Despite Xi’s pledges in 2020, there was a major expansion of China’s coal fleet in the last year, Yuan Jiahai, a professor of economics at the Beijing-based North China Electric Power University, told NewsChina. Yuan said that China approved plans to install an additional 46.1 gigawatts (GW) of coal-fired power capacity in 2020, over three times the amount approved in 2019.
Moreover, Yuan estimated that total coal power capacity under development, including plants that are already under construction, announced but yet to be approved, approved but temporarily suspended, and those approved but yet to be constructed, amounts to 413 GW, accounting for 41 percent of China’s existing coal power capacity. Capacity, however, is not the same as actual generation, which is measured in kilowatt hours (kWh) or megawatt hours (MWh) and refers to how much electricity is generated over a specific period.
“If all these projects were to be completed, they would pose a major problem for China if it wants to reach its carbon emission goals,” Yuan said.
According to Li Xiang, a research fellow with Peking University’s Institute of Energy, the enthusiasm for coal power investment is largely driven by local governments. In the past, because coal prices can fluctuate dramatically, coal power plants were not always profitable, especially as electricity prices are fixed by the government.
In 2018, rising coal prices meant many coal power plant operators saw major losses. According to energy portal in-en.com, which collects industrial data in the energy sector, in 2018, 257 out of 474 coal power plants under five major centrally administered State-owned electric power companies ran at a loss, with combined financial losses of 38 billion yuan (US$5.9b).
“While the financial status of these plants became better in 2019 and 2020, centrally administrated State-owned enterprises are not eager to expand their operations,” Li said.
Most coal power projects in 2020 were approved by provincial authorities. They see building new coal power plants as one of the most effective ways to boost their economies. Coal power plants require a lot of capital investment, and not only create jobs, but also provide a reliable energy supply that can attract more investment, Li told NewsChina.
In order to curb the expansion of coal power capacity, the central government launched a pilot program in five northwestern provinces and autonomous regions. In Gansu, Shaanxi, Xinjiang, Ningxia and Qinghai, authorities are only allowed to run one major State-owned coal power company, while the management of all other companies was transferred to the central government. Smaller and less efficient coal power plants were ordered to close.
Han Wenxuan, a deputy chief economist at the Energy Research Institute of Huaneng Group, one of the big five State-owned electric power generation companies, told NewsChina that by the end of this year, coal power capacity in these five provinces and regions will be cut by a third and the program could soon be rolled out across the country.
But given the slow progress in phasing out coal power plants, Han estimated that China would not be able to reach peak carbon in its electricity sector by 2025, but 2030 could be more realistic.