China is betting on coal
Energodigest | 17 March 2023
As we have written in our previous publications, the European Union last year suffered a setback on its way towards decarbonization and low carbon power generation. Amid stubbornly high fuel prices, consumers were leaning more on coal-fired power in a bid for energy security, with the EU’s share of global thermal coal consumption rising to 6%. But this pales in comparison with China’s stunning 51%.[1]
China has the world’s biggest coal power fleet (see Fig. 1),[2] with coal being the mainstay fuel for electricity generation. The country relied on coal to generate 56.2% of its electricity last year, according to the National Bureau of Statistics,[3] or even 62.7% according to Ember (see Fig. 2). Despite its ambitious climate goals, the Chinese government realizes that placing all bets on renewables won’t make much sense,[4] so it has decided to double down on coal.
China has the world’s biggest coal power fleet (see Fig. 1),[2] with coal being the mainstay fuel for electricity generation. The country relied on coal to generate 56.2% of its electricity last year, according to the National Bureau of Statistics,[3] or even 62.7% according to Ember (see Fig. 2). Despite its ambitious climate goals, the Chinese government realizes that placing all bets on renewables won’t make much sense,[4] so it has decided to double down on coal.
Last year, China permitted more new coal power plants than it had since 2015, with a total capacity of 106 GW vs. 23 GW a year earlier.[5] Many projects were approved in a fast-track process and began construction just months later.
China has been ramping up its coal production to keep up with growing demand, with the total figure for 2022 rising to a record 4,496 million tonnes, up 10.4% YoY (see Fig. 3). And yet this output is far too low, so China is now importing more coal, even from Australia, signaling the end of an unofficial ban that ran for over two years. Around 2 million tonnes of thermal coal were already shipped off this February,[6] and over another 1 million tonnes have been booked to load in March.[7] China is showing a strong resolve to achieve self-sufficiency, with the government raising import duty on thermal coal to 6% from 1 April to support local producers (last April, import duty on coking and thermal coal was reduced to zero with effect from 1 May 2022 until 31 March 2023).
China has been ramping up its coal production to keep up with growing demand, with the total figure for 2022 rising to a record 4,496 million tonnes, up 10.4% YoY (see Fig. 3). And yet this output is far too low, so China is now importing more coal, even from Australia, signaling the end of an unofficial ban that ran for over two years. Around 2 million tonnes of thermal coal were already shipped off this February,[6] and over another 1 million tonnes have been booked to load in March.[7] China is showing a strong resolve to achieve self-sufficiency, with the government raising import duty on thermal coal to 6% from 1 April to support local producers (last April, import duty on coking and thermal coal was reduced to zero with effect from 1 May 2022 until 31 March 2023).
That said, China is not willing to give up on its clean energy plans[8]. However, as global markets reel from rising prices, energy shortages and supply chain disruptions, the Chinese government has to give priority to immediate needs, such as energy security and stable power generation, which cannot be satisfied without fossil fuels – at least for now.