Coal transitions in China’s power sector: a plant-level assessment of stranded assets and retirement pathways

This paper estimates the potential scale of stranded assets in the coal power sector in China under different policy scenarios. A number of factors are putting significant pressure on the coal-power sector: a recent investment bubble in new capacity, structural slowing in electricity demand growth, upcoming moves to liberalize electricity markets and introduce a carbon market, and continued support for renewable and low-carbon sources of electricity. Stranded assets in the Chinese coal-fired power sector are estimated at 90 billion USD2015 under the current policy trajectory (NDC-Style Scenario). This situation threatens to increase the political economy challenges of China’s electricity sector transition to a low-carbon system. This situation is not unique to China: other countries will also face coal-sector stress due to the competitiveness of renewables, and therefore managing existing coal power capacities needs to move to the forefront of climate and energy policy efforts.