Press "Enter" to skip to content

China pledges to be carbon neutral—but remains addicted to coal

Our mission to help you navigate the new normal is fueled by subscribers. To enjoy unlimited access to our journalism, subscribe today.

Chinese President Xi Jinping’s bombshell declaration on Tuesday that China will achieve ‘carbon neutrality’ before 2060 coincides with a spurt of approvals for the construction of new coal power plant projects in a country that is already the world’s largest producer and consumer of coal.

Carbon neutrality means China is aiming to produce net zero carbon emissions in the next 40 years. It’s also planning for its carbon emissions to peak by 2030. Xi didn’t provide any specifics on how the country plans to meet those goals or kick its coal habit—but in order to meet the neutrality goal, China needs a drastic cutback on coal.

China, the world’s largest carbon emitter, consumes half the world’s coal. Li Shuo, a Beijing-based policy advisor for Greenpeace China, described the country as “addicted” to the resource.

Subscribe to Eastworld for weekly insight on what’s dominating business in Asia, delivered free to your inbox.

That means the stakes are high: a carbon-neutral China by 2060 would lower global warming projections by 0.2 to 0.3 degrees Celsius, according to Climate Action Tracker.

But it also means China reducing its dependence on coal is a tall order.

Energy security concerns and entrenched industrial interests, Li said, have made it “very difficult to get rid of the dirty little rock from our energy system.”

But it needs to be done. Suspending new coal plant projects and phasing out reliance on coal power, Li said is “the No. 1 priority if we are going to have any chance to fulfill the neutrality vision.”

Entrenched interests

China’s coal consumption peaked in 2013 and declined between 2014 and 2016, before starting to rise again, as pressure to mitigate an economic slowdown over the last two years took priority over reducing emissions and pollution.

Overall, China has gradually reduced its reliance on coal over the last decade, said Guo Hongyu, director of the climate and energy program for Greenovation Hub, a Beijing-based environmental non-governmental organization.

Even as coal consumption has decreased, coal-fired power plant projects keep getting approved for construction.

“There’s an irony there—on the one hand China does not need as much coal as before, but on the other hand it’s still building coal plants,” Li said.

Around the same time that coal consumption was decreasing, between 2014 and 2016, provincial authorities approved a slew of coal-fired power plants equivalent in energy capacity to the entire U.S. coal fleet.

For provincial authorities, the coal plant projects are a surefire way to generate jobs and boost economic growth and investment on paper. China’s coal industry is dominated by state-owned enterprises with an “entrenched industrial interest” in continuing coal production, Li said, and many provincial authorities pursue coal projects regardless of their long-term economic viability.

“If you bring in a large-scale new infrastructure, what happens on the account book of the local government is if the project costs 10 billion then 10 billion GDP is created—as a local governor, that’s your legacy,” Li said. “But over the medium- to long-term, you’re not going to make that investment back … it doesn’t really contribute to the sustainability of the environment and our economy.”

Renewable energy, by comparison, has a higher share of private-owned enterprises. As an energy source, it’s also less reliable than coal, since it depends on environmental factors like sunshine and wind that can’t be controlled.

China is the largest producer, exporter, and installer of solar panels, wind turbines, batteries, and electric vehicles, said Gørild Heggelund, a senior research fellow at the Fridtjof Nansen Institute in Oslo who researches China’s environmental, energy, and climate policy.

Although China already has policies that promote renewable energy, like the Clean Energy Consumption Action Plan, launched in 2018, “There are of course challenges here,” Heggelund said, since “coal is still regarded as the most reliable source [of energy.]”

Pandemic boost

Nationwide coronavirus lockdowns in early 2020 led to a decline in coal use and carbon emissions in China, but now, the country is focused on economic recovery, and constructing large-scale infrastructure projects like coal plants is one way to boost gross domestic product and create jobs.

“China is still building more coal-fired power plants, this year in particular at a higher pace,” Li said. “This needs to be immediately put on the shelf.”

By the end of June, provincial governments in China had approved 17 gigawatts of new power plants, more than the amount approved in 2018 and 2019 combined, Guo said, though approval doesn’t necessarily mean the plants will actually be built or become operational.

“China needs to stop building new coal-fired power plants,” Guo said, and it also “needs to accelerate the phasing out of existing coal-fired power plants.”

Energy security

Another reason China is so wedded to coal is that it has huge reserves of the resource, meaning it doesn’t need to rely on other countries. China has the fourth-highest concentration of coal in the world after the U.S., Russia, and Australia, with 13% of global reserves.

“China is endowed with coal as a resource, so there’s also an energy security concern, right—we don’t need to import any coal, we are more than self-sufficient,” Li said.

Self-reliance in the energy sector is a strategic priority for China, and coal is central to that strategy—for its second-largest energy source, oil, it is highly dependent on imports. In 2017, it passed the U.S. to become the largest crude oil importer in the world, and its oil imports are only projected to increase.

“Energy security is a key issue for China, and tops the leadership agenda,” Heggelund said.

Mixed signals and hope

Heggelund said that although China is emitting “mixed signals” by issuing renewable energy policies as it renews its emphasis on coal plants, the release of its five-year plan, a regular set of reforms and economic growth targets, will give some indication of the country’s energy and climate priorities.

Xi’s Tuesday message, Heggelund said, “is clear, and it should be expected that China will intensify and strengthen its policies and measures to achieve [carbon neutrality.]”

The government needs to set a firm target for decreasing coal consumption, a “much higher” target for renewable energy use, and an absolute carbon reduction target, Li said.

“There needs to be a transition away from the fossil [fuel] industry to a more cleaner way of development,” Li said.

More must-read international coverage from Fortune:

  • Scientists say a gap in COVID vaccine research may keep us from returning to “normal”
  • There’s an ulterior motive to China’s carbon neutral pledge: Cornering the green tech market
  • How data helped keep Red Bull’s F1 team on track during the pandemic
  • Check out Airbus’s concepts for the world’s first “zero-emission commercial aircraft”
  • Researchers find a “druggable pocket” in coronavirus that could lead to new antivirals