A Decade to Act: Policy opportunities for China to begin a coal phase-down while working towards economic and social goals
A successful transition away from coal to clean energy is the central pillar of China’s strategy to achieve carbon neutrality before 2060 and keep the global 1.5˚ Celsius target within reach. China has committed to “strictly control” new coal power projects and coal consumption over the 14th Five-Year Plan (2021-2025) (FYP) period, start to phase it down during the 15th FYP (2026-2030), and “make best efforts to accelerate this work”.
To meet these goals and to keep 1.5˚C within reach, China needs to decrease coal power generation by 25-30% over the next decade. The framework developed in the new report—A Decade of Action: A strategic approach for a coal phase-down in China—offers policymakers clear next steps to begin the retirement of coal plants needed to reach China’s goals during the 14th and 15th Five Year Plan periods (2021-2030).
- By retiring a small set of poorly performing, old, small, redundant, or otherwise undesirable plants (low-hanging fruit plants), China can feasibly phase-down coal power.
- Rapid renewable deployment, efficiency improvements, and cross-region balancing in addition to the carefully structured and targeted near-term coal phase-down presented in this report can help China achieve a power transformation that supports both carbon neutrality and the global 1.5˚C goal.
- This comprehensive approach allows China to maintain high-quality economic growth with improved human well-being while phasing-down coal power.
- A total of 203 GW coal power capacity (19.4% of existing capacity) can be targeted for retirements, and with the additional cancellation of new projects at early development stages, capacity would be decreased even further to 981 GW by 2030.
- These retirements would achieve significant additional benefits: large reductions in carbon and air pollutant emissions; improvement in average efficiency; large water conservation benefits low risk in stranded assets; moderate and manageable job losses; and a minimal impact on the regional grid.
The report results offer a way forward and provide ample reasons for this work to start within the next five years. In order for a coal phase-down strategy to become reality, additional planning on the parts of the national and subnational governments will be required. Implementation begins with the following steps from both the Chinese national and regional levels:
- Conduct a plant-level review to identify an early retirement schedule and strategy, based on the report findings.
- Analyze the renewable energy, grid, storage and transmission investment and fiscal planning to fund these investments and to replace any lost tax revenues.
- Building on the estimates provided here, evaluate the job losses and their composition at the county level and provide dedicated fiscal and capacity-building support for actions such as job training for impacted workers.
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