In May 2019, China’s National Energy Administration (NEA) loosened restrictions on new coal power plant construction. This gave eight provinces the green light to build new coal-fired generation capacity. Because of the increasingly uncertain value proposition of new coal power generation, even investments that pass the NEA’s three-pronged warning system may not be in China’s long-term national interest. New investments in coal generation capacity create asset, institutional, and environmental risks. The Regulatory Assistance Project concludes that strengthening existing measures and continued implementation of China’s policy directions in three areas:
- Electricity planning and investment,
- Electricity markets, and
- Environmental regulations will reduce those risks.
This policy brief highlights specific measures that policymakers can take to reduce risks and achieve China’s longer-term energy and climate goals.