China’s state-owned enterprises (SOEs) are investing in low-carbon sources and helping push the country’s energy transition towards a “critical turning point” where coal power starts to decline, a new report finds.
The report, by thinktank Ember, finds that, in the decade to 2020, central government-controlled power companies (central SOEs) had increased their wind and solar capacity nearly five-fold, surpassing 200 gigawatts (GW).
By 2022 – the most recent data available in the report – central SOEs accounted for about 40% of China’s installed solar capacity and 70% of its wind capacity.
Together with local government-controlled energy firms (local SOEs), these companies have made a “significant contribution” to shrinking coal’s share of China’s electricity mix, which has dropped from more than 70% in 2000 to less than 60% in 2023.
Moreover, coal is contributing less to meeting China’s rising electricity demand, the report says. From 1991-2000, 85% of the incremental electricity demand was met by coal, while in 2011-2020 this figure dropped to only 47%.
The report adds that, if current trends continue, coal power in China “will being to decline in absolute terms”, a turning point that could trigger a reduction in carbon dioxide (CO2) emissions from the country’s electricity sector – and its emissions overall.
While SOEs’ diversification strategies have reduced their reliance on coal, however, the report says that these entities remain closely bound up in the “coal-electricity ecosystem”.
As such, the turning point away from coal power could trigger “potential tensions and conflicts” – particularly in coal-reliant regions of the country – that will need to be addressed in order for China’s energy transition to continue.
The transition journey of SOEs
SOEs are organisations set up to carry out commercial activities on behalf of the government.
They play a “crucial role” in China’s economy, particularly in key sectors, such as energy. According to the World Bank, SOEs accounted for 23-28% of China’s GDP in 2017.The leading nine power-sector SOEs are dubbed as “five bigs and four smalls” (五大四小). Collectively, these firms control more than half of China’s electricity generation capacity, as shown in the figure below.
Power-sector SOEs are particularly dominant in terms of the “coal power market (煤电市场)”, Ember notes, with private capital only accounting for a 5% share.
This gives power-sector SOEs a key role in China’s energy transition.
In addition, as a hybrid of corporate organisation and government ministry, SOEs’ development plans closely follow the central government’s overall blueprint.
Their governing body, the state-owned assets supervision and administration commission (SASAC), issued a “guiding opinion” mandate for SOE’s energy transition in 2021, after president Xi Jinping declared the “dual carbon” goal in 2020.
(The “dual carbon” goal is to peak emissions before 2030 and become “carbon neutral” before 2060. Read Carbon Brief’s China country profile for more detail.)
The mandate says that in order to “lay a solid foundation for achieving carbon peak” by 2030, SOEs should “incorporate over 50% of renewable energy in their generation capacity mix by 2025”.
Another recent report, by thinktank Climate Energy Finance (CEF), finds that the “five big” SOEs have poured tens of billions of yuan (billions of dollars) into the buildout of renewable energy, since this document was issued.
With capital expenditure being aligned with energy diversification goals, CEF says all “five bigs” already met the SASAC target in 2023.
Ember’s study on central SOEs finds their wind and solar capacity increased nearly five-folds since 2011, surpassing 200GW in 2020, roughly equivalent to the total installed capacity of Germany.
In 2022, central SOEs accounted for about 40% of China’s solar capacity and 70% of the wind capacity, adds Ember, leading China to approach “a critical turning point in its transition towards a clean electricity future”.
The Ember report says if current trends in energy transition continue, coal power will “begin to decline in absolute terms” – a similar conclusion to recent Carbon Brief analysis.
Pushing down coal’s share
Coal’s share of China’s electricity generation is declining. As shown in the figure below, coal’s share (black) dropped from nearly 80% in 2000 to about 60% in 2023.
(It fell further still, to a record-low 53% in May 2024, according to Carbon Brief analysis.)
Meanwhile, the combined share of wind (dark green) and solar (light green) grew from about 4% in 2015 to almost 16% in 2023, says Ember.
In addition, the role of coal in meeting the growing electricity demand is diminishing, as shown in the figure below.
Ember finds about 85% of the incremental electricity demand from 1991-2000 was met by coal (black), falling to 76% in the decade to 2010 and only 47% in the decade to 2020.
The contribution of renewable energy (green), including wind, solar, hydro, bioenergy and other sources, steadily increased over the same time period.
In 2023, China’s demand for electricity grew 6.7% compared to the previous year – higher than the average annual demand growth of about 6% between 2013 and 2022.
Ember says that, although hydropower decreased by about 59 terawatt hours (TWh) in 2023, wind and solar met 46% of the increased demand, followed by bioenergy and nuclear.
“If hydro had remained at 2022 levels, non-fossil fuel generation would have met more than half of the demand increase in 2023, further pushing coal power out of the generation mix,” adds the report.
(Carbon Brief’s previous analysis shows the decline of hydropower was due to a series of droughts in 2022/23.)
