New Coal Power Approvals Drop Sharply as China Edges Toward Peak Coal
Fewer Coal Plant Permits Amid Growing Clean Energy Footprint
Recent data show that China’s approvals for new coal-fired power capacity have fallen to one of the lowest levels in several years. In 2025, just 41.77 GW of new coal capacity was approved in the first nine months — a marked decline from previous years.
This slowdown suggests that the country may be approaching its peak coal era. With renewables — wind, solar and other clean sources — growing rapidly, the pressure to issue more coal-power permits is decreasing. Large-scale coal units still dominate new permits, but the pace has clearly slowed.
The Shifting Macro-signal in China’s Energy Policy
The decline in coal approvals is not just a statistical blip. It may mark a structural pivot: from coal-led growth to a more diversified, cleaner energy mix. Analysts now consider 2025 as a possible turning point where China moves from expansion of coal toward consolidation, renewables integration, and possibly coal phase-down.
If this momentum holds, it could shorten the window of coal’s dominance and reinforce China’s commitment to long-term decarbonization — especially if combined with increased investment in renewables and grid upgrades.
What the Decline in Coal Approvals Implies for China’s Power System and Emissions Trajectory
Emissions Peak within Reach as Coal Curbs Tighten
Cutting back on new coal plants reduces the risk of “stranded assets” — coal power stations that might remain idle or underused as clean energy scales up. This helps align China’s power capacity with its ambitions for peak emissions and eventual net-zero targets.
A shrinking pipeline of coal plants also eases pressure on air quality, public health, and climate goals. If paired with aggressive renewable deployment and energy-efficiency measures, this shift could support a sustained decline in carbon intensity of China’s power sector.
The Challenge of Balancing Demand, Energy Security and Clean Transition
Despite declining approvals, coal still plays a critical role in China’s energy security — especially in regions where grid flexibility or renewable intermittency remain challenging. The presence of large, dispatchable coal units may serve as a buffer during peak demand or when renewables underperform. That reality complicates the transition: ensuring reliable supply while reducing coal’s footprint requires careful planning, storage, grid-management, and diversification.
Moreover, while fewer approvals reduce future coal growth, existing coal plants will still operate for decades. Decisions about retirement schedules, retrofit upgrades, and emissions controls will critically determine whether emissions fall or simply plateau.
Overcapacity in Waste-to-energy Incineration and What it Reveals about China’s Waste Management Strategy
Explosion of Incineration Capacity and Mismatch with Actual Waste Flows
China’s waste-to-energy sector expanded rapidly over the past decade. By 2024, the number of incinerators had grown dramatically, and the total capacity to burn municipal waste surged.
Yet the sector now faces a paradox: many plants are under-fed. Households and municipalities are producing less combustible waste — partly thanks to waste-sorting, recycling and shifting consumption patterns — which means many incinerators don’t get enough feedstock to operate at planned capacity. As a result, a large share of incineration capacity remains idle or underutilized.
This overcapacity points to a structural flaw: policy and investment planning assumed continuous or increasing waste generation, while real waste streams started to shrink. The consequence is a mismatch between infrastructure scale and real demand.
Financial Stress, Subsidy Drawdown and Systemic Strain on the Sector
Incinerators once benefitted from favorable subsidies, waste-disposal fees, and carbon-credit revenues under the former carbon-market rules. Since 2024, however, waste-to-power has become ineligible for carbon credits — and subsidies have been scaled back sharply.
As a result, many operators face revenue shortfalls. Some firms report hundreds of millions of yuan in unpaid subsidies and outstanding waste-disposal fees. These financial pressures have made the waste-to-energy business a less attractive investment, raising the risk of bankruptcies or shutdowns for smaller plants.
The overcapacity problem now threatens urban waste-management stability: if many plants close or run below capacity, municipal waste disposal could revert to landfills or informal dumping — a step backward for environmental goals.
How Coal Phase-down and Waste-Management Stress Intersect in China’s Low-carbon Transition
Parallel Shifts away from Traditional High-carbon Systems
China’s reduction in new coal-power approvals and the increasing dysfunction in waste-to-energy capacity both reflect a broader structural shift. In both sectors, the logic of massive infrastructure build-outs (coal plants, incinerators) is giving way to prioritizing efficiency, flexibility, and sustainability.
In the power sector, fewer new coal plants signal a turn toward renewables, grid upgrades, and cleaner energy supply. In waste management, overbuilt incineration capacity combined with lower waste generation suggests a shift away from predictable “burn-everything” systems toward more resource-efficient, circular economy approaches.
