Natural gas in China’s power sector: Challenges and the road ahead
This insight discusses the latest developments in China’s gas-fired power generation, the main challenges, and the road ahead both in the context of the upcoming 14th Five-Year Plan and the recently announced 2060 carbon neutrality goal. It argues that expensive imported gas, costly turbine technology, and the lack of fully competitive electricity markets have been the main obstacles limiting the role of natural gas in China’s power sector. Nevertheless, gas-fired power capacity could see faster growth in the 14th Five-Year Plan, likely adding 40 to 50 GW of new capacity by 2025. The buildout will boost the gas fleet to 140–150 GW, up 50 per cent from current levels, suggesting gas use in the power sector could also double, reaching 75–80 bcm by 2025. The policy framework will likely become more supportive for gas in power, as the government looks to limit coal consumption—in line with its goal of peaking emissions before 2030—and the rising needs of power system flexibility driven by renewables integration. Looking further ahead, however, China’s 2060 carbon neutrality pledge would also mean the country needs to curb all fossil fuel consumption, including that of gas.