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China Briefing: New energy transition guidance; Five coal plants approved; Energy-efficiency targets raised

China Briefing
Welcome to Carbon Brief’s China weekly digest. 
We handpick and explain the most important climate and energy stories from China over the past seven days.

Snapshot
China has issued “detailed” instructions on how to push forward its energy transition, state media reported. A government spokesperson said that the “top-level” directives aimed to address the “shortcomings” of the existing system and policies to facilitate the country’s “low-carbon” development under its “dual-carbon” climate goals.
Meanwhile, five large coal-fired power projects have been approved for construction in various Chinese provinces since the beginning of 2022, according to a report. The news came as the Chinese leadership said on Monday that coal power companies would “be supported” to generate electricity “at full capacity”. 
Elsewhere, new guidelines have raised energy-efficiency targets for 17 industries ranging from oil refining to construction. The document intends to help those “energy-intensive” industries carry out technological upgrades and eliminate “backward” production capacity.
Key developments
China releases ‘top-level’ document for energy transition
WHAT: Last Thursday, China’s National Development and Reform Commission (NDRC) and National Energy Administration (NEA) – the state economic planner and energy planner, respectively – jointly published a set of “opinions” to guide the nation’s energy transition. The document lays out a “clearer” roadmap on the nation’s efforts to decarbonise its energy system, according to People’s Daily, the official newspaper of the Communist Party of China. In the meantime, Caixin – an independent Chinese financial publication – described the directives as a “top-level mechanism”. It noted that the document gave systematic instructions for a “green and low-carbon energy transition” – a “key” step for China’s to peak carbon emissions before 2030 and achieve carbon neutrality before 2060.
HOW: The “opinions” set out 10 general targets, including enhancing regional and sectoral coordination, developing a “new type of power system”, improving the “clean” and “efficient” use of fossil fuels and establishing a mechanism to ensure supplies. The document emphasises that fossil fuels should only be “replaced” when renewable energy supplies become “reliable” – a message Chinese officials have repeatedly stressed since power shortages occurred late last year. It also stipulates that total energy consumption should be managed in a “flexible” manner and that the nation should set up a “unified power market system”. (Earlier this month, China Briefing analysed China’s roadmap for a “unified power market system” and explained the importance of “opinions” in China’s governing system.)
WHO: Explaining the latest orders, an NEA spokesperson said that “promoting green and low-carbon energy transition” was the “key” to achieving the nation’s “dual-carbon” goals. The spokesperson said in an official release that the “opinions” aimed to address some of the “shortcomings” in the existing system, mechanism and policies for the energy sector, such as the “increased” challenges in ensuring energy supplies. The official described the “opinions” as one of the schemes to ensure the implementation of the “1+N” policy framework. (The latter is a set of “top-level” documents formulated to guide the country to achieve its climate goals. Read this China Briefing for more details.) The spokesperson added that the “opinions” would work alongside a series of carbon-peaking policies to “systematically” propel China’s energy transition.
‘VERY SIGNIFICANT’: Dr Jing Chunmei – director of scientific research and information at the China Centre for International Economic Exchanges – told People’s Daily that China had formulated “a series of measures” in energy transition and achieved “significant” results in utilising renewables. However, there were still drawbacks in the system and mechanism, policy framework and governing methods, Dr Jing noted. She told the newspaper that the “opinions” covered a wide range of aspects throughout the energy transition process and established a multi-pronged “roadmap”. She added that the document had “very significant guiding value”. 
INTERPRETATION: One of the key targets in the “opinions” instructs the nation “to form an energy production and consumption pattern, where non-fossil fuels will not only basically satisfy the additional energy demand but also replace fossil-fuel stocks at scale, while the abilities to guarantee energy securities are increased comprehensively…by 2030”. Li Yongliang – deputy head of the industrial development department of the China Petroleum and Chemical Industry Federation – told China Chemical News that the target meant that China’s total energy consumption would keep growing until 2030, but the growth was expected to be primarily met by non-fossil energy. At the same time, the “stocks” – or the existing fossil-fuel portion – would be replaced by non-fossil energy on a large scale, Li noted. He added that the implication was that the proportion of non-fossil energy would increase significantly in the whole energy system. [China’s non-fossil energy ratio will have to increase significantly in the next few years to meet the targets in its 14th five-year plan and updated nationally determined contribution.]
‘GREEN’ ELECTRICITY: Lin Jiaqiao – co-director and co-founder of Rock Environment and Energy Institute, a Beijing-based independent thinktank – told Carbon Brief that, in his opinion, the document aimed to strike a balance between “the development of green electricity” and “the exit of fossil fuels, especially coal power”. Lin explained that the document aimed to remove administrative, financial, regional and other obstacles to ensure maximised “green” electricity production. He said that it also intended to make “green” electricity “truly accessible” to residents, industries and businesses at “affordable prices”. He added: “This calls for clear, well-designed and reasonable policies and market tools urgently for the energy sector – in addition to slogan-like policies from the top.”
Five coal-fired projects receive go-ahead
WHAT: Five large coal-fired power projects have been given the go-ahead for construction since the beginning of the year, according to an article on the Chinese news portal Sohu. All of the newly approved projects would use highly efficient units that could save on energy and coal consumption, the article said. The piece was originally published by the Beijixing Electricity Net, an outlet focused on the energy and power sectors. Carbon Brief has tracked down the official announcements for the approval of all five projects.
