New five-year plan for energy: long on system building, short on decarbonisation

Strengthening energy security underpins the 14th Five Year Plan for a Modern Energy System, which was published on Wednesday. 

Significantly, it had been released into the government system on 29 January, before the start of the war in Ukraine, a conflict that has profound implications for global energy supply.

Though coal, gas and oil all find their place in the plan, it does demonstrate ambition to expand non-fossil energy. It is also a blueprint for systematic reforms and technological innovation in preparation for deep decarbonisation.

To ensure energy security, it sets a target of building up a production capacity for all forms of energy of 4.6 billion tonnes of standard coal equivalent by 2025. It gets rid of the total energy consumption target (5 billion tonnes) set in the 13th Five Year Plan (FYP). Setting a target for capacity rather than actual production points to a greater emphasis on ensuring there are reserves for times of need. And the removal of the total energy consumption target is in line with recent policies to liberate renewables from rigid energy quotas and free up space for energy consumption needed for economic growth.

The plan is notably ambiguous on coal. There are no limits for its production, consumption or power generation capacity. This corresponds to the plan’s language of “strengthening coal’s role as energy security guarantee… and the regulating role of coal power in the power system”. 

In the next five years, coal power plants in China will be built or retrofitted as flexible, rather than baseload, power sources to help regulate the fluctuations of renewables. The plan says that by 2025 around 24% of all power generation capacity (3,000 GW) will be “flexible power sources”, and at least 200 GW of existing coal power will undergo flexibility retrofits. Rapid ramping up and down of coal power generators will dramatically increase coal consumption per unit of electricity generated. And notably, the new plan has eliminated the control on the efficiency of coal power generation in the 13th FYP.

For the first time, the plan sets a target for non-fossil energy in total power generation (39%). But that is said to be less ambitious than what the market has anticipated, and could be just a minimum for reaching the target of 20% non-fossil energy in the energy mix. Moreover, the plan doesn’t specify how much of that will come from wind and solar, although it does say their expansion shall be accelerated.

Rather than creating strong short-term decarbonisation targets, the plan is more concerned with building up a system ready for a low-carbon future, a system flexible and smart enough to accommodate a large amount and proportion of renewables. 

There are new targets created for increasing the percentage of the economy that is electrified, widely deploying power storage and adopting more robust demand-side response mechanisms involving big electricity users. 

Read China Dialogue’s earlier article on how China is trying to find a place for coal in a decarbonising power system.