Reducing China's Fossil Fuel Consumption: Strategies For A Greener Future

China is the world's second-largest economy and the second most populous country. It is also the world's largest consumer of energy, the largest producer and consumer of coal, and the largest emitter of carbon dioxide. China's industrial sector, particularly manufacturing, drives a large proportion of its energy demand, with much of the energy coming from burning coal. In 2019, manufacturing accounted for about 55% of China's total energy consumption, and 59.6% of the manufacturing sector's energy came from coal.

China's dependence on coal for industrial power generation has significantly contributed to air pollution. To address this, China has been renovating old coal-burning facilities, with ultra-low emissions technology incorporated into 80% of its coal-fired energy capacity by 2019. China has also emerged as the world's single largest investor in clean energy transition, investing $266 billion in energy transition measures in 2021.

China has set ambitious targets to reduce its dependence on fossil fuels, including a pledge to make non-fossil fuel energy 20% of its energy supply by 2030 and to achieve carbon neutrality by 2060. To meet these goals, China has been rapidly deploying renewable energy sources such as wind, solar, and hydroelectric power. China has also been prioritising the development of electric vehicles and improving the energy efficiency of its buildings.

Despite these efforts, China still generates about 70% of its electricity from fossil fuels, and its emissions are projected to peak before 2025. To achieve its carbon neutrality target, China will need to accelerate its transition away from fossil fuels, improve its power grid infrastructure, and continue to invest in renewable energy sources and technologies.

Reduce coal consumption

China is the world's largest consumer, producer and importer of coal, with its consumption and production each accounting for around half of the global totals. In 2021, coal accounted for 56% of the country's total energy consumption.

To reduce coal consumption, China could:

• Focus on renewable energy sources: China has already made strides in this area, with its installed solar and wind energy capacity now accounting for 35-40% of the global total. The country is expected to reach 1,200 gigawatts of total wind and solar capacity in 2026, four years earlier than its current target of 2030.
• Address energy security concerns: China's reliance on imported coal and other fossil fuels has led to energy security concerns, which have been exacerbated by geopolitical tensions and rising fuel prices. By diversifying its energy sources and investing in renewable energy infrastructure, China can reduce its dependence on coal and improve its energy security.
• Reform the power grid: China's power grid has been built to accommodate coal power, and transitioning to renewable energy will require significant changes to the transmission, distribution, and operation of the grid.
• Phase out coal-fired power plants: China has already started to retire small, older, and more polluting coal-fired power plants. Continuing this process and replacing them with renewable energy sources will help reduce coal consumption.
• Improve energy efficiency: China has set targets to improve energy efficiency and reduce coal consumption per unit of GDP. These efforts can help reduce overall coal consumption.
• Address social and economic factors: Coal is deeply embedded in China's social and economic structure, and addressing these factors will be crucial for reducing coal consumption. This includes creating new jobs in renewable energy industries and providing support for communities and workers affected by the transition away from coal.

Increase renewable energy sources

China has been the world's largest and fastest-growing producer of renewable power for over a decade, and its lead has widened with an acceleration of solar and wind power capacity in recent years. In 2020, China pledged to have 1,200 GW of renewables capacity by 2030, but it is on track to meet that goal five years early.

China's renewable energy sector is growing faster than its fossil fuels and nuclear power capacity, and is expected to contribute 43% of global renewable capacity growth. China's total renewable energy capacity exceeded 1,000 GW in 2021, accounting for 43.5% of the country's total power generation capacity, up 10.2 percentage points from 2015.

Solar Power

China is the world's largest solar panel manufacturer and has the largest domestic market for solar panels. In 2022, China installed roughly as much solar capacity as the rest of the world combined, then doubled it in 2023. By the end of 2026, China could have as much as 1,000 GW of solar power alone.

China's solar exports grew by 64% to US$52 billion in 2022, with Europe being the destination for 56% of exports. The country's massive production is driving solar component prices to all-time lows, which will accelerate the energy transition.

Wind Power

China has the largest wind resources in the world, with three-quarters of this natural resource located at sea. China encourages foreign companies, especially from the United States, to invest in its wind power generation. In 2020, China deployed 71.7 GW of wind energy capacity, a 60% increase from 2019, and more than the rest of the world combined.

