China: renewables now as cheap as coal

Source: World Economic Forum

Two things are critical to keeping the rise in global temperatures from pre-industrial times to less than 2 degrees C.  One is China.  The other is coal.

China is now by far the world's biggest emitter of CO₂, contributing about 1/3rd of all global emissions.  Unless it restrains its emissions and then starts to cut them, the world is finished. 

And, from the point of view of global warming (and pollution) the worst fossil fuel is coal.  We must build no more coal power stations, and we must as rapidly as possible close down those we already have.

So far, coal has still been cheaper than renewables in China.  But the gap has been rapidly narrowing.  However, the cost of subsidies has risen sharply too, and the central government has (temporarily?) limited subsidies.  So the fall in costs of renewables is vital to getting China to continue switching to them.

This piece from IEEFA is relevant on both counts:

China’s green light to build more coal-fired power plants probably won’t usher in a flurry of new construction as most policies and investments in the top energy user will tilt toward renewable sources.

More than 10 regions will be freed of their overcapacity tag in 2022, clearing a hurdle for them to resume building coal-fired plants. But many of the nation’s largest power companies are under a state drive to develop more clean energy projects, according to Morningstar Inc., which expects growth in coal-fired capacity to lag other sources.

“The profitability of coal-fired power plants is so low, there’s no incentive for them to build more,” said Morningstar analyst Jennifer Song. “China as a whole has set consumption targets for renewable energy sources. We can see those large power groups also have quotas to build more renewable projects.”

Businesses and governments are tracking China’s efforts to transform its energy mix as its massive scale could shape global trends and spur a faster transition toward renewable energy. In its battle against pollution, China has spent more on renewable energy than any other country and led a campaign to burn gas instead of coal. Yet it’s still pumping money at home and abroad into coal-fired generation, and it’s forecast by the International Energy Agency to continue to consume about half the world’s coal through 2023.

Data on Monday showed China’s investment during January-March in thermal power plants, which mostly consist of coal-fired generators, slumped 30 percent from a year earlier. In contrast, spending on hydropower and wind power projects rose 48 percent and 30 percent, respectively.

“Most of the capital expenditure planned by coal-fired power companies will be in renewable energy,” said Song Qiuyi, a Shanghai-based analyst at Capital Securities Corp., adding the latest assessment from NEA won’t change the situation.