China still uses coal for majority of electricity generation

By Rhod Mackenzie
While many countries are moving away from using coal to consign its use to history, China continues to increase its consumption. This commitment to coal seems to contradict China's impressive successes in green technologies and poses a threat to global efforts to combat climate change. However, it is important to note that China is making efforts to adapt coal to the climate agenda.

The article mentions a new coal record, but it is unclear what this refers to.
Despite optimistic forecasts from the International Energy Agency (IEA), China did not reduce its coal consumption over the past year. Instead, it reached a new historical high. The country produced 4.66 billion tons of coal, which is 2.9% more than the previous year. However, since domestic production could not meet the required values, the shortage was compensated by imports of 474 million tons. This is a 62% increase from the previous year and more than all of Russia's production in 2023, which was 438 million tons. The previous record for coal imports, 327 million tons, was set back in 2013.
Around 60% of China's coal is utilised for electricity generation. As per the Global Energy Monitor, the country maintained its position as a global leader in the development of coal generation infrastructure, with an increase of over 70% in the commissioning of coal-fired thermal power plants (CHPs) at the end of last year. If 27.6 GW of power was put into operation in China in 2022, and 47.4 GW in 2023, this would account for approximately 70% of the global increase in coal generation capacity. For comparison, it is worth noting that China's entire gas generation capacity is 40 GW.

China's demand for coal is driven by the ongoing post-Covid economic recovery, with a considerable growth rate of 5.2% in 2023.

China's economy has shown an increasing appetite not only for coal but also for other fossil fuels. Over the past year, China has achieved a new high in domestic oil and gas production and imported more crude oil than ever before in its history. In 2021, China imported 563.99 million tons of LNG, an increase of 11% compared to the previous year, regaining its position as the world's top LNG importer.

However, coal remains a crucial element in China's energy balance, accounting for 59% of the country's primary energy consumption. In comparison, oil accounts for only 17%, gas for 8%, nuclear for 2%, and all renewable energy resources, including hydroelectric power plants, account for 14%.
Coal has two advantages over oil and gas: it is cheaper and China has abundant reserves. Due to limited domestic resources, China can only increase its share of oil or gas in its energy mix by relying more on imports. Currently, China imports 45% of its oil and 70% of its natural gas, while its import dependence on coal is only 9%.

Even if import prices for oil and gas decline in 2023, they will still be more expensive than coal. In comparison to 2022, the price of imported coal has decreased by 20%.

However, despite these advantages, coal has a significant drawback. The combustion of coal in China results in the annual release of 8.6 billion tons of CO2 into the atmosphere, which accounts for 70% of all emissions from China's energy and industrial sectors and a quarter of all global carbon dioxide emissions.

Does China's preference for coal imply that its position in the PRC's energy balance will continue to strengthen?

China has no plans to increase the share of coal in its energy balance, as non-decarbonized coal or gas is incompatible with its 2060 carbon neutrality goals. In April 2021, Chinese President Xi Jinping stated that China would strictly control coal-based electricity projects and gradually reduce them during the 15th Five-Year Plan period (2026‒2030). In July 2023, Xi Jinping stated that China will determine two-thirds of its climate goals independently, without being influenced by others. This statement suggests that coal still holds a significant place in the country's energy balance and that China has no plans to abandon it prematurely. Comrade Xi confirmed his plans at the monthly meeting of the Politburo of the CPC Central Committee on January 31, 2024.

China aims to reduce the role of coal in its energy balance by increasing the share of renewable energy sources. This process is clearly focused on a shift towards renewable energy.

To illustrate, I will refer to the APS (Accelerated Transition Scenario) for China to achieve carbon neutrality, as proposed by the IEA, which includes this replacement.

To address this issue, alongside the construction of new coal-fired thermal power plants, China achieved a significant milestone in expanding its renewable energy capacity in 2023 (refer to chart 1).

As of the end of last year, China's total installed capacity of variable renewable energy sources, namely solar and wind energy, reached 1050 GW. To comprehend the magnitude of these accomplishments, it is worth noting that the entire Russian energy system has a capacity of approximately 250 GW, whereas the United States has less than 500 GW.

By the end of 2023, solar energy capacity had increased by 216.88 GW, reaching 609.49 GW (+55.2% YoY). Wind energy capacity increased by 75.9 GW, reaching 441.34 GW (+20.7%).
The growth of solar energy is particularly impressive, as indicated by these figures. The increase in capacity for the year was approximately consistent with the capacity added by the country over the previous four years. For comparison, in pre-Covid 2019, China commissioned 30.1 GW of capacity. In 2023 alone, China added more solar power capacity than the United States has added throughout its entire history.

According to information published by the China Electricity Council (CEC), China plans to continue expanding its renewable energy sources. By 2024, the installed capacity of solar energy is expected to reach 780 GW and wind energy to reach 530 GW. This year, solar and wind power will surpass coal in terms of installed capacity.

China's energy transformation is ambitious and includes not only the
expansion of renewable energy sources but also the role of water resources and nuclear power.

The commissioning of new hydroelectric power capacities in the past year cannot be compared to the achievements of 2022. This year, the world's second-largest hydroelectric power station, Baihetan, reached full capacity (16 GW). The hydroelectric power station is expected to replace the combustion of 64 million tons of coal per year and reduce carbon dioxide emissions by 175 million tons per year.

China holds the world record for hydroelectric power capacity with the Three Gorges (Sanxia) hydroelectric power station, boasting an installed capacity of 22.5 GW.

