18:42 21.07.2020

China’s coronavirus recovery drives boom in coal plants, casting doubt over commitments to cut fossil fuels

Source: South China Morning Post
China’s coronavirus recovery drives boom in coal plants, casting doubt over commitments to cut fossil fuels

Far from treating the coronavirus pandemic as a once-in-a-lifetime opportunity to speed up decarbonisation and lock in climate goals, there are signs China is falling back on its old playbook of pumping cheap credit into fossil-fuel heavy energy projects to help the economy recover from a historic first quarter contraction.

Following a dramatic plunge in energy consumption and greenhouse gas emissions at the start of the year, China’s energy sector is roaring back to life. 

Daily consumption of coal,  oil and gas in June was on par with the previous year, according to the government, and analysts say carbon emissions have bounced back to pre-coronavirus levels.

It may still be too early to say where energy use and emissions are heading in 2020, but the environmental detox that followed months of sweeping lockdowns appears to be over.

China has 249.6 gigawatts of coal-fired power capacity either under construction or in planning, according to Global Energy Monitor and the Centre for Research on Energy and Clean Air – which is larger than the current coal fleets of the United States or India.

In this year alone, China permitted 17.0GW of coal-fired power for construction, more than the previous two years combined, and the power sector has proposed some 40GW of new coal plants, the two groups said in a report in June.

 

China has 249.6 gigawatts of coal-fired power capacity either under construction or in planning, according to Global Energy Monitor and the Centre for Research on Energy and Clean Air – which is larger than the current coal fleets of the United States or India. Photo: Reuters

Far from treating the coronavirus pandemic as a once-in-a-lifetime opportunity to speed up decarbonisation and lock in climate goals, there are signs China is falling back on its old playbook of pumping cheap credit into fossil-fuel heavy energy projects to help the economy recover from a historic first quarter contraction.

Following a dramatic plunge in energy consumption and greenhouse gas emissions at the start of the year, China’s energy sector is roaring back to life. 

Daily consumption of coal,

 oil and gas in June was on par with the previous year, according to the government, and analysts say carbon emissions have bounced back to pre-coronavirus levels.

It may still be too early to say where energy use and emissions are heading in 2020, but the environmental detox that followed months of sweeping lockdowns appears to be over.

China has 249.6 gigawatts of coal-fired power capacity either under construction or in planning, according to Global Energy Monitor and the Centre for Research on Energy and Clean Air – which is larger than the current coal fleets of the United States or India.

In this year alone, China permitted 17.0GW of coal-fired power for construction, more than the previous two years combined, and the power sector has proposed some 40GW of new coal plants, the two groups said in a report in June.

The surge in new coal-fired power plant approvals is being driven in large part by a glut of local government infrastructure projects facilitated by easy access to bank loans and central government support for stimulus spending, analysts said.

“What is behind this is to some extent Covid-related because large-scale infrastructure projects are very appealing when local governments face economic difficulty,” said Li Shuo, senior climate and energy policy officer for Greenpeace East Asia.

China, the world’s largest energy consumer, has in recent years taken steps to rein in the pace of new coal power plant developments, aware of overcapacity and smog belching power stations that have contributed to pollution in cities.

It has reduced the share of coal in its overall energy mix from 72 per cent 10 years ago to 58 per cent in 2018, according to data from the National Bureau of Statistics, and it is the world’s biggest investor in renewable energy.

But the acceleration of coal plant construction this year highlights the tension at the heart of China’s energy planning, one which often pits the strategic interests of Beijing against the immediate goals of cash-strapped provincial governments.

“Provincial interests always see a lot of job creation, they see an opportunity to create value. So they have very, very strong short and medium term motivations to try to get coal-fired power projects back on the plan,” said Melissa Brown, the director of energy finance studies, Asia, at the Institute for Energy Economics and Financial Analysis.

“In the meantime, you’ve got a lot of long term, thoughtful players [in Beijing] that look after the power sector, look after climate change and economic planning, who see the structure of the debate about the power sector in very different terms.”

According to Li, “Beijing can say whatever it wants, but at the end of the day, when it comes to coal-fired power plants, the authority that approves those is at the provincial level.”

Still, there are indications policymakers in the capital may be growing wary of the resurgence of coal plant development.

Six powerful central government bodies, including China’s top economic planning agency, the National Development and Reform Commission, and three ministries issued a joint statement in June saying that coal-fired power capacity would be capped at 1,100GW this year, “backward” power generation units would be decommissioned, and new plants should be built only as required. China’s coal-fired capacity currently stands at around 1,050GW.

 “This was a very important statement, right after this spike in new coal plant approvals,” said Lauri Myllyvirta, lead analyst at the Centre for Research on Energy and Clean Air.

“It is a signal to the provinces they are keeping an eye on this, and if the development frenzy continues, you can expect more binding policies.”

On the international stage, China is as unwavering as ever in its commitment to a clean energy transition.

Zhang Jianhua, director of China's National Energy Administration, told the International Energy Agency’s Clean Energy Transitions Summit earlier this month that in the upcoming 14th five-year plan,  Beijing would “stay committed to a green and low carbon transition in the energy sector”, despite headwinds from the Covid-19 pandemic.

He also promised an additional 85.1GW of wind and solar power would be installed this year, bringing the total capacity of renewables to 850GW. And China, which is already a world leader in the deployment of electric cars, would make expansion of charging infrastructure a top priority.

China’s next five-year plan  will lay out the blueprint for economic, energy and environmental targets for the period covering 2021-25, although the coronavirus has added significant uncertainty to its drafting.

The impact of the pandemic has already forced China to drop an economic growth target  for 2020 and abandon a numerical target for energy consumption per unit of gross domestic product, a measure of efficiency that is linked to emissions commitments.

Under its current policies, China is on track to meet its Paris Agreement climate goals, including a 20 per cent non-fossil fuel share in the energy mix by 2030.

However, a lot of energy planning “is still up in the air because of the sheer level of uncertainties that Covid-19 introduced”, said Greenpeace's Li.

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