China's renewables surge drives dramatic drop in coal power permits

China is witnessing a marked shift in its energy strategy as the rapid deployment of renewable energy has led to a significant decline in coal power expansion. According to a new report by the Centre for Research on Energy and Clean Air and Global Energy Monitor, the country has slashed coal power permits by 83 percent in the first half of 2024 compared to the same period in 2023, highlighting China's ambitious climate goals and the growing capabilities of clean energy to meet national demand.

Renewables lead the way the way as coal takes a backseat 

The dramatic decrease in coal power permits is not just a random fluctuation but is closely tied to China's unprecedented growth in renewable energy — in 2023 alone, China added an impressive 293 gigawatts (GW) of new wind and solar power, nearly matching the total wind and solar capacity of the United States by the end of that year. 

With solar and wind installations expanding rapidly, China finds itself in a position to slow down its reliance on coal — traditionally the backbone of China's energy supply. In the first half of 2024, China granted permits for only 9 GW of coal power capacity, a sharp contrast to the more than 100 GW permitted annually in 2022 and 2023.

The rapid growth in renewables has also caused a significant drop in coal power generation, which decreased by 7 percent from June 2023 to June 2024. As renewables take on a larger share of the energy mix, the need for new coal projects is diminishing, leading to fewer proposals and a slowdown in construction. This is a marked contrast to the coal boom of 2022-2023, when over 100 GW of new coal power capacity was permitted annually.

Challenges persist 

However, despite the surge in renewables, coal is not yet being fully sidelined. While the reduction in coal permits is promising, construction began on over 41 GW of coal projects in the first half of 2024, nearly matching the total for all of 2022. 

The government's target to bring 80 GW of coal-fired capacity online in 2024 also suggests that coal will continue to play a significant role in the near-term energy mix.

The continued reliance on coal is partly due to the perceived need for energy security, especially following the 2021-2022 droughts that reduced hydropower availability. 

However, the report argues that China already possesses more than enough dispatchable capacity, including thermal, hydropower, and nuclear, to meet peak demand. The real challenge lies in enhancing grid flexibility and coordination to maximize the use of renewable energy sources and minimize the reliance on coal.

The road ahead

The report states that to truly capitalize on the momentum in renewable energy, China must address the challenge of phasing down its extensive coal power fleet. In order to meet long-term emission targets, China will need to accelerate the retirement of existing coal plants and consider canceling previously permitted projects.

Looking ahead, China's upcoming Nationally Determined Contributions (NDCs) and the 15th Five-Year Plan will be pivotal in shaping global energy trends by setting ambitious targets for coal reduction and renewable energy expansion.

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