For years, environmentalists and force policymakers have seen China’s reliance on coal as a major impediment to reducing global carbon emissions. Burning coal is the world’s largest source of carbon dioxide emissions, and some of all coal-fired power plants are in China.
Despite insisting that the country will move away from coal, Chinese officials have hesitated. In September 2021, for example, Chinese President Xi Jinping announced that China would no longer fund coal-fired power plants overseas. But today, coal consumption is increasing globally. Nationwide. Over the past year, China’s provincial governments have given the green light to more coal-fired power generation capacity than in the past six years combined. If those plants were built and operated as usual, China would exceed its climate update commitments. Global temperature targets are out of reach.
The strange thing about China’s dependence on coal is that it makes little financial sense. China is pushing to invest in coal, even though coal-fired power plants have posted record losses in recent years. Several factors, adding up the need for electrical security, China’s design of climate goals, and the local interests of local governments support this uneconomic behavior. However, the prices of China’s commitment to coal may be very high as the world tries to avoid the worst effects of climate change.
In 2021, China experienced its worst energy shortage in decades, affecting more than 20 provinces. The following year, the combination of drought and heat waves led to severe power restrictions in regions that rely on hydropower. As a result of those energy crises, climate replenishment considerations are now tempered by force security considerations. Xi is adopting the slogan “Build first, destroy later,” a reference to his plan to keep classical force resources in place for now. Beijing is happy with its old “traffic light. ” tracking system, according to which the central government in Beijing allowed some local governments to build coal-fired power plants only if the capacity was mandatory and financially viable. While the country’s economy is struggling, China will give even less priority to its climate commitments.
In the short term, China has increased its coal production to allay concerns about the security of its energy supply. In eastern and southern China, where most of the newly planned coal-fired power plants will be located, provinces justify approving the plants by raising the need for reliable energy resources. Some western provinces say they need new coal-fired power plants in their areas to facilitate the integration of new renewable energy resources into their electric power supply.
The fact that China is dependent on coal is that it makes little monetary sense.
The design of China’s medium-term climate goals gives provincial governments the flexibility to consider more permits for coal-fired power plants. China has said its coal consumption will peak until 2025 and its carbon emissions until 2030. But Beijing has not specified the punto. de any of those peaks, forcing corporations and provincial governments to see a brief window to secure carbon-intensive investments. Targets for degrees of carbon intensity (a measure of carbon emissions consistent with the unit of GDP) have not stopped the government from approving new coal programs. Skyrocketing power plants. Economic expansion may simply leave more room for higher emissions without undermining measures of carbon intensity.
But China’s looming economic slowdown may simply be one explanation for why localities are granting so many coal permits. Some provincial governments justified the new approvals on the grounds that the plants would stimulate the economy. The government used a similar logic just a decade ago to attract investment and create jobs; When Beijing gave local governments the authority to allow coal-fired power plants in 2014, a wave of new structures ensued until the traffic-reduction formula instituted in 2016 slowed the boom.
And yet, making an investment in coal-fired power is not an economical option. In fact, many energy corporations now seem reluctant to continue building power plants because their long-term profitability is questionable. China’s coal-fired generation capacity has grown faster than coal production, so the revenue generated by coal-fired power plants probably won’t justify their higher upfront costs. State-owned enterprises bear a great responsibility in expanding coal mines and building more coal-fired electric power generation capacity, as they are partially protected from government losses. Even after China’s coal-fired power corporations lost unprecedented amounts of cash in 2021 due to power shortages, they still enjoy smart credit ratings because they are subsidized by the state.
Many of these new coal-fired power plants may not be financially viable. Medium-term expansion projections do not justify the need for such a large number of people. Prior to the COVID-19 pandemic, analyses by networking plan groups and industry associations recommended coal capacity would peak at 1,200 gigawatts, but recent leases may also increase capacity above 1,400 gigawatts. The pandemic led to a transitory slowdown in energy demand, followed by a resurgence that contributed to power shortages. China’s electricity demand is expected to grow by as much as 6% in 2023, but there is no authoritative research indicating that China wants to build so many new coal-fired power plants to meet its energy needs.
The slow pace of force market reforms in China is exacerbating the situation. Today, markets such as bilateral contracts and centralized auctions account for about a portion of all electric power generation in the country, with the rest of the electric power being sold according to government plans. , the government limits the maximum value of electric power sales, so any plant that primarily supplies backup capacity will lose money. Shortfalls can be compensated for by simply increasing the value of energy at peak times or charging consumers for capacity, but so far those efforts have led to the collapse of the power plant. New plants, as well as some older ones, may suffer the same fate as Beijing’s Gaobeidian coal-fired power plant, which ceased operations in 2017. ostensibly to meet air pollutant targets, and whose coal-fired appliances are now kept running. Stand-alone operation, operating for only a few hundred hours a year.
Given these headwinds, it’s still unclear whether all licensed coal-fired power plants will actually be built. Some localities that have approved plans for new power plants probably won’t build them in the near future. It’s also unclear how much carbon those plants contain. Plants will emit: The maximum emissions from a coal-fired plant come from the amount of electrical power it produces, not its capacity. If those plants are built but operated from time to time (used, for example, as a reserve), they would emit potentially no devastating long-term climate impact. One thing is for sure: replacing older facilities with newer, more effective turbines can lead to marginal emissions discounts in the short term, but at the expense of cementing a long-term commitment to coal.
China’s coal strategy will have a major impact on the profitability of its renewable energy sector. If coal expansion outstrips demand, the appetite for renewable energy generation could simply wane. So far, that hasn’t happened. China continues to build wind and solar power plants at a record pace. On the other hand, if many of China’s coal-fired power plants are simply converted into backup power sources, it could spur the expansion of renewables by allowing provinces and blank power developers to build faster without worrying about the safety of the force.
No country will turn off the lights to meet its climate update targets. But there are other tactics with which China can protect its energy source while accelerating the transition to low-carbon energy. Expanding the energy park can help mitigate the variability of renewables. Localities hope to better meet electricity demand, for example by encouraging electric vehicle charging at night and reducing the use of air conditioning during periods of peak energy consumption. The structure of wind and solar power plants can also make energy more affordable, a key component of Force Security. Once a renewable energy plant is built, most of its long-term power prices are fixed, creating more predictable balance sheets and making the entire force sector less vulnerable to global fossil fuel volatility.
China is entering an era where emissions trajectories can be drastically altered depending on the interaction of many competing factors. To keep the country on track to meet its climate goals, Beijing will want to help quell enthusiasm for coal by offering provinces roadmaps to improve their strength security. Reforming electricity markets can also help manage significant excess coal-fired power capacity while fostering low-carbon opportunities to displace fossil fuels. In any case, the successes and failures of China’s coal transition will have global repercussions. China fails to abandon coal while maintaining its economic growth; Other countries with less complex energy systems would probably think twice about switching from fossil fuels to cleaner energy. China’s effect on global emissions, therefore, depends not only on the amount of carbon it releases into the atmosphere, but also on the strength of its example.