Coal Is In Terminal Decline, But China’s Consumption Is Climbing

Yves here. We reported in the very early days of this site, in 2007, that China was planning 562 new coal plants by 2012. China was also closing its dirtiest coal-fired electricity plants. But even with efforts to increase solar and wind power and wring energy efficiencies out of the large manufacturers, coal remains a key energy source in China. From a 2019 post, Coal Is Dead, But China Is Reviving It:

The Energy Information Administration reported this month that while lower-cost coal-fired plants will survive in the future as well, higher-cost ones will continue to be retired as they cannot compete with cheap gas-fired alternatives.

According to the authority, between 2019 and 2030, some 90 GW of coal generation capacity will be retired, most of it high-cost capacity. This year and next, coal power plants will account for 25% and 22% of the energy mix, respectively. Coal production, too, will fall this year by 8% because of this drop in demand in the power utility sector….

As its economy began to slow down a couple of years ago, China, as Reuters reported recently, has become more willing to relinquish some of its climate goals in favour of cheap energy. Since the start of 2018, the country has built 429. GW of new coal capacity and another 121 GW under construction.

Now to today’s update.

By Haley Zaremba, a writer and journalist based in Mexico City. Originally published at OilPrice

Coal, the dirtiest of the world’s fossil fuels, has been in terminal decline for years now. Investment in the once-vital commodity has crashed, and the ESG movement is only accelerating that trend. Analysts are no longer questioning whether the fuel will recover, and are instead asking which country will be the last to build a new coal plant. A reportreleased this week by climate and energy think tank Ember found that global coal-fired electricity fell by 4 percent in 2020, a record drop. That loss in coal-fired power was made up for by a 4 percent gain in wind and solar capacity (totaling more than 314 terawatt-hours).

Once one of the world’s cheapest and most abundant fuel sources, coal is now struggling to compete against clean energy alternatives that are now cost-competitive (both solar and wind power became cheaper than coal in most of the world back in 2019). At the same time, the flood of low-emissions natural gas from the United States shale revolution has also driven down demand for coal.

But all of that was before the global pandemic tore through the global economy and transformed our collective priorities. We’ve seen this before. Countries often make lofty climate goals and commit to leaving coal behind until crisis hits – and then they run back to their old stalwart fuel source. It happened to Japan after the 2011 Fukushima nuclear disaster drove the country away from nuclear energy. It’s happening to Mexico as the nation scrambles to shore up its energy security in the face of an economic downturn. Canada considered a return to coal to fill the economic holes left by the demise of its oil sands. And now China is leading the charge back to coal in an effort to establish energy security and sovereignty in the face of economic downturn and pandemic fears.

According to a report from Power Engineering this week, “China has emerged far and away as the dominant driver in [coal’s] rising relevance for the developing world.” While the world’s coal consumption dropped by 4 percent, China’s gained 2 percent over the last year. “Worldwide,” the report continues, “China now accounts for 53 percent of the overall coal-fired generation portfolio.”

China’s rise in coal production and consumption is not limited to domestic activity. At the same time that Beijing has been committing to loftier climate goals than ever before, pledging to go carbon neutral by 2060 and to reach peak emissions in just a decade, it has ramped up coal production both at home and abroad, where at least a portion of those increased emissions will be attributed to other country’s carbon footprints.

Two years and an eternity ago, Yale Environment 360 predicted China’s return to coal and warned that the country’s ambitious overseas development plans will directly imperil global climate initiatives. “China’s Belt and Road Initiative is a colossal infrastructure plan that could transform the economies of nations around the world,” the article stated. “But with its focus on coal-fired power plants, the effort could obliterate any chance of reducing emissions and tip the world into catastrophic climate change.”

China is not just re-emerging as a coal-fired world power. Beijing has also positioned itself at the forefront of the global clean energy movement and China holds a monopoly on many of the rare earth metals that the clean energy production chain relies on. To characterize China as a one-dimensional climate destroyer or climate savior is clearly a massive and disingenuous oversimplification of the issue. While these kinds of flattened portrayals are common, the reality is much more complex, and the nuances of it are extremely important, not just for China, but for the globe. As the world’s second-largest economy (for now) and largest greenhouse gas emitter by a massive margin, China’s success or failure in its climate pledges is of paramount importance to the entire world. A return to coal is not the whole story, but it’s a seriously worrying development.

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  1. peter

    “As the world’s second-largest economy (for now) and largest greenhouse gas emitter by a massive margin”

    one of those scary one dimensional claims, The USA as of 2020 has a share of 15% with a population while China almost doubles that with 28%.

    But compare that to the population served. China has more than 4 times the USA population and supplies its population with less than half the CO2 output per capita….

    1. Ian Ollmann

      The Earth does not care about per-capita calculations.
      Both countries need to work much harder pushing towards zero.

  2. Sound of the Suburbs

    Why will globalisation be an environmental disaster?

    Maximising profit is all about reducing costs.
    Western companies couldn’t wait to off-shore to low cost China, where they could make higher profits.
    China had coal fired power stations to provide cheap energy.
    China had lax regulations reducing environmental and health and safety costs.
    China had a low cost of living so employers could pay low wages.
    China had low taxes and a minimal welfare state.
    China had all the advantages in an open globalised world.
    It did have, but now China has become more expensive and developed Eastern economies are off-shoring to places like Vietnam, Bangladesh and the Philippines.

    Environmentally measures cost money and reduce profit.
    The goal is to maximise profit.
    Coal provides cheap energy and China wants to keep it’s competitive advantage.

    1. Sound of the Suburbs

      It did have, but now China has become more expensive and developed Eastern economies are off-shoring to places like Vietnam, Bangladesh and the Philippines.

      What did the Chinese get wrong?
      Davos 2019 – The Chinese have now realised high housing costs eat into consumer spending and they wanted to increase internal consumption.
      They let real estate rip and have now realised why that wasn’t a good idea.

      The equation makes it so easy.
      Disposable income = wages – (taxes + the cost of living)
      The cost of living term goes up with increased housing costs.
      The disposable income term goes down.
      They didn’t have the equation, they used neoclassical economics.
      The Chinese had to learn the hard way and it took years, but they got there in the end.

      They have let the cost of living rise and they want to increase internal consumption.
      Disposable income = wages – (taxes + the cost of living)
      It’s a double whammy on wages.
      China isn’t as competitive as it used to be.
      China has become more expensive and developed Eastern economies are off-shoring to places like Vietnam, Bangladesh and the Philippines.

      1. Sound of the Suburbs

        Why is it so confusing with neoclassical economics?
        It doesn’t take into account that employees get their money from wages.

        Everyone pays their own way.
        Employees get their money from wages.
        The employer pays the way for all their employees in wages.
        Off-shore from the West ASAP to maximise profit.

        Do you really want to pay the high cost of living in the West in wages?
        There are plenty of other countries to choose from.

    2. drumlin woodchuckles

      The answer is rigid militant belligerent protectionism. Make it a life-in-prison or a death-penalty felony to attempt to import anything from a country with standards lower or cheaper than the country into which the import is being attempted into.

  3. The Rev Kev

    Coal is in terminal decline over the dead body of the Australian government. And it is bipartisan. Scotty from Marketing is backing coal for the next 10, 20, 30 years and will push for it constantly as exports. And the leader of the Opposition is in full agreement-

    Scotty is so in bed with the coal industry that about four years ago he brought in a supplied lump of coal into Federal parliament and said ‘This is coal, don’t be afraid’ and then had it passed among colleagues there while making a speech how great coal is- (1:11 video)

  4. coboarts

    “We’ve seen this before. Countries often make lofty climate goals and commit to leaving coal behind until crisis hits – and then they run back to their old stalwart fuel source.” Most of the focus is on profits driving the continuing use of coal. However, when any economy runs into energy shortages, they will burn whatever they can get. In the end, unless wind, solar, wave, geothermal, fusion, green hydrogen, ammonia or 4th wave piezoelectric tennis shoes can carry the demand – it will get burned. Before it’s over, every bit of economically or even non-economically recoverable fossil fuel gets burned. Everything left in the ground today is a savings account for future use.

  5. topcat

    Replying to your own posts seems a little….odd. Are all of the Psychiatrists on Easter break? I remember this from Annie Hall I think where everyone in NY was crazy for 3 weeks in summer.

    1. Jeremy Grimm

      SoTS often writes lengthy comments. Replying to your own comment is a way to break down the length of each comment and a way to attempt collecting replies to each point of a long comment. It is also a way to add something related that you think of later after entering a comment. It is also a way to acknowledge and thank comments to your comment. I am not sure why you are concerned about how SoTS comments.

        1. Basil Pesto

          fwiw, I don’t think self-replying is indicative of any kind of oddness, but SoTS’ comments are among the few that I tend to just skip entirely. I find them – ironically because of the formatting – hard to read, and they tend to engage minimally with the piece in question and other commenters in lieu of advancing an overarching diagnosis, and in turn draw minimal engagement themselves. It’s all a bit repetitious and uninteresting. Yes, I feel like a churlish turd (churd?) critiquing others’ comments.

  6. Roger

    When proper accounting for fugitive methane emissions are taken into account, natural gas is worse for climate change than coal. If the climate impact for methane is properly accounted for over 20 years (instead of the usual 100 years), with the climate so close to/already triggering tipping points natural gas is a “bridge fuel” to disaster. China is actually upgrading their coal fleet to much more efficient levels, more electricity per unit of coal – this also changes the math for coal vs natural gas in coals favour.

    We need to stop focusing on coal and see coal AND natural gas as requiring significant yearly reductions in use. Instead, we have Nordstream 2, multiple NG pipelines from Russia to China, and other projects to embed natural gas in the energy mix. NG is not a clean climate change fuel.

    If China gets “cleaner” replacing coal with NG, like the US in the past few years, it actually worsens the climate change outlook.

  7. cbu

    New Chinese coal plants are relatively cleaner ultra-supercritical ones. Older plants are being retrofitted with more efficient sub-units.

  8. Jeremy Grimm

    I believe I first heard the notion that what China and India did to control CO2 emissions was what mattered for the future listening to a discussion interview with Adam Tooze. The US and Europe are increasingly minor players with increasingly limited influence over future climate — ignoring their possible efforts toward geoengineering. I do not understand Europe or India. The US seems to have a shifting public relations policy regarding CO2 and Climate Chaos but what passes for actual policy appears to be the outcome of a game of catch-as-catch-can played between powerful monied interests behind the scenes in dark hallways of Government.

    I understand China as much more rational and deliberate about its actions and goals. I believe China’s “charge back to coal” reflects true limitations of electric power generated using presently known sources of renewable energy and its distribution through a national electric Grid. I am not sure what kind of economy the US has. China manufactures and produces goods, much more like what I imagine an economy is all about. I believe the US could color itself with rainbows of ‘Green’, unrelated to the hard realities of producing the amount and kinds energy necessary to support an industrial economy, and having relatively little further impact on the Earth’s climate.

  9. Pwelder

    One feature of coal power generation that should not be overlooked: That humongous coal pile next to the power plant, is right there next to the power plant. So it’s less vulnerable to Mother Nature in a bad mood or other bad actors who might cause short-term disruptions by blowing up your NatGas pipeline or cutting off electricity to the equipment that powers it – as happened in the Texas freeze.

    Of course nuclear power generation also has its fuel supply on-site, and would be far better in terms of emissions. But for some weird reason it seems to be outside the Overton Window among our policy makers.

    And that’s a shame. At my age (older than dirt) I really care about grid reliability and security of supply.

    1. topcat

      Nuclear needs fuel and that has to be dug up at great energy cost as does coal. Uranium is also a very finite resource so running the world on nuclear doesn’t help much. Nuclear costs a fortune to build, takes a long time, and leaves a lot of radioactive crap at the end. The USA is home to huge refrigerated swimming pools full of spent fuel rods desperately trying to stay cool using even more energy. No one knows what to do with these swimming pools, making more of them is possibly a bad idea.

  10. drumlin woodchuckles

    The long-term China goal is to exterminate every trace of industry outside of China. The CommunNazi ChinaGov Regime plans for China to be THE First World Source of all manufactured goods and plans for the Entire Rest of the World to be its Third World Resource Colony and Captive Market. So a revival of coal in China means a revival of coal for the entire world net-net on balance.

    How can we help China shrink its coal use? By helping China shrink its economy. The less economic production in China, the less coal consumption in China. In practice, that is no longer possible for the MacKinder World Island. Once the One Ball One Chain Great Han Co-Prosperity Sphere Project is complete, it will all be a One China Super Continent.

    It is not too late for America to understand the need to round up and exterminate all the Free Trade Supporters living inside America so that America can then withdraw from the World China Economy and create its own Fortress Autarkamerica on its own efficient use of its own resources.

      1. drumlin woodchuckles

        Thank you for your interest in my comment. I am always happy to hear from you. Please let me know if you have any other concerns.

    1. Jeremy Grimm

      I cannot fathom China’s long-term goals. Your ‘harshly’ worded characterization of China’s long-term goals to turn the rest of the world into resource colonies sounds very like the founding goals of the British Empire, and the American Empire after it. Your comment evokes a strange suggestion of psychological projection — the US projecting US faults onto China like a man who has been unfaithful to his wife but accuses his wife of cheating on him. As the US Empire crumbles the US does not appear to act based on long-term goals and US business considers a month. or more seldom a year. as long-term. Of course why should China be expected not to reach out for Empire as other nations have in their time.

      I doubt you could be serious about the US having any capability to lessen economic production in China. China will decide how to manage economic production in China and China will decide coal consumption in China. In the new world of a China with an Industrial economy facing the US Neoliberal Financialized economy — China’s actions will have the greater part in determining future CO2 emissions.

    2. James Simpson

      Is your comment to be taken as satire of the current US administration’s anti-China policies? I can’t take it seriously. If China were to destroy the economies of the rest of the world, how would it trade with them? No nation is an autarky, nor could it get anywhere good with policies aimed that way. China is far less aggressive compared to the USA.

  11. James Simpson

    Coal, oil and gas are difficult to leave behind for the same reason they were embraced so enthusiastically in the 19th and 20th centuries: they are the most energy-dense fuels on the planet. Humans abandoned wind and water power as soon as they realised how much more energy they could obtain from fossil fuels with much less effort. Renewables are vastly less efficient at turning solar energy into electricity, and that will always be the case. Unfortunately, fossil fuel use will likely destroy all complex life on earth within the next couple of centuries unless, as seems almost impossible, we cooperate instead of competing and end capitalism.

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