Peking Clean Coal: Promising Dish from Chinese Energy Cuisine

Despite the IEA’s optimistic forecasts, China has not reduced its coal consumption over the past year. On the contrary, it hit a new all-time high. In 2023, 4.66 billion tons of coal (+2.9% YoY) were produced here. As domestic production could not be increased as required, its shortage was compensated by imports of 474 million tons (+62% YoY).

Approximately 60% of China’s coal is used in power generation. According to the Global Energy Monitor, for 2023, the country has retained its position as the world leader in terms of the rate of coal-fired generation infrastructure development. In the past year, it has increased the commissioning of coal-fired thermal power plants (TPPs) by more than 70%. While China commissioned 27.6 gigawatts (GW) of capacity in 2022, it will commission 47.4 GW in 2023, accounting for about 70% of the global increase in coal-fired generation capacity. As a comparison, all gas-fired generation capacity in China amounts to 40 GW.

China’s demand for coal is due to the ongoing post-covid economic recovery. In 2023, China’s GDP growth rate was quite significant – 5.2%.

China’s economy has shown a growing appetite not only for coal but also for other fossil fuels. Over the past year, China has pushed domestic oil and gas production to a new high. China also imported more crude oil through 2023 than at any time in its history. It has also regained the top spot among LNG importers in the world.

But coal still has a special place in China’s energy mix. It is a basic element, a kind of Chinese “national treasure.” It accounts for 59% of the country’s primary energy consumption. In comparison, oil is only 17%, gas is 8%, and nuclear is 2%. All renewable energy resources account for 14%.

Coal has two comparative advantages over oil and gas, namely its cheapness and the availability of China’s own reserves. Due to limitations in its resource base, China can only increase the share of oil or gas in its energy mix by increasing its dependence on imports. China now imports 45% of oil and 70% of natural gas, and only 9% of coal.

No matter how much fossil fuel import prices fall in 2023, they will always remain a more expensive resource than coal. Compared to 2022, imported coal became 20% cheaper last year.

But amidst these advantages, there is an obvious disadvantage to coal. Coal burning emits 8.6 billion tons of CO₂ into the atmosphere, accounting for 70% of China’s total power and industrial emissions, and a quarter of the world’s total emissions.

Does China’s “favoritism” toward coal mean that its position in the country’s energy mix will continue to strengthen?

No, China does not plan to increase the share of coal in its energy balance. No one in China needs to prove the incompatibility of non-decarbonized coal with the goals of achieving carbon neutrality by 2060. As early as April 2021, Chinese President Xi Jinping said that China will strictly control coal-fired power generation projects and gradually reduce them during the 15th Five-Year Plan period (2026-2030). In July 2023, Xi Jinping clarified that the country chooses its own climate path, whereas 2/3 of achieving this goal should be determined by ourselves, and China will not be influenced by others, the Chinese president said. This statement, among other things, hints at the special place of coal in the country’s energy balance and the fact that China is not going to give it up prematurely.

China is primarily going to reduce the role of coal in its energy mix by increasing the share of renewable energy sources. The vector nature of this process is obvious and unquestionable.

To meet this challenge, in parallel with the commissioning of new coal-fired thermal power plants, China has made a genuine breakthrough in ramping up renewable energy capacity in 2023.

At the end of last year, China’s total installed capacity of variable RES – solar and wind power – amounted to 1050 gigawatts (GW). To understand the scale of these advances, Russia’s entire power system has about 250 GW of installed capacity, while the USA has less than 500 GW of installed capacity.

The solar power sector gained an additional 216.88 GW of capacity to total 609.49 GW (+55.2% YoY) at the end of 2023. Wind power capacity additions totaled 75.9 GW, to 441.34 GW (+20.7% YoY).

Particularly impressive, as these figures suggest, has been the growth of solar power. China commissioned more solar power capacity in 2023 alone than the USA has in its entire history.

According to information released by the China Electricity Council (CEC), China is not going to stop there. China’s installed solar power capacity in 2024 will reach 780 gigawatts (GW) and wind power 530 GW. Solar and wind power will exceed coal power in installed capacity this year.

