China’s coal surge challenges climate pledges, green investment: Study

SINGAPORE - Construction and approvals for new coal-fired power plants in China surged in 2024, risking further lock-in of the dirty fuel and challenging the climate commitments of the world’s top greenhouse gas polluter, according to an analysis released on Feb 13.

China, the world’s top coal consumer and producer, has by far the world’s largest fleet of coal power plants that belch out vast amounts of planet-warming carbon dioxide (CO2). In 2023, its total CO2 emissions from coal-fired power generation hit 5.56 billion tonnes – more than the carbon emissions from the United States that year.

China is also adding record amounts of renewable energy capacity – a further 356 gigawatts (GW) of capacity in 2024 – about 4½ times the European Union’s additions in the same year.

But continued coal power expansion risks undermining this, said the report from the Finland-based Centre for Research on Energy and Clean Air (Crea) and Global Energy Monitor (Gem), which tracks fossil fuel and renewable energy projects worldwide.

In 2024, coal power construction activity in China surged to 94.5GW, its highest level in a decade.

The country also approved 66.7GW of new coal-fired power capacity, marking a resurgence in the second half of the year after a slowdown in the first half to 9GW, the report said.

China now accounts for 93 per cent of global construction starts for coal plants in 2024.

Instead of replacing coal, clean energy in the country is being layered on top of an existing fossil fuel-heavy system, with coal generating about 60 per cent of China’s electricity. This makes it increasingly difficult to achieve the intended shift towards a power sector driven by renewables, the authors said.

The surge in coal power capacity challenges

President Xi Jinping’s 2021 pledge to strictly limit the increase in coal consumption

over the current 14th five-year plan period (2021-2025) and phase it down in the 15th five-year plan period (2026-2030). He has also said China’s carbon emissions would peak before 2030, and it would reach carbon neutrality before 2060.

“China’s current push for new coal power is primarily driven by industry interests that are advancing coal expansion under the banner of ‘energy security’,” said the report’s lead co-author Qi Qin, China analyst for Crea.

“These groups recognise the constraints imposed by the 2030 carbon peak and 2060 carbon neutrality targets and are moving quickly to secure growth before the window narrows,” she told The Straits Times.

The report says more than 75 per cent of newly approved coal power capacity was backed by coal mining companies or energy groups with coal operations.

Globally, the coal power plant fleet has been shrinking, with older plants shutting down in Europe, the US, Australia and elsewhere, though some new plants are still being built in Asia outside China.

Ms Qin said China does not need additional coal power capacity, provided that grid efficiency improves and the expansion of renewables continues at its current blistering pace.

In total, China has about 1,400GW of installed wind and solar power capacity.

That huge green capacity is helping China meet most of its annual electricity demand growth, while also significantly slowing the rise in CO2 emissions across the economy.

Dr Jorrit Gosens, a China energy expert and fellow at the Centre for Climate and Energy Policy at the Australian National University in Canberra, who was not involved in the report, said: “Total emissions are already beginning to plateau, due to continued and accelerated renewables build-out, a very high share of electric vehicles, as well as slowing economic growth.”

The danger is that if coal remains dominant in power generation or if its share does not decline rapidly enough, it could slow the decarbonisation of China’s power sector, leading to a prolonged plateau in emissions, said Ms Qin. And that could weaken the profitability of renewables.

What China decides on coal matters to the world. Burning fuel is the single largest source of CO2 emissions from human activity, and burning coal is the single largest source of CO2 emissions from China.

To achieve the deep cuts in global CO2 emissions that climate scientists say are needed to slow the pace of global warming, China must dial back its coal addiction, experts say.

Still, despite its ramping up of coal investment in 2024, Ms Qin said China’s CO2 emissions are still likely to peak before 2030, a view shared by Dr Gosens.

Ms Qin said: “The key questions are how high that peak will be, how long emissions will stay at that level, and how quickly China can transition from peak to net zero. These factors will have significant implications for global climate goals.”

Dr Gosens said a key point is the utilisation rate of China’s coal-fired power plants – the percentage of time they are generating electricity. Emissions depend on how much coal is burned, not power plant capacity.

“There is a risk of lock-in, however. The investment in these plants needs to be paid back, and the simplest way to do so is to allow them to produce power. There is currently no clear indication that Beijing plans to close plants early, or compensate power plant owners for early retirement,” he told ST.

The Crea-Gem report said electricity buyers locked into long-term coal power contracts face penalties if they fail to buy contracted volumes. This discourages them from prioritising clean energy. New coal power capacity with similar terms will further limit the space for renewables, the report’s authors added.

Still, China’s record roll-out of solar and wind gives hope that the country will achieve substantial CO2 cuts by 2035, Dr Gosens said. That would help cement China’s image as a green-technology leader.

“Many are looking to China to fill the leadership in international climate discussions now the US has retreated again,” he said.