China’s top five independent power producers (IPP) have set targets to peak carbon emissions by 2025 or earlier. However, analysts expect them to struggle to meet such ambitious goals. These companies are China Energy Investment Corp (CEIC), Datang Group Huadian Group, Huaneng Group, and State Power Investment Corp (SPIC). Together, they make up 44% of 2.2 TW of China’s overall installed generating capacity.
According to fata from the National Energy Administration, the power sector contributed to 41% of China’s CO2 emissions. Hence, the industry has a crucial role to help Beijing achieve its pledge to become a carbon-neutral economy by 2060. However, analysts said these five companies and other smaller peers had no clear plans to phase out coal-fired power plants.
A report by Global Energy Monitor showed China commissioned 38.4 GW of new coal-fired power capacity in 2020, compared to 37.8 GW decommissioned in other parts of the world. According to the report, China accounted for 76% of global coal-fired power generation capacity added last year. By comparison, India, in the second spot, only added 2 GW of capacity, just 5.2% of China’s capacity expansion. A separate industry survey showed that the majority of active coal plants in China would not retire until 2040.
At the same time, renewable power has higher costs related to long-distance power transmission and generation intermittency. China’s north and northwest have better resources for utility-scale solar and wind projects. However, China’s economic development and energy demand are concentrated in the east and southeast. Coal-fired generation also provides proven solutions to deal with peak load shortages.
Green bond issuance and other green financing are becoming increasingly popular to reduce the cost burdens. The Big 5 companies have issued CNY9 billion ($1.4 billion) worth of carbon neutrality bonds on Shanghai Stock Exchange. However, analysts at investment bank CICC said China’s decarbonisation push still requires CNY60 trillion ($9.2 trillion) until 2060.
