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China Watch: Coal on the rise – can China turn it around?

By Robin Whitlock |

Whether the world meets emissions targets depends largely on China. It burns half the coal used across the world to generate electricity, is outstripping all countries in building wind and solar generation, makes more than half the world’s EVs and is struggling to keep up with the demand for electricity. Each month, we’ll keep you up to date with what’s happening because what happens in China matters to us all.

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Waipipi wind farm
 

China emits more greenhouse gasses than the rest of the developed world combined: 27% of the global total. This is more than triple China’s 1990 levels and a 25% increase over the past decade with China the only G20 country where coal use has increased. Until China takes control of its emissions, the global fight to decarbonise cannot be won.

Electricity demand in China has grown by over 1,880 TWh, or an average of 7% per year, from 2015 to 2020 (falling to 4% in 2020 due to Covid-19), according to a report by United Kingdom energy research company Ember. Between 2010 and 2020, China’s electricity demand grew by an average of more than 8% or about 340 TWh per annum, equivalent to the electricity demand across the UK in 2020.

Although China expanded its renewable energy generation by 821 TWh, this has not been sufficient to meet the country’s overall electricity demand. Although coal-powered generation as a share of overall generation mix has fallen by 7%, in absolute terms coal has been increasing steadily and still supplies 39% of China’s overall growth in electricity demand.

“China’s coal generation has continued to expand, up 15% in the first half of 2021 from the pre-pandemic level,” says Ember senior analyst Muyi Yang. “This happens as rising electricity demand outpaces growth in clean power. However, with coal prices hitting record highs, this also puts China’s power companies in a dilemma between pressure to meet rising needs for electricity and growing financial difficulties caused by their loss-making coal-fired power plants.”

Wind and solar generation

Source: ourworldindata.org. Per capita CO2 emissions for China and New Zealand

Growth in renewable energy

While this, and the fact China is still developing an official road map to being carbon neutral, may dent confidence about its commitment to reduce emissions, there are two mitigating factors to consider. The first is that with a population of 1.4 billion, China’s per capita emissions are still far lower than many countries, including New Zealand. The second positive indicator is that while they don’t have a roadmap yet, Xi Jinping announced last year that China will reach peak carbon in 2030 and be at net zero emissions by 2060.

 
 
 

Yang says China is increasing its efforts to generate renewable energy, in an effort to provide reliable power without having to lean so heavily on coal: “Stable-cost solar power provides an attractive solution for this dilemma. China’s recent ramp-up of policy support for rooftop solar PV further vindicates the practicality of this option.”

He says that China is taking a two-pronged approach to reducing its emissions while maintaining its steady energy supply

“One is to support domestic coal supply, in an effort to stabilise the electricity markets in the short term. Two, is to accelerate the deployment of solar PV and other clean technologies, which will in turn squeeze coal out of the electricity markets over the long run.”

Like almost everything about China, the sheer scale of what it can achieve when mobilised involves big numbers. It is the world’s most prolific producer of wind energy, with the capacity to make more than twice as much as the second-largest generator, the United States. It also has about a third of the world’s solar generation. This year it is expecting to raise its generation from solar and wind to around 11% of the country’s power consumption, up from just under 10% last year.

But that’s just the tip of what’s to come. At the end of 2020, China had 253.69 GW of installed solar and 279.04 GW of wind farms. By 2030, the capacities will stand at 890.31 GW and 742.62 GW, respectively. China had 3 GW of solar farms under construction at the end of June 2021 and 34.3 GW of projects undergoing permitting. On the wind front, 29.4 GW is under construction and 42.9 GW is in the permitting stages.

The growth in renewables highlights another issue, connecting it all to the grid. In 2017, more than 30% of the renewable power produced in the sunny, windy provinces in northwest China was never used. That was because it couldn’t be delivered to where it was needed, the highly populated megacities of eastern China, such as Shanghai and Beijing, thousands of kilometres away. Billions are being spent to overcome these types of infrastructure problems.

The other issue, which New Zealand is also grappling with at the moment, is storage to balance out the grid. A mix of technologies is in play including batteries, pumped hydro and thermal storage. Policymakers have made it clear that the country’s scientists and engineers need to develop more-effective energy-storage technologies and local governments, keen to stimulate economic growth, are supporting research centres. So, are companies who have confidence in the long-term opportunities with the clear directive that’s been issued.

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