Potential Challenges With China’s Transition Away From Coal

China currently relies on coal for a large % of it’s energy needs.

If China is to transition to cleaner energy sources like natural gas and renewables for example, there are some clear barriers and challenges.

In this guide, we take a closer look at what those barriers, challenges and difficulties might be.

 

Summary – Potential Challenges With China’s Transition Away From Coal As An Energy Source

China’s Current Energy Summary

China currently relies heavily on coal for energy, and looks likely to continue to do so into the short term future. China still consumes (at this point) more coal than the rest of the world combined

About 70% of China’s CO2 emissions come from coal, and about 14% from oil. 

China is also one of the largest users of natural gas (behind the US and Russia)

China leads the world in renewable energy investment, and installed wind and solar power capacity

There have also been plans in China for more nuclear power

 

Challenges In Transitioning From Coal To Other Cleaner Energy Sources

Issues might be related to market forces, tech breakthroughs, the welfare of society, and environmental health, and other areas.

Potential challenges in transitioning away from coal might include:

– China already has a significant investment in coal power plants (China consumes more coal than the rest of the world combined according to some estimates), so changing away from these power plants would lead to stranded investments.

Some sources indicate there is already an over capacity of coal power

– China’s installed capacity for coal isn’t expected to peak before 2025 according to some estimates

– China’s electricity industry has made up about 71% of total energy consumption in past years, and this has been a structural hurdle to the advancement of reforms in China’s energy mix (thediplomat.com)

– Despite the large investments made in solar and wind, these energy sources still only make up a small % share of China’s electricity generation (abc.net.au)

– Some sources indicate that the last 15 years’ development strategies in the energy sector can still influence today’s power system.

When there has been such a heavy use of coal in China in the past few decades, there might be a lag on incorporating and using cleaner energy sources at scale anytime soon.

Energy sources that will be used in 15 years time need to begin with their planning stages today.

China’s objective in the past also appeared to be security of electricity supply to power the rapidly expanding economy, rather than to minimize emissions

– The current power grid is primarily set up for coal power plants and runs on coal, and there’s a lack infrastructure and investment to properly integrate renewables to the Chinese power grid.

For example, current power infrastructure isn’t designed specifically for renewable variable energy, and can also lead to power loss from power already generated (where solar and wind energy for example is squeezed out of, or can’t get into the grid – abc.net.au indicates it could be up to 20 per cent).

Investors can lose out when there are power losses

Some sources indicate that there isn’t even adequate distribution capacity right now to transition from coal to natural gas quickly

– There’s been good profits in coal in recent years due to various factors such as the price of coal, and some sources indicate that there might be certain groups of people (such as business and political elites) making money from them that are incentivized to keep them going

– Cheap coal and the self sufficiency China has by using coal are both incentives for heavy coal use

– Coal power plants that haven’t reached the end of their useful life end up becoming stranded investments the quicker natural gas and renewable energy are used.

So, there are economic losses for investors and those making money from, or benefitting from coal power, if coal power plants were to be aggressively shut down in the short term

– There may be tax revenue implications for governments with the phasing out of coal power, such as loss of a certain % of industrial taxes

– When energy supply systems are changed too quickly, or there are other energy supply changes made, there can be energy shortages and energy price volatility for business and citizens – so there’s a delicate balance with how quickly and at what scale energy system changes can be made.

One example is, if the supply of coal is decreased too quickly, it can lead to coal shortages and price increases for coal energy and electricity

– Several major industries are heavily reliant on coal power, and would have problems with transitioning over to other energy sources in some ways if not planned adequately

– There have been subsidies for, and protectionism of current energy prices, which are primarily coal driven

– Less focus on the environmental impact of new power plants means there’s lax regulations on existing and new coal power

– Penalties for businesses polluting as a result of using coal power might not be enough of a deterrent.

It can be cheaper to pay dirty energy and pollution fines than invest in energy and emission friendly energy solutions

– Renewable energy currently lacks a performance and cost advantage over coal in some ways.

Technology for renewable energy doesn’t always allow it to be economically competitive in some ways (although renewable energy has become cheaper over time, and it’s expected at some point in the future, renewables will be cheaper than coal)

For example, there can be issues with efficiency, operation and maintenance costs, and market prices.

Mainly it is the infrastructure to take on new equipment. 

Electricity dispatching and absorption for example is an issue [as well as power loss and also variability] (the diplomat.com)

– There’s potential for short term social and economic impact of closing down coal power plants and energy price reforms, such as the impact on the disposable income of citizens, and unemployment for those employed in the coal energy sector

– There could be an education gap for skilled and knowledgeable workers to transition from coal power plants to cleaner energy too quickly

– Much of China’s recent increase in coal consumption has been in line with economic growth, and a move away from coal might conflict with economic objectives

– There’s still a lead time on the construction of, and use of nuclear power reactors

– Some renewable energy depends on suitable geographical positioning (which isn’t always available), and large areas of land for installation.

