China’s primary energy mix consists of 64% coal, 6.4% gas, 19% oil, 2% nuclear, and 9% renewables (including biomass. In 2017, their power generation mix was composed of 68% coal, 2.8% gas, 0.15% oil, 3.8% nuclear, and 25% renewables (including biomass).
China’s continued investment in new coal-fired power plants increases the risk of carbon lock-in and stranded assets., This is particularly the case as continued investment in coal comes despite the fact that the country already is dealing with coal overcapacity issues., China’s reliance on coal seemingly shows little sign of decline as the building of new plants is used to boost GDP and industry groups argue that these plants will be needed to meet future energy demand. Between 2000 and 2017, increases in coal generation have met over 50% of net new electricity demand in 13 out of 18 years. In 2020 alone, China commissioned 38.4 GW of new coal plants.
This being said, there are some encouraging signs. President Xi Jinping has recently announced that China will begin to phase down coal from 2026, and the country’s energy regulator has stated that it aims to reduce the share of coal in total primary energy to less than 56% in 2021., With regards to overseas financing, China’s investments in coal plants through the Belt and Road Initiative has been substantially reduced since peaking in 2015 and 2016. Of the 52 coal plant projects announced between 2014 and 2020, only one has gone into operation (25 have been shelved and eight have been cancelled).
Despite China’s reliance on coal, in recent years renewables have taken on a greater role in the country’s power sector. Between 2015-2018, wind and solar met more than 25% of new electricity demand. In 2020, China brought 72 GW of wind and 48 of solar online. This is about 15% of the country’s total installed renewable generation capacity in 2019 and significantly greater than recent single year net additions.