Why China Will Continue To Rely On Coal
By Paul Homewood
There was a guest post on WUWT by Larry Kummer a couple of days ago, “Britain joins the shift from coal, taking us away from the climate nightmare”, which appeared to be announcing the early death of King Coal.
It was triggered by the continuing decline of coal power in the UK, but was really based around recent news that coal consumption in China has stalled in the last couple of years. I have already discussed this issue here, here and here.
It is with good timing then that the latest report from the World Nuclear Association has just appeared, with a summary of the up to date energy situation in China. Naturally it concentrates on nuclear power, and is well worth a read for those interested in that – the full report is here.
However, it starts with a summary of the overall energy position in China, which offers a much more realistic assessment:
Most of mainland China’s electricity is produced from fossil fuels, predominantly from coal – 73% in 2015. Two large hydro projects are recent additions: Three Gorges of 18.2 GWe and Yellow River of 15.8 GWe. Wind capacity in 2015 was 8.6% of total, but delivering only 3.3% of the electricity.
Rapid growth in demand has given rise to power shortages, and the reliance on fossil fuels has led to much air pollution. The economic loss due to pollution is put by the World Bank at almost 6% of GDP, and the new leadership from March 2013 has prioritised this.* Chronic and widespread smog in the east of the country is attributed to coal burning.
In August 2013 the State Council said that China should reduce its carbon emissions by 40-45% by 2020 from 2005 levels, and would aim to boost renewable energy to 15% of its total primary energy consumption by 2020. In 2012 China was the world’s largest source of carbon emissions – 2626 MtC (9.64 Gt CO2), and its increment that year comprised about 70% of world total increase. In March 2014 the Premier said that the government was declaring “war on pollution” and would accelerate closing coal-fired power stations.
In November 2014 the Premier announced that China intended about 20% of its primary energy consumption to be from non-fossil fuels by 2030, at which time it intended its peak of CO2 emissions to occur. This 20% target was reiterated by the President at the Paris climate change conference in December 2015, along with reducing CO2 emissions by 60 to 65% from 2005 levels by 2030. This means that China’s energy growth has entered a ‘new normal’ phase including environmental protection, and to address this, vigorous development of nuclear power is required. By 2030 nuclear capacity will be 120 to 150 GWe, and nuclear will provide 8% to 10% of electricity.
The February 2015 edition of the BP Energy Outlook 2035 projects that by 2035 China becomes the world’s largest energy importer, overtaking Europe, as import dependence rises from 15% to 23%. China’s energy production rises by 47% while consumption grows by 60%. China’s fossil fuel output continues to rise with increases in natural gas (+200%) and coal (+19%) more than offsetting declines in oil (-3%). China’s CO2 emissions increase by 37% and by 2035 will account for 30% of world total with per capita emissions surpassing the OECD by 2035.
The distribution of energy resources relative to demand poses some challenges, notably for north-south coal transport and east-west power transmission.
Electricity demand has been slowing from over 14% pa in 2010, corresponding with a 10% growth in GDP, according to the China Electricity Council. Three-quarters of this was in industry. In 2015 electricity demand growth was only 0.5%, corresponding with a 6.9% growth in GDP, showing a marked decoupling of the two metrics, though this is partly due to subdued economic conditions. Residential consumption is less than 10% of this (compared with 34% in the USA).
Per capita electricity consumption was 3510 kWh in 2012. By 2030 it is expected to be 5500 kWh/yr and by 2050 about 8500 kWh/yr.
Electricity generation in 2015 increased only 0.3%, to 5.81 PWh. That from fossil fuels was 4242 TWh, from hydro 1126 TWh, nuclear 171 TWh and renewables 271 TWh, according to the National Bureau of Statistics. Nuclear was the fastest-growing electricity source in 2015 (29% growth), while generation from fossil fuels dropped 2.7%, due to weak economic conditions more than the ongoing energy transformation. The OECD Nuclear Energy Agency said that 2015 gross nuclear generation was 169 TWh, 3% of total, and net 158.3 TWh. Net export was 12 TWh in 2013, with that to Hong Kong being 9 TWh, adding to its 39 TWh generation (29 TWh from coal, 10 TWh from gas).
