China Pledged to ‘Strictly Control’ Coal. The Opposite Happened.

In April 2021, Chinese President Xi Jinping pledged to “strictly control coal-fired power generation projects” in China. Since then, government permits for new coal power plants have soared. According to analysis of Global Energy Monitor data, in the two years before Xi’s pledge, the government approved 127 plants, collectively capable of producing 54 gigawatts of coal power. In the two years after, that number rose to 182 plants, with 131 gigawatts of coal power. In short, China’s new coal power capacity has more than doubled.

Government advisors have said they are “definitely certain” Beijing can achieve its climate targets, and the International Energy Agency (IEA) has predicted that China’s fossil fuel use will peak next year. But the coal spree threatens to put China—the world’s largest carbon emitter—off track of meeting its commitments to reach peak carbon dioxide emissions before 2030 and achieve carbon neutrality by 2060. This, in turn, jeopardizes the international goal of limiting global warming to 1.5 degrees Celsius. The international community needs to push Xi to take his pledge seriously—and this week’s Asia-Pacific Economic Cooperation (APEC) summit in San Francisco is a good place to start.

By many measures, China is the front-runner in the global clean technology race. Its renewable energy investments accounted for 55 percent of the global total in 2022. Just two Chinese companies have captured over half of the world’s electric vehicle battery market, and 60 percent of electric cars sales in 2022 occurred in China. It also has the world’s largest fleets of solar and wind power plants. The most striking growth has been in solar power, where new installations in 2023 alone are expected to provide one-and-a-half times the total installed capacity of solar power in the United States. Importantly, the expected additional power generation from clean energy sources installed this year is more than the average annual increase in China’s power demand, marking a potential inflection point.

Despite this growth, concerns over electricity shortages in the summer of 2022 spurred a policy U-turn. The shortages were triggered by a historic drought that led to a collapse in hydropower generation, coupled with a heat wave that caused a spike in power demand for air conditioning.

The underlying reason for the shortages, however, was the rigid and outdated way that China’s power grid is operated. The hardest-hit province, Sichuan in the southwest, had to continue exporting electricity to far-flung eastern provinces under inflexible contracts while rationing power at home. In a well-functioning power grid, electricity flows would have been readjusted, with Sichuan importing electricity and other provinces increasing power generation. But China’s grid operation is too inflexible to use existing capacity and infrastructure efficiently. The country thus requires excessive power capacity to avoid shortages.

Instead of reforming its inefficient power system, China responded to the shortages by effectively ignoring its plans to “strictly” control new coal power plants.

After Xi’s initial coal pledge, Beijing’s top leadership dispatched inspectors to the National Energy Administration (NEA), admonishing the agency for failing to control new coal power buildup. In response, the NEA set strict conditions for new coal power projects: New plants could not be used for “bulk power generation,” or continuous, 24/7 operation. Instead, they could only provide “supporting” roles—essentially, by adjusting power generation in response to fluctuations in electricity demand and supply from renewable energy sources.

The pledge is now being ignored in two ways: Not only have coal power project approvals soared, but authorities are also not following or enforcing the NEA policy to control new projects. In fact, leaders have shifted from discouraging these projects to pushing for acceleration. In 2022, regulators set a target to begin construction this year on 80 gigawatts of new coal power capacity—equivalent to around 80 large coal power plants—and another 80 gigawatts next year. They also pushed profitable coal mining firms to invest in coal power generation.

As the 2030 deadline for carbon emissions to peak approaches, many Chinese officials and executives now see the next five years as a window of opportunity to add carbon-intensive capacity, according to a survey of experts on China’s energy sector by the Finland-based Centre for Research on Energy and Clean Air (CREA), where one of us works.

The shift in national policy has created a chance for local governments and power firms to push through new permits. State-owned enterprises tend to prioritize market share over profitability, so they are jumping on the opportunity even though most coal power projects in China are loss-making. Meanwhile, provinces are seizing the reduced scrutiny on coal to increase their power capacity and boost local economic activity. Coastal provinces are seeking to generate power locally instead of relying on imports from inland provinces, while inland provinces are counting on exports to these same coastal provinces to justify their coal power investment.

The “supporting” role of coal power has even become a way for local officials and project developers to justify new projects. They simply apply the “supporting” label on projects without explanation. A CREA assessment of coal power projects approved in 2022-23 showed that most did not meet the NEA requirements. Furthermore, most new projects are in provinces and regions such as Inner Mongolia, Shandong, and Shaanxi that do not require more coal power to meet energy demand. These provinces already have more than enough to meet demand peaks and support existing and planned wind and solar capacity.

The Chinese government’s propensity for abrupt shifts in policy, as seen in the hasty dismantling of the zero-COVID policy, has reinforced the coal rush by prompting officials and companies alike to adopt an “enjoy while it lasts” mindset. When a massive number of permits are handed out, market participants expect that the government will soon curb the excesses. This becomes a reason to grab as many permits as possible. This dynamic played out in the similarly large coal plant permitting wave of 2015-16, which was promptly followed by a clampdown—first on new permitting and then on already permitted projects.

Now, 209 new coal power plants are either under construction or permitted in China, which accounts for 72 percent of the world’s planned yet unbuilt capacity. If all of these projects are built, China will add the equivalent of India’s entire coal power fleet to its grid over the next five years, increasing its coal power capacity by around 23 percent by 2030. This trajectory is far above the climate-aligned development pathways recommended by the IEA and top energy modelers at Tsinghua University, who both argue that the capacity of China’s coal power fleet would have to plateau between 2020 and 2025, and gradually shrink thereafter, for the country to meet its climate commitments.

China has pledged to reduce coal consumption over the 2026-30 period in a national action plan to peak carbon emissions—a commitment that was included in the 2021 U.S.-China joint declaration on climate. If coal power capacity keeps rising rapidly, plant use would have to fall to achieve this goal. Power companies and provinces with interests in new coal power plants would then run into financial trouble, as they did during the previous overcapacity crisis in 2015-16. And these powerful interests would be opposed to rapid reductions in coal use, making it more challenging to implement the clean energy transition.

To ensure this does not happen, Beijing needs to strictly enforce existing policies and cancel permits already granted in breach of those policies. It will also need to implement reforms to reduce reliance on coal power and firm up its commitments to limit growth in emissions this decade. This will require, among other things, reforming power grid operation. Since power plants and the grid must continually adjust to variations in solar and wind output, more flexible operation will be essential for integrating large amounts of clean energy to the grid.

Meanwhile, other governments should call on China to clarify how it intends to follow through on its pledge to phase down coal consumption and “strictly control” new coal projects. At the APEC summit this week, governments should push Beijing to end the approval of new coal plants and unveil a clear timeline for power sector emissions to peak. In particular, U.S. President Joe Biden should carve out space in his bilateral meeting with Xi on the sidelines of the summit to raise these issues, since Xi made his initial coal pledge at Biden’s 2021 Leaders Summit on Climate. And countries further ahead in the energy transition, such as European Union member states, should engage in technical exchanges with China to share their experiences in tackling, among other issues, power market reforms.

An international effort to end new coal projects is critical to limiting global warming to relatively safe levels. But only action that holds the world’s largest coal power producer to account can be truly effective.