Muyi Yang, author of the Ember report, tells Carbon Brief that the surge in low-carbon energy means an “absolute decline” in coal power is “very likely to soon begin”.
Yang also thinks “the recent announcement of the ‘coal power low-carbon retrofitting action plan’ signifies that China has started to prepare for the new era of coal generation”.
The action plan, released by China’s top planner National Development and Reform Commission (NDRC), is allocated to a number of SOEs, including the “five bigs”.
However, the Shuang Tan newsletter says the action plan is designed “to test the selected technologies at a few carefully chosen [SOE] coal power units”. Moreover, since the action plan did not set a “performance target”, it is “unlikely to drive industry-wide transformation”, adds the newsletter.
‘Crossing the river by touching the stones’
Despite the progress to date in diversifying China’s electricity supply – and the business models of the country’s power sector SOEs – major challenges lie ahead, Ember says.
A number of central SOEs also have major interests in other parts of the coal ecosystem.
Central SOE China Shenhua, for example, spent 8bn yuan (about $1bn) on coal mining development and exploration, and only 824m yuan (about $113m) in hydropower in the first half of 2023, according to a report by CEF.
Nevertheless, Shenhua parent company CHN Energy’s overall portfolio still complies with SASAC’s general energy diversification goal, CEF says. This is largely due to another subsidiary – Longyuan Power – being one of the largest wind power companies in China.
The Ember report explains:
“This [coal-electricity] ecosystem is characterised by extensive cross-industry and cross-ownership linkages encompassing coal production and supply, logistics, the coal chemical industry, power generation and the manufacturing of related equipment and facilities. Consequently, an absolute decline in coal generation will inevitably impact other interconnected and interdependent segments of this system, with far-reaching ramifications, particularly within the broader socio-economic assemblages that have evolved around it.”
“Reduced coal generation presents substantial challenges”, says Yang, “economic restructuring, including switching to ‘green industry’, will require comprehensive support”.
The challenges are more significant in major coal-producing provinces, such as Shanxi. In 2022, coal and its related industry contributed 80% of tax revenues and provided 55% local jobs for the province, according to Chinese financial media outlet Caixin.
Ember says that this illustrates why diversification of power-sector SOEs is, on its own, insufficient. It explains:
“Diversification strategy by large generation SOEs is useful, as it weakens the incumbent utilities’ commitment to the existing coal-dominated power system, making deeper transition…possible. However, its effectiveness begins to wane when considering its inability to adequately address the tensions and conflicts that may arise from the absolute decline in coal power and the wider impacts associated with it.”
The report continues by suggesting that coal-dependent regions will also need to develop tailored diversification strategies to address the “unique challenges” they face. It says:
“By diversifying the economic base of these areas, a smoother transition can be facilitated, mitigating the adverse effects on local communities and workers who have long relied on the coal-electricity sectors.”
Yet challenges remain, Ember says, because clean-energy industries may not bring benefits to the same regions that have long relied on coal.
Yang says “the key issue here is not about the magnitude of the benefits [of renewable energy], but their distribution”. He adds:
“Many modelling studies have confirmed that the clean energy transition is beneficial and can create growth and jobs, more than sufficient to offset reduced economic activities from conventional fossil fuel supply chains.
“By leveraging their substantial resources and infrastructure, SOEs can lead the development and integration of renewable energy projects, enhance grid stability, and ensure a reliable energy supply.”
Finally, the report suggests that China takes the path of “gradualism and experimentation” to navigate the challenges inherent in the transition away from coal. It says:
“Often likened to ‘crossing the river by touching the stones’, these approaches are widely recognised as pivotal to China’s economic success. They allow for careful testing and adjustment of strategies and policies, facilitating the adaptation of broader policy directives into pragmatic, localised actions tailored to specific circumstances. Additionally, they help promote consensus-building among a diverse range of stakeholders by incorporating iterative improvements based on practical experience and feedback.”
The post ‘Critical turning point’ for coal poses risks for China’s state power firms, says report appeared first on Carbon Brief.
‘Critical turning point’ for coal poses risks for China’s state power firms, says report
The country’s most valuable utility didn’t like offshore wind. But a proposed merger with Dominion would include a $11.4 billion project in Coastal Virginia.
A utility megamerger announced this week would mean that the largest offshore wind project in the United States would be owned by the same company that already is the nation’s leading developer of renewables and battery storage.
NextEra Energy to Join the Offshore Wind Club, But Does It Matter?
Australia’s new environmental standards are supposed to protect wildlife. Right now, they don’t.
We have one of the worst mammal extinction rates in the world. We’ve already lost 39 species, including the Christmas Island Shrew and the desert rat-kangaroo, while iconic species like the Hairy-Nosed Wombat, Pygmy blue whale and Swift Parrot continue to slide towards extinction. Forests are still being bulldozed at an alarming rate. Rivers and reefs are under serious pressure.
