China Under Pressure To Cancel Coal Projects – Analysis

By Michael Lelyveld

As China awaits a reckoning over climate change targets, environmental groups are turning up the heat over the country's construction of coal-fired power plants.

China's continuing construction of coal plants has become a make-or-break issue for climate researchers and advocates as the government prepares plans to meet President Xi Jinping's goals for peaking carbon emissions before 2030 and achieving carbon neutrality before 2060.

"How China addresses the apparent contradiction between its massive coal-fired build-out plans and its net-zero emissions plan may become one of the biggest challenges in efforts to limit the rise in global temperatures and meet climate targets," Reuters said.

While China should be cutting coal use to meet the looming deadlines, it has been adding new coal power plants at the rate of about one per week, the environmental research group Carbon Brief said last month.

Worldwide coal power generation fell 4 percent last year during the COVID-19 pandemic, but China increased its coal- fired output by 1.7 percent, making it the only G20 country to record a significant rise, the London-based group Ember said in its annual electricity review.

The Global Energy Monitor (GEM) reported similar data and the identical trend in its "Boom and Bust 2021" report this month.

China commissioned 76 percent of the world's new coal plants last year, an increase from 64 percent in 2019, GEM said.

China's share of global coal power production jumped from 44 percent in 2015 to 53 percent last year, according to Ember.

Although the country made strides in renewable energy, it also boosted coal power as electricity consumption continued to climb.

China added 71.7 gigawatts (GW) of power from wind and 48.2 GW from solar in 2020, but coal power capacity also grew by 38.4 GW, the survey found.

An additional 73 GW of new coal-fired capacity was approved, said Lauri Myllyvirta of the Center for Research on Energy and Clean Air in a Carbon Brief report.

New power plants are designed to keep operating for 30 to 40 years, locking in carbon emissions and challenging climate goals.

Coal's share of China's total energy mix has dropped to 56.8 percent, but coal-fired generation has jumped 19 percent during the 2016-2020 period of the 13th Five-Year Plan, Reuters said, citing the Ember report.

Carbon reduction vs. growth

Behind the numbers is a concern that China's government is missing an opportunity to make needed reductions in carbon emissions under pressure to boost economic growth as the COVID crisis comes under control.

Disappointment followed Premier Li Keqiang's presentation of the government work report and the outline of the 14th Five-Year Plan in March, since neither called for cancelling new coal power projects through 2025.

Instead, the government promised only to "rationally control the scale and pace of development in the construction of coal-fired power," Reuters said.

The government may address the issue later this year in an action plan for reaching a plateau in emissions before 2030, but further delay until the 15th Five-Year Plan period could make the goal an impossible task.

At a press conference on renewable energy development on March 30, officials of the National Energy Administration (NEA) stuck closely to script, praising China's achievements, but giving no hint of a decision to either cancel the coal projects or allow them to proceed.

During the 2016-2020 period, the proportion of non-fossil energy consumption rose from 12.1 percent to 15.9 percent, said Li Fulong, director of the NEA Development and Planning Department.

By 2030, the non-fossil share will reach "around 25 percent," Li said, according to an official transcript.

In late January, the NEA came under heavy pressure from the Ministry of Ecology and Environment (MEE) as an environmental inspection team released a report blasting the agency for allowing coal-fired projects to continue.

As a result of internal divisions at the NEA, coal power installations were still increasing in 12 of China's 31 provinces and provincial-level municipalities, the inspection team said.

"Never before has a high-level central government agency been inspected and openly criticized for multiple failures related to energy development," Carbon Brief said in a posting at the time.

The NEA was ordered to submit a "rectification plan" to the Communist Party of China (CPC) Central Committee and the cabinet-level State Council within 30 working days. It is unclear whether the conflict has been resolved.

Meanwhile, climate researchers have published an extensive study of China's 1,037 currently operating coal plants and nearly 3,000 individual generating units, evaluating them for technical, economic and environmental criteria to determine which of them should be retired first.

The analysis published in the journal Nature found that 18 percent of the plants "consistently score poorly across all three criteria and are thus low-hanging fruits for rapid retirement."

The targeted plants account for 111 GW of capacity.

If the worst coal plants are shut down, the rest could continue to operate with a minimum lifetime of 20 to 30 years and "gradually reduced utilization" to meet climate change goals with complete phaseout of coal power by 2045 or 2055, the study said.

Authors of the study include contributors from the University of Maryland Center for Global Sustainability, the North China Electric Power University, Tsinghua University and the National Resources Defense Council in Beijing.

The proposal for retirements attempts to address the concern that China's coal plants will become stranded assets, to be abandoned when they no longer produce a return on investment. Some plants are reported to be running with utilization rates as low as 50 percent.

Delayed retirement

While the analysis could form the basis of a government phaseout plan, the study's findings may be seen as less than reassuring.

For one thing, most of China's coal plants are less than 15 years old, raising the risk that many will be sidelined before their intended life spans.

The authors also acknowledge that "the retirement pathways explored fully depend on an immediate halt of new constructions of coal power plants in China," begging the question that remains at issue.

The study estimated that 100 GW of coal power capacity is currently under construction with an additional 160 GW planned, suggesting major losses if the projects are stopped.

Philip Andrews-Speed, a senior principal fellow at the National University of Singapore's Energy Studies Institute, voiced doubt that the government would adopt the approach.

"I think it is largely wishful thinking, at least in the short term," Andrews-Speed said.

In yet another study released this week, the London-based think tank TransitionZero said that China must close 588 coal plants in the next decade and stop new projects immediately to meet Xi's targets.

But the researchers argued that China could save U.S. $1.6 trillion (10.4 triliion yuan) over 20 years by replacing coal plants with renewable sources of power.