Thinking beyond diversification: Next step in China’s coal power transition

This report by Ember examines the role of large state-owned enterprises (SOEs) in China's transition from coal power to renewable energy. It argues that while a strategy of diversification into renewables has successfully led to a relative decline in coal's share of the generation mix, China is approaching a critical turning point of absolute coal power decline. The authors advocate for a 'beyond-diversification' approach to manage the socio-economic impacts on the interconnected coal-electricity ecosystem and coal-dependent regions.

• Large generation state-owned enterprises (SOEs) are central to China's energy transition because they own and operate the majority of the country's coal power fleet. Central generation SOEs have aggressively diversified into renewables, accounting for approximately 70% of China's wind capacity and 40% of its solar capacity by 2022.
• China has seen a relative decline in coal power, with its share of generation falling from over 70% in the mid-2000s to approximately 60% in 2023. This is driven by a rapid increase in non-fossil fuel generation, which surpassed thermal capacity for the first time in 2023, constituting more than half of the total installed capacity.
• The transition to clean energy is accelerating. The share of electricity demand growth met by clean electricity rose from 15% (1991-2000) to 22% (2001-2010) and then to 47% (2011-2020). In 2023, wind and solar combined to produce more electricity than hydropower for the first time.
• China is approaching a critical turning point where coal generation may enter an absolute decline. IEA forecasts suggest that non-fossil fuel generation could meet almost all incremental electricity demand between 2024 and 2026, with coal generation potentially peaking around 2025.
• A 'beyond-diversification' strategy is necessary because the absolute decline of coal power will disrupt the 'coal-electricity ecosystem'—a network of cross-industry linkages including coal production, logistics, the coal chemical industry, and equipment manufacturing.
• A just transition requires more than green industrialization, as coal-dependent regions may not possess a competitive advantage in the clean energy economy. Strategies must address broader socio-economic issues, including the rural-urban divide and the need for worker reskilling and economic restructuring in mining cities.

APA

Yang, M., Sun, Y., & Shi, X. (2024). Thinking beyond diversification: Next step in China’s coal power transition. Ember. https://ember-energy.org/app/uploads/2024/08/Report_Thinking-beyond-diversification_Next-step-in-Chinas-coal-power-transition.pdf

Chicago

Yang, Muyi, Yongping Sun, and Xunpeng Shi. Thinking beyond diversification: Next step in China’s coal power transition. Ember, 2024. https://ember-energy.org/app/uploads/2024/08/Report_Thinking-beyond-diversification_Next-step-in-Chinas-coal-power-transition.pdf.

Wikipedia

{{cite report |last1=Yang |first1=Muyi |last2=Sun |first2=Yongping |last3=Shi |first3=Xunpeng |title=Thinking beyond diversification: Next step in China’s coal power transition |publisher=Ember |date=5 August 2024 |url=https://ember-energy.org/app/uploads/2024/08/Report_Thinking-beyond-diversification_Next-step-in-Chinas-coal-power-transition.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{yang2024thinking, author = {Yang, Muyi and Sun, Yongping and Shi, Xunpeng}, title = {{Thinking beyond diversification: Next step in China’s coal power transition}}, institution = {Ember}, year = {2024}, month = aug, url = {https://ember-energy.org/app/uploads/2024/08/Report_Thinking-beyond-diversification_Next-step-in-Chinas-coal-power-transition.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }