Chinese Coal Economy

Daniel Begovich
December 8, 2021

Submitted as coursework for PH240, Stanford University, Fall 2021

Introduction

Fig. 1: A coal power plant in Shuozhou, China. (Source: Wikimedia Commons)

As the world's leader in coal consumption and production, China faces pressure from other world superpowers to appropriately reduce carbon emissions. Leaders from around the world are working to pivot away from fossil fuels in time to ameliorate the ongoing climate crisis, but doing so requires China to do its part. China has been the world's leading greenhouse gas emitter since 2005 and currently leads the world in coal production and consumption. Coal powers over half of the Chinese economy, which is largely industrial. [1] Coal reliance is especially problematic since coal is the most carbon-intensive of all fossil fuels. China still relies heavily on coal not only for energy but also as a significant source of employment as well as an opportunity for investment.

2020 Summary

In September of 2020, China announced its goal to be carbon neutral before 2060. Months later, the country announced it would limit the increase in coal production until 2025. Recently, however, energy shortages within the country caused China to increase coal production to record levels of output. [2] To meet the level of electricity demand required to power homes and keep industrial cities functioning, China reopened and expanded coal mines, increasