China Eyes Higher Coal Production Ahead of Winter

Beijing has asked Chinese coal miners to ramp up production ahead of peak demand season this winter.

A spokesperson for the National Reform and Development Commission—Beijing’s planning agency—said that the central government will encourage local authorities and companies to work on boosting coal supply, Reuters reported.

China, the world’s biggest wind, solar, and EV market, is investing heavily in coal, too. A couple of months ago, Beijing’s special climate envoy, Xie Zhenhua, said that the phaseout of hydrocarbons was unrealistic.

“It is unrealistic to completely phase out fossil fuel energy,” Xie, who will represent China at COP28 in Dubai in November, told ambassadors in Beijing ahead of the climate summit.

China is the world’s biggest consumer of coal and the largest importer of crude oil. Despite its soaring wind and solar power capacity installations in recent years, the country continues to consume growing volumes of coal, oil, and natural gas and continues to approve the construction of new coal-fired power capacity.

In the first half of this year alone, Beijing approved more than 50 GW in new coal generation capacity. At the moment, there is 243 GW of new coal capacity that has received permits or is already under construction in the country.

Highlighting the importance of dispatchable generation capacity, this summer China leaned on coal when drought reduced its hydropower output, despite its record wind and solar capacity. The latter already constitute a little over 50% of total generation capacity. Output, however, is a different matter, with coal accounting for 71% of the total in the first half of the year.

Earlier this month, in a bid to make sure future coal generators remain viable, said it would provide guaranteed payments to their owners, enabling them to recover some 30% of their capital costs. The reason for these payments is that some of the coal power plants that are currently being constructed will be used for wind and solar backup rather than constant generation.

By Charles Kennedy for Oilprice.com

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