WHERE: The approved projects will be situated in three provinces. All of their units are expected to use the ultra-supercritical technology. In Zhejiang – a populous and economically developed province on China’s eastern coast – two projects with a combined investment of 13bn yuan (£1.5bn) will be constructed, the local government announced last week. One of them will have two units – each with a capacity of one gigawatt (GW) – and the other will have two 660-megawatt (MW) units. Meanwhile, a company statement said last Tuesday that the authorities of Hunan – a landlocked province in southern China – had greenlighted a project containing two 1GW units. Furthermore, a £1.3bn project with four 660MW units was approved by the government of Guangxi – which borders Vietnam – its operator stated last month. A separate project with two 660MW units also received the authorisation in Guangxi in January and is already under construction, according to company statements.
WHEN: The news came as many small coal-fired power units had been closed down to protect the environment and reduce emissions, the Beijixing article noted. It added that their production capacity was expected to be replaced by “large-scale, clean coal-fired power projects”. Take Shandong province, for example. The eastern region had the largest installed coal power capacity in China as of the end of last year. But in the second half of 2021 alone, the local authority shut down 141 small coal power units, and the capacity of most of them was lower than 50MW, according to China Energy News. [This continues a trend that has been going on for several years across China.]
WHEN: The news also came as China’s State Council – the country’s administrative authority – showed its support for coal-fired power generators this week. According to state news agency Xinhua, the State Council instructed at a meeting on Monday: “Coal supply will be increased and coal-fired power plants will be supported in running at full capacity and generating more electricity, so as to meet the electricity needs for production and residential consumption.” 
SIGNIFICANCE: Commenting on why China is still approving coal-fired power projects, Dr He Gang – assistant professor in the Department of Technology and Society at the Stony Brook University – pointed to the “inertia” from the mentality of “coal power or no power” and the “impulse” of “local investment for the economy”. But he said such thinking was a “trap”. He told Carbon Brief: “There are other and better options: renewables are achieving grid parity which could accelerate a renewable-dominant pathway. Such a pathway is both technically feasible and economically beneficial to China’s development.” Dr He explained that China had made clear its long-term climate pledges, but “when and at what scale” China peaks its emissions will have a large impact on how it and the world would achieve carbon neutrality. 
‘CLEAN’ COAL: Jacqueline Tao – analyst at TransitionZero, a London-based “climate analytics firm” – told Carbon Brief that despite its climate pledges, China “is considering adding another 200GW of coal-fired capacity by 2030”. She said that promoting “clean” coal technologies “is not expected to be aligned” with the nation’s pledge of achieving carbon neutrality before 2060. She noted that replacing a subcritical coal plant with an ultra-supercritical (USC) plant would see an efficiency gain of about 10% and an emissions reduction potential of 200 grams of carbon dioxide per kilowatt hour (gCO2/kWh). However, even with better performance, USC coal plants would still emit about 700-800gCO2/kWh, she noted, adding, “unless retrofitted with carbon capture and storage, these ultra-supercritical coal [units] are poorly suited for decarbonising China’s grid”. 
‘SHIFTING PRIORITY’: Commenting on the news, Li Shuo – senior global policy advisor at Greenpeace East Asia – told Carbon Brief: “Reviving China’s economy has clearly become a priority for the government since late 2021. Growth generated by trade and domestic consumption is sluggish. That is pivoting China’s economy back to heavy industries and infrastructure development.” He continued: “The coal approval and recently announced steel sector peaking timeline are prominent examples of the shifting priority. The climate momentum is waning. That’s a worrying development.” (Last week’s China Briefing assessed the new peaking target for the iron and steel industry.)
New guidelines raise targets for ‘energy-intensive’ industries
WHAT: China has raised energy-efficiency targets for 17 industries in a set of guidelines published last Friday. For the first time, the instructions have required those so-called “energy-intensive” industries to save energy, in addition to reducing pollution and cutting emissions, according to Shanghai Securities News. The document says that those industries should carry out the three tasks in “synergy” to maximise the benefits. 
WHO: The orders came from four top government agencies which overlook a wide range of affairs, including the economy, energy, environment and industrial development. They are the state economic planner, NDRC, the state energy planner, NEA, the Ministry of Ecology and Environment and the Ministry of Industry and Information. The 17 industries include some of the country’s top carbon dioxide (CO2) emitters, such as oil refining, coal-to-chemicals, cement, iron and steel, construction and non-ferrous metals smelting.
TARGETS: The guidance uses two targets to guide the industries to increase their energy efficiency: a must-achieve “baseline” target and a stricter “benchmark” target. Although those targets are not new – they were set by the four government agencies last November – the latest guidance clarifies the portion of each industry that should meet these targets by 2025. Across all 17 industries, the required portions are a leap from the industries’ current situations. For instance, the instructions command that 30% of the production capacity of the iron-smelting and steel-smelting sector should beat the “benchmark” target and “virtually” all should meet the “baseline” target by 2025. In comparison, as of the end of 2020, only 4-6% the industry’s capacity had met the then “benchmark” targets depending on the production processes and “around 30%” had failed to meet the then “baseline” target. The guidelines say that authorities should encourage and guide companies to meet the “benchmark” targets and fast-track the phaseout of those which fail to meet the “baseline” targets by the deadline.
SIGNIFICANCE: Mao Tao – a department director at the Ministry of Industry and Information – told Shanghai Securities News that the guidelines have set a higher bar for the production processes of the targeted industries. He explained that the phrase “reducing pollution and lowering emissions (减污降碳)” had repeatedly appeared in important meetings and government documents over the past year or so. But he said that the new guidelines added the phrase “conserving energy” (节能) in front of the existing order, signifying “higher requirements” for the decarbonisation of those industries. The South China Morning Post reported that the guidance “will spur industry consolidation”, citing “analysts”. The newspaper said analysts expected “the biggest players to gain market share from the phasing out of the weakest players”.
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