Decarbonizing China’s Power Sector for Cleaner Air and Climate Smart Cities

At the US-China Climate Smart/Low Carbon City Summit held September 15-16 in Los Angeles, 11 Chinese cities and 3 provinces committed to taking steps to reduce carbon emissions and reach “peak coal” earlier than China’s national 2030 target. Continued expansion of renewables, gas, nuclear power and energy efficient buildings in China’s cities will depend heavily on efforts to decarbonize the country’s power grid. Speakers at this meeting will discuss emerging power reforms and clean energy investments (including nuclear power) at both national and municipal levels to decrease coal-fired electricity. 

At the height of President Xi Jinping’s visit to the U.S., China announced a national carbon cap-and-trade program, to go effect in 2017. Frederick Weston (Regulatory Assistance Project), Jon Creyts (Rocky Mountain Institute), and Isabel Hilton (chinadialogue) joined the Wilson Center’s China Environment Forum Director Jennifer Turner on September 29, 2015 to discuss the announced emissions trading scheme (ETS) and other recent developments in China’s power sector.

As China seeks to be less dependent on coal, speakers discussed needed power sector reforms, and the opportunities and challenges the nation faces transitioning to low-carbon alternatives. There werefive key takeaways from the discussion: 

1. China’s announcement of a cap-and-trade program is part of a series of environmental reforms that illustrate the integration of both environmental and energy policy.

For many, China’s announcement came as almost groundbreaking, given the country’s contribution to global carbon emissions and straggling environmental regime. In reality, China’s plans to implement a cap-and-trade program have roots as early as 2013, when it implemented pilot emissions trading systems in seven provinces, including Beijing, Shenzhen, and Guangdong.

Since then, China has made several domestic and international climate commitments to curb emissions, from the U.S.-China Climate Agreement announced in November 2014 to adding more stringent amendments to its 15-year-old air pollution law this past August.

These pledges show that China’s leadership at the upper echelons are prioritizing issues at the nexus of  environmental and energy policy, says Weston of the Regulatory Assistance Project.

2. China’s economy can continue to grow – without coal.

One may not consider carbon reductions to pair well with economic growth for a country so heavily dependent on coal. However, a study by the Rocky Mountain Institute, as outlined by Jon Creyts, finds that China not only can wean itself off coal and maintain current economic growth, but can grow six-fold to 2050, even at current energy consumption levels.

Though this will require a radical transformation of the power sector, the country’s leadership is poised to transition toward a more balanced economy by reducing overall energy demand,restructuring energy supply, and reducing emissions.

3. Adoption of “green dispatch” is key to transforming China’s energy sector toward greater efficiency and lower carbon emissions.

Modeled after the U.S. electricity market, green dispatch provides utilities with a market-based pricing for energy sources, in stark contrast to China’s “equal shares” policy which effectively subsidizes coal by guaranteeing that new power plants will be allowed to run a minimum set of hours per year. Adoption of green dispatch would make renewables more cost competitive and accelerate China’s transition toward more efficient energy generation.

Currently, China’s energy grid encourages construction of coal plants by guaranteeing that they will run for a minimum set of hours. As a result, this pushes for lower-cost alternatives, like nuclear and wind, while reducing inefficient coal plants to operate.

4. As China seeks to expand its renewables portfolio, nuclear energy presents itself as a double-edged sword.

China’s quest to reduce its carbon footprint will require rapid renewables expansion. China is on that path, leading the world in renewable energy generation. In 2013, it reached its goal – two years early – of supplying 30 percent of its energy mix come from renewables. From 2010 to 2013, solar installation expanded a whopping 22-fold. China leads the world in installed wind power, but issues of low grid connectivity and high rates of curtailment hinder continued growth.

Currently, nuclear energy makes up a mere two percent of the energy supply, but China’s leadership appears keen to ramp this up to not only reduce the country’s dependency on coal, but as a way to  attract foreign direct investment and  promote domestic nuclear technology. However, according to Isabel Hilton, editor of chinadialogue a lack of a regulatory regime and safety concerns  will hinder nuclear from joining wind and solar in the ranks. 

Related Content:
• China Announces Cap and Trade Program
• Impact of China’s Cap and Trade Announcement
• Tracking the Energy Titans: U.S.-Canada-China Energy Trends

Written by Joyce Tang 

Joyce Tang is a Research Assistant at the Wilson Center's China Environment Forum. She is currently a senior at American University, majoring in International Studies. 

(Photo of Transmission Towers in Taklamakan Desert, Xinjiang by Feng Wei Photography / Flickr)