The Future of Coal in China

Abstract

As the world’s largest consumer of total primary energy and energy from coal, and the largest emitter of carbon dioxide (CO2), China is now taking an active role in controlling CO2 emissions. Given current coal use in China, and the urgent need to cut emissions, ‘clean coal’ technologies are regarded as a promising solution for China to meet its carbon reduction targets while still obtaining a considerable share of energy from coal. Using an economy-wide model, this paper evaluates the impact of two existing advanced coal technologies—coal upgrading and ultra-supercritical (USC) coal power generation—on economic, energy and emissions outcomes when a carbon price is used to meet China’s CO2 intensity target out to 2035. Additional deployment of USC coal power generation lowers the carbon price required to meet the CO2 intensity target by more than 40% in the near term and by 25% in the longer term. It also increases total coal power generation and coal use. Increasing the share of coal that is upgraded leads to only a small decrease in the carbon price. As China’s CO2 intensity is set exogenously, additional deployment of the two technologies has a small impact on total CO2 emissions.