The surge in China's coal production capacity is not contradictory to ambitious climate action

The carbon dioxide emissions related to coal in China depend on the consumption of coal rather than the production capacity of coal-fired power plants, so the surge in the number of coal-fired power plants may not lead to a sharp increase in emissions.

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2009At the Copenhagen Climate Conference in, China was accused of obstructing the achievement of a new global climate agreement, but this situation has long been a thing of the past. More than a decade later, this country is gradually transforming into a leader in climate action. this year9The series of new commitments announced by China at the United Nations General Assembly in May may be evidence of this.2060One of the commitments was to achieve carbon neutrality by.

Whether China's global commitment can withstand the test depends on whether it can implement it through domestic policies. Because of this,2020The surge in newly planned coal-fired installed capacity in China in the first half of the year is of great concern, although it does not actually contradict the goals of the 13th Five Year Plan. The increase in the number of coal-fired power stations has made the obstacle that China must overcome to significantly reduce emissions even more prominent. However, since coal related emissions depend on coal consumption rather than coal power production capacity, the number of new power stations alone may not contradict China's new commitment.

The problem of overcapacity in China's coal-fired power generation

It is estimated that the installed capacity of coal-fired power plants planned or under construction in China is249.6Giva , surpassing the United States（246.2GW and India（229The total installed capacity of existing coal electricity in Jiwa. Since this year2After the National Energy Administration relaxed the "coal power planning and construction risk warning system" in June,2020The planned production capacity of coal-fired power projects in the first half of this year has reached40.8Jiwa, including the approved construction of Da17Jiva, much more than2018and2019Total annual approved new installed capacity（12Jiva.

At first glance, China's emission prospects are not optimistic and seem to run counter to its emission reduction targets. However, overcapacity in China's coal-fired power sector is a chronic problem. It is estimated that in addition to the production capacity required to ensure stable electricity supply, China currently has an excess coal power production capacity of up to400GW, and over time, these excess capacity will also lead to a decrease in China's coal electricity utilization rate:2019In, the average utilization rate of thermal power plants was49%Below2015Of50%and2011Of60%。 It's not surprising that half of China's coal-fired power companies are losing money.

Consumption and production capacity

The driving force behind China's coal power growth is not demand, but the pursuit of political achievements. The promotion system for officials is still mainly based onGDPOn heroes. Therefore, they disregard the fact that these projects have limited long-term economic value and may even become stranded assets, and complete local industrial and infrastructure projects through financing and constructionGDPAnd investment growth goals. In recent years, the more developed eastern provinces have been striving to reduce coal consumption, thereby reducing air pollution. The reason for the significant differences between provinces is also due to this.

Carbon dioxide emissions depend on coal consumption rather than power generation capacity. Therefore, China's carbon dioxide emissions from coal-fired power generation are likely not to increase proportionally with the growth of new coal-fired power installations. In fact, emissions may not increase at all. The surge in production capacity may lead to a further decrease in the average utilization rate of coal-fired power, thereby exacerbating the economic losses of certain operators. More importantly, new coal-fired power plants may replace old ones with higher unit emissions and lower efficiency.

Focusing on the 14th Five Year Plan

If we cannot accurately determine the actual emissions related to coal based on the number of newly built coal-fired power plants, then perhaps a better judgment can be made through the five-year plan. The current goal of the 13th Five Year Plan is to control the installation of coal-fired power within1100We have also set targets for the proportion of various non fossil fuels in the energy structure, as well as goals and development plans for the renewable energy sector. The 14th Five Year Plan（2021-2025）Currently in the final preparation stage, and will be2021year3To be released during the two sessions held in September. The updated target will be set. After the 14th Five Year Plan is approved by the two sessions, each department and region will formulate their own plans according to it. For example, the National Energy Administration will2021The "14th Five Year Plan" for this department will be determined in the second half of the year.

Implementation Action: China's "Ecological Civilization"

Many analysts believe that for those who2060Achieve carbon neutrality years ago, and2030The 14th Five Year Plan is a crucial period in terms of time span for achieving the two goals of peaking carbon emissions before the year, and therefore a decisive test of China's new commitments. Although it is not possible to accurately predict the future growth of coal consumption in China through the recent coal power expansion plan, the root cause of overcapacity in the coal sector does serve as a warning to China's broader climate ambitions, especially the need to immediately reform the promotion assessment system, as this is the fundamental reason for local officials to support the construction of new coal-fired power plants.

It is also necessary to guide credit towards climate friendly projects and stay away from projects that are highly carbon intensive and lack economic feasibility, such as many coal-fired power plants in China. For example, 2015to2019During the year, China added360A coal-fired power generation unit, with a construction cost of at least800USD100mn Even though these power stations ultimately have no serious impact on China's carbon dioxide emissions, from the perspective of opportunity cost, it shows that these investments have missed other low-carbon options. More importantly, once they inevitably become stranded assets, the financial system will bear enormous pressure.

In other words, the Chinese government not only needs to have ambitious goals and policies, but also needs to ensure that they are strictly implemented - even if this means balancing gains and losses. From the surge in the number of planned coal-fired power stations, it can be seen that some provinces still use the so-called dichotomy to view the relationship between economic and environmental goals. That is to say, they are still pursuing conflicting goals through different channels, although this is not in line with the purpose of ecological civilization construction. In order to achieve the new climate goals, China must translate its slogan into clear policies at all levels of government, which requires the country to make difficult energy choices and bear the corresponding consequences.