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Low Carbon Transition Pathways of Coal Power in China

In December 2022, the Coal Transition Task Force at Energy Foundation China (EF China) held a webinar about the low carbon transition pathways of coal power in China. Experts at the webinar discussed the current situations, challenges, and potential pathways of China’s coal power transition with the country’s carbon neutrality target from the stranded assets and financial risks perspectives.

Zou Ji, CEO and President of EF China, Jenny Chu, the foundation’s Director of Strategic Partnerships, Liu Qiang, China Deputy Chief Representative at the Children’s Investment Fund Foundation,Song Ranping, Program Manager at the Sequoia Climate Foundation, Lina Li, Asia Strategy Director at the European Climate Foundation, Wang Ke, Associate Professor of the School of Environment and Natural Resources at Renmin University attended the webinar.

In his opening speech, Zou Ji proposed four key points in transitioning coal power in China: first, identifying the overall timeframe for phasing out coal; second, managing the window of opportunity for the phase-out based on life cycles of coal power units, fixed assets investment, and technology iteration; third, accelerating non-fossil fuel/renewables development that coordinates power sources, grid, demand, and storage; and last, managing stocks and flows of coal power.

Next, Wang Ke introduced his research about the decarbonization pathway of China’s coal power from the stranded assets and financial risks perspectives. According to him, decarbonizing the power sector is an important pillar to the early achievement of China’s carbon neutrality goal. Following the principle of “building first before dismantling,” renewable energy has made significant progress in replacing incremental power consumption, and the operation hours of coal power units are also declining, gradually shifting from the main power source to a flexible power source, he said. Combined with the current high coal prices, the entire coal power industry is suffering severe economic loss, bringing potential financial risks, according to him, who also said that the total locked-in emissions of China’s existing coal power units would exceed the carbon budget under the country’s dual carbon targets.

After Professor Wang’s presentation, webinar participants discussed the transition pathways of coal power in China and future priorities for EF China. Liu Qiang of the Children’s Investment Fund Foundation said that the transition needs to balance long-term and short-term development goals. With China’s long-term carbon neutrality target, the phase-out of coal should address the economic recovery and changing policies in the next two to three years. Meanwhile, in the context of energy diversification, solutions for coal power transition should be proposed aiming at different regions, based on the forecast for coal power installation, renewable energy development, and market mechanisms in the future, he said. Song Ranping Song of Sequoia emphasized the transformation from scientific research to real policy changes that can be implemented at the subnational level in the short term. Lina Li of the European Climate Foundation said that the channels and platforms between China and Europe can be utilized to promote the coal phase-out work of both sides. She also suggested more introduction about European energy and climate policies to the Chinese audience to counter media biases and enhance bilateral exchanges.

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