Low-Carbon Transition Paths of Coal Power in China’s Provinces under the Context of the Carbon Trading Scheme

Abstract

The importance of coal power in maintaining the security of the national power supply and the stability of the grid is irreplaceable for China at present, as was reflected in the “power shortage” event of 2021. To achieve the goal of carbon neutrality, the low-carbon transition paths of coal power for each province were analyzed in the context of China’s emission trading scheme (ETS). The prospect and importance of coal power was preliminarily analyzed first. Following the “bottom-up” direction, the real option method was used to establish decision models for investing in carbon capture, utilization and storage equipment (CCUS) and eliminating high carbon-intensive units. Results showed that Inner Mongolia will first adopt CCUS in 2037 and the thresholds can be met in all provinces before 2050. However, the ETS will not lead to the elimination of coal power during the studied period. Combined with an evaluation of the development potential of coal power, four transition paths were distinguished for Chinese provinces. Considering that China’s ETS is in the developing stage, its full potential for stimulating the low-carbon transition of coal power was further discussed. On this basis, several policy implications were provided.