Coal-fired power is still enjoying a construction boom in China, but a marked slowdown in the permitting of future plants has given experts hope that the world’s biggest emitter may be turning a corner.
China led the world in the construction of new coal-fired power plants in the first half of 2024, with work beginning on more than 41GW of new generation capacity, data published on Thursday showed.
That was as much new coal power capacity as China embarked on during the whole of 2022. It represented 90% of the world’s new coal plant construction so far this year.
More could be on the cards: the Chinese government has a target of bringing 80GW of new coal-fired generation capacity online for the whole of 2024.
But while new starts surge ahead, the pipeline of future plants looks as if it could be much smaller. Only 9GW worth of power plants received permits in the first half of 2024, a reduction of 83% compared with the first half of 2023, according to a report by two thinktanks, the Centre for Research on Energy and Clean Air (CREA) and Global Energy Monitor.
The slowdown in coal permitting comes as China’s renewable energy sector has surged ahead, adding as much new wind and solar generation capacity in 2023 as the UK’s total electricity production from all sources.
That increase in renewable power was a key factor in driving down China’s coal power generation, by 7% between June 2023 and June 2024. Qi Qin, lead author of Thursday’s report and China analyst at CREA, said: “The development of clean energy enables the Chinese government to set more ambitious goals for reducing coal power generation and carbon emissions. China needs to stop allowing room for fossil fuel emissions to grow in its policies.”
Power generation is different to capacity. For political and economic reasons, new fossil fuel powered capacity can be added that is not used to its full potential. Similarly, wind and solar are intermittent resources, so the amount of electricity generated can vary.
There are strong political reasons why China might want to increase its coal capacity. The government took fright at droughts in 2022 that vastly diminished the country’s hydroelectricity capacity and caused factory shutdowns, and the war in Ukraine has destabilised energy prices globally. After years of relative decline, coal was repositioned by Beijing as the best solution for base load power.
However, coal plants are struggling economically, according to David Fishman, a senior manager at the Lantau Group, an energy consultancy in Shanghai. He said it was no longer profitable in the long term to build coal power plants in China. “The only reason to do so would be strategic reasons,” for example pressure from other stakeholders, such as local government officials, who might be concerned about energy security or short-term GDP growth. “Coal power plants lose money right now. They don’t have guaranteed uptake … the ones I talk to mostly say: ‘we’re in pain,’” Fishman said.
The increase in renewable generation, if coupled with investments in upgrading the electricity grid and potentially reforming the electricity market, could offer China a path to energy security without the dominance of coal, as well as a way to cut greenhouse gas emissions sharply, analysts said.
Christine Shearer, an analyst at Global Energy Monitor, said: “The steep drop in new coal plant permits is a hopeful sign that China’s massive solar and wind builds are dampening its coal ambitions. With clean power now capable of meeting the country’s electricity demand growth, China should cancel its remaining coal proposals and accelerate the retirement of its existing coal plants.”
Weaning China away from the dirtiest fossil fuel will require facing down the powerful coal lobby, which is entrenched within China’s regional and national governing structures. Fishman said that while certain stakeholders, such as officials for coal-producing provinces such as Shaanxi, may still be pushing for continued coal use, “it’s hard to see how they’ll win”.
“Why would you want to build this thing that not only is politically problematic but also doesn’t stimulate GDP?” Fishman asked, referring to coal-fired power plants.
Coal producers see the future differently, and are unlikely to give up without a fight. In an article published on Tuesday, Shaanxi Investment Group, a commodities and mining firm, praised Qingshuichuan Energy, one of its subsidiaries that is focused on coal, for its efforts to “ensure an adequate supply of coal” for the peak energy demands of summer.
For the rest of the world, these questions have acute relevance. China is the world’s biggest emitter by far, responsible for more than a quarter of global carbon dioxide emissions. The government has promised that emissions will peak by 2030, but most scientists fear this is far too late to limit global temperature rises to 1.5C above preindustrial levels. For China to peak this year, or next, would still give the world a small chance of staving off climate disaster, and analysts believe that with concerted action such a peak is possible – and indeed may already have happened, according to CREA, given the surge in clean power.
China’s government will not comment on this speculation, and holds fast to the existing pledge to peak by 2030, made by its president, Xi Jinping, in 2020. A spokesperson said China’s energy strategy was based on “the principle of building the new before discarding the old”. That phrase, first used by Xi in his speech to the Communist party congress in 2022, reflects the Chinese government’s desire to peak emissions in a way that also ensures energy security, something that Beijing has been increasingly concerned about since the war in Ukraine and summer power outages in 2021 and 2022.
“We are exercising better control over the amount and intensity of energy consumption, particularly of fossil fuels, and transition gradually toward controlling both the amount and intensity of carbon emissions,” the government spokesperson said.
