On Wednesday, China declared its intention to keep increasing coal production and maintaining its position as a fundamental power source. China expands coal supply while advancing major renewable projects for energy security and climate action. A new coal power capacity of 66.7 GW was approved in 2024, less than in prior years but still significantly higher than in prior years.

The sum of new and resurrected coal power plans was 68.9 GW, which is lower than the 117 GW in 2023 and the 146 GW in 2022, indicating a possible slowdown in project launches. However, despite President Xi Jinping’s 2021 promise to “strictly control coal power projects,” the number of coal power construction projects reached its highest level since 2015, with 94.5 GW starting construction. With only 30.5 GW coming online thus far, actual commissioning has decreased from 49.8 GW the previous year.

China’s Growth in Coal Power vs. Global Trends

China’s growth in coal power runs counter to worldwide trends. The world’s coal fleet outside China decreased by 9.2 GW in 2024, despite China’s ongoing capacity expansion. Currently, worldwide, 93% of coal power construction starts in China.

Renewable Energy and Grid Pricing Reforms

By unveiling new offshore wind farms and speeding up the development of “new energy bases” in its arid regions, China demonstrated its commitment to renewable energy. Future changes to the grid’s renewable energy pricing systems were also noted in the report. China announced this month that it would reduce subsidies for renewable energy projects.

The dominance of coal is being strengthened at the expense of renewable energy sources by long-term coal power contracts. Long-term electricity customers are discouraged from giving clean energy priority because they risk penalties if they don’t buy the agreed-upon volumes. Grid space for renewables is further constrained by pre-signed agreements that guarantee operating hours for newly installed coal capacity. The financing of new coal power projects is dominated by coal mining firms. Even when market fundamentals do not support it, coal mining corporations or energy organizations with coal mining operations financed more than 75% of freshly approved coal power capacity in 2024, artificially increasing demand. China expands coal supply while advancing major renewable projects for energy security and climate action, highlighting its dual strategy of energy security and climate commitments.

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Climate Action and Carbon Neutrality Goals

China restated its approach to combating climate change, announcing that it will create a set of significant projects as it moves closer to carbon neutrality and peak carbon emissions. A change is evident in the 2024 approvals, as many projects are justified by local governments on the grounds of local energy security and economic development, despite governmental goals for coal power to help renewable integration.

Policy recommendations include limiting the influence of coal mining companies on power demand, accelerating coal plant retirements, reducing long-term coal power contracts, prioritizing coal power flexibility retrofits, and setting ambitious coal reduction targets in China’s 15th Five-Year Plan to align its power sector with carbon reduction goals.

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