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If China Is So Committed To Renewable Energy, Why Are So Many New Coal Plants Being Built?
Wade Shepard ,
CONTRIBUTOR
I travel to emerging markets around Asia and report on what I find.
Opinions expressed by Forbes Contributors are their own.
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It seems like a contradiction: a country claiming that they are committed to improving its air quality, who has put up more windmills, solar panels, and hydropower dams than anywhere else in the world, as well as issuing piles of forward-thinking environmental policies, that is still building large amounts of brand new coal-fired power plants.
So how do we account for this apparent contradiction? Is China’s position on renewable energy little more than political doublespeak? Does the country want its coal and clean skies too?
China, a country known for its smoggy skies and hazardous environmental conditions has rapidly become the global leader in developing and implementing renewable energy technologies on a mass scale. The country’s central government understands that there is a problem that needs to be fixed as fast as possible. In the words of Energy Innovation’s Hal Harvey, who has been instrumental in advising China on energy issues, “They get it.”
 In this Dec. 3, 2009 file photo smoke billows from a chimney of the cooling towers of a coal-fired power plant in Dadong, Shanxi province, China. (AP Photo/Andy Wong, File)
Responding to the air pollution crisis, China’s central government has made some monumental strides. It is estimated that by 2020, over 15 percent of China’s energy capacity will come from non-fossil fuel sources, and the country is the clear global leader when it comes to renewable energy.
However, the most coal-fired energy capacity in the world is also in China.
Even as China adds mountains of renewable energy capacity and develops progressive government policies to improve air quality, the old incumbent coal is still maintaining its leading position — and its looking to do so for a long time yet.
China’s National Action Plan for Air Pollution Prevention and Control's mid-term review, which was released on July 5th, shows that the eight provinces which make up their ‘key regions,’ added on a massive 50.8 GW of new coal-fired energy capacity between the years of 2013-15. For scale, the country’s total installed energy capacity in 1980 was 66 GW. On top of this, the report showed that 42 GW of additional coal-fired capacity is currently under construction, with 11 GW more being approved just last year. Meanwhile, just 10.8 GW of coal-fired capacity in these provinces was taken offline during this same period. Considering that each coal-fired power plant has a lifetime of thirty to fifty years, it seems as if China has hedged its biggest energy bet on coal for the foreseeable future.
But as the National Action Plan for Air Pollution Prevention and Control, a mandate from China's State Council, has already banned the increase of coal-burning energy capacity, how can these numbers be explained?
First of all, not all coal is equal and neither is every coal-fired power plant. At the same time that China is transitioning from fossil fuels to renewables the country is also transitioning from high-polluting, cheap coal to premium, ultra-supercritical coal, which is burned at a very high temperature and at a very high rate of efficiency. Some of these new coal plants in China are better than anything seen yet in the US, and in the words of Harvey, China is “backing out really crappy old coal with better coal.”
“New power plants certainly have much more aggressive emission control technologies than older plants, although many older plants are being fitted with these control technologies as well,” said Lauri Myllyvirta, a researcher at Greenpeace. “China has managed to reduce SO2 and NOx emissions from the power sector very rapidly in the past few years, above all due to retrofitting and due to stagnating power generation from coal, which has allowed emission controls to catch up. Where the logic falls apart is that very little capacity is being retired.”
China’s central government, regardless of how it appears, is not an omnipotent, monolithic organization. Provincial level governments still maintain massive amounts of decision making autonomy, as well as the power to occasionally enact initiatives which run against the grain of Beijing. As most energy planning is carried out at the provincial level, the end results sometimes don’t run flush with national policy.
“The major error the central government seems to have made is to devolve energy planning to provincial authorities, who are clearly not paying any attention to market demand for power generation from coal - any kind of investment will boost GDP numbers,” Myllyvirta said.
According to Myllyvirta, there are some very clear drivers behind China’s local governments’ hesitancy to sever ties from coal.
1) Coal power is an easy way to generate economic activity at a time of reduced growth, not only via the construction of coal plants but through supporting local miners, who are struggling;
2) The profit margins for coal-fired power plants are currently over-inflated, as the cost for coal is market driven, and has dropped significantly, but cost of electricity, which is government regulated, has remained unchanged;
3) Expectations of future energy demand have not yet been adjusted to take into account the vast amount of renewable energy coming online and slowing economic growth.
So while the contradiction of attempting to reduce carbon emissions on one hand while increasing coal-fired energy capacity on the other can be contextualized, it cannot be completely explained away. Increasing coal energy capacity so dramatically at the height of a national air-quality crisis mitigates some of the gains made in renewable energy.
However, just because just because China has X-amount of new coal-fired energy capacity doesn’t necessarily mean that all of this capacity is being utilized -- not at all. By the numbers, China has upwards of 200 GW of redundant coal-fired power capacity and, ultimately, has little use for many of the new coal plants that are currently being built.
(lol at this last paragraph)
“The entire coal power overcapacity situation has been caused by the fact that power generation from coal has hardly increased since 2011 and has been falling since 2013. This is the biggest climate story in the world - China's coal demand is actually likely to have peaked in 2013, almost a decade ahead of targets,” Myllyvirta said.
“In other words, they've overshot, they've overshot their capacity requirements by a significant amount already,” Harvey concurred. “In my opinion, coal usage has already peaked in China, I would foresee the breaks being put down on coal construction and a lot of those plans for plants not being completed or built at all.”
Last year, China’s coal consumption dropped 3.7% while coal imports plunged 30.4%.
“The massive over-investment in coal-fired power is a wasted opportunity to deploy clean energy even faster, and overcapacity is exacerbating the problem of ‘wasted’ wind and solar power, as grid operators fail to prioritize renewable energy sources over coal,” Myllyvirta opined.
Basically, China’s unnecessary clinging to coal seems to be a temporary, transitional phenomenon that will gradually wan as the country continues its complicated, jarring transition away from sluggish, dirty state-owned industries towards leaner, more sustainable models of business and energy production.
I'm the author of Ghost Cities of China. I'm currently traveling the New Silk Road doing research for a new book. Follow by RSS.
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