At the moment, the energy news out of China is a deluge of reports and think pieces about the government's recently unveiled an extremely ambitious plan to become carbon neutral by 2060 - very big news from the nation that is responsible for a quarter of the world’s total greenhouse gas emissions. Beijing’s lofty rhetoric is backed up by the nation’s assertive investment and development of large-scale solar energy projects and what will soon be the world’s largest nuclear fleet. But at the same time that China is talking about getting its carbon footprint down to nothing, the nation is also returning to coal at a breakneck pace. Problematically for the country’s climate goals, its coal-fired power fleet is still quite young, and China is still adding capacity and has hundreds of more coal-fired plants that are already in the planning phase. In fact, China has already added 11.4 gigawatts of coal power capacity just in the first half of 2020, which accounts for more than half of the coal capacity added in the entire world in the same six months. Despite the climate-friendly rhetoric, “in the short term, China is still moving full steam ahead on coal,” reports Quartz. “its post-COVID stimulus spending on fossil fuels is three times larger than its spending on clean energy, including nearly $25 billion on coal power plants and even more on mining and processing.”
So what has prompted this return to coal and the overall energy ambivalence exhibited by China today? According to a report this week from Reuter’s “The Wider Image,” the nation’s pivot back to coal is fuelled by “energy security and economic fears.” China is plagued by diverging interests, and while Beijing is pushing for cleaner and greener energy, there is still a lot of support for fossil fuels.
"New coal plants are a way for provinces to support other industries like coal mining and heavy industry," Christine Shearer, coal program director at GEM, told Reuters. "You have a lot of entrenched coal interests in China and the central government has not reined them in, despite Beijing's strong support for clean energy."
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Ultimately, in China, the economy remains the top priority. Coal is an established and trusted industry in China, and there is a large degree of hesitance to rock the boat. "Beijing is reluctant to do anything that might slow economic growth, which is why you see the central government slapping the provinces on the wrist for all the newly permitted plants ... but not actually doing anything about them," Shearer went on to say.
These effects are only compounded by escalating geopolitical tensions in the region, which also serve to push people back toward the kind of energy industry they already know so well. “Amid growing geopolitical tensions, power projects fueled by domestic coal could also become more attractive because the government is keen to improve self-sufficiency and ease its dependence on foreign energy supplies,” writes Reuters. So far, China’s appetite for energy has uniformly outstripped its production capacity. The world’s second-largest economy is already the world’s single-biggest oil importer and is a net importer of coal as well, despite its sizable domestic coal reserves.
Adding to the nation’s anxiety about energy security and self-sufficiency is the history of “crippling power shortages” that rocked the country in 2011. Building on this experience, it is also a priority for local authorities to have a significant reserve of fossil fuels in case the rapidly changing energy landscape hits any snags.
If China has any hope of meeting its climate goals, or of reaching their expected peak emissions target in 2030, it will have to crack down on coal, regardless of the potential drawbacks. To do so, there will have to be a sea change in the nation’s attitude toward coal, and a more concerted effort to leave it behind and to enforce the policy that’s already in place to do so. Ultimately, the world has no chance of hitting global greenhouse gas emissions targets and avoiding catastrophic climate change unless China can quit coal, and quit it now.
By Haley Zaremba for Oilprice.com
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China, on the other hand, is letting economics triumph over politics vis-à-vis its coal use. The nation’s pivot back to coal is motivated by energy security and economic considerations. Ultimately, the economy remains the top priority. Beijing is reluctant to do anything that might slow economic growth and therefore rock the boat. And with escalating geopolitical tensions with both the United States and India, power projects fuelled by domestic coal could also become more attractive because the government is keen to improve self-sufficiency and ease its dependence on foreign energy supplies.
Furthermore, new coal plants are a way for the provinces to support other industries like coal mining and heavy industry. While China is pushing for cleaner and greener energy, there is still a lot of entrenched coal interests in the country and the central government has no interest in rushing to rein them in. Adding to this is the history of crippling power shortages that rocked the country in 2011. Building on this experience, it is also a priority for local authorities to have a significant reserve of fossil fuels in case the rapidly changing energy landscape hits any snags.
And yet, the government recently unveiled an extremely ambitious plan to become carbon neutral by 2060. Moreover, China is the largest investor in solar energy. According to BloombergNEF, nearly half of the world’s new renewable energy investment of $279.8 bn came from China compared with 40.5 bn from the United States. China is currently racing to dominate the global electric vehicle (EV) market. It has set a target for NEVs to account for a fifth of overall car and truck sales by 2025 compared with the current level below 5%.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London