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China's Power System: The Green and the Black

Armond Cohen's picture
Clean Air Task Force

Armond Cohen is co-founder and Executive Director of the Clean Air Task Force, which he has led since its formation in 1996. In addition to leading CATF, Armond is actively involved in CATF...

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Consider these two statements:

“China is the world’s biggest market for wind power and solar photovoltaics.”

“China is the world’s largest consumer of coal, biggest emitter of carbon dioxide, has some of the deadliest air pollution in the world, and is still adding dozens of new coal fired plants ever year.”

If you follow energy discussions, you will often hear one of these two visions of China’s energy system emphatically described by various pundits and advocates. At first blush, the two visions seem fundamentally in conflict. Only one must be true! How can China be both “green” and “black” at the same time?

As is often the case, the reality is more complicated and nuanced. The short story is that the sheer scale of China’s energy appetite makes both of the above visions simultaneously true—and that will likely remain the case for at least the next decade or two.  China is simultaneously going to be the world’s largest market for low-carbon energy over the next 15 years and the world’s largest consumer of coal, continuing to build new coal-fired power plants and to see absolute coal consumption grow, albeit somewhat more slowly than in the past, as China enters a long plateau at still-staggering levels of coal consumption.  

It’s important that energy observers, policy makers, and advocates are able to hold both visions of China simultaneously in our collective consciousness: China is the builder of the world’s largest fleet of “green” power, even as China continues to operate nearly a terawatt of coal-fired generating capacity and single-handedly burn over half of the entire world’s annual coal supply.

This discussion heated up recently with the news that Chinese coal use fell for the first time in 2014, dropping 2.9 percent even as the Chinese economy expanded by about 7.4 percent, according to official statistics. That news—assisted by some earnest efforts to craft a media narrative—has generated a growing media buzz about an allegedly impending “peak coal” in China.  

[First, a caveat on the numbers; China  sometimes makes changes amounting to major revisions to its official coal and carbon statistics. As Robert Wilson cautions, China’s official coal consumption statistics showed a massive decline in the late 1990s, only to have the entirety of this apparent drop in coal use revised away in subsequent year’s statistics. Glen Peters, a post-doctoral researcher on human drivers of climate change at the Center for Climate and Environmental Research in Oslo also points out that China similarly revised up their initial 2013 estimate for coal consumption by 8 percent. As China consumes as much coal as the rest of the world combined—roughly 4 billion tons per year—a revision of that magnitude is an enormous quantity of coal, equivalent to roughly one third of total United States coal consumption or the entire annual consumption of Germany and the United Kingdom combined.]

 Coal Consumption and Production in China and the Rest of the World
Image source: US Energy Information Administration

Putting aside the reliability of China’s coal statistics, I wrote recently that there is likely to be no imminent peak in China’s power sector coal consumption, despite the apparent decline in coal use in 2014. The reason is partly the enormous amount of coal already built in the last decade, and partly that China is still building new coal-fired power plants at a rapid clip.

China electricity generation additions in 2014
Image Source: CATF from China National Energy Administration website for GW, accessed 17 February 2014. Assumed capacity factors: fossil (58% per IEA WEO 2013); hydro (34% per IEA WEO 2013); wind (33%); solar (15%).

As shown above, despite substantial growth in wind, solar, and nuclear capacity, when China’s new capacity additions are adjusted for the capacity factor of different resources (or the amount of annual energy produced per unit of capacity), very generously for wind and solar, the amount of new coal-fired energy generating capability added to the China grid last year exceeded new solar energy generating capability by 17 times, new wind energy by more than 4 times, and even new hydro by more than 3 times.

To put that into perspective, the new coal-fired power plants built in 2014 alone have a capacity more than double the entire United Kingdom’s legacy coal fleet.

Those coal plants are brand new, and while they in part help replace older, dirtier, and less efficient coal plants, which China has been phasing out in recent years, these new plants will be around and cranking away for many decades, along with the rest of China’s coal fleet, most of which is less than 15 years old.

John Mathews and Hao Tan of Macquarie University School of Management, and the University of Newcastle, respectively, take issue with my focus on new capacity, and wrote a long article recently claiming that China is “greening faster than it’s getting blacker.”  They present a lot of facts and figures, which they argue show that China is rapidly expanding its “green” power generation sources. Unfortunately, they prove only that China is slowly expanding the percentage share of energy from non-fossil sources—or as they put it, “greening on the margins”—not that China is poised for a real and sustained absolute decline in coal consumption any time soon.