The ambitious nature of China’s energy transformation over the past year is not exhausted by RES expansion. China is also the world leader in nuclear power plant construction rates: in January 2024, the PRC accounted for 23 reactors with a capacity of 23.7 GW out of 58 units under construction worldwide with a capacity of 59.9 GW.

In the coming years, China plans to build 250 GW of nuclear power plants to add to the 50.8 GW already built. As a result, China’s nuclear power capacity will exceed 300 GW. This is 5 times the installed capacity of all French nuclear power plants, 3 times that of the USA, today’s leader in nuclear generation.

The share of NPPs in the installed capacity of China’s power sector is currently small, at 2%. Even if all the announced Chinese nuclear power plants are built, their generation will not exceed 25% of the total electricity generation in China.

There is no doubt that the implementation of “cyclopean” RES projects should lead to the closure of many coal-fired power plants. But the process of substitution of coal by the sun and wind cannot be understood unambiguously as, for example, in the case of building nuclear power plants that replace coal-fired plants in the base load.

Renewable energy belongs to the category of unmanageable energy sources and therefore needs to be stabilized. This means that coal and renewables in the Chinese context are doomed to exist together for many years, during which coal-fired power plants will take over the reliability of the entire grid. In the transition to balancing the unevenness of RES operation, the IEA estimates that the utilization rate of coal-fired plants will decrease from 53% at present to 35-40% in 2030. And this will lead to lowering CO₂ emissions by the coal-fired generation.

One method of reducing the carbon footprint of coal-fired power plants is to replace the fleet of old power plants with modern high-efficiency plants, resulting in burning less coal to generate an equal amount of electricity.

This implies the introduction of so-called “ultra-supercritical” thermal power plants, equipped with steam boilers that operate at a pressure of 320 bar and a temperature of 600 to 610 degrees Celsius. These conditions provide higher efficiency in converting thermal energy into electricity, as the efficiency of ultra-supercritical TPPs ranges from 44% to 46%, which is higher than that of supercritical TPPs (37% to 40%), with steam boilers operating at a pressure of 243 bar and a temperature of no more than 565 degrees Celsius.

The share of ultra-supercritical TPPs in the capacity structure of existing coal-fired generation facilities in China is 32%, and 93% among those under construction. Since last year, plants with a capacity of about 68 GW have been under construction. The possibility of building another 92 GW of thermal power plants has been announced.

China’s coal fleet is one of the youngest in the world, with two-thirds of power plants built since 2005. Most of its power plants could run for another three or four decades. This means that balancing the issues of energy security and climate protection will require more radical solutions to reduce their emissions than those mentioned above.

The cardinal solution to avoid early decommissioning of coal-fired power plants is to equip them with emissions capture and storage systems (CCS, carbon capture and storage). Upgrading existing thermal power plants with CCS can reduce their emissions by up to 95%. The presence or absence of CCS capacity is actually a regulator of coal-fired power plant fleet size on China’s path to carbon neutrality.

The CCS development course has been endorsed as an important tool of China’s emission reduction strategy during the 12th Five-Year Plan (2011-2015). Up to 2023, 21 pilot projects have been launched in China to develop small capacity CCS. The largest of the existing coal-fired power plant projects is capable of capturing up to 450,000 tons of СО₂ per year.

It is worth noting right away that CCS systems are not yet widespread in the world due to their high cost. All the more important is the launch of three CO₂ capture and storage projects in China in 2023 with a total capacity of 10 million tons/year.

To achieve carbon neutrality by 2060, China would need 1300 million tons/year of storage capacity for power sector emissions under the IEA’s APS scenario; 65% of this storage capacity would come from coal-fired power plant emissions.

The formation of a nationwide industry to capture, store, and partially recycle CO₂ is the final piece of the puzzle that would allow China to defeat dirty coal in its struggle to achieve carbon neutrality.

Will China be up to such a herculean task? Unrealistic, you might say. However, all the previous successes in decarbonizing the country makes one think otherwise.

Zuhreddin Zuhreddinov
Independent Expert Oil, Gas and Energy (Uzbekistan)