Coal in China is seeing a multi-year resurgence after years in which the government seemed ready to dial back and ultimately halt coal power construction. Indeed, just months after the 2020 announcement by Xi Jinping on carbon peaking and carbon neutrality, in early 2021 a Central Environmental Inspection Team report criticized the National Energy Administration for approving too much coal and ignoring environmental policy goals (albeit on air quality, not carbon). The report stated that NEA had 'built what shouldn't be built (coal, coal power lines), and not built what should be built.' China also committed internationally to 'strictly control' new coal capacity through 2025, after which coal power should decline. Ironically, that CEIT report was just months before a major new coal boom in China began, which kicked off even before power shortages in late 2021 that were caused by high coal prices and then further power cuts in 2022 caused by hydro shortfalls in some regions.
Our guest for this episode is Sam Clissold, analyst with Carbon Tracker. Sam has deep expertise and experience looking at the pipeline of coal power projects in China and analyzing the potential economic risks of stranded assets they pose.
Topics we discuss:
- China's coal plant pipeline and what's driving the increase.
- What happened to the plan to 'strictly control' new capacity?
- The geography of new coal - where is new coal being built?
- What are the economics of making coal more flexible to balance renewables, and does this cost potentially lead to asset stranding?
- Why is coal booming in Guangdong? To replace gas?
- Plans to introduce a capacity payment scheme to subsidize coal power.
- The overall scale of the coal power stranded asset risk and its size relative to China's economy.
For further reading:
Sam Clissold, 'Balancing Act: Stranded Assets and Flexibility in China's Power Sector,' Carbon Tracker, 30 March 2023, at https://carbontracker.org/reports/balancing-act-stranded-assets-and-flexibility-in-chinas-power-sector/.
Episode producers: Joyce Yuan (production) and Anders Hove (host)
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