Fixing this sorry state of affairs was why the Federal Government promised to fix Australia’s broken national nature laws—a promise that culminated in the nature law reforms passed late last year.
A big part of these reforms is the creation of new “National Environmental Standards” — rules intended to guide decisions on projects that could damage nature.
But the Government’s latest draft standards—open for consultation until May 29th—fall dangerously short.
Instead of setting clear environmental guardrails, the draft rules risk making it easier for damaging projects to get approved, while nature continues to decline. Legal experts are warning that unless the standards are changed, they could weaken protections rather than strengthen them.
So what are these standards, exactly?
The new standards are a centrepiece of major reforms to the Environment Protection and Biodiversity Conservation Act (EPBC Act), which were passed late last year and are designed to fix a broken environmental regulatory system. They are meant to set clear rules for what environmental protection should actually look like.
In simple terms, they’re supposed to answer questions like:
- What measures should developers be made to put in place to protect threatened species?
- How do we ensure the most important habitats and natural places are not hacked away, “death-by-a-thousand-cuts”-style, from ongoing development proposals?
- When should a project simply not go ahead?
- What rules should states follow if they’re in charge of assessing development projects?
- How do we make sure nature is actually improving, not just declining more slowly?
If designed and implemented properly, these standards could become the backbone of strong, effective reformed nature laws.
But right now, they leave huge loopholes open.
The biggest problem: process over outcomes
The biggest problem with the draft standards is that they focus too heavily on whether companies follow a process—not whether nature is genuinely protected in the end. That might sound technical, but it has real-world consequences.
Imagine a company wants to clear critical habitat for a threatened species. Under a strong system, the key question should be: Will this project cause unacceptable or significant environmental harm?
But under the current draft standards, if the company follows the required steps and paperwork, the project could still be considered acceptable — even if the damage to nature is clear.
This is deeply ineffective. Destruction that checks bureaucratic check-boxes is still destruction. The standards should enforce the protection of nature—not just the ticking of procedural boxes.
A smaller definition of habitat could leave wildlife exposed
Another alarming change in the draft standards is the narrowing of how “habitat” is defined, which could have serious consequences for wildlife protection.
Habitat is more than just the exact spot where an animal is seen sleeping, nesting or feeding today; we need to think more holistically about habitat as a connected network of ecosystems that species may rely on to survive, including breeding grounds, migration corridors, areas used during drought or fire, and places they may need to move to as the climate changes.
But the draft standards effectively shrink the areas considered important enough to protect by defining habitat as only very small areas that if destroyed would certainly send the species extinct, rather than habitat which maintains and restores healthy populations able to thrive well into the future.
For animals already under pressure from habitat destruction and climate change, protecting only the bare minimum is a dangerous approach. In practice, that could mean that places which are essential for threatened species to recover and survive long term are destroyed just because they are not classified under the standards as ‘habitat’—a lose-lose outcome for biodiversity and the Australian government’s nature protection goals.
Offsets are still doing too much heavy lifting
Australians have heard the promise before: “Yes, this area will be damaged — but it’ll be offset somewhere else.” In practice, environmental offsets have severely failed to replace what was lost.
You can’t instantly recreate a centuries-old forest. You can’t quickly rebuild complex wildlife habitat. And some ecosystems simply cannot be replaced once destroyed. Yet the draft standards still rely heavily on offsets rather than prioritising avoiding harm in the first place.
The standards must reduce their reliance on offsets, and instead prioritise actual habitat protection. Because once extinction happens, there’s no offset for it.
Australia cannot afford another backwards step on nature
The Albanese Government came to office promising to end Australia’s extinction crisis and repair national nature laws. But this will be a broken promise if the huge loopholes in the National Environmental Standards aren’t addressed.
Right now, Australia is losing wildlife and ecosystems faster than they can recover. Scientists have warned for years that incremental change is no longer enough.
Strong standards could help turn things around by:
- stopping destruction in critical habitat,
- setting firm limits on environmental harm,
- requiring genuine recovery for nature,
- and making decision-makers accountable for real outcomes rather than process.
If the Government locks in rules that prioritise process over protection, Australia risks entrenching the very system that caused the crisis in the first place.
What needs to change?
The Government still has time to fix the draft standards before they are finalised over the next month.
Greenpeace Australia Pacific is calling on the government to:
- ensure decisions are based on outcomes, not just process
- ensure that all important habitat is protected, not just narrow areas
- ensuring that death-by-a-thousand-cuts is avoided by considering the “cumulative impacts” of multiple projects in a region
- ensuring offsets are only used as an absolute last resort
Australians were promised stronger nature laws—not more loopholes. Australia’s wildlife cannot afford another missed opportunity.You can help ensure the Federal Government’s final standards put to parliament are as strong as possible by putting in a quick submission here.
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