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BEIJING / TOKYO – China’s failure to break dependence on coal power threatens to undermine the country’s commitment to achieve carbon neutrality by 2060.
Last year, China built enough coal-fired power plants to supply 38.4 gigawatts of electricity, according to data from the US think-tank Global Energy Monitor, far exceeding the 8.6 GW of plants that were withdrawn. This net gain in capacity, the equivalent of 30 nuclear facilities, suggests that coal will remain king in China for the foreseeable future.
The China Electricity Council industry group, in a February report, called coal-fired power a cornerstone of maintaining a stable electricity infrastructure. Despite the growth of renewable energy, coal-fired thermal power “can make a huge contribution,” said Yu Chongde, vice president and general secretary of the board.
A state-of-the-art coal-fired power plant in Inner Gansu Province began commercial operations in November, using equipment manufactured by Harbin Electric, a state-owned company.
The plant significantly reduces emissions of sulfur dioxide and other particulates, and replaces an old, obsolete facility, so the plant is seen as a contributor to decarbonization. Its location in a coal mining region removes carbon dioxide that would be produced by transporting fuel.
The Chinese government has determined that locally produced coal is essential to meet the country’s energy needs. Power generation from renewables remains less than reliable, and China’s electricity demand soared 3% last year despite the economic slowdown caused by the pandemic.
“We aim to reach a peak of CO2 emissions before 2030 and achieve carbon neutrality by 2060,” President Xi Jinping said in September during a speech at the United Nations. To achieve this vision, China has embarked on expanding its capabilities in wind, solar and nuclear power.
Nationwide power generation capacity jumped 190 GW last year. Wind power accounted for 71.6 GW of the total, while solar power contributed 48.2 GW, with both sources exceeding the additional coal-fired capacity.
Chinese experts predict that the total capacity of wind, solar and nuclear power will more than triple by 2030 compared to last year. These renewable energies should provide a share of 47%, against 27%. The share of thermal energy in the electricity mix would fall by 16 points over this decade, but would remain a main source at 41% in 2030.
Chinese coal-fired power plant builders have used technology and cost competitiveness developed against a backdrop of strong domestic demand to export the facilities. Harbin Electric has built a factory in Dubai which opened last year, the first of four to be commissioned by 2023.
Dongfang Electric and Shanghai Electric Group are also building thermal power plants abroad. Like China, several other Asian countries depend on coal as a stable source of energy to fuel economic growth. Construction of new coal-fired power plants passed shutdowns last year in India, Vietnam, Indonesia and elsewhere.
Yet the rest of the world is clearly moving away from coal. Outside of China, the capacity of coal-fired power plants decreased by 17 GW on a net basis when the closures are compared to new builds, according to data from Global Energy Monitor.
The United States removed 11.3 GW of coal-fired facilities without building new ones. President Joe Biden is expected to steer the country more towards renewable energy as he prioritizes the fight against climate change. The UK, which seeks to phase out all coal-fired power plants by 2025, scrapped large capacity last year.
In Japan, new coal-fired power plants have overtaken pensions. The government plans to suspend or phase out inefficient plants by fiscal year 2030. But this strategy indicates that high-efficiency coal-fired plants will remain in service.
Coal-fired power plants risk becoming stranded assets or holdings that produce no balance sheet value. Homeowners are facing external pressure to sell power plants.
Japanese companies are scrambling to respond to the decarbonization trend. Jera, the country’s largest power generation group, has pledged to achieve net zero carbon dioxide emissions by 2050, setting the target for the government.
Tokyo Electric Power Co. Holdings and Chubu Electric Power consolidated their thermal power businesses to form Jera, which now produces more than 10% of Japan’s carbon emissions. Jera plans to adopt hydrogen to produce gas and replace coal with ammonia as a fuel.
In the service of electric power development, also known as J-Power, low-efficiency coal-fired power plants contribute 36.8% of total electricity production. The company is looking to develop technology to capture carbon dioxide produced by power plants and bury the by-product under the ocean.
Japan’s three mega-banks have said they will cut all ongoing funding for coal-fired power projects to zero.
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