In 2022, China is set to install 56 GW of wind turbines, with 50 GW from onshore wind and 6 GW from offshore wind turbines.

Hydroelectric Power

Hydroelectric power remains the largest component of renewable electricity production in China. In 2021, it generated 1,340 TWh of electricity, followed by wind power at 655 TWh and solar power at 327 TWh.

China operates four of the world's six largest dams, including the Three Gorges Dam, the world's biggest, and the Baihetan Dam, the second biggest.

Geothermal Power

Geothermal resources in China are abundant and widely distributed throughout the country, with over 2,700 hot springs occurring naturally. Recognizing geothermal energy as a renewable energy source since the 1970s, China has conducted extensive explorations to identify high-temperature resources for electric generation.

Biomass Power

China has the world's largest domestic market for wind turbines. In 2020, China had more than 150 dams with a generating capacity of over 300 megawatts and installed capacity of 369 gigawatts.

Clean Energy Technology

China is a major leader in clean energy technology, with its companies accounting for four of the world's five biggest renewable energy deals made in 2016. In 2017, China accounted for 45% of global investments in renewable energy, amounting to US$126.6 billion.

China has become the world's largest producer of electric cars and buses, and its renewable manufacturing has grown, driving down the costs of renewable energy technologies.

Energy Security

China sees renewables as a source of energy security, as they can be built and used wherever there are sufficient water, wind, and sun, unlike oil, coal, and gas, which are finite and subject to geopolitical tensions.

National Energy Administration (NEA)

The NEA has played a crucial role in China's renewable energy development. It has recognized the need for new policies and mechanisms to achieve the country's renewable energy targets and has launched initiatives to improve rural grid transmission and allow village collectives to invest in distributed renewable power.

Unified National Power Market

China has announced plans to create a unified national power market by 2030, merging its six regional grids into one nationwide electricity market. This reform will help manage fluctuations in supply and demand and enhance China's position as a global leader in renewable energy capacity.

Reduce emissions from existing coal plants

China's industrial sector, particularly manufacturing, drives a large proportion of the country's energy demand, with much of the energy coming from burning coal. In 2019, manufacturing accounted for about 55% of China's total energy consumption, and 59.6% of the manufacturing sector's energy came from coal.

China's heavy use of "subcritical" coal plants has exacerbated the issue, as these plants are known for burning coal in a dirty and inefficient manner. To address this problem, China has been renovating old coal-burning facilities and incorporating ultra-low emissions technology. By 2019, this technology had been incorporated into 80% of China's coal-fired energy capacity, and the construction of lower-emission plants continues.

• Retrofit and upgrade coal plants: China can continue to retrofit and upgrade its existing coal-fired power plants with advanced technologies to improve their efficiency and reduce emissions. This includes installing scrubbers or flue gas desulfurization equipment to remove sulfur and other pollutants from the plant's emissions.
• Implement Carbon Capture and Storage (CCS): CCS technology captures carbon dioxide at its source and stores it permanently underground. While implementing CCS technologies in coal-fired power plants has proven challenging due to economic and technical factors, continued innovation and collaboration between government and industry can make CCS a viable solution.
• Improve energy efficiency: China can focus on improving energy efficiency in the industrial sector, particularly in energy-intensive industries such as steel, chemicals, and cement production. By optimizing processes and adopting more efficient technologies, China can reduce the amount of coal needed for industrial power generation.
• Promote renewable energy integration: China has been investing heavily in renewable energy sources such as wind, solar, and hydropower. By increasing the share of renewable energy in its energy mix, China can reduce its reliance on coal-fired power plants and, consequently, their emissions.
• Enhance grid flexibility: China can work on enhancing the flexibility and resilience of its electricity grid to better accommodate the integration of renewable energy sources. This includes improving energy storage capabilities and developing a more flexible and responsive grid infrastructure.
• Policy and regulatory measures: The Chinese government can introduce and enforce policies and regulations aimed at reducing emissions from coal-fired power plants. This includes setting emission standards, implementing carbon pricing mechanisms, and providing incentives for the adoption of cleaner technologies.
• International cooperation: China can continue to engage in international climate negotiations and collaborations, such as the Paris Agreement and partnerships with other countries. By sharing best practices and technologies, China can accelerate its progress in reducing emissions from coal-fired power plants.
• Research and development: Continued investment in research and development is crucial for identifying and implementing new technologies that can reduce emissions from coal plants. This includes exploring advanced combustion techniques, carbon capture technologies, and the integration of coal with renewable energy sources.
• Phase out coal plants: In the long term, China may consider phasing out its oldest and least efficient coal-fired power plants. By strategically planning and implementing this transition, China can reduce emissions and accelerate its shift towards cleaner energy sources.
• Public awareness and engagement: Educating the public about the importance of reducing emissions and promoting sustainable practices can foster a collective sense of responsibility. This can lead to behavioral changes that support emission reduction efforts, such as energy conservation and the adoption of renewable energy technologies.

