‘Two-Headed Beast’: China’s Coal Addiction Erodes Climate Goals

Cautious applause was greeted with China's unexpected promise to reduce its carbon footprint to zero by 2060, but new spending on coal to fire up a virus-hit economy threatens to nullify its audacious attempt to lead the world into a low-carbon future.

Over the last thirty years, China's economic boom has been propelled by fossil fuels, and the nation burns about half of the coal used globally each year.

Its annual carbon emissions nearly tripled between 2000 and 2018, and now account for almost a third of the world's overall greenhouse gases linked to global warming.

China's coal consumption climbed back in June this year to close to the peak levels seen in 2013, amid promises to wean the economy off coal with the world's most aggressive investment in renewables.

That was partly due to a pivot back to coal in the Saudi peninsula, China's main oil supplier, after geopolitical instability.

But the coronavirus, which for the first time in 30 years saw the Chinese economy contract, also opened government lenders' taps to construct new coal plants to revive flat-lining provincial economies.

There is a “tension at the heart of China’s energy planning” Li Shuo, senior climate and energy officer at Greenpeace China, told AFP.

It “pits Beijing’s strategic interests against the immediate goals of cash-strapped provincial governments, makes it difficult to walk the talk” on cleaner future.

This week Xi Jinping unveiled China’s bold pitch for leadership on global warming at the United Nations, vowing his nation will reach peak emissions before 2030 and go carbon neutral thirty years later.

It is the first time China has announced any plans to become carbon neutral, but so far there have been no details on how the country would rebalance away from fossil fuels.

In the first half of 2020, China approved 23 gigawatts-worth of new coal power projects, more than the previous two years combined, according to Global Energy Monitor (GEM), a San Francisco-based environmental NGO.

“A new fleet of coal plants is in direct contradiction with China’s pledge to peak emissions before 2030,” said Lauri Myllyvirta, China analyst at Centre for Research on Energy and Clean Air.

– Facing both ways –

The world’s second-largest economy is also positioning itself as the global leader in renewables.

It is already the top global producer and consumer of wind turbines, solar panels and electric vehicles, and Chinese factories make two-thirds of all solar cells installed used worldwide.

“China’s energy policy is like a two-headed beast, with each head trying to run in the opposite direction,” said Greenpeace’s Li.

But renewables are running out of the market with the latest coal boom, since China's energy distribution scheme uses Soviet-style quotas, where a monthly output cap is given to power suppliers.

Over recent years, the grid quotas have forced local governments to raise allocations for coal-fired electricity, leaving less space for renewable energy usage on the grid, even though investment in them is stepped up.

“Local governments prefer to buy more coal-generated power to protect mining jobs,” Li said.

Wind and solar farms have been forced to idle and dozens of new renewable projects have been cancelled since late last year as small private operators struggle to make money.

– ‘White elephants’ –

Experts say China’s coal addiction will not be easy to end.

The country already has 400 gigawatts more coal-fired capacity than what is needed to meet peak demand, according to GEM.

“China’s coal fleet is running at about 50 percent capacity,” Myllyvirta said.

“Many facilities are white elephants. Adding new ones would only make them less efficient.”

Policymakers say new plants with lower emissions standards will replace the old dirty chimneys.

But the savings are modest: new plants emit just 11 percent less carbon dioxide per kilowatt-hour of power generated compared to the old ones.

The direction of travel for now still points to an energy future dominated by coal.

Renewables are slapped with higher land taxes, interest rates on loans and have lower grid quotas.

Onshore wind farm subsidies are reportedly set to end in 2021. Offshore wind farm subsidies ended in March as solar subsidies were also cut in half, while renewable energy investments dipped eight percent in 2019, according to Bloomberg New Energy Finance results.

Meanwhile, with new coal power stations, overseas Belt and Road investments will festoon developing nations from Pakistan to Zimbabwe.

“Our energy policy needs a serious overhaul — a surgery — because the growth in renewables has hit a glass ceiling,” Li said.

“But reforms have stalled for nearly a decade because the coal lobby is too powerful.”