Commentary: China’s Plan to Cut Emissions at Coal Power Plants Could Actually Slow Its Green Transition

China's significant dependence on coal power is a major hurdle in its journey towards carbon neutrality, as the country is not only the largest producer and consumer of coal but also houses the biggest and youngest fleet of coal-fired power plants, providing over 60% of its electricity [para. 1]. To advance its energy transition, China must aggressively develop renewable energy sources while simultaneously addressing the coal power industry's misalignment with green energy objectives. This could result in increased operational costs and higher capital burdens, potentially slowing down the transition [para. 2].

On July 15, the National Development and Reform Commission and the National Energy Administration launched an action plan targeting coal power emissions reduction through co-firing with biomass and green ammonia, alongside carbon capture, utilization, and storage (CCUS) technologies [para. 3]. The plan aims to decrease coal power emission intensity to be comparable to that of gas-fired power plants by cutting emissions by 20% by 2025 and 50% by 2027 from a 2023 baseline [para. 5][para. 6]. To achieve this, retrofitted plants are expected to increase biomass and green ammonia usage to 10% [para. 6]. However, the plan's stipulations, such as ensuring sufficient biomass supply and favorable geological conditions, might limit the retrofitted units' eligibility [para. 7]. Financial measures involving treasury bonds, green bonds, and green credit are included, although meeting the green finance standards remains challenging [para. 8].

The economic viability of the proposed technologies is questionable as they could lead to higher electricity prices and systemic transition costs [para. 10]. The biomass co-firing faces hurdles like high fuel costs and supply shortages, making many biomass power plants economically unviable without sufficient subsidies. Competition from coal power plants could drive biomass fuel prices higher [para. 11]. Green ammonia co-firing is another cost-prohibitive solution due to the high energy-intensive process of producing green hydrogen through water electrolysis [para. 12][para. 13]. Despite China's advancements in renewable energy, its capacity is insufficient to support such energy-intensive technology solutions [para. 13].

CCUS also poses financial and energy challenges, as previous pilot projects indicate the technology is both costly and energy-consuming. Utilizing expensive solutions on already declining and unprofitable coal plants lacks rationality [para. 15]. Moreover, high-quality data for assessing retrofit projects, a crucial component, remains a stumbling block as China has yet to establish methodologies for measuring, reporting, and verifying co-firing technologies’ emission reduction impacts [para. 16][para. 17].

Since 2015, the coal power industry has struggled with overcapacity, yet new coal power plant constructions persist alongside growing renewable capacity [para. 21]. Existing “clean coal” policies primarily aim to enhance energy efficiency rather than substantially reduce emissions [para. 22]. Recent retrofitting efforts targeted at making coal power plants more adaptable to grid demands and stabilizing against renewable energy variability might be diverted by the new action plan that calls for renewable energy to aid coal power reduction in emissions [para. 23].

In conclusion, despite China’s initiatives to improve pollution control and power plant efficiency, the path to decarbonization requires a strategic phasing out of coal instead of further investment in “clean” or “low-carbon” coal technologies, which could escalate costs and complicate the green transition [para. 26]. A meticulously planned roadmap is essential for this energy transformation to prevent counterproductive outcomes like greenwashing and incomplete retrofit projects [para. 25][para. 26].