In 2020, China's total hydroelectric power capacity was 420 GW. The Chinese government aims to commission hydroelectric power stations with a total capacity of 62 GW by the end of 2025 and begin work on another 60 GW.

China is currently the global leader in nuclear power plant construction pace. As of January 2024, out of the 58 power units under construction worldwide with a total capacity of 59.9 GW, China accounts for 23 reactors with a capacity of 23.7 GW.
China plans to build an additional 250 GW of nuclear power plants in the coming years, adding to the existing 50.8 GW. This will result in a total capacity of over 300 GW, which is five times greater than the installed capacity of all nuclear power plants in France and three times greater than that of the United States, the current leader in nuclear generation.

However, despite China's ambitious plans to expand its nuclear power capacity, currently only 2% of the country's installed electric power capacity comes from nuclear power plants. Even if all of the proposed nuclear power plants are constructed, they will only generate up to 25% of the country's total electricity.

It is important to note that the development of renewable energy projects should lead to the closure of many coal power plants. However, the transition from coal to solar and wind power is not straightforward. Unlike the replacement of coal thermal power plants with nuclear or hydroelectric power plants for base load generation, the process of replacing coal with renewable energy sources is complex.

It should be noted that while renewable energy sources will match coal generation in terms of installed capacity this year, solar energy will not be comparable to coal energy in terms of electricity generation until 2030. Currently, solar and wind energy make up only 15% of electricity generation, while coal generation accounts for 60%.

As renewable energy sources are uncontrollable, they require stabilization. Therefore, in the Chinese context, coal and renewable energy sources will coexist for many years, with coal-fired power plants responsible for ensuring the reliability of the entire energy system. According to the IEA, in the transition to balancing the uneven operation of renewable energy sources, the load level of coal plants will decrease from 53% to 35-40% in 2030. This reduction in load level will lead to a decrease in CO2 emissions from coal-fired generation.

Energy storage systems, such as pumped storage power
plants, are a useful alternative to peaking coal power plants. This reduces the need for stable generation sources with their inherent carbon footprint. Energy storage devices, such as batteries and pumped storage power plants (PSPPs), help compensate for irregularities in electricity generation and consumption.
According to the Global Energy Monitor, in 2023, China was responsible for the majority of the global commissioning of pumped storage power plants. Specifically, in 2022, China accounted for 67% of the global commissioning of pumped storage power plants (7.1 GW), and in the first half of 2023, this figure increased to 74% (7.9 GW). PSPPs have two reservoirs with a height difference. During the day and at night, water is pumped from the lower reservoir to the upper one using inexpensive electricity from the general network. In the morning and evening, the water is discharged back into the lower reservoir, driving the turbines of electric generators.

China has set records in other energy storage projects, as well as pumped storage power plants. As of the end of last year, the total installed capacity of new energy storage projects completed and put into operation across the country was 22.6 million kilowatts / 48.7 million kilowatt-hours. This represents an increase of over 260% compared to the end of 2022.

The article also discusses the new trend of ultra-supercritical coal-fired power plants.
One way to reduce the carbon footprint of coal-fired power plants is to replace older, less efficient plants with modern ultra-supercritical thermal power plants.

These plants are equipped with steam boilers that operate at a pressure of 320 bar and a temperature of 600 to 610 °C, requiring less coal combustion to generate the same amount of electricity. These conditions increase the efficiency of converting thermal energy into electricity. Ultra-supercritical thermal power plants have an efficiency of 44-46%, which is higher than supercritical thermal power plants (37-40%) whose steam boilers operate at a pressure of 243 bar and a temperature of no more than 565°C. It is noteworthy that all equipment for ultra-supercritical thermal power plants is completely localized.

In China's existing coal generation facilities, ultra-supercritical thermal power plants make up 32% of the power structure. This number increases to 93% for those under construction, with approximately 200 GW of capacity being built.
To prevent early retirement of coal-fired power plants, a fundamental solution is to equip them with emission capture and disposal systems (CCS). By modernizing existing thermal power plants with CCS, emissions can be reduced by up to 95%. The presence or absence of CCS capacity effectively regulates the size of China's coal-fired power plant fleet on its path to carbon neutrality.

The development focus of CCS has been endorsed as an important tool in China's emission reduction strategy during the 12th Five-Year Plan (2011‒2015). Currently, 21 pilot projects for small-capacity CCS development have been launched in China, with the largest existing coal-fired power plant project capable of capturing up to 450 thousand tons of CO2 per year.

It is worth noting that CCS systems have not yet become widespread globally due to their high cost. In 2023, three CO2 capture and storage projects with a total capacity of 10 million tons per year will be launched in China.

The cost of CCS is mainly determined by access to CO2 storage. The Chinese Academy of Sciences estimates that approximately 385 GW of China's coal capacity could find suitable CO2 storage within a 250 km radius. The repositories include saline aquifers and oil fields.

At the state level, China supports CCS projects through hubs or clusters. This allows small CO2 emitters to participate in projects that would not be profitable on their own and reduces the risk of low utilization of underground storage facilities.

According to the IEA APS scenario, China will need 1,300 million tons of energy sector emissions disposal capacity per year to achieve carbon neutrality by 2060. 65% of this disposal capacity will come from emissions from coal-fired power plants.

Establishing a nationwide industry for capturing, storing, and recycling CO2 is the final step towards enabling China to surpass dirty coal in the race towards carbon neutrality.

While it may seem like a daunting task, China's previous successes in decarbonization suggest otherwise.