In March 2023, the Coal Transition Task Force at Energy Foundation China (EF China) held a webinar about the supply and demand situation of coal and power in China, which was zoomed in on the specific industries driving the growth in 2022, the reasons behind the increase, and recommendations for the future of coal and power decarbonization.

In her opening speech, Yu Han, Coal Transition Task Force Director said that due to energy security concerns in China, local governments are emphasizing the role of coal and coal power in ensuring stable energy supply, despite the poor economics of building new coal power capacity. This mindset resulted in an increase in both the production and consumption of coal in 2022, according to her, who stressed that building a new energy system requires a new consensus for secure, decarbonized sources. In the short term, responses should include promoting the electricity market reform, stimulating investment in the green energy field, advancing local consumption of green electricity, and developing new business models; while in the long term, China could benefit from Europe’s experience in ensuring energy security and from consolidated bilateral cooperation, she said.

Fu Sha, EF China’s Strategy and Planning Director, said that the output growth of major coal consuming sectors in China was very limited in 2022, though both the supply and consumption of coal hit historical high. The reasons behind such paradox probably included the decreasing share of natural gas in energy consumption in industrial use and residential heating due to higher price, the higher demand from the coal chemistry sector, the larger inventory in coal power plants, and the lowering calorific value of coal, she said, who also pointed out that in the power sector, which accounts for over half of total coal consumption in China, the investment was still focused on non-fossil generation in 2022. According to Dr. Fu, the reasons for the new coal power projects approval might include the surging local power demand in both volume and capacity; long-distance transmission of electricity via bundled wind, solar, and thermal power sources; power generation capacity substitution; and higher demand for heating in the winter (Insert PDF Link: China’s supply and demand of coal in 2022).

Zou Ji, CEO and President of EF China, said that the recent rebound in China’s coal power investment is mainly driven by energy security concerns. He believed that adding coal-fired power plants in coal consuming provinces will incur a series of risks regarding supply price, investment, and sustainable economic growth; while developing renewables is a reliable alternative to ensuring energy security. EF China strives to provide solutions for different stakeholders, such as supporting analysis and education for how to develop renewables, add energy storage, promote demand side management, grow renewable industry for a thriving local economy, and accelerate coal transition with air quality as a driving force in key areas, he said.

Representatives from climate philanthropies also attended the webinar.