In fact, they show that the drop in China’s 2014 coal-fired electricity generation is almost entirely due to annual fluctuations in hydro output due to annual changes in hydrological conditions (i.e. rainfall). As Matthews and Tan’s Figure below shows, hydro output increase in 2014 by 174.2 terawatt-hours, more than the total increase in annual demand and an order of magnitude more than the increase in nuclear, solar or wind generation. Combine a big swing in hydro output with a slow year for economic growth, and you’ve got a slight decrease in fossil generation on the year.

Year-on-year change in China’s electric energy generation, 2014 vs 2013
Year-on-year change in China’s electric energy generation, 2014 vs 2013. Source: Matthews and Tan, from primary data from China Electricity Council. 

In other words, the total contributions of solar, wind, and nuclear to “greening” China’s mix are unfortunately still small enough to be effectively lost in the noise of hydrological and economic variations from year to year. “Greening at the margins” is having truly marginal impact.

In the meantime, capacity additions clearly show which way Chinese state planners expect the grid to go over the next decades, with 47 gigawatts of brand new coal plants added in 2014 alone (enough to supply nearly all of California’s electricity demand, which peaks at about 45-50 gigawatts).

So let’s be clear: China’s rapid build-out of wind and solar—and nuclear I might add (with some some 30 nuclear plants under construction)—is impressive. As I noted in my own post, China has pledged to peak its CO2 emissions by 2030 and achieve 20 percent of its primary energy from non-fossil energy sources. Both of these goals will require it to build out over the next 15 years what will amount to the world’s largest low-carbon power system.  At the same time, Matthews, Tan, and others celebrating a “greener” Chinese power system downplay the fact that China can still build dozens of new large coal-fired power plants within that constraint and continue to burn simply staggering amounts of coal. 

Even Greenpeace acknowledges we could be far from a true peak in China’s coal consumption. The graphic below is a projection of China’s electricity generation mix developed by Greenpeace International’s Lauri Myllyvirta, based on China’s pledge to obtain 20% of its total energy from non-fossil sources by 2030. As we can see, China’s coal-fired power generation continues to grow through 2030, even as it expands non-fossil generation four-fold.

Projected power generation mix in China to meet non-fossil energy goals
Source: Lauri Myllyvirta from data from China’s State Council Energy Plan for 2014-2020 and the IEA’s New Policies scenario.

Driving China’s emissions truly downward over the following decades therefore will almost certainly require an expanded role for carbon capture and storage to reduce emissions from China’s massive legacy coal fleet, as well as an acceleration in the pace of renewables and new nuclear plant construction.

I take no pleasure in describing these trends. But, if we are to develop a workable carbon mitigation strategy, it is very important to understand the full picture and not to overstate the relative progress of renewables in China. China’s emissions trajectory is enormously important for global climate mitigation efforts, which will require a near-zeroing of global carbon emissions from the energy system well before the end of this century. 

A variety of recent analyses from the Intergovernmental Panel on Climate Change, the UN Deep Decarbonization Pathways Project, the Global Commission on the Economy and Climate, and the International Energy Agency, have all concluded that a diverse portfolio of low carbon technologies—including enhanced efficiency, many renewables, nuclear energy and carbon capture and storage—will be necessary to zero out carbon in China and elsewhere.  CATF believes the likely long-run persistence of coal (and gas) in China and across the developing world makes a focus on carbon capture especially critical in the next few decades.

For that reason, Clean Air Task Force’s work in China focuses on facilitating early large-scale carbon capture and storage projects. We are also beginning to explore how China’s proven ability to bring down energy technology costs might be applied to commercializing advanced, non-light water nuclear reactors that are potentially safer, less costly, with lower waste and weaponization risk, and quicker to build. 

While we expect and hope that renewable energy such as wind and solar can and will grow in its share of China’s total energy mix, we also think it would be unwise to base a zero-carbon strategy entirely or even predominantly on those technologies.

Even as China becomes the biggest user of renewable energy, China’s “black” energy system will unfortunately continue to grow in absolute terms and be with us for some time. It’s critical for climate protection that we utilize every tool we can to limit the climate damage from that system.

