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ID:
168653
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| Summary/Abstract |
China is currently pursuing electricity reforms that will create wholesale markets for electricity. Electricity markets hold considerable promise for facilitating China's transition to clean energy systems, but face obstacles. The most significant obstacle to market reforms is their potential financial impact on coal generation, which currently accounts for most of China's generating capacity. In this paper, we examine the impact of market reforms on coal generation in China, using Guangdong Province as a case study. We find that, in the near term, market prices are likely to lead to significant decreases in net revenues for coal generators relative to the current benchmark tariff, with 40%–60% of coal generation capacity unable to cover the cost of remaining in commercial operation. We estimate that existing coal generators in Guangdong had 94 billion yuan (US$14 billion) in outstanding debt in 2016, creating large risks for banks and raising questions about the potential impacts of electricity market reforms on China's financial industry. The impact of market reforms on coal generators creates two problems—transition and resource adequacy. The development of mechanisms for long-term resource adequacy provides a common solution to both of these problems.
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| 2 |
ID:
162320
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| Summary/Abstract |
Coal combustion to power China's factories, generate electricity, and heat buildings has increased continually since Chinese energy use statistics were first published in 1981. From 2013 until 2015, however, this trend reversed and coal use declined from 2810 million metric tons of coal equivalent (Mtce) to 2752 Mtce, leading to a levelling off of China's overall CO2 emissions. Some analysts have declared that China's coal consumption may have peaked. Preliminary data, however, indicate that coal consumption increased in 2017. To understand future near-term trends in China's coal consumption, we analyze a number of important drivers of coal use and find projected increases in electricity demand that cannot be met by other fossil-fuel or non-fossil-fuel electricity sources, as well as projected increases in coal use in light manufacturing, other non-industrial sectors, and for transformation. We find that these projected increases will lead to near-term growth in China's coal use to levels of approximately 2900 Mtce to 3050 Mtce in 2020, with associated increases in energy-related CO2 emissions.
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