Analysis: How green is China? The world’s second-largest economy is planning higher coal-power output

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Coal is being unloaded from a cargo ship at a port in Lianyungang, Jiangsu province, China. Photo credit: Reuters / Stringer.

By Anders Lorenzen

China, the world’s largest economy, has in the past decade invested a record amount of capital in clean energy.

But despite this, the writing on the wall indicates that the country is not taking serious steps to move away from coal, of which they’re the largest consumer. 

In fact, quite the contrary appears to ring true.

Using tech to extract even more coal

While China might be innovating in the clean energy and cleantech space, they’re also innovating in technology in order to mine ever more coal and in more difficult deposits – as this Reddit post explains.

As China came out of the COVID-19 lockdown, they fired up their coal factories and industries, and they mined coal not because they needed it but simply because it stimulated the economy. As China adds more clean energy to its grids, there is less need for the same amount of coal capacity. But nevertheless, large quantities of coal are still being mined for the simple reason that it creates jobs. For years China has struggled with a surplus supply of coal, and as that mountain piles up, they now struggle with the capacity to store it. 

Coal is not just for electricity 

Therefore, Chinese scientist is attempting to find other uses for coal rather than burning it for electricity. As a result, new industries such as coal- to- chemicals are emerging. Chemical products that would need crude oil as a feedstock, will now use coal. This year alone China Coal has budgeted 17.4 billion yuan for coal-to-chemicals projects.

This may prompt fears that even if China managed to fully decarbonise its electricity sector to run on renewables and nuclear, they might not be willing to give up on coal. 

This in itself would worry anyone concerned about climate change.

Cancelling out the progress made elsewhere

But are they intending ever to rid the electricity sector of coal?

According to the NGO, the Global Energy Monitor, 148 gigawatts (GW) of new coal capacity in China are either under construction or are about to begin construction. This is depressing news for climate advocates. When much of the world is reducing reliance on coal, China is increasing it. This is cancelling much of the progress made elsewhere. 

China’s renewed push into coal has been driven by Chinese energy companies desperate to gain market share, and by local governments who view coal plants as a source of jobs and investment. In addition, for the third year running China has relaxed restrictions on coal power expansion. While electricity demand in China rose 8.5 percent last year, the current grid is already oversupplied, and coal stations are utilized only about half the time.

It has been harder for Beijing’s Central Government to monitor this as local governments have the authority to manage energy policy and decide what does and don’t get built.

Money matters

Another concern is that as more and more major global banks refuse to finance coal projects, according to China Dialogue, such moves have not yet been seen by Chinese banks. Bank of China (BOC), Industrial and Commercial Bank of China (ICBC), Agricultural Bank of China (ABC) and China Construction Bank (CCB) – have few or no policy provisions regarding their involvement with fossil fuels. In fact, since the Paris Agreement (agreed in 2015) – these four Chinese banks have together financed fossil fuel production with nearly US$240 billion. 

The road ahead

On the face of it, the road ahead looks murky, and China would still officially say they stand by their environmental commitments and share a long-term view to fully move away from coal. But as the US, under the Trump administration, has rolled back Obama era environmental regulations and has seen a resurgence back to coal, China’s stance is likely not to improve climate ambitions before the world’s largest economy does so. 

And privately, don’t be fooled, China’s absolutely number one priority will be to get the economy back and firing post-COVID-19. And if that involves increasing coal mining, building coal infrastructure and new coal power plants – so be it. The fact that they’re not needed does not really matter from China’s point of view – they create jobs.


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