Controlling coal consumption
In 2016, coal accounted for 65% of China’s total primary energy supply, and 69% of its electricity production (IEA, 2018c). In that year, China accounted for 51% of the world’s primary coal energy supply (IEA, 2018c). China’s actions on coal are therefore key to limiting global coal consumption: globally, coal in primary energy will need to decrease by 97% compared to 2010 levels by 2050 to be compatible with 1.5°C pathways, unless large scale carbon capture and storage technology becomes available (IPCC, 2018). Coal will also need to be completely phased out of the electricity supply by 2050, meaning that the no new coal fired power plants can be built as of now (Climate Action Tracker, 2016). This was confirmed in the recent IPCC report (IPCC, 2018).
Controlling and decreasing coal consumption is a policy objective in China’s National Action Plan on Climate Change, Energy Development Strategy Action Plan (2014–2020), and 2015–2020 Action Plan on the Efficient Use of Coal. The 13th Five Year Plan period (2016–2020) introduced more coal-related targets, such as a ban on new coal-fired power plants until 2018, and a cut in production capacity of coal (Enerdata, 2016). To combat air pollution, China is shutting down some coal-fired power plants, for example in Beijing, where the last remaining coal fired power plant was shut down in 2017 and replaced with gas power plants (Xinhua, 2017). China’s plan for continuing to curb air pollution between 2018 and 2020 extends air pollution targets to a wider range of cities (Feng, 2018a). The Chinese government is also pushing a switch from coal to gas in homes and factories, and gas consumption rose 15% in 2017 over 2016 levels (Chen, 2018).
Despite these efforts, coal consumption rose again in 2017 and 2018, after three consecutive decreasing years between 2013 and 2016. Some plants in China are being retrofit to use coal more efficiently (NEA, 2018). In 2018, loosened regulations allowed a restart on new coal plant construction after a two-year freeze, primarily in response to increased industrial electricity demand (Feng, 2018b). An analysis by CoalSwarm found that 259 GW of coal capacity are under development in China, about as much is installed in the United States, which, if installed, would increase China’s coal capacity by 25% (Shearer, Yu, & Nace, 2018). Increased policy effort will be needed to turn China’s coal consumption around and align it with a 1.5°C compatible pathway.
On the production side, China’s National Development and Reform Commission (NDRC), has issued, in its government work report, targets to cut annual coal production capacity by 150 million tonnes in 2018. This may not lead to immediate reductions in output, due to overcapacities in the sector (Platts, 2018).
In detail, coal consumption in China may already have peaked in 2013, as it dropped 2.9% in 2014, by 3.7% in 2015 and by 4.7% in 2016. This appears to be mainly due to two factors: a decline in growth in the construction and manufacturing sector as a result of the overall slowdown of China’s economic growth, as well as a continued policy drive to lower coal use in order to reduce air pollution and greenhouse gas emissions (Korsbakken & Peters, 2017; Qi, Stern, Wu, Lu, & Green, 2016). However, coal consumption rose 0.3% in 2017, largely driven by increased electricity demand, but stayed below its 2013 peak (IEA, 2018b). In the first half of 2018, Chinese coal consumption rose 3.1% over the same period in the previous year, responding to increased electricity demand partially driven by industrial rebound (Feng, 2018b).
In our current policy projections (see Assumptions below), coal’s share in China’s total primary energy demand decreases from 58% in 2017 to between 39 and 48% in 2030. As a result, and assuming growing energy demand, CO2 emissions could either flatten or continue to rise.
Renewable energy targets
In its 13th Five Year Plan period (2016–2020), China set the following targets for non-fossil capacity installed by 2020: 340 GW of hydropower capacity, 200 GW of wind power, 15 GW from biomass and 120 GW of solar power, as well as 58 GW of nuclear capacity (NDRC, 2016). As it turned out during 2017 that the solar target would be reached much earlier than 2020, the National Energy Administration adjusted it upward to 213 GW by 2020. Investment in renewable energy in China in 2017 reached $126.6 billion USD, accounting for 45% of global investment in renewables (Frankfurt School-UNEP Centre/BNEF, 2018).
News sources are reporting that the National Development and Reform Commission (NDRC) will increase the renewables target for 2030 to 35% of electricity consumption through the Renewable Portfolio Standard. This target would be met under the lower bound of the CAT’s current policies scenario. The plan would also increase 2018 and 2020 non-hydro power consumption targets for some provinces (Bloomberg News, 2018). However, the Chinese government abruptly reduced subsidies for solar installations in 2018, which is expected to lead to reduced installations (Baker, 2018).
Looking farther into the future, Bloomberg New Energy Finance projects that in 2050, China will have 1. TW of solar PV and 1 TW of wind power installed (BloombergNEF, 2018). Globally, renewables will need to supply 70–85% of electricity by 2050 to be compatible with a 1.5°C compatible pathway.