Toward a Carbon-Neutral State: A Carbon–Energy–Water Nexus Perspective of China’s Coal Power Industry

Abstract

Carbon neutrality is one of the most important goals for the Chinese government to mitigate climate change. Coal has long been China’s dominant energy source and accounts for more than 70–80% of its carbon emissions. Reducing the share of coal power supply and increasing carbon capture, utilization, and storage (CCUS) in coal power plants are the two primary efforts to reduce carbon emissions in China. However, even as energy and water consumed in CCUS are offset by reduced energy consumption from green energy transitions, there may be tradeoffs from the carbon–energy–water (CEW) nexus perspective. This paper developed a metric and tool known as the “Assessment Tool for Portfolios of Coal power production under Carbon neutral goals” (ATPCC) to evaluate the tradeoffs in China’s coal power industry from both the CEW nexus and financial profits perspectives. While most CEW nexus frameworks and practical tools focus on the CEW nexus perturbation from either an external factor or one sector from CEW, ATPCC considers the coupling effect from C(Carbon) and E(Energy) in the CEW nexus when integrating two main carbon mitigation policies. ATPCC also provides an essential systematic life cycle CEW nexus assessment tool for China’s coal power industry under carbon-neutral constraints. By applying ATPCC across different Chinese coal industry development portfolios, we illustrated potential strategies to reach a zero-emission electricity industry fueled by coal. When considering the sustainability of China’s coal industry in the future, we further demonstrate that reduced water and energy consumption results from the energy transition are not enough to offset the extra water and energy consumption in the rapid adoption of CCUS efforts. However, we acknowledge that the increased energy and water consumption is not a direct correlation to CCUS application growth nor a direct negative correlation to carbon emissions. The dual effort to implement CCUS and reduce electricity generation from coal needs a thorough understanding and concise strategy. We found that economic loss resulting from coal reduction can be compensated by the carbon market. Carbon trading has the potential to be the dominant profit-making source for China’s coal power industry. Additionally, the financial profits in China’s coal power industry are not negatively correlated to carbon emissions. Balance between the carbon market and the coal industry would lead to more economic revenues. The scenario with the most rapid reduction in coal power production combined with CCUS would be more sustainable from the CEW nexus perspective. However, when economic revenues are considered, the scenario with a moderately paced energy transition and CCUS effort would be more sustainable. Nevertheless, the ATPCC allows one to customize coal production scenarios according to the desired electricity production and emission reduction, thus making it appropriate not only for use in China but also in other coal-powered regions that face high-energy demands and carbon neutrality goals.