Installed generating capacity has been increasing at nearly 10% per year since 2010 and reached 1508 GWe at the end of 2015. At the end of 2015 fossil fuelled capacity (mostly coal) reached 990 GWe, hydro capacity was 319 GWe (up 15 GWe in the year), nuclear capacity was 26 GWe, wind capacity reached 129 GWe and solar PV 43 GWe, according to the National Bureau of Statistics. In 2015, 32.5 GWe of wind capacity and 18.3 GWe of solar PV was installed, but utilization hours decreased. In 2015 some 34 TWh of potential wind output – about 20% – was forgone because of inadequate grid connections, according to the National Energy Administration, and several provinces* have been ordered to stop approving wind projects until they improve transmission infrastructure. The Institute for Energy Economics and Financial Analysis (IEEFA) forecasts that China will install an additional 22 GWe of wind, 16 GWe of new hydro, another 6 GWe of nuclear and 18 GWe of solar (60% utility scale, 40% distributed rooftop solar) in 2016.
* Inner Mongolia, Jilin, Heilongjiang, Gansu, Ningxia and Xinjiang.
In the 13th Five-Year Plan from 2016, six to eight nuclear reactors are to be approved each year. Non-fossil primary energy provision should reach 15% by 2020 and 20% by 2030 (from 9.8% in 2013). Wind capacity is expected to be 250 GWe and solar 150 GWe by 2020, significantly more than in the 2014 action plan. Coal’s share of primary energy was down to 64.4% in 2015, from 72.5% in 2007. The action plan aim was 62% in 2020.
In June 2015 China submitted its Intended Nationally Determined Contribution (INDC) to climate change mitigation and adaptation for 2020 to 2030 to the UN. This pledge included increasing the share of non-fossil fuels in primary energy consumption to about 20% and restraining carbon emissions in 2030 to double of those in 2005 (after being 158% of the 2005 level in 2015 and 182% in 2020). Annual average new nuclear capacity 2005 to 2020 is 3.4 GWe/yr, from 2020 to 2030 it is 9.0 GWe/yr.
These are the key points we can draw:
1) Electricity generation has effectively stalled, only rising by 0.3% last year. Fossil fuels generation fell by 2.7%. As the report says, this was due to weak economic conditions rather than ongoing energy transformation.
2) The BP Energy Outlook predicts that China’s energy consumption will grow by 60% by 2035. (This is in line with projections from the IEA).
3) China’s INDC promises to increase the share of non fossil fuels in primary energy consumption to 20% (from 11% in 2014).
4) The INDC also projects that carbon emissions in 2030 will be double those of 2005, and 27% higher than last year.
5) By 2035, coal production will have risen by 19%, and natural gas by 200%.
It is easy to do a few sums:
- If we assume primary energy consumption in 2014 was 100, then fossil fuels = 89.
- By 2035, primary energy consumption will have grown by 60%, therefore = 160.
- Non fossil fuels by then = 20% (actually by 2030) and would therefore = 160 x 20% = 32
- Therefore fossil fuels = 128, an increase of 44% on 2014.
OK, we don’t know how much energy consumption will have increased by 2030, but we can make a reasonable estimate of, say, 50%. This would give a fossil fuels figure of 120, still an increase of 35% from 2014.
The only thing we don’t know is the split of coal, gas and oil. But what we do know is that China’s INDC states that gas will supply at least 10% of energy come 2020.
However, gas already supplies 6%, according to BP, so there appears to be little prospect that gas will make much inroads into coal’s share.
Fossil fuels consumption currently amounts to 2649 Mtoe (BP 2014), and gas only accounts for 167 Mtoe of this. We have already seen that this is projected to increase by 44% by 2035. If gas is to supply all of this increase, it would need to rise from 167 to 1334 Mtoe. Is this in any way remotely likely?
For a start there is the question of global gas prices. Unless gas production massively increases, all of this extra demand will simply cause prices to spike, likely leading to a global recession.(In global terms, annual gas consumption is 3065 Mtoe and coal 3881 Mtoe – can we really expect gas output to replace this coal?)
But there is another substantial issue – energy security. China already need to import 28% of the gas they use. There is no way the Chinese government would want to be over reliant on imported energy – this is the main reason they are so keen to claim sovereignty over the oil rich, South China Sea.
Would they really be prepared to keep their own coal reserves in the ground and coal power plants idle, whilst importing millions of tonnes of gas?
And, of course, we already know the answer, because they are continuing to build more and more coal power stations. The above report mentions that fossil fuelled capacity (mostly coal) reached 990 GWe last year. This compares to a figure of 870 GWe in 2013, as quoted in the China Statistical Yearbook.
Even the INDC talks of:
The reality is that China will continue to be heavily reliant on coal for may years to come.