China Leans on Coal Amid Energy Security Push

China leans on coal amid energy security push | Reuters

On Sunday, China’s state planner emphasized that coal would play a bigger part in the country’s electricity supply and said that the fossil fuel would be used to increase the energy system’s dependability and security.

Beijing has recently increased its focus on energy security as a result of rising global energy prices following Russia’s invasion of Ukraine and domestic supply disruption.

According to data from the National Bureau of Statistics, the world’s second-largest economy relied on coal to produce 56.2% of its electricity last year, but has significantly increased its use of natural gas and renewable energy in recent years to reduce carbon emissions.

Fluctuating output from renewable plants, however, has led policymakers to lean on reliable and easily dispatchable coal power to shore up the country’s baseload supply. Hydropower output declined last year due to extreme summer heat and a drought in southwest China, which resulted in power outages.

“We will strengthen the basic supporting role of coal (and) take orderly steps to increase advanced coal production while ensuring safety,” said the In a report to the yearly meeting of parliament, the National Development and Reform Commission (NDRC).

According to research released last week, energy security concerns caused China to approve the construction of 106 gigawatts more coal-fired power capacity last year, which is four times more than the previous year and the most since 2015.

About 50GW of that energy was used for construction.

“The energy security narrative is still going strong,” said Greenpeace China policy advisor Li Shuo.

“This has given impetus to China’s coal sector as seen in the rapid approval of coal plants across the country,” he said.

Increasing domestic oil and gas supply was another point made by the NDRC.

“We will intensify the exploration and development of petroleum and natural gas at home to discover more untapped reserves and increase production,” it said.

Despite a strategy to boost use of natural gas as a bridge fuel to achieve its 2060 carbon neutrality, China is slowing an aggressive campaign started in 2017 to replace coal with gas.

Concerned about supply shortages amid high global prices, the planner pledged to “strictly control the expansion of projects to replace coal with natural gas”.

The state planner also reaffirmed its efforts to further reform the oil and gas industry, with a particular emphasis on enhancing the pricing structure for natural gas so that it more accurately reflects the cost of production and procurement.

About 40% of the gas consumed in China is imported.

“(We shall) develop sound mechanisms to adjust urban end-user prices of natural gas in step with procurement costs,” the report said.

A second batch of significant wind and solar power plants will be built in China, they added.

While the nation develops renewable energy sources, some have described the reliance on coal as temporary in order to make up for supply shortages.

“New renewables generation has not been able to cover all the demand growth in any specific year, which means some additional coal generation is still needed each year,” said David Fishman, senior manager at the Lantau Group, a Chinese energy consultancy.

“We may witness the first year in which renewable energy completely meets rising demand in 2023 or 2024… after this coal consumption should start to decrease year-on-year,” he said.

China has pledged to reach peak carbon emissions by 2030 and carbon-neutrality by 2060.

According to the NDRC report, Beijing wants to cut its energy use as a percentage of GDP by about 2% by 2023.


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