Coal has been the impetus behind China’s economy and greatly contributes to China’s greenhouse gas emissions. Despite the fact that there has been a rise of other energy sources slowly replacing coal, the government has built additional coal plants. This prompted the government of China to ban the building of new coal plants in places with a surplus power supply.
The National Development and Reform Commission (NDRC), China’s primary economic planner, emphasized that there is an issue arising with excessive production of coal supply. There has been a lower demand, resulting from a decline in industrial growth.
In the plan, China has banned the construction of new coal-fired power stations in many regions of the country. Also, the building of government-approved plants will be postponed until 2018.
Using electricity from fossil fuels sources is the biggest reason for the rise in carbon emissions. Scientists say that this is one reason for the constant increase of the earth’s temperature. Worldwide leaders collaborated in New York and signed the recent Paris climate accord, with goals of halting and decreasing carbon emissions. This can potentially keep global temperatures below two degrees Celsius, or 3.6 degrees Fahrenheit.
As the largest producer of greenhouse gases through its use of fossil fuels, China is on the path to reaching a peak in carbon emissions by 2030. Fortunately, this goal seems feasible as factors such as an economic slowdown and implementation of government jurisdiction reduced the number of coal-fired power plants near big cities. Also, great sums of money used in wind and solar energy decreased coal use in China in 2015.
Projects already under construction are still being built. Even though the government has placed a ban on new coal projects and it is positively enforced, the real reason for the policy is short-term economic effects.
China is encountering an economic slowdown, demonstrated by falling electricity demands, with the construction of wind turbines and solar panels replacing coal plants in the market.
Nevertheless, in China’s greatly regulated energy market, local governments have driven the production of new power plants that have continued to create jobs and expand the tax base. Through the central government’s policies, the country is attempting to stop the creation of power plants that won’t even be used that much if they are built.
The policies proclaim that 13 provinces and regions, including primary producers such as Shanxi and Inner Mongolia, are to curtail the construction of new coal plants, postponing the projects until 2017.
Fortunately, the government proclaimed the closing of coal-fired plants that utilized older technology. This completely differs from the United States, which is actually the world’s second greatest producer of carbon emissions. Under Obama’s policies, it has become extremely hard to build new coal-fired plants.
The Energy Information Administration concluded that almost 14 gigawatts of coal-fired capacity were put to rest in the United States. Simultaneously, there is the construction of six additional coal-fired plants that is planned through the next five years, with a total limit of less than one gigawatt.
In China, as coal prices decrease, the big state-owned electricity generators gain more profits as the highly regulated electricity prices have not fallen.
As a result of the political influence of the coal market and the ever decreasing price of coal, larger percentages of wind and solar-generated electricity sources are not being built. In order to fight this issue, also known as curtailment, the Chinese government has implemented a command for operators of coal-fired plants to pay operators of wind and solar plants whose electricity is not used.
The problem is that worldwide, the coal industry is in excessive supply, and the ban on additional coal plants worsens the situation. The country may export its excess coal supply. Consequently, the glut of coal supply may drag down the standard price index.