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Bruce McFarling's picture
Bruce McFarling on Mar 24, 2015

Also note that the discussion of this issue will sometimes by confused by the bias of the press in covering aspects of stories of particular interest to financial investors, since this is one part of the population that is willing to pay for regular delivery of information they find of value. And for financial markets, it is often of more interest whether China is importing more or less coal than how much total coal China is burning in the aggregate … since it is the import market which helps drive the coal commodity market prices in exporting countries.

Building massive new coal power plants close to coal mines and moving the power to the cities by long distance HVDC transmission will allow substantial improvements in the air quality in those cities … but it can also increase the advantage of domestic production over coal imports.

A shift in the share of domestic versus imported thermal coal could, indeed, be a rational response to a realization that “sooner or later”, coal reserves will have to be left in the ground … that is, if China is going to “eventually” curtail its production before its supply is exhausted … then the self-interested policy may be to press the domestic reserve closer to exhaustion, and have more of the coal “left in the ground” be located in the ground of other nations.

And even as we continue to hear talk of the “new normal” here in Beijing, it bears remembering that a 7% addition to today’s GDP is the same absolute amount of growth as a 10% addition to the GDP of the late 90’s, so its not as if the “new normal” represents an abandonment of a rapid growth strategy, so much as an incremental adjustment to how rapid that growth is going to be.

Joe Schiewe's picture
Joe Schiewe on Mar 24, 2015

It is nice to read an article that is honest about the incredible challenge ahead but doesn’t get wrapped up in fear mongering or idol worship of specific types of low carbon energy options.  I am hoping that one or more of the various types will become so reliable, scalable, readily accessible, fast to market, safe, inexhaustible, cost competitive enough to not require subsidy and have a minimal environmental impact that most will invest heavily in them simply because they are preferred in nearly every way.  This type of energy source may even allow us to start reducing our dependence on liquid and gas hydrocarbon fuels.  Although I believe climate change concerns are a great motivator, I just hate the wars, manipulation, oppression, poverty, suffering and fear that come with our absolute dependence on fossil fuels.  Fossil fuels are faithful hired servants that provide such wonderful societal benefits that we have become addicted and slaves to their care.  I don’t think that this is healthy and we need other options.  Thanks again for the article.

donough shanahan's picture
donough shanahan on Mar 24, 2015

Armond

I made the point to Hao Tan that the grid was not greening in any significant way. However there is a good analysis in his data but it ends up at the less important (and somehat wrong) conclusion. 

Lauri Myllyvirta's picture
Lauri Myllyvirta on Mar 25, 2015

I’ll begin by cherishing for a moment the fact that we are debating whether or not China is going to get off coal, not whether growth can be slowed down or stopped (which we would have been just a year ago).

 

 

 

That said, the fact that China’s targets put a pretty firm cap on power generation from coal, even at relatively high GDP and power demand assumptions, means two things:

-given improvements in thermal efficiency, coal use for power will flatline or even reduce slightly

-given restructuring of industry and electrification of both industrial and non-industrial energy use implicit in the demand forecast, total coal use will peak and begin to decline before 2020.

 

Also I’m not sure that this post fully reflects the fact that half of China’s coal use is outside the power sector (roughly 50% power, 30% industry, 20% small scale), and the fact that while China has been adding a lot of coal-fired capacity, power generation from coal has flatlined since 2012 and will not rebound under the current targets.

Bruce McFarling's picture
Bruce McFarling on Mar 27, 2015

As a late addition to this discussion from inside China, note that the ramp-up of non-fossil fuels slows after 2020 … there is an inflection in the rate of growth around 2019/2020.

That suggests that while the slated growth in non-fossil fuels between 2016 and 2020 in that diagram could well reflect constraints on how fast it can be rolled out, the track shown after 2020 may not reflect the speed that it can be rolled out.

If non-fossil fuels could be rolled out faster after 2021, but its not shown as doing so in the official projections, it could well be because there is a current reason to be understating the possible non-fossil fuel roll-out in the 2020-2025 period. On inspection, that would seem to be because without the inflection in growth of non-fossil fuels, the total consumption of coal would be showing appreciable declines by 2025. So, drawing the projection in this way makes for a picture of future coal demand that is less scary to the substantial vested interests in the coal industry than drawing a projection that did not slow the rate of growth of non-fossil fuel industry.

 

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