Promoting Provincial Coal Power Transition Pathways in China

Guest blog post by Princeton-in-Asia Fellow Michael Giovanniello 

As the 2022 Beijing Winter Olympics come to an end, China has delivered the first Olympic games supplied by 100% renewable energy. With a slogan of “Together for a shared future”, the Olympics provided a window into the clean energy future China aims to achieve. But implementing this vision across the whole country will not be simple. Significant care will be needed to balance decarbonization goals with energy stability and equity, especially given the diverse development conditions across China’s provinces. By empowering provincial governments to play a greater role in promoting energy transition, China can achieve a faster and more equitable transition. 

New research by NRDC and the Peking University (PKU) Institute of Energy sheds light on the critical role that Chinese provinces can play in phasing out coal power and meeting national targets for carbon peaking and neutrality. The report (available in Chinese here) studies the coal power fleet in six provinces, which together account for 28.8% of China’s coal power capacity, and identifies optimal coal power development pathways for each from now to 2035.  

The six provinces—Shandong, Jiangsu, Shanxi, Hebei, Gansu, and Jilin—were selected to reflect the diversity of provincial coal power fleets (see Figure 1). For example, in terms of size, Shandong (102 GW) is home to China’s largest coal power fleet.  In terms of composition, Jiangsu and Hubei are dominated by larger, more efficient coal power units, whereas Jilin and Gansu more commonly use older and smaller coal power plants. These differences influence the approaches individual provinces can use to balance low-carbon growth with energy stability, with careful consideration of each province’s coal power fleet and energy situation needed to help them implement national coal and carbon reduction targets.

The report developed tailored coal development pathways for each of the six provinces, providing actionable measures for these provinces as well as a planning framework that can be easily applied to other provinces. The results underscore the potential and importance of province-level analysis and actions to promote China’s national coal phaseout. In Shandong, which has 45% as much coal power capacity as the entire United States, the study found that an optimal coal power development pathway could cut coal power capacity by 5.27 GW, or 5.2%, by 2025. By 2030, the province could cut coal power capacity by 14.9% compared with 2020—representing a substantial step towards accomplishing and even outperforming Shandong’s commitment of peaking carbon emissions by 2027.

The report further illustrates the impact that provincial characteristics have on coal reduction potential. For example, Jiangsu, which receives high quantities of electricity from other provinces via west-to-east transmission lines, can cut 4.78 GW of coal capacity and transition 14 GW of existing coal capacity from baseload to peaker functionality, supporting higher shares of renewables on its grid. In contrast, provinces that are major electricity exporters, such as Shanxi and Hubei, may potentially need to add up to 5.2 GW of new capacity to cover increasing demand.

Policy recommendations

Based on the analysis of the six representative provinces, NRDC and PKU provide the following policy recommendations and insights that can be applied to promote coal power reductions and clean energy development at the provincial level:

1.     Accelerate the phaseout of obsolete coal power capacity. The report provides a framework for determining the order in which coal units can be retired, retrofitted, or mothballed in the short term. This framework accounts for factors such as pollution intensity, efficiency, residential heating demand, regional coal power resources, the availability of financing sources, and additional economic benefits. Provinces can apply this framework to inform their provincial coal power optimization planning.

2.     Adjust the role of coal power in China’s energy portfolio. Coal power currently provides the majority of China’s electricity, but going forward, coal units should transition from providing base load power to providing flexibility and reliance for a renewables-dominated grid. Retrofits that improve efficiency, flexibility, and enable CHP (combined heat and power) functionality will help existing capacity assume this supporting role, especially in northern China, where heat demand is highest. 

3.     Fully tap into demand-side resources. For provinces with high electricity consumption, peak load (over 90% of power capacity) often only occurs a couple of days of the year. These short-term peaks can be covered by leveraging demand-side resources, thereby avoiding the need to build expensive new coal capacity and enabling further reductions to existing capacity.

4.     Optimize the development of interregional transmission. Ultra-high voltage (UHV) transmission will play a decisive role in accelerating provincial coal phaseout. For example, Shandong’s ability to cut 5.27 GW of coal capacity by 2025 depends on 35 GW of interregional transmission capacity—the province would otherwise experience shortfalls of up to 30 GW. Going forward, transmission planning should be coordinated with renewables development and coal fleet optimization to increase the share of renewable electricity on UHV lines.