A Coal Cap in China's Power Sector Can Reduce Air Pollution and Harvest Economic Benefits
- Feb 17, 2015 11:00 pm GMT
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Luan Dong, China Coal Cap Project Assistant, China Climate and Energy Policy Program, Beijing
China’s power sector accounts for almost a quarter of the world’s total coal consumption, or as much as all the OECD countries consume together. Controlling China’s coal consumption – as Beijing has vowed in its most recent Energy Development Strategy Action Plan – requires the power sector to take significant measures to optimize its energy sources, using less dirty coal and more clean alternatives.
Conducted as part of NRDC’s China coal cap project, a new study by North China Electric Power University led by Assistant Professor Yuan Jiahai, lays out a pathway for capping coal consumption in which China’s power sector can not only reduce its emission of dust, SO2, NOx, and other air pollutants but, more critically, contribute to economic and social gains through decreased coal power investments and fuel costs and increased health benefits.
Such a pathway adopts aggressive targets in energy efficiency and renewable energy deployment and integration, as well as end-of-pipe pollution control measures. For end-use energy efficiency, the study calculated the energy saving potential of using more efficient lighting, generators, transformers, speed governors, home appliances, and ground source heat pumps at a total of 701 TWh in 2020 – an amount that would take the Three Gorges Dam over seven years to generate – and even larger in the future.
When determining energy sources for future electricity generation, the authors from North China Electric Power University designed two scenarios: a reference scenario reflecting high electricity demand with existing energy saving measures, and a coal cap scenario with lower electricity demand – a result of the additional energy saving measures mentioned above – and strict coal consumption control.
In the coal cap scenario, coal consumption in the power sector drops steadily after 2025, while nuclear, wind, and solar generation grows to fill the gap.
In the coal cap scenario, total coal consumption in the power sector peaks in 2025 – five years earlier than in the reference scenario – at a much lower volume of 1.45 billion tonnes of coal equivalent (tce), compared to 1.72 billion tce by 2030 in the reference scenario. The power sector’s coal consumption peak comes five years after the total national, all-sector coal consumption peak designed by the China coal cap project; this is because the decrease in coal consumption in the iron and steel, cement, building and other sectors through 2025 will exceed the increase in the power sector. More importantly, compared to these other sectors, power plants have more stringent pollution control standards and technology to burn coal more cleanly. So a later peak – effectively concentrating more of the country’s coal consumption in the power sector – makes sense in terms of reducing pollution.
When existing air pollution control regulations are effectively implemented – no new regulations required – such a coal cap scenario can significantly reduce dust, SO2, and NOx emitted by the country’s coal-fired power fleet (see graph below). Furthermore, the coal cap scenario also projects lower CO2 emissions from the power sector (nearly 900 million tons lower compared to the reference scenario peak), and lower stress on water resources in China’s coal-producing western regions: compared with the reference scenario, water consumption of six major western coal bases in the coal cap scenario is 57 million tons less in 2020, and 606 million tons less in 2030.
In the coal cap scenario, dust, SO2, and NOx emissions continue to decrease through 2030. Noticeably, the reduction for all three pollutants slow down after 2020, highlighting that by then end-of-pipe controls alone will be unable to further improve air quality, and absolute controls on coal consumption are needed. The power sector would also produce less carbon emissions and consume less water in China’s dry western regions.
Reducing power sector’s coal consumption means that new generation sources need to fill the gap. Between the reference and coal cap scenarios in 2030, China will need to install an additional 30 GW of hydropower (440 GW in total), 80 GW of wind power (430 GW in total), 30 GW of nuclear (190 GW in total) and 76 GW of solar power (376 GW in total, including concentrated and distributed PV and concentrated solar power), which will require a significant investment. Fortunately, the study finds that these investments in low-carbon power generation can be largely, if not entirely, offset by reduced investment in coal-fired power plants and fuel costs, and the health benefits gained from less pollution (see graph below). Between 2030 and 2040, for example, a coal cap policy will save enough in coal power plant and fuel investments to cover the cost of electricity generation and transmission from all sources, as well as the costs occurred when integrating distributed electricity sources – all calculated as the “additional costs” in the graph below – with additional economic and health benefits of about 648 billion yuan ($104 billion) to spare.
* Health benefits measured by avoided excess deaths from ischemic heart disease, stroke, chronic obstructive pulmonary diseases, and lung cancer, and are calculated at 140 yuan/ton of coal.
** Negative due to expected new investments in CCS and ultra-supercritical technologies to comply with CO2 emissions standards.
Forceful and effective policy measures must be in place to bring about these environmental and economic benefits, including a coal cap policy for the power sector that directs more investment to low-carbon energy sources. The authors also advocate for electricity market reform that creates an open and competitive system that encourages renewable energy development and reflects the true costs of power generation – including the costs of integrating and dispatching renewable sources – in electricity prices. An enabling institutional environment combined with supportive policies and technological innovations in energy efficiency, renewables, grid infrastructure, and a more efficient coal-fired power fleet will lead China’s power sector to benefit the environment, climate, and human health.
NRDC’s China Coal Consumption Cap Project brings together over 20 leading Chinese stakeholders, including government think tanks, research institutes, and industry associations, to develop a comprehensive roadmap and policy package for establishing and implementing a binding national coal consumption cap that aims to help China peak its coal consumption by 2020. To learn more, please visit the project website.