Environmental Implications and the Opportunity for a Circular Low-Carbon Economy
If China can leverage these cross-sector shifts, the environmental gains could be substantial. Reduced coal expansion limits future carbon lock-in; decreased reliance on waste incineration encourages waste reduction, recycling, and sustainable consumption; and combined renewable energy plus waste-reduction efforts could lead to cleaner air, lower emissions, and less environmental pollution overall.
This convergence aligns with global sustainability trends — and suggests that China may be quietly embracing a more systemic transformation rather than one-off sectoral reforms.
Institutional and Economic Pressures Shaping Energy, Waste and Environmental Policy in China
Policy Inertia, Market Signals and Infrastructure Overhang
The rise in incinerators and coal-power build-outs over the past decades was driven by strong policy incentives, subsidies, and rapid growth needs. But as economic growth slows, consumption patterns shift, and environmental pressure mounts, those incentives have weakened.
In waste-to-energy, subsidy cuts and carbon-credit removal have exposed overbuilt capacity. Many investors who took the early risks now confront debt and underuse. In energy, rising renewable penetration and emissions targets reduce the demand for new coal — but managing a just transition (energy security, jobs, regional economies) remains complex.
The Challenge of Managing Stranded Assets and Socio-economic Impacts
Coal plants approved in recent years risk becoming stranded if renewables scale and demand growth slows. Similarly, incinerators may suffer long-term underuse or financial collapse. Both scenarios carry economic risk: for energy companies, local governments, and communities reliant on these industries for employment and economic stability.
Policymakers face a trade-off: decommission or repurpose underperforming assets while ensuring social and economic stability. Redirecting resources toward renewables, recycling, circular economy industries, or green infrastructure could mitigate impacts — but requires coordination, planning, and investment.
The Emerging Opportunity for Green-industry Growth and Sustainable Investment
Simultaneously, the phase-down in coal approvals and waste-to-energy overcapacity could open space for green industries, recycling, renewable-energy infrastructure, circular-economy services, and clean-tech investment. As coal declines and incineration slumps, demand may grow for renewable power, waste-reduction infrastructure, material recovery, recycling, and sustainable consumption models.
If managed well, this transition could foster new jobs, tech development, and cleaner growth, aligning economic output with environmental sustainability.
Major Risks and Trade-offs during China’s Shift away from Coal and toward a Circular-economy Model
Risk of Energy Insecurity and Instability during Transition
Reducing coal-plant approvals and relying more on renewables increases pressure on grid stability, especially during peak demand or periods of low renewable generation. Unless China accelerates grid upgrades, storage deployment, and demand-management systems, there is risk of supply volatility — particularly in winter or extreme weather conditions.
Potential Collapse of Waste-to-energy Industry and Waste-management Backslide
If overcapacity leads to plant closures, there is a risk that waste-processing capacity will shrink, and waste that used to be incinerated may end up in landfills or dumped illegally — reversing progress in urban waste management and raising pollution and public-health concerns.
Economic Fallout for Workers, Firms, and Local Governments Tied to Coal or Incineration Industries
Communities and businesses built around coal power or waste incineration may face job losses, stranded assets and economic decline. Without proactive policy to retrain workers, redeploy capital, and encourage new green-economy investment, the social cost of transition could be substantial.
Risk of “Lock-in” of Inefficient or Polluting Infrastructure
If policy and market reforms lag, China could end up with a mix of under-used coal plants, idle incinerators, and growing renewable infrastructure — leading to fragmented energy and waste systems that are inefficient, costly, and environmentally problematic.
Effective governance, systemic planning, and transparent regulation will be critical to avoid such lock-in.
The Bottom Line
China’s recent slowdown in coal-power approvals and the simultaneous overcapacity crisis in waste-to-energy incineration reveal a deeper structural transition in how the country approaches energy, waste, and sustainability.
The decline in new coal permits suggests that the era of coal-driven growth may be ending, or at least pausing — opening space for renewables, clean energy investment, and lower-carbon supply systems. Meanwhile, the waste-incineration sector’s struggles highlight that infrastructure build-out alone is not enough: systems must evolve, waste flows must be managed, and policy incentives must adapt to changing social behaviours and environmental expectations.
This dual shift — away from coal expansion and away from waste-burning dependency — could pave the way for a new model of low-carbon, circular-economy development in China. Yet the transition carries risks: stranded assets, social disruption, potential environmental backslides, and energy-security challenges.
How China navigates these trade-offs — whether it invests in clean infrastructure, supports green-industry growth, and aligns policy with market signals — will determine whether this moment becomes a turning point for sustainable development, or a half-measured adjustment.
The next five to ten years will likely define the shape of China’s energy-waste-environment future: will the country move decisively toward a cleaner, more circular economy — or get caught between old infrastructure and new ambitions?
