China's huge coal plant building has weird climate logic – Reuters
[1/2]A man rides his bicycle past the chimneys of a power station located on the outskirts of Beijing October 29, 2009. REUTERS/David Gray/File Photo Acquire Licensing Rights
LAUNCESTON, Australia, Sept 19 (Reuters) – China is building two-thirds of the coal-fired electricity generation capacity currently under construction globally, and this may not be as disastrous for the climate as it sounds.
The world's largest producer and importer of coal has 136.24 gigawatts (GW) of coal-fired generation under construction, according to data released in July by the Global Energy Monitor.
This represents 66.7% of the global total of 204.15 GW, and China is streets ahead of second-placed India, with 31.6 GW being built and third-placed Indonesia with 14.5 GW.
These three countries represent 89% of the coal-fired plants currently under construction, and it's not a coincidence that all of them have large populations, growing energy demand and vast domestic coal reserves.
China's under-construction coal generation is about 12% of its existing capacity, and adding more coal-fired power would seem incompatible with the stated goal of achieving net-zero carbon emissions by 2060.
But it's worth looking at China's overall energy demand, including its status as the world's largest importer of crude oil.
The large coal-fired construction programme can be seen in the wider context of China's rapid shift to electric vehicles and away from internal combustion engine (ICE) cars and trucks.
Sales of what China terms new energy vehicles (NEVs), which includes fully electric vehicles and types of hybrids, are surging, and accounted for 36.9% of total sales in August, according to data from the China Passenger Car Association.
A total of 1.94 million passenger vehicles were sold in China in August, the strongest month so far this year, with NEVs accounting for 716,000 of the sales.
Sales of NEVs have accelerated from under 5% of the total in January 2021, as car makers scaled up production, resulting in lower costs and improved availability.
It's likely that China will continue to push ahead with the rapid switch to NEVs, given its leadership in mass producing these vehicles and the batteries that power them.
There is also an economic reason for China to encourage the switch to vehicles powered by electricity as it lessens the reliance on imported crude oil.
China's imports of crude in the first eight months of 2023 were 11.4 million barrels per day (bpd), which if paid for at the current oil price would cost in the region of $250 billion.
It makes sense for China to cut its crude imports over time, as this lowers its import bill and reduces its energy reliance on countries such as Saudi Arabia and Russia, which have acted against China's economic interest by tightening oil supply to drive prices higher.
It makes sense from an economic and geopolitical perspective to power China's vehicle fleet using domestic electricity rather than imported crude oil.
The question is then whether China can meet its climate goals by switching increasingly to NEVs, which will be powered by a coal-heavy electricity grid for decades to come.
China used coal for about 63% of its electricity generation in 2022, with hydropower coming in second at 14%, and other renewable energies such as wind generating 9% and solar 5%.
China is also the world's biggest installer of renewable power sources and is expanding its nuclear fleet as well, but coal is expected to remain the bedrock of electricity production, even as its share of generation gradually decreases.
But even using a predominantly coal-fired grid to charge NEVs is better from a climate perspective, insofar as an electric vehicle powered by a 60% coal-fired grid will produce lower lifecycle emissions that a similar ICE vehicle.
A model developed by the U.S. Department of Energy's Argonne National Laboratory shows that in a country with China's power generation profile, a battery electric vehicle will have to drive 78,700 miles (125,900 km) before being cleaner than an ICE equivalent.
However, the average car will drive about 170,000 miles in its lifespan, meaning that the electric vehicle ends up being better for emissions than the ICE equivalent, even if powered by a predominantly coal-fired grid.
While it would obviously be better for the environment for China to stop building coal-fired power plants and instead accelerate the deployment of renewables, there is some logic to the current policy.
Using mainly domestic coal and some relatively low-cost imports will allow China to lower crude oil imports over time, increase the penetration of NEVs and have a lower emissions profile than if it carried on with a predominantly ICE vehicle fleet.
The opinions expressed here are those of the author, a columnist for Reuters.
Editing by Christian Schmollinger
Our Standards: The Thomson Reuters Trust Principles.
Thomson Reuters
Clyde Russell is Asia Commodities and Energy Columnist at Reuters. He has been a journalist and editor for 33 years covering everything from wars in Africa to the resources boom and its current struggles. Born in Glasgow, he has lived in Johannesburg, Sydney, Singapore and now splits his time between Tasmania and Asia. He writes about trends in commodity and energy markets, with a particular focus on China. Before becoming a financial journalist in 1996, Clyde covered civil wars in Angola, Mozambique and other African hotspots for Agence-France Presse.
Turkey is willing to hold off ratifying Sweden's bid to join NATO this month as it awaits signs of U.S. support for its own request to buy F-16 jets, sources said, potentially disappointing bloc allies hoping to end 17 months of delay.
Reuters, the news and media division of Thomson Reuters, is the world’s largest multimedia news provider, reaching billions of people worldwide every day. Reuters provides business, financial, national and international news to professionals via desktop terminals, the world's media organizations, industry events and directly to consumers.
Build the strongest argument relying on authoritative content, attorney-editor expertise, and industry defining technology.
The most comprehensive solution to manage all your complex and ever-expanding tax and compliance needs.
The industry leader for online information for tax, accounting and finance professionals.
Access unmatched financial data, news and content in a highly-customised workflow experience on desktop, web and mobile.
Browse an unrivalled portfolio of real-time and historical market data and insights from worldwide sources and experts.
Screen for heightened risk individual and entities globally to help uncover hidden risks in business relationships and human networks.
All quotes delayed a minimum of 15 minutes. See here for a complete list of exchanges and delays.
© 2023 Reuters. All rights reserved
