China’s energy landscape is at a critical juncture, marked by the paradox of notable advancements in clean energy capacities juxtaposed with a steadfast reliance on coal power. This dichotomy creates a multifaceted challenge for China as it strives to meet its climate objectives and assert its leadership in renewable energy while contending with the entrenched position of coal. This article delves into the implications of these energy trends, exploring the intricacies of China’s energy strategy and offering policy recommendations to ensure alignment with environmental commitments.
The Dual Trajectory of Energy Expansion
China’s energy sector is experiencing a dual trajectory: rapid growth in renewable energy and sustained coal power development. In 2024, China approved 66.7 gigawatts (GW) of new coal-fired power capacity, marking a resurgence in coal project approvals after a slower start to the year. Alongside this, 94.5 GW of new coal power construction commenced, the highest level observed since 2015. This expansion trend indicates that substantial new coal plants are set to become operational in the next two to three years, reinforcing coal’s integral role in China’s power system.
Despite the coal expansion, China also experienced a record-breaking year in clean energy deployment, adding 356 GW of wind and solar capacity in 2024. This addition is almost equivalent to the total installed wind and solar capacity in the United States by the end of the year and is 4.5 times greater than the European Union’s additions. However, the utilization of solar and wind energy saw a sharp decline in the fourth quarter of 2024, suggesting that coal’s entrenched position could be hindering renewable energy integration and utilization.
The juxtaposition of these two trajectories underscores the complexity of China’s energy landscape. While the clean energy sector thrives and sets new records, the persistent development of coal power projects indicates a deep-rooted reliance that could undermine renewable energy advancements. The challenge lies in managing this dual growth path, ensuring that the expansion of renewables is not curtailed by the entrenched dominance of coal, and fostering a seamless transition toward a more sustainable energy future.
Persisting High Activity in Coal Power Permits and Project Initiation
In 2024, coal power permits remained high with 66.7 GW approved, despite a slight decline from previous years. New and revived coal power project proposals reached 68.9 GW, indicating a potential slowdown compared to the higher levels of 117 GW in 2023 and 146 GW in 2022. The year also saw 94.5 GW of new coal capacity begin construction, demonstrating strong momentum in coal project development. This continued high activity in coal permits and project initiation reveals an ongoing reliance on coal as a cornerstone of China’s energy framework.
However, the commissioning of coal plants has moderated, with 30.5 GW coming online so far in 2024, down from 49.8 GW in 2023 yet consistent with commissioning levels seen in 2021 and 2022. This demonstrates a balancing act where coal power development persists albeit with signs of moderation. The sustained high activity in coal approvals and project initiations continues to cast a shadow over China’s clean energy aspirations, highlighting an urgent need for more targeted policies to taper coal dependence.
The buoyant activity in coal project initiation underscores the economic and energy security motives that drive China’s energy strategy. Despite global calls for reducing coal reliance, local governments continue to favor coal power to support economic development and ensure stable energy supply. Addressing this persisting reliance on coal requires comprehensive policy measures that align local objectives with national and global climate commitments.
China’s Contrasting Path to Global Trends
Globally, the coal fleet outside China reduced by 9.2 GW in 2024. Conversely, China’s construction starts account for 93% of the global total in 2024, underscoring China’s significant influence on coal power’s future. This contrasting path highlights the challenge China faces in balancing its energy mix while maintaining economic growth and energy security. The stark contrast between China’s coal growth and the global trend of coal reduction raises critical questions about China’s path to achieving its climate goals.
Long-term coal contracts reinforce coal dominance, as electricity buyers face penalties if they fall short of purchasing contracted coal volumes. This discourages clean energy prioritization and limits grid space for renewables, delaying the transition to a cleaner energy mix. Additionally, over 75% of newly approved coal power capacity in 2024 was supported by coal mining companies or entities with coal mining operations, accelerating coal demand artificially and potentially undermining central policies to curb coal consumption.
The entrenchment of long-term coal contracts creates a significant barrier to renewable energy adoption, where financial and contractual penalties deter energy buyers from shifting to cleaner sources. The role of coal mining companies in financing new coal power capacity further entrenches coal dominance in China’s energy landscape. These factors collectively create formidable obstacles to achieving a sustainable and balanced energy transition, necessitating strategic policy interventions.
Misalignment with Policy Intentions
Despite policy aims for coal power to aid renewable integration, many 2024 coal power project approvals were driven by local governments’ goals of economic development and local energy security, rather than integration flexibility. Long-term contracts and technical constraints discourage coal plants from performing regulatory functions intended to support renewable energy integration. This misalignment with policy intentions highlights the need for a strategic shift in China’s energy policies.
Implementing clear and ambitious coal consumption reduction targets, coal power phase-down goals, and renewable energy expansion objectives in China’s next Nationally Determined Contribution (NDC) to the UNFCCC and the 15th Five-Year Plan is essential for a definite pathway toward decarbonization. This requires cohesive policy frameworks that align local and national objectives, ensuring that economic and energy security goals do not undermine climate commitments.
In an energy landscape marked by entrenched coal reliance, aligning policy intentions with practice is critical. This misalignment presents both a challenge and an opportunity to reevaluate and reinforce policy strategies, aiming for a coherent and integrated approach that facilitates renewable energy integration while gradually phasing out coal dependency. Addressing these structural and regulatory constraints is key to promoting a balanced and sustainable energy future.
Policy Recommendations for a Balanced Energy Future
China is at a pivotal point in its energy development, marked by significant progress in renewable energy capacity and an ongoing dependence on coal power. This paradox presents a complex challenge for the nation as it seeks to achieve its climate goals and solidify its position as a leader in clean energy while grappling with coal’s entrenched role. This article examines the consequences of these energy patterns, analyzing the nuances of China’s energy policies and strategies. Additionally, it provides policy suggestions to ensure that China’s environmental goals and growing energy needs are harmoniously aligned. The interplay between advancing renewable resources and maintaining coal power underscores the difficulty China faces in balancing immediate energy demands with long-term sustainability aspirations. Policymakers must navigate this duality to foster a more environmentally responsible and economically viable energy framework. We aim to unveil the crucial steps that could guide China towards a greener energy future while ensuring stable progress and adherence to global environmental commitments.
