While headlines around the world have focused on China’s continued coal use, the actual story is much more complex. Behind those numbers is a rapidly changing energy landscape that could lead to a much less carbon-intensive future.
The key elements of this are the fast changes in non-fossil energy capacity, especially the explosion of solar energy since 2022. There is a big difference between the construction of coal-fired power plants and the actual use of coal. While Chinese companies have continued to build new power plants, many of them are running at half capacity, and some may never be used.
Moreover, the government continues to force old, inefficient plants to close down. According to China’s National Bureau of Statistics, the percentage of China’s energy generated by coal has dropped by more than 10 percent in the past decade and may well have peaked in absolute terms. Meanwhile, more than 80 percent of new electricity-generating capacity is renewables.
The most dramatic change has been solar power, partially because of rapidly decreasing costs. China’s National Energy Administration reported that, as of 2023, solar was 18.5 percent cheaper than thermal power, and it is likely to continue to fall, making it the most cost-effective power source. Wind is also now marginally cheaper than thermal power.
The other big change is the discovery of alternatives to grid connection, which can be a challenging process for solar. Solar is obviously a daytime source, which means it rarely coincides with the highest demands for power that are generated by nighttime heating and light. This leads to curtailment—in other words, the failure to use all available renewables by the grid—not just in China, but around the world.
In China, especially since it published its first long-term plan for hydrogen in 2022, the use of solar electricity to generate hydrogen through electrolysis has become an important alternative to grid connection, which is then used to produce ammonia and fed into the petrochemical industry. Since much of China’s petrochemical industry is currently coal-based, this has the potential for major carbon savings.
In addition to this new supply of green energy, there is new demand for clean power. A key part of transitioning away from fossil fuels is the move from direct combustion to using electricity. The most obvious example is in transportation, where China leads the world in the production and sales of electric vehicles.
China has also built a high-speed rail network and 59 urban metro systems that provide an excellent alternative to airplane travel. As shown in the graph below, the use of electric vehicles is quickly rising, and virtually all new urban buses in China are now battery electric or fuel cell.
Smaller vehicles are also electric now. China has more than 400 million electric two-wheelers on the road, and a large, though uncounted, number of electric three-wheelers, a common type of transport in rural areas. Goods are generally brought to city centers by small electric trucks, with diesel semitrucks left to intercity roads. While this is not a complete solution, it reduces both carbon emissions and urban air pollution.
While the electrification of the transportation sector has been the most visible, many homes, especially in the rural areas around cities, have switched from burning coal directly to electric heat pumps. Much of the industrial sector has also switched to electricity rather than direct combustion of fossil fuels. As a result, the percentage of coal used in the power sector—as opposed to direct combustion—has risen significantly from 41 percent in 2015 to 56 percent in 2022. This use is more efficient, supports electrification, and enables the use of pollution abatement equipment that has improved China’s urban air quality.
Do these changes make China carbon-free? Absolutely not. But they are critical for paving the way for a cleaner future. As long as businesses and citizens are burning fossil fuels directly, it is much more difficult to transition to carbon-free sources, as the entire mode of consumption needs to change.
If the public is already using electricity, then the switch from a fossil source to a non-fossil source can be seamless and just requires changes at the generation level. Moreover, electrified transportation and heating are more efficient than burning directly, and they reduce air pollution, so there are immediate benefits. Even at the current percentage of coal in the overall electricity supply, electric vehicles in China are 40 percent less carbon-intensive than internal combustion engine cars.
If coal-fired power plants aren’t needed, then why are Chinese localities building so many of them? The answer is that it is all about local control. In 2021, many areas in China experienced power outages, which were not caused not by a natural disaster but instead by power plants failing to have enough coal on hand to meet demand.
While that was mainly due to a mismatch between unregulated coal pricing (which was increasing) and regulated power prices, localities decided that they needed to control more of their own power supply and not rely on cost-conscious companies that had let their coal inventories drop dangerously low in the hopes that coal prices would fall.
Chinese experts and officials will often describe the construction of coal-fired power plants as being about “energy security,” which often gets misunderstood by outsiders as applying purely to the nation as a whole. Oftentimes, they mean the security of control at the local level.
These new power plants are clearly not the most efficient way to address these energy issues, and their construction does involve real expenditures of carbon and other resources. But they shouldn’t be confused with the overall trend of Chinese energy development.
In multiple sectors—transportation, renewable energy, and overall electrification—the clear trend is toward a greener energy system. In fact, in areas like renewables and electric vehicles, China is now the world’s leading player. With the United States essentially abandoning the field, it will become even more dominant.
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