By implementing these strategies and maintaining its commitment to reducing emissions, China can make significant progress in minimizing the environmental impact of its existing coal-fired power plants.

Improve energy efficiency

Improving energy efficiency is a key part of China's plans to reduce its fossil fuel consumption. China's 14th Five-Year Plan, released in March 2022, includes the following goals to improve energy efficiency:

• "More safe and solid" energy security
• "Remarkably effective" low-carbon energy transition
• "Significant" increase in energy efficiency
• "Obvious" enhancement of innovation capacity
• "Continuous" improvement of general energy services

The plan also calls for a shift from "dual control" of energy to "dual control" of carbon, which involves moving from controlling energy intensity and consumption to controlling carbon emissions and carbon intensity.

China has also made large investments in renewable energy sources, such as solar and wind power, and is working to improve its electricity grids to better integrate these sources. In addition, China is investing in energy storage technologies, such as batteries and pumped-storage hydroelectricity, to ensure that renewable power is available when needed.

China's efforts to improve energy efficiency are also driven by concerns about air pollution, which has become a significant problem in many Chinese cities due to the burning of coal and other non-renewable energy sources.

Reduce fossil fuel imports

China's energy portfolio consists of domestic coal, oil, and gas from domestic and foreign sources, as well as small quantities of uranium. China's energy consumption is dominated by coal, which supplied about 58% of its total energy consumption in 2019. China is the world's largest consumer of energy, the largest producer and consumer of coal, and the largest emitter of carbon dioxide.

To reduce fossil fuel imports, China can focus on the following strategies:

Diversification of Energy Sources

China has already started diversifying its energy supplies, with hydroelectric sources, natural gas, nuclear power, and renewables accounting for a growing share of its energy consumption. China intends to cap coal use to less than 58% of total primary energy consumption by 2020 to reduce air pollution. Natural gas, nuclear power, and renewable energy consumption have been increasing to offset the drop in coal use.

Energy Efficiency Improvements

China's key issue is growing internal consumption without improving energy efficiency, which threatens both China's growth and world oil markets. China can improve energy efficiency by accelerating pricing, regulatory, and other reforms. China is actively seeking smart energy technology to optimize its energy use.

Development of Renewable Energy Sources

China has committed to making non-fossil fuel energy 20% of its energy supply by 2030 and has pledged to achieve carbon neutrality by 2060. China is the world's largest renewable energy producer and consumer, with its renewable power output nearly tripling between 2017 and 2022. China has invested heavily in wind, solar, and hydroelectric power, becoming a global leader in these sectors. China aims to continue increasing its renewable energy capacity, with plans to build more than 200 utility-scale clean energy bases across the country.

Energy Security and Strategic Reserves

China's energy security is closely tied to its access to foreign energy sources, particularly in politically unstable regions. China has diversified its oil portfolio by investing in Africa and the Middle East, reducing its dependence on any single region. China is also building a strategic petroleum reserve to protect against external market shocks, aiming for 90 days of import reserves.

International Cooperation and Trade

China has been signing international agreements to secure its energy supplies and reduce oil imports. China has shifted its diplomatic stance to a softer, more global approach, focusing on energy and raw materials security. China's manufacturing and exporting capabilities in clean energy technologies can support global decarbonization efforts. However, trade friction and concerns over the economic security of green value chains may slow down the transition to clean energy.

Energy Market Reforms

China is working towards creating a unified national power market by 2030, merging its regional grids to better manage fluctuations in supply and demand. This reform will help China optimize its renewable energy use and enhance its position as a global leader in renewable energy capacity.

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