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

China's large generation state-owned enterprises (SOEs) have significantly diversified into renewable energy, contributing to a relative decline in coal power's share of the generation mix from over 70% in the mid-2000s to about 60% in 2023. While this strategy has accelerated the transition, the report warns that China is approaching a critical turning point where coal generation may enter an absolute decline, potentially peaking around 2025. The authors argue that current diversification efforts are insufficient to address the systemic risks to the 'coal-electricity ecosystem,' which includes coal production, logistics, and chemical industries. They propose a 'beyond-diversification' approach that emphasizes a just transition for coal-dependent regions, comprehensive economic restructuring, and coordinated stakeholder bargaining to mitigate social tensions and the rural-urban divide.

• Large generation state-owned enterprises (SOEs) are central to China's energy transition due to their control over the majority of coal power assets. By 2022, central generation SOEs held approximately 70% of the country's wind capacity and 40% of its solar capacity.
• Coal power's relative share in China's generation mix has decreased from over 70% in the mid-2000s to approximately 60% in 2023, driven by the rapid expansion of non-fossil fuel generation.
• The transition to clean energy is accelerating; the share of electricity demand growth met by non-fossil fuels rose from 15% (1991-2000) to 47% (2011-2020). In 2023, wind and solar combined to produce more electricity than hydropower for the first time.
• China is nearing a critical turning point where coal power will likely enter an absolute decline. IEA forecasts suggest coal generation may peak around 2025, with non-fossil fuel generation meeting nearly all incremental demand between 2024 and 2026.
• A 'beyond-diversification' strategy is required because the absolute decline of coal power will disrupt the 'coal-electricity ecosystem,' which includes interconnected industries such as coal production, supply, logistics, and the coal chemical industry.
• A just transition must extend beyond direct coal-electricity workers to address broader socio-economic risks in coal-dependent regions, such as the rural-urban divide and slow improvements in living standards, as these regions may not have a competitive advantage in the new clean energy economy.

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} }