China’s Call For More Coal May Defy Climate Goals – Analysis


By Michael Lelyveld

China’s emergency response to power shortages and demand for more coal are raising questions about its ability to meet its climate change goals.

Summer heat waves and floods appear to have set back plans to reduce reliance on coal as China’s energy mainstay while the government battles back against soaring demand and rising prices with orders to produce more.

On July 18, the nation’s top economic planning agency ordered major power producers to increase their coal stockpiles to at least seven days’ worth of consumption by July 21, Reuters reported.

“We are in the peak power consumption period and must guarantee coal supply to power plants … and will not allow the shutdown of power generation units due to a lack of coal,” the National Development and Reform Commission (NDRC) said.

The NDRC warning followed record highs in peak-load capacity and power generation on July 14 as regional and provincial power grids strained to keep pace with demand, the official Xinhua news agency reported.

More than 22 cities issued schedules for rotating power outages to prevent blackouts, S&P Global Platts news service said.

The modest size of the inventory requirement was a reflection of the low levels of coal supplies at eastern power plants. The NDRC took steps to reduce high prices with the announcement that it would release 10 million metric tons of coal from its limited reserves, which were reportedly down to 40 million tons.

The numbers are a small fraction of the 1.94 billion tons of coal that China produced in the first half of the year and the 4.04 billion tons that it consumed in 2020, according to official and industry data.

Coal production through June was up 6.4 percent as electricity output climbed 13.7 percent from a year earlier during the COVID-19 recovery period, the National Bureau of Statistics (NBS) said.

First-half coal consumption rose 10.7 percent, while electricity use jumped 16.2 percent, a National Energy Administration (NEA) official said on July 28.

In another move to boost coal, the NDRC said on July 19 that it plans to add 110 million tons of new production capacity in the second half of this year. Forty million tons of annual capacity were under review for approval while 70 million tons were already under construction, the agency said.

On Thursday, the NDRC authorized the restart of 15 shuttered mines for a year in northern provinces and Xinjiang to deliver about 44 million tons of coal, Bloomberg News reported. Last week, 38 mines in Inner Mongolia were ordered to reopen, it said.

Last year, China accounted for 54.3 percent of all the coal consumption in the world in energy equivalent terms, according to the BP Statistical Review of World Energy.

China’s sensitivity to the figures may account for the infrequency of its disclosures of consumption volumes and tonnage in reports by the China National Coal Association (CNCA) and state media.

In a rare report on July 20, the official English-language China Daily verified an earlier Reuters estimate of last year’s consumption tonnage, but not its calculation that usage rose 0.6 percent, marking the fourth year in a row of increases.

Instead, state media have highlighted more favorable numbers from plans to reduce coal’s share of China’s primary energy mix in percentage terms. Those measures predict progress in keeping with President Xi Jinping’s pledge last September to reach a peak in carbon emissions before 2030 and achieve “net zero” carbon neutrality before 2060.

At an industry conference in late June, state-owned energy companies said that coal’s share would drop from 56.8 percent of energy supplies last year to 44 percent in 2030 and just 8 percent by 2060 to meet Xi’s climate goals.

Future dependence

By 2025, the coal share of energy use will fall to 51 percent, according to the China Electric Power Planning & Engineering Institute. As renewable sources increase, generating capacity from non-fossil fuels is slated to exceed that of coal-fired power by the end of this year, the China Electricity Council (CEC) said.

But the China Daily report did not exclude the possibility that coal consumption will keep rising in physical tonnage terms as total energy use continues to grow.

Despite efforts to put the best face on the numbers, China faces criticism for its reliance on coal and doubts about whether it will achieve Xi’s climate goals.

“Coal is still involved in generating some 60 percent of the country’s power. But the government is wary of that figure rising any higher,” CNN Business reported on June 30. Attempts to limit consumption “have coincided with a thirst for energy caused by economic rejuvenation, along with extreme weather,” the news network said.

The concerns are likely to rise with calls for more coal capacity and stockpiling to address power shortages.

“China has many coal plants that are more than 40 years old. They don’t make money, they’re not efficient,” U.S. climate envoy John Kerry told Bloomberg Television on July 21. “We’re not pointing fingers. We’re stating facts — that China is now the largest emitter,” Kerry said.

The former U.S. secretary of state noted that China has set a 2060 deadline for carbon neutrality in contrast to the 2050 goal urged by other countries to limit global warming.

“It’s ‘OK’ that ‘China’s goal is different from that … as long as they are doing things that are possible,'” Bloomberg quoted Kerry as saying.

China’s pursuit of climate change targets also seems to be suffering from its continued drive for industrial output and economic growth, which has pushed power supplies to the limit at a time of peak seasonal demand.

The CEC expects electricity consumption to rise 6 percent in the second half from the year-earlier period, while the full-year forecast calls for growth of 10-11 percent, Reuters said.

Despite the troubling signs, China energy expert Philip Andrews-Speed at the National University of Singapore said that the 2030 goal for peak carbon emissions is achievable.

Reduction goals

Andrews-Speed argued that the planned addition of 110 million tons of “advanced coal production capacity” amounted to only 2.7 percent of last year’s consumption figure. On a net basis, the increase could be even less, if closures of outdated mining facilities are taken into account.

“What we don’t know is how much capacity they are closing this year,” said Andrews-Speed.

According to China Daily, over 1 billion tons of outdated capacity was eliminated in 2016-2020.

“If this rate of closure is continuing, then the addition to total capacity this year is marginal,” Andrews-Speed said.

In a July 30 statement, the NDRC encouraged qualified mines to expand with new capacity but it required them to shut down a “certain amount” of outdated capacity within three months of approval, Reuters said.

The surge in electricity demand and recent power outages can be explained by hot weather and the possible shortage of transmission capacity, Andrews-Speed said.

He also questioned the view that the government push for economic growth has been a major cause of the power problems, noting that economic growth rates have settled down to single digits after the record 18.3-percent spurt in the first quarter compared with the year-earlier COVID-19 slump.

“I still think that carbon emissions will peak by 2030. Carbon neutrality by 2060 is a more open issue,” Andrews- Speed said.

S&P Global Platts blamed the electricity problems on regulated rates that prevented power producers from charging consumers for their increased fuel costs, leading to losses and low utilization rates for both coal-fired and gas-fueled power plants.

“This means that despite the risk of blackouts and scorching temperatures in July, power companies were unable to fully ramp up electricity generation,” the news service said.

The report cited a power producer in southern China as saying that operating rates at its coal-fired plants were “around 70 percent” and only 50-60 percent for gas-fueled generators despite high demand during the heat wave.

The costs for coal and liquefied natural gas have risen far above the break-even point for power production.

“The break-even coal price for many coal-fired power plants is around 600-650 yuan (U.S. $92.13-99.81) per metric ton, but the coal price has far exceeded this level currently, which means that the more power they generate, the more losses they will incur,” an industry source said.

According to a manager of the Huaneng Group utility, the industry’s losses are widespread.

“Power plants do not have incentives to generate power at current prices,” the unidentified manager told Reuters on Aug. 2.

“If the prices continue to stay at this level, no one can survive,” the manager said.

Following a top-level Communist Party meeting on July 30, the Politburo released a statement indicating that a roadmap for achieving Xi’s climate goals would be released “soon,” according to Platts.

The statement said that “China’s carbon mitigation practices need to be coordinated across all provinces, sudden measures that are unrealistic should be avoided, and a measured approach is needed for handling energy-intensive and emission-intensive projects,” Platts reported.


Radio Free Asia’s mission is to provide accurate and timely news and information to Asian countries whose governments prohibit access to a free press. Content used with the permission of Radio Free Asia, 2025 M St. NW, Suite 300, Washington DC 20036.

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