China Briefing: Beijing ‘doubling down on fossil fuels’; China’s CO2 emissions increase; Coal production growth

Chinese leaders are “doubling down on fossil fuels” amid “growing” fears of global energy shortages and “rising” concerns of an economic slump, according to Bloomberg. The news came after the Chinese government repeatedly underlined the importance of energy security at a series of key political meetings last week. 

Meanwhile, the International Energy Agency (IEA) said last week that China was the main driving force behind a global CO2 emissions “rebound” past pre-pandemic levels. Separately, an energy advisor to the Chinese government told state TV that China’s CO2 emissions had grown by 350m tonnes last year, more than double the average annual increase in recent years.

In other news, China’s “raw coal” production reached 687m tonnes in the first two months of this year, up 10.3% compared to the same period last year, according to official data from China. The rise followed Beijing’s campaign to “ramp up production for the winter heating season”, Reuters reported.

WHAT: This week, Bloomberg’s newsletter analysed how and why China has fallen back to fossil fuels, particularly coal, in its recent energy policy. The analysis – written by Bloomberg’s climate reporter Karoline Kan – said that Chinese leaders are “doubling down on fossil fuels” out of “growing” fears of global energy shortages and “rising concerns” of a Covid-sparked economic slump. It read: “Faced with turmoil, China is returning to its old habit of coal, no matter what damage it does to climate momentum.” (Read the web version of the newsletter.)

HOW: According to Bloomberg, China has pushed for coal in two ways in recent months. One was a narrative “shift” that stressed coal’s importance in “ensuring continued growth”, the outlet said. The other was new approvals of coal mines and coal-fired power projects “even as such efforts are shunned in most other parts of the world”, it noted. 

WHEN: Bloomberg’s analysis came hot on the heels of China’s “two sessions”, a series of key political meetings that took place in Beijing last week. At the conferences, the government included the term “shuang tan” – meaning “dual carbon” in a nod to China’s carbon-peaking and carbon neutrality goals – in its annual work report for the first time, signifying nationwide efforts towards the objectives, according to the state broadcaster CCTV. However, the leadership also repeatedly underscored the importance of ensuring energy security and stable coal production and supply. (Last week’s China Briefing analysed the messages coming out of the “two sessions”.)

WHO: The National Development and Reform Commission (NDRC), the state economic planner, stressed energy security again in China’s economic and social development plan for 2022, which was approved at the “two sessions”. According to the plan, energy security is the “precondition” of stable “low-carbon” development and the “support” for hitting the five-year energy intensity target from 2021 to 2025. Liu Hongqiao – an independent consultant and former China specialist at Carbon Brief – analysed the economic plan in her newsletter last week. Liu wrote that “energy security, framed as a ‘mounting’ economic risk and a national security issue, is given a level of priority on the government’s agenda higher than ever before”.

INTERPRETATION: Prof Du Xiangwan – the deputy head of an energy advisory team to the Chinese government – interpreted China’s coal policy on the state broadcaster last Saturday. Prof Du said that China’s coal consumption would likely “still increase” in the 14th five-year plan (FYP) period from 2021 to 2025, even though there would be “strict” control. (Read Carbon Brief’s assessment of China’s 14FYP.) This is because growth in non-fossil energy is not yet large enough to cover incremental increases in demand. Prof Du predicted that renewable energy would “start to” replace coal power in meeting non-incremental energy demand in the 15FYP period from 2026 to 2030, but “the replacement [volume] would not be great”. He added that renewable energy should be able to replace coal power “relatively safely and reliably from 2030” when the former would have developed rapidly for more than a decade. (More on Prof Du’s interview in the next development.)

SIGNIFICANCE: Speaking of China’s recent coal push, Qin Yan – carbon analyst at Refinitiv, a “provider of financial markets data and infrastructure” – told Bloomberg’s Karoline Kan that “one of the biggest challenges” for China to get to net-zero “is a mindset shift”. Qin said that “giving the power back to coal now only makes the shift…harder to complete”. 

QUOTES: Byford Tsang – senior policy advisor at E3G, a climate change thinktank – told Carbon Brief that, “strictly speaking”, China “is not walking back on its target” with its recent drive for coal. But Tsang pointed out that “any additional fossil fuel is going to be stranded asset because it is not going to run the full course of the lifetime if we are to meet the peaking and neutrality goals, or getting China’s emission trajectory in line with the 1.5C target under the Paris Agreement”. He noted that the coal boost “might not have a big impact” on China meeting its carbon-peaking target, but it will make its net-zero transition “more costly”. He added that “the local economy will rely more on fossil fuels and it is going to make it harder to move away”.

WHAT: The global CO2 emissions “rebound” past pre-pandemic levels has “largely been driven by China”, according to the IEA. In a release from last Tuesday, covering emissions from energy, the agency reported a combined 750m-tonne increase in CO2 by China between 2019 and 2021. “In 2021, China’s CO2 emissions rose above 11.9bn tonnes, accounting for 33% of the global total”, it said, with a year-on-year increase of 4.8%. The IEA noted that China’s emissions hike was largely caused by “a sharp increase in electricity demand that leaned heavily on coal power”. It said the country’s electricity demand “grew by 10% in 2021”, with an almost 700-terawatt-hour (TWh) increase, “the largest ever experienced in China”. China has not released an official figure for its CO2 emissions in 2021. (Earlier this month, China Briefing reported on separate calculations that found China’s CO2 emissions grew by 4.5% 2021.)

WHO: Separately, Prof Du Xiangwan – deputy director of China’s National Energy Advisory Committee of Experts – said that China’s CO2 emissions had risen by 350m tonnes in 2021. (The figure matches data from the IEA, which put last year’s CO2 emissions growth for China as 353m tonnes.) Speaking on state broadcaster CCTV last Saturday, Prof Du noted that from 2013 to 2020, China’s emissions had grown by 160m tonnes every year on average. This means last year’s growth more than doubled the annual increase of previous years. “Therefore, technically speaking, last year [we saw] a ‘carbon addition’, not ‘carbon reduction’,” Prof Du said in reference to a 2021 catchphrase mentioned by the show’s presenter. Prof Du did not give China’s total CO2 emissions last year or its year-on-year growth. 

WHY: Prof Du put the cause of last year’s emissions bump as the “impulsive” development of energy-intensive industries by local governments to drive their regions’ economic growth – which Prof Du described as an “old mindset”. He noted that the central government had “repeatedly” ordered “suppression” of energy-intensive industries, but “some regions” still relied on them to drive their economic recovery. (Carbon Brief’s contributing China editor, Jianqiang Liu, has explained this “old mindset” in his in-depth analysis of China’s shifting mentality towards climate change.) 

‘CAMPAIGN STYLE’: Prof Du called for “serious attention” to last year’s emissions increase, adding that local governments had likely been “charging towards a high peak in a campaign style” in 2021. He confessed that he was “a little surprised” by how much the emissions had jumped. (Prof Du’s “campaign style” mention refers to a previous order from China’s President Xi Jinping, who instructed the nation to “rectify campaign-style ‘carbon reduction’”. Carbon Brief explained the expression last year.) 

HOW: China’s CO2 emissions saw a rapid increase in the first three months of last year before showing “signs of cooling” from April to June and starting to fall in the following three months, according to analyses written by CREA’s analyst Lauri Myllyvirta for Carbon Brief. Myllyvirta said that China’s emissions had increased by 15% year-on-year in the first quarter of 2021, “the fastest pace in more than a decade”. The country registered a 1% year-on-year increase in the second quarter and a 0.5% year-on-year decrease in the third quarter. Overall, China’s CO2 emissions “grew 4% in 2021”, Myllyvirta wrote on Twitter last month, based on his calculations of China’s annual statistical communiqué. (He did further analysis of the latest official statistics this week.)

COAL PRODUCTION: China’s coal production rose by 10.3% year-on-year in the first two months of 2022, reaching 687m tonnes, according to a release by the National Bureau of Statistics (NBS) on Tuesday. The increase came “after Beijing encouraged miners to ramp up production for the winter heating season, with demand also receiving a boost from Indonesia’s export ban”, Reuters reported. Mysteel – a Shanghai-based website publishing commodity news, data and analyses – reported that China’s coking coal production saw a 7.6% year-on-year decline in January and February, dropping to 74m tonnes. It also cited NBS data. 

COAL MINING: Bloomberg reported on Monday that China is planning “a massive increase” in coal mining in a move that “will dramatically reduce” its dependence on coal imports. The country’s state economic planner, NDRC, wants to increase domestic coal production capacity “by about 300m tonnes” and build a “620m-tonne stockpile”, the outlet said, citing “people familiar with the matter”. The news came as global prices for thermal coal hit “record levels” due to fears of supply disruptions following Russia’s invasion of Ukraine, the New York Times reported.

COAL PLANTS: Gansu province in north-western China is “planning to launch” coal power projects with a combined capacity of “nearly 10 gigawatts (GW)” to “adapt to the rapid development of renewable energy”, reported Caixin, an independent Chinese financial publication. The province is also due to reopen two coal-fired power plants – which were closed down “many years ago” – to provide flexible peaking services, the outlet said. (The news echos an order from a high-level meeting in January, which instructed that the building of large solar and wind energy farms must be “supported” by “clean” and “efficient” coal power capacity and “carried” by “stable, safe and reliable” ultra-high-voltage transmission lines in a so-called “new energy supply and accommodation system”. It also echoes news that a “batch” of wind and solar energy base with a combined capacity of 100GW is being built in provinces including Gansu.)

COAL STUDY: A new study has estimated that China’s total coal power capacity “may grow” by about 158GW “through 2030” – including a 202GW increase by building new plants and a 44GW decrease through retiring existing plants. Published by the Center for Global Sustainability at the University of Maryland School of Public Policy, the study projected that the country’s coal power capacity would reach 1,237GW during the 15FYP (2026-2030). It found that China’s coal fleet “may still grow” to 1,139GW by the end of the 15FYP if all of the new coal power plants in their early planning stages are cancelled. 

DATA ‘FALSIFICATION’: China’s Ministry of Ecology and Environment (MEE) has “slammed” four companies for “falsifying” carbon emissions data, Reuters reported. The newswire described the move as “part of the country’s efforts to improve data quality as it prepares to expand its national emissions trading scheme (ETS) into more industrial sectors”. In the release, the ministry noted that “accurate and reliable” data is the “lifeline” of the “effective” operation of an ETS, which – in turn – is “an important tool” for achieving carbon peaking and carbon neutrality.  

ETS: On Tuesday, China’s MEE released a notice, laying out details about the reporting and verification of companies’ greenhouse gas emissions for 2021 – with updated guidelines on how to calculate the emissions. Interpreting the significance of the document, Zhang Jianhong – senior engineer at the China International Engineering Consulting Corporation – told China’s Securities Times it signified that the preparation for the second “compliance period” of the national ETS had “officially begun”. Zhang said that the notice showed that the national carbon market was likely to expand to other industries this year, with construction materials and nonferrous metals being the most and second-most likely sector. (Carbon Brief has analysed how China’s national ETS could help tackle climate change.)

ELECTRICITY: China’s electricity consumption saw a 16.9% year-on-year increase in February, clocking in at 624 terawatt hours (TWh), according to the National Energy Administration, China’s state energy regulator. Qin Yan – carbon analyst at Refinitiv – described the growth as “surprisingly high” in a Twitter post. Data from the same authority also showed that the country’s electricity consumption across January and February grew by 5.8% compared to the same period last year, reaching 1,347TWh. China’s state broadcaster CCTV reported on the statistics.

OVERSEAS FINANCE: Reuter picked up a new policy brief which found that China’s two main trade policy banks “made no new overseas energy finance commitments in 2021”, a phenomenon described as “a first for this century”. Reuters said the finding was “a sign that Beijing’s pledge to stop investing in foreign coal plants is already in effect”. Dr Cecilia Han Springer – a co-author of the brief published by the Boston University Global Development Policy Center – told Carbon Brief that China’s “no overseas coal” pledge “may have played a small role” in the finding. “However, ongoing pandemic-related economic constraints in China and host countries probably played a bigger role,” she said, adding that “China’s lockdown especially makes it hard to cut global deals”.

NEW TEAM: China has established a new expert team to help it hit its “dual-carbon” goals. The team, known as the “standardised general team for carbon peaking and carbon neutrality”, comprises dozens of influential academics and political advisors, according to an official notice. The team would be tasked to formulate and revise the standards in areas including energy production and energy consumption, said Tian Shihong, director of the National Standards Committee. Their work could help ensure that the Chinese standards align with their global counterparts. Shanghai Securities News had the story.