China’s electricity mix: changing so fast that CO2 emissions may have peaked

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EP-News-Logo2 (1)-newChina installed a world record of 32.5 gigawatts (GW) of wind power last year, and a world record 18.3 GW of solar power, according to official figures from the National Bureau of Statistics of China on 29 February. Coal consumption fell 3.7%, nuclear power grew 30% and natural gas 3.3%. These trends mark a rapid diversification of China’s electricity generation capacity with reduced dominance of coal. Some even believe China’s CO2-emissions have peaked – 15 years before the 2030 target.

“The latest figures confirm China’s record-breaking shift toward renewable power and away from coal,” said Tim Buckley, Director of Energy Finance Studies at the Institute for Energy Economics and Financial Analysis (IEEFA) in a comment. “Solar and wind continue to be the big winners, as illustrated by a 73.7% increase in grid-connected solar generation capacity. Declining consumption coupled with an over-abundance of domestic supply, meaning coal imports into China were particularly badly hit, dropping 30.4% year on year.”

Liu argues it’s better to move on to the next generation of energy technologies and that China believes it might as well start now

Here are some of the key statistics from China’s 2015 Statistical Communique made available by the European Climate Foundation (original in Mandarin http://www.stats.gov.cn/tjsj/zxfb/201602/t20160229_1323991.html)

  • Coal consumption fell by 3.7%, crude oil consumption grew by 5.6%, natural gas consumption increased by 3.3%.
  • Coal consumption still accounted for 64.0% of total energy consumption.
  • China’s total energy consumption grew 0.9% in 2015, reaching 4.3 billion TCE (tons of coal equivalent).
  • The energy intensity of China’s economy (in terms of emissions per unit of GDP) fell by 5.6%.
  • Coal imports decreased by 29.9% in 2015 (to 204,060 million tons).
  • Grid-connected solar power grew 73.7% in 2015, reaching 43.18 gigawatts of installed capacity. Grid-connected wind grew 33.5%, reaching an installed capacity of 129.34 gigawatts.
  • Clean energy consumption including hydropower, wind power, nuclear power and natural gas accounted for 17.9% of total energy consumption.
  • Thermal power capacity (coal, gas and oil) increased more slowly, growing 7.8% to 990.21 gigawatts of capacity. Nuclear power grew rapidly by 29.9%, reaching an installed capacity of 26.08 gigawatts. Hydropower capacity grew 4.9%.

Thus, the Chinese electricy generation capacity mix saw significant changes:

China’s Electricity Generation Capacity (GW)

China figure 1

Source: China’s National Bureau of Statistics, IEEFA calculations

Notwithstanding the addition of 71.6GW of new thermal power capacity, as a result of the high marginal cost of thermal supply, total thermal generation declined 2.7%, reports IEEFA. Thermal power plant utilisation rates declined from 56.2% on average over 2014 to a record low 50.9% in 2015.

China’s Electricity Generation (TWh pa)

China figure 2

Source: China’s National Bureau of Statistics, IEEFA calculations

IEEFA forecasts that China will install an additional 22 GW of wind, 16GW of new hydro, another 6GW of nuclear and 18GW of solar (60% utility scale, 40% distributed rooftop solar) in 2016. “With electricity demand forecast to grow by 3.0-3.5% in 2016, this 62GW of additional zero carbon electricity capacity will be more than sufficient to meet total electricity demand growth, such that coal consumption is forecast to fall again in 2016,” said Buckley.

It is possible for China to see sustained decline of CO2 emissions, which means CO2 emissions peaked in 2014, much earlier than the 2030 target

At the same time as China is setting new global renewable energy records, rapidly improving energy efficiency is combining with an ongoing structural change in the nature of Chinese economic growth (2015 GDP growth was +6.9%), decoupling it from the growth of electricity demand (of +0.5%), according to IEEFA.

They won’t back down

IEEFA adds that “there is no suggestion that China in 2016 might back away from this electricity sector transformation. Only last Friday, China’s State Grid Corp Chairman Liu Zhenya (the head of the world’s largest power provider) said his company rejects the so-called all-of-the-above energy strategy to meet China’s evolving power needs and address climate change. Liu argues it’s better to move on to the next generation of energy technologies and that China believes it might as well start now.” The only hurdle to overcome is mindset, according to Liu. “There’s no technical challenge at all.”

Dr Yang Fuqiang, Senior Adviser of the Natural Resources Defense Council (NRDC), said in a comment that the numbers show that “China’s CO2 emissions in 2015 declined from the level of 2014. The year of 2014 was a turning point. Two forces have been driving downward CO2 emissions in China: one is the continuous and rapid decline of coal consumption and the other is the rising consumption of non-fossil energy.”

Fuqiang said that “China has identified coal and steel as the two priority sectors to resolve the problem of overcapacity in 2016. In 2016 China will have to cut 1 billion tons of excessive coal capacity and 100 million to 150 million tons of excessive steel capacity. We estimate that China will continue to see decreasing coal consumption in 2016.”

“Energy intensity went down by 5.6% last year, from which I estimate a 7% cut in carbon emission intensity. That means energy intensity reduction during the 12th Five-Year Plan period would be over 18%, exceeding the target of 16%. It also indicates that carbon emission intensity during the 12th Five-Year Plan dropped over 20%, surpassing the target of 17%. I believe that China’s carbon emission intensity is likely to decrease by about 50% if China maintains the momentum during the 13th Five-Year Plan period, exceeding the target of reducing carbon intensity by 40% to 45% by 2020 pledged by the Chinese government at COP 15.”

Sustained decline

According to Fuqiang, the “China Coal Cap Project estimates that China will cut coal consumption to under 2.5 billion tons of standard coal by 2020, which is equal to 3.5 billion tons of coal consumption, with coal accounting for 55% of China’s total energy consumption. The project also estimated that China is expected to reduce consumption of crude steel and cement to 700 million and 2 billion tons respectively by 2020. China’s coal consumption already peaked in 2013. If coal consumption declines faster than The China Coal Cap Project’s prediction by 2020 and surpasses the increase of other fossil fuels including oil and natural gas, it is possible for China to see sustained decline of CO2 emissions, which means CO2 emissions peaked in 2014, much earlier than the 2030 target. This will bring a positive and profound impact on global climate negotiations and actions and efforts in improving domestic air quality and ecological protection.”

“There will be huge uncertainty in China’s future energy consumption mix and carbon emission outlook. China’s demand for coal is likely to recover once the economy turns for the better and energy demand rebounds”

Professor Boqiang Lin, Dean of the Institute for Studies in Energy Policy at Xiamen University, sounded a more cautious note: “This set of data indicates sluggish economic growth, which was reflected by weak energy demand. Despite increasing installed capacity of renewable energy, utilization hours and profitability are decreasing. According to industrial sources, last year saw the worst wind curtailment. Energy supply was excessive in general and the utilization hours of thermal power plummeted further.”

According to Lin, “There will be huge uncertainty in China’s future energy consumption mix and carbon emission outlook. China’s demand for coal is likely to recover once the economy turns for the better and energy demand rebounds. Even if total energy consumption growth rate is zero, to replace 1% coal consumption requires 10% growth in clean energy. This is not an easy task and we should not overestimate the trend.”

Editor’s Note

This news story is based on sources made available by the European Climate Foundation and the Institute for Energy Economics and Financial Analysis (IEEFA).

Comments

  1. Charles says

    This comment:
    “Clean energy consumption including hydropower, wind power, nuclear power…”

    throws doubt on the whole article. Yes, nuclear is a non-hydrocarbon fuel source, and there may be some fraction of 1% of environmentalists who see it as part of the solution, but simply to lob that in there, without further comment, as an uncontroversial fact, pulls the rug out. Yellow cake is neither green nor clean.

    • Bas Gresnigt says

      90% of German population supports the Energiewende as the solution…
      That is far more support for renewable than anywhere in the world for nuclear!

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