China’s massive clean energy boom has unfolded in tandem with a major uptick in coal-fired power, proving onceagain that the country’s leading role in clean energy spending is all about energy security rather than a commitment to cleaning up its carbon footprint.
China has the second biggest economy in the world after the United States, but it is the world’s single largest greenhouse gas emitter. This means that China could make or break the world’s ability to meet global climate goals and emissions targets. Whether or not this will happen will heavily depend on two broad developments in the Chinese energy sector: ramping up renewable energy production capacity and decreasing the country’s heavy reliance on fossil fuels, and especially coal-fired power. China is knocking that first imperative – clean energy spending – out of the park. The second one – kicking coal – has proven to be comparatively rather low on President Xi Jinping’s agenda.
This duality is pronounced: China is at once the undisputed leader of the clean energy revolution and the world’s largest burner of coal. According to a recent BloombergNEF analysis, China was responsible for nearly half of global spending in the renewable energy sector last year, clocking in at a whopping $546 billion. That’s three times more than the second-highest spending bloc, which was the European Union at $180 billion, and nearly four times the $141 billion spent by the United States. Together, China, the U.S., and the EU were responsible for more than 80% of global clean energy spending for the year, according to the WEF 2022 Fostering Effective Energy Transition report.
But at the same time that China was smashing green spending records and making “staggering progress on renewables,” Beijing greenlit 106 gigawatts of new coal-fired energy capacity – a fourfold increase from 2021. 106 gigawatts is the equivalent of 100 large-fired power plants according to reporting from CNBC. It’s clear that all of China’s energy spending isn’t discriminatory; they’re trying to build up any kind of energy capacity that they can, as fast as they can.
China’s most recent push to shore up energy independence comes on the heels of a year of extreme energy insecurity. A severe drought in Sichuan Province took a massive bite out of the country’s hydropower sector. As water levels dried up to half their normal quantities, energy scarcity spread rapidly throughout the region. Historically, China has been heavily dependent on hydro; in 2020, nearly a fifth of the country’s installed energy production capacity was hydroelectric, and in Sichuan hydro represented nearly two thirds of the energy mix. As temperature fluctuations grow more frequent and more intense with climate change, hydropower is becoming more and more variable, posing a considerable threat to energy security. The result was a massive increase in China’s already considerable coal spending to make up for the lost hydropower – a trend that continues to shape China’s energy policy in 2023.
In fact, China has not only invested heavily in ramping up its own domestic coal production, it has also been importing coal in enormous quantities to build up its stockpile. In the first two months of this year, China’s coal imports increased by a whopping 71% compared to the year before, when coal demand was unusually low thanks to the country’s economy-killing Zero Covid Policy. This development is proof that old habits die hard, and for China, security and reliability remain synonymous with coal. Coal has been the stalwart foundation of China’s economic development for generations.
Yes, the country is now making a heroic effort to diversify its portfolio, but the beginning of this year has made it abundantly clear that the more things change, the more they stay the same. As much as Beijing wants to place itself at the vanguard of the global clean energy transition, it just can’t sever its ties with coal, which are so deep-seated that they are as ideological as they are economical.
By Haley Zaremba for Oilprice.com
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