China’s rapid development of renewable energy is causing a noticeable slowdown in the approval of new coal-powered projects, according to a recent report by the Centre for Research on Energy and Clean Air (CREA) and Global Energy Monitor (GEM).
Despite the decline in new coal power permits, GEM warns that the existing pipeline of coal projects still presents significant challenges for China to meet its climate goals and energy transition targets.
The report highlights that in the first half of 2024, China reduced coal-power permits by 83% compared to the same period in 2023, approving only 9 gigawatts (GW) of coal capacity. This is a sharp contrast to the surge in coal power permits seen in 2022 and 2023, which exceeded 100 GW annually. The reduction in new and revived coal power proposals is also evident, with early 2024 seeing only 37 GW of proposals, down from 60 GW in early 2023.
However, GEM cautions that this reduction may not be sufficient to significantly reshape China’s emissions trajectory.
In the first half of 2024, over 41 GW of coal projects began construction, nearly matching the total coal capacity that commenced construction in all of 2022. This represents more than 90% of global new coal construction activities. Additionally, the government’s goal of bringing 80 GW of coal-fired capacity online in 2024 suggests a potential increase in project completions later in the year, following the commissioning of 8 GW in the first half.
The report attributes the slowdown in coal power permitting to the rapid expansion of renewable energy in China. The current pace of renewable energy installation appears capable of meeting the country’s growing electricity demand, prompting the central government to shift its policy focus. While continuing to support clean energy development, the government is now placing greater emphasis on reducing carbon emissions to achieve its climate and energy objectives. By limiting new coal power projects and prioritizing grid reforms, energy storage, and other clean energy solutions, China is laying the groundwork for significant emission reductions.
Nevertheless, transitioning away from coal will require China to phase down its massive coal power fleet and address the concerns of coal industry stakeholders. To meet its long-term emission targets, China will need to accelerate the retirement of existing coal plants and cancel previously permitted projects.
Given China’s strategic shift toward reducing carbon emissions and the rapid development of clean energy, another surge in coal power approvals similar to that of 2022-2023 is unlikely. However, China’s technical plans to reduce rather than eliminate carbon emissions from coal power, and its continued reliance on coal as a baseload power source, suggest that coal will continue to play a significant role in the near-term energy landscape.
To mitigate the global climate crisis, China’s upcoming Nationally Determined Contributions (NDCs) and the 15th Five-Year Plan must set ambitious targets for both reducing coal consumption and expanding renewable energy.
Qi Qin, lead author of the report and China Analyst at CREA, emphasized the importance of clean energy in enabling China to set more ambitious goals for reducing coal power generation and carbon emissions. “China needs to stop allowing room for fossil fuel emissions to grow in its policies. Energy security should be achieved through clean energy and a more flexible, market-oriented power grid, rather than by burning coal,” Qin stated.
Christine Shearer, a Research Analyst at GEM, echoed this sentiment, noting that the sharp decline in new coal plant permits is an encouraging sign that China’s large-scale solar and wind projects are curbing its coal ambitions. “With clean power now capable of meeting the country’s electricity demand growth, China should cancel its remaining coal proposals and accelerate the retirement of its existing coal plants,” Shearer said.