Following a flurry of approvals of over 100 gigawatts (GW) of new coal power annually in 2022 and 2023 and amid an ongoing construction boom of coal-fired power plants, new statistics show that China has abruptly curtailed approvals for new projects.
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Just 9 GW of coal-fired power plants – 12 projects in total – received permits in the first half of this year, a reduction of 83 per cent compared with the same period in 2023, according to a joint report by Centre for Research on Energy and Clean Air (CREA) and Global Energy Monitor (GEM).
In the study, the two think tanks highlighted that the marked slowdown in coal power approvals reflects “a strategic pivot towards prioritising emissions reductions and accelerating the deployment of clean energy”. With Beijing stepping up the pace on clean power generation and adding new wind and solar capacity at levels sufficient to meet electricity demand growth, the need for fossil fuels to power a cooling economy has been diminishing.
The decline in coal power activity is further reflected in the reduction of new and revived coal power proposals which are down from 60 GW in early 2023 to 37 GW in the same period this year, said the report.
In the first half of 2024, China reduced coal power permits by 83 per cent compared to the same period of 2023, permitting only 9 gigawatts (GW) of coal capacity. Source: Centre for Research on Energy and Clean Air; Global Energy Monitor
Yet in the same set of published data, CREA and GEM also noted that power firms are continuing to initiate construction on already-permitted coal plants. Analysts are hesitant to say if the trend of low permit approvals for new coal plants is here to say. Environmental campaign group Greenpeace, which conducted its own research on coal plant permits, said only time will tell if the new statistics indicate a turning point for coal build-up in China.
According to the report, China led the world in the construction of new coal-fired power plants in the first half of 2024, with work beginning on more than 41 GW of new generation capacity. This was as much new coal power capacity as China embarked on during the whole of 2022, and represented 90 per cent of the world’s new coal plant construction so far this year.
Moreover, the Chinese government plans to bring 80 GW of coal-fired capacity online for the whole of 2024, indicating a potential increase in project completions in the latter half of the year. A genuine energy transition will require phasing down the existing massive coal power fleet and addressing the interests of coal power stakeholders, said the report authors.
Qi Qin, lead author of the study and China analyst at CREA said: “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.”
Lauri Myllyvirta, senior fellow at Asia Society Policy Institute who closely tracks energy trends in China, described China’s slowing down new permit approvals for coal plants as a “course correction” that has happened as the amount of projects permitted from 2022 to 2023 had been “clearly excessive”.
Myllyvirta, who is also a lead analyst at CREA, noted that this meant that more coal plants were due to come online. “Further measures will be needed to manage the resulting overcapacity.”
Across China, coal plants as well as coal-fired steel plants, have been struggling economically and many developers have found that it is no longer profitable in the long term to build these facilities. However, local government officials, for political reasons such as concerns about energy security, might still opt to expand capacity and allow for the building of new plants unless there is a clear directive from the central government.
Last week, China abruptly suspended its system for approving new steel plants, as the government responded to a deep demand slump. The country, which has the largest steel industry in the world, did not permit any coal-based steelmaking projects in the first half of 2024 – the first time since announcing its major carbon neutrality goals in 2020.
Myllyvirta said: “The sharp course correction in coal power approval happening at the same time as China stopping the permits for new coal-based steel plants is an extremely significant move.”
Greenpeace East Asia’s Beijing-based project lead Gao Yuhe questioned if Chinese provinces are slowing down coal approvals only because there is overcapacity, given the surge in approvals over the past few years. “Are these the last gaps of coal power in an energy transition that has seen coal become increasingly impractical? Only time can tell. A rebound remains possible until there are firm measures put in place to directly prevent further coal expansion.”
“Without more proactive support for wind and solar grid connectivity, a post-peak plateau remains a risk,” she said.
In its analysis, Greenpeace said a concerning trend is that more than 70 per cent of the newly approved coal projects in 2024 were for plants with generation capacities above 660 megawatts (MW). Gao said the facilities are quite large and the new approvals are still quite worrying. “Coal facilities do not nimbly switch on and offline, and large facilities are particularly inefficient,” she said.
China is rapidly approaching peak coal consumption, with independent analysis in recent months indicating that such a peak may already have happened, given the surge in clean power. The Chinese government has not publicly commented on this speculation and reiterates that it commits to existing pledges to reach its carbon emissions peak before 2030 and become “carbon neutral” before 2060.
