China's Two Sessions reiterates commitment to pollution control

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The topic of environmental protection continues to feature heavily in the Two Sessions today. Wood Mackenzie experts share some initial thoughts.

Principal consultant Frank Yu said: “We expect the government to reaffirm commitments to environmental targets, but we may see some variation at the provincial level. For example, those provinces that have met or exceeded clean sky targets may see some easing of the pace of reform. For other provinces/regions where air pollution remains a challenge e.g. areas in the Fenwei plain region, we expect that policies may be accelerated. Economic growth and stimulus is the priority which may therefore see some diversification of strategies. But this doesn’t mean that China is simply going to fall back on more coal, and where coal-fired power is approved it will be required to use ‘clean coal’ technology.

China is committed to electrify its economy, in part to improve energy security. Coal capacity will continue to rise and is critical to keeping electricity prices low. Coal currently remains at around 65% of the generation mix. So new capacity will move ahead – we see 120-130 GW of new capacity approvals over the next five years, with capacity peaking around 2025 at around 1,200 GW. But greater environmental scrutiny will be applied and tightening emissions regulations.”

Research director Alex Whitworth said: “Development of the renewables sector is key to energy security in the long term. Subsidies for wind are coming down but State Grid is planning for higher capacity additions than we had been anticipating 29 GW of wind and 39 GW of solar, about 4-5 GW higher than Wood Mackenzie expected. With much of the manufacturing localised, there is limited supply chain risk.”