Coal power in China



Coal power in China is electricity generated from coal in China and is distributed by the State Power Grid Corporation. It is a big source of greenhouse gas emissions by China.

China's installed coal-based power generation capacity was 1080 GW in 2021, about half the total installed capacity of power stations in China. Coal-fired power stations generated 57% of electricity in 2020. Over half the world's coal-fired power is generated in China. 5 GW of new coal power was approved in the first half of 2021. Quotas force utility companies to buy coal power over cheaper renewable power. China is the largest producer and consumer of coal in the world and is the largest user of coal-derived electricity. Despite China (like other G20 countries) pledging in 2009 to end inefficient fossil fuel subsidies, there are direct subsidies and the main way coal power is favoured is by the rules guaranteeing its purchase – so dispatch order is not merit order.

The think tank Carbon Tracker estimated in 2020 that the average coal fleet loss was about 4 USD/MWh and that about 60% of power stations were cashflow negative in 2018 and 2019. In 2020 Carbon Tracker estimated that 43% of coal-fired plants were already more expensive than new renewables and that 94% would be by 2025. According to 2020 analysis by Energy Foundation China, to keep warming to 1.5 degrees C all China's coal power without carbon capture must be phased out by 2045. But in 2023 many new coal power stations were approved. Coal power stations receive payments for their capacity. A 2021 study estimated that all coal power plants could be shut down by 2040, by retiring them at the end of their financial lifetime.



To curtail the continued rapid construction of coal fired power plants, strong action was taken in April 2016 by the National Energy Administration (NEA), which issued a directive curbing construction in many parts of the country. This was followed up in January 2017 when the NEA canceled a further 103 coal power plants, eliminating 120 GW of future coal-fired capacity, despite the resistance of local authorities mindful of the need to create jobs. The decreasing rate of construction is due to the realization that too many power plants had been built and some existing plants were being used far below capacity. In 2020 over 40% of plants were estimated to be running at a net loss and new plants may become stranded assets. In 2021 some plants were reported close to bankruptcy due to being forbidden to raise electricity prices in line with high coal prices.

As part of China's efforts to achieve its pledges of peak coal consumption by 2030 and carbon neutrality by 2060, a nationwide effort to reduce overcapacity resulted in the closure of many small and dirty coal mines. Major coal-producing provinces like Shaanxi, Inner Mongolia, and Shanxi instituted administrative caps on coal output. These measures contributed to electricity outages in several northeastern provinces in September 2021 and a coal shortage elsewhere in China. The National Development and Reform Commission responded by relaxing some environmental standards and the government allowed coal-fired power plants to defer tax payments. Trade policy was adjusted to permit the importation of a small amount of coal from Australia. The energy problems abated in a few weeks.

In 2023, The Economist wrote that ‘Building a coal plant, whether it is needed or not, is also a common way for local governments to boost economic growth.’ and that ‘They don’t like depending on each other for energy. So, for example, a province might prefer to use its own coal plant rather than a cleaner energy source located elsewhere.’