China pumps out coal plants at increasing pace to allay power-security fears, risking climate transition: Greenpeace

Coal-plant approvals in the first half of 2023 outpace 2022’s rate and exceed 2021’s total, according to Greenpeace research
Deepened reliance on coal risks sidelining development of key climate solutions, especially energy storage, that China needs to meet its carbon goals

Business of climate change

Yujie Xuein Shenzhen

Published: 7:00am, 4 Aug 2023

Why you can trust SCMP

China continues to approve new coal power plants at an increasing pace in an effort to avoid power shortages and restart economic growth, according to Greenpeace, raising alarm among analysts about the country’s ability to meet its stated decarbonisation goals.

Local governments approved nearly 30 gigawatts (GW) of new coal power capacity in the second quarter of 2023, driving total approvals to 50.4GW in the first half of the year, according to Greenpeace research released on Thursday. That is more than half of last year’s total installation and far exceeds 2021’s full-year total, the report said.

“Local governments want to ensure energy supply and stabilise the economy, and [they] consider coal power as the safest solution for energy security,” said Gao Yuhe, a Beijing-based project leader with Greenpeace East Asia.

But deepened reliance on coal, the organisation fears, risks sidelining key climate-change solutions, especially energy storage, that China needs to develop as it races to build a power infrastructure based on renewable energy by the end of this decade and meet its goal of net-zero emissions by 2060.

Cracks run through the partially dried-up river bed of the Gan River during a regional drought in Nanchang, Jiangxi province, China, on August 28, 2022. Photo: Reuters

China’s economic and industrial powerhouses, including Guangdong, Hebei, Jiangsu, and Shandong provinces are among the regions that have approved the most new coal projects in 2023 so far, according to the report.

Already the world’s largest producer and consumer of coal, China ordered local governments to ramp up coal usage after several rounds of power shortages struck across the nation in the past two years amid sharply higher fossil-fuel costs and extreme weather including floods and droughts. Beijing has also implied that coal will stay at the core of China’s energy infrastructure during the central government’s annual work report this year.

However, the opportunity cost of continuing coal investment could be steep, according to analysts.

Why is China’s steel sector investing US$100 billion in coal-fired plants?

“Coal power projects are mostly loss-making and will provide little boost to economic growth in the future,” Gao said. “The real revitalisation of the economy requires investment in projects such as new energy storage rather than new coal power.”

Already the world’s largest producer of renewable energy, including wind, solar and hydro, China expects to have 1,500GW of renewable capacity by the end of 2030, far exceeding Beijing’s 1,200GW goal.

“Building renewable energy but no energy storage is like building wheels but no axel,” Gao said. “The energy transition isn’t just about buckets of wind and solar, but also the infrastructure that will tap those power sources into meeting electricity demand.”

An aerial photo taken on July 6, 2023 shows a photovoltaic (PV) power plant in southwest China’s Guizhou Province. Photo: Xinhua

Inflexibility in China’s electric grid is the key factor in the country’s energy-security issues, as the system is ill-equipped to absorb the intermittent renewable power generated by wind and solar, according to Greenpeace. Energy-storage systems stockpile electricity to enable a flexible grid that can smoothly provide power despite frequent fluctuations among multiple generation sources.

China must urgently increase the pace of grid investments and make more storage a mandatory requirement before connecting renewables to the grid, according to Nikhil Bhandari, co-head of APAC natural resources and clean energy research at Goldman Sachs.

Some local governments are already taking action. A separate report by Greenpeace last week found that the number of energy-storage projects on Guangdong’s key project lists doubled between 2021 and 2023, and also increased in other provinces such as Jiangsu and Zhejiang, which are emerging as China’s potential green manufacturing hubs.

China pumps out half of world’s energy storage research as US share declines

China’s central economic planner, the National Development and Reform Commission, released a five-year plan in March, aiming to develop energy-storage capacity to boost renewable power consumption. In the first half of 2023, new energy storage could drive direct investment of 30 billion yuan (US$4.2 billion), according to data released by China’s National Energy Administration.

“Energy storage is a top concern for China,” said Greenpeace’s Gao. “It’s not just about building up a new power supply. It’s about designing a system that will meet electricity demand.”