For example, grasslands and deserts might be the best type of land for solar and wind.

Renewable energy needs to be able to make back the investment cost, and geographical suitability is one factor that plays into this

– Additionally with geographical positioning, new sites for renewables should ideally near cities and industrial centres to make transport of electricity easy, but land is not always available this close.

Further to this, transmission lines must either be built, or upgraded, to carry electricity from land with new renewable energy installations and equipment

– Renewable energy may make some environmental issues worse when concentrated in a particular area, such as degraded land

– There can be a lack of communication between government, industry/business and citizens in regards to energy – which can lead to frustration and implementation problems

– There can be in-built social resistance for moving away from coal which is a known energy source

– There can be key decision makers that don’t believe in the ability of renewables to provide reliable and adequate electricity

– There can be key decision makers that prefer the employment, incomes and GDP growth that coal currently offers

– oilprice.com outlines some of the issues specifically for transitioning from coal to gas, and some of those issues include – coal to gas fired boiler conversions being dependent on gas import capacity being ready, needing adequate gas distribution capacity and infrastructure, households and industrial businesses needing to switch from coal to gas for energy and electricity, and lack of communication between the government and businesses.

– There can be many technical, practical and economic limitations and difficulties in changing energy sources, energy systems and power grids at scale

– Overall, any energy transition can be slow and complex when done at scale, such as for an entire power grid, or when completely new energy sources are being introduced

– Plus, other potential challenges which you can read in the guide below

– In addition to transitioning from coal for electricity, coal may also be substituted for other energy sources when it comes to transport like electric cars and cars that run primarily on alternative energy sources.

We’ve talked about some of the issues in relation to transport at the bottom of this guide

 

*Note – an asterisk on coal use is the difference between % coal use, and total coal use.

A country’s coal use % could go down alongside the rising use of other energy source, but total coal use could still stay the same or increase. In this instance, emissions would stay the same or increase. 

So, this difference is worth consideration when assessing emissions and energy use.

 

Why Would A Country Want To Transition Away From Coal?

Primarily because of the emissions that coal is responsible for compared to other energy sources.

 

China’s Reliance On Coal, & Coal Related CO2 Emissions

Read about China’s coal consumption and emissions arising from coal in this guide.

 

What Energy Sources Could China Transition To?

The three main energy sources that are mentioned are natural gas, renewables (like solar and wind), and nuclear:

– If a country is still to use predominantly fossil fuels in the short term, natural gas is preferred over coal because natural gas emits 50 to 60 percent less carbon during the combustion process (chinapower.csis.org).

– Switching to renewable energy is obviously in many cases even better from an emissions standpoint than fossil fuels as a clean energy source.

– Nuclear energy is also cleaner in terms of emissions compared to coal

Read more about how China is using or investing in these energy sources in this guide.

 

China’s Difficulties, Complexities & Challenges With A Transition Away From Coal

thediplomat.com, oilprice.com, and abc.net.au all go into the difficulties, complexities and challenges in deeper detail

You can access these resources from the resources list

 

What About Energy In Transport?

Apart from electricity production, transport is another energy user.

Some potential problems in the transport sector when trying to make transport cleaner from an emissions perspective are:

China’s electricity grid running on coal is an issue for electric cars

Both electric cars and traditional cars in China currently have similar CO2 and small particulate matter emissions (PM2.5) per unit of distance driven (and a large reason is to do with the electricity the electric cars in China use)

Some sources also point out the logistical challenge in switching from gasoline and diesel powered cars to hybrid and electric cars when done at scale

The lithium ion batteries used to power EVs require a huge amount of energy to produce (roughly twice as much as regular cars), can be hard to recycle (due to a range of reasons), and require the mining of metals which may face scarcity issues in the future.

 

chinapower.csis.org outlines these transport issues in more detail.

 

Sources

1. https://chinapower.csis.org/china-greenhouse-gas-emissions/

2. https://oilprice.com/Latest-Energy-News/World-News/Chinas-Coal-To-Gas-Transition-Sputters.html

3. https://www.weforum.org/agenda/2018/05/china-is-a-renewable-energy-champion-but-its-time-for-a-new-approach/

4. https://thediplomat.com/2018/04/the-stumbling-blocks-to-chinas-green-transition/

5. https://www.abc.net.au/news/2018-03-25/china-pledges-to-drastically-cut-fossil-fuels/9500228

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