China’s $30 Billion Coal Investment May Be Wasteful Climate Risk
Increased spending this year on coal power and steel production threatens China’s climate goals and could end up as wasted investment.
(Bloomberg) -- Increased spending this year on coal power and steel production threatens China’s climate goals and could end up as wasted investment, according to clean air campaigners.
An acceleration in approvals in the first half of 2022, representing as much as 230 billion yuan ($32 billion) in investment, comes despite declines in coal-fired power generation and steel output, according to a report authored jointly by the Centre for Research on Energy and Clean Air and Global Energy Monitor.
Much of that investment could end up stranded. Announcements of new coal projects have slowed, suggesting reluctance on the part of utilities because coal-fired power has recently been “grossly loss-making,” the report said. China’s renewables capacity, meanwhile, continues to rapidly expand, and is approaching the market size needed to peak and reduce emissions.
Stung by power shortages that crippled the economy last year, China has raised production of coal to record levels to prevent a repeat of the crisis. However, extending its dependence flies in the face of scientists who say that the world needs to rapidly phase-out its use of the dirtiest fossil fuel to avoid the worst effects of global heating.
“Although the ramp-up of coal might be a short-term policy adjustment, it poses a risk to China’s long-term climate commitments,” said Xinyi Shen, a researcher at CREA. “With its goal of hitting carbon neutrality by 2060, China is running out of time to transition away from fossil fuels.”
China is the world’s biggest producer and consumer of both coal and steel. The new permits include 15 gigawatts of coal-fired power capacity and 30 million tons a year of coal-based blast furnaces. The steel industry, which has pledged to peak emissions by 2025, is China’s second worst emitter after power generators. “There is an urgent need to align investments in new production capacity in the steel sector with the goal of peaking and reducing CO2 emissions,” the report said.
(All times Beijing unless noted otherwise)
- APPEC conference in Singapore’s China spotlight, including speakers from PetroChina, and Rongsheng Petrochemical, 09:00
China’s solar sales to Europe have soared this year as the continent wrestles with an unprecedented energy crisis. But tens of thousands of the panels are sitting unused in warehouses because there aren’t enough engineers to install the rooftop modules.
On The Wire
- China’s MMG to Invest $2B in Peru’s Las Bambas in 5 Yrs: Reuters
The Week Ahead
Thursday, Sept. 29
- USDA weekly crop export sales, 08:30 EST
Friday, Sept. 30
- China’s official PMIs for September, 09:30
- Caixin’s China factory PMI, 09:45
- China weekly iron ore port stockpiles
- Shanghai exchange weekly commodities inventory, ~15:30
More stories like this are available on bloomberg.com
©2022 Bloomberg L.P.