Coal will continue to play a crucial role in ensuring China's energy security for the foreseeable future. In pursuit of its 2030 carbon emissions peaking target, China aims to establish a clean and efficient utilization system covering the entire coal industry chain by 2030.
Key Areas for Coal Usage:
- Coal Power: Over the next three years, coal power plants will undergo technology upgrades through biomass co-firing, green ammonia co-firing, and Carbon Capture, Utilization, and Storage (CCUS). By 2027, carbon emissions per kWh from upgraded projects are expected to be reduced by 50% compared to 2023 levels, approaching the current emissions level of gas-fired power plants.
- Coal-to-Chemicals: Policies promoting coal-to-liquids and coal-to-gas development have become more aggressive, with a new emphasis on accelerating the development of strategic bases for these technologies. However, in the short term, the focus remains on strategic reserves and technology demonstrations, keeping overall capacity relatively modest. Since October 2024, two major coal-to-liquids demonstration projects in Xinjiang have commenced or resumed operations, with a combined capacity of 5 million tonnes/year.
- According to coal-related policies since 2024, China's mid-term approach towards the coal industry is to enhance clean and efficient utilization at all stages. The country will strictly control coal consumption during the 14th FYP period (2021-2025) and gradually reduce usage during the 15th FYP period (2026-2030). Simultaneously, China will enhance its coal reserve capacity.
Source: China's NBS, GL Consulting
Note: *Primary electricity includes hydropower, solar photovoltaic, wind power and nuclear power, etc.
Mtce stands for million tonnes of standard coal equivalent
Source: OilChem, GL Consulting
The above content is the major conclusions and highlights extracted from China (Energy Transition) Policy Perspective, a monthly report that focuses on the evolution of China's energy transition through deep analysis into China's volatile yet policy-driven energy market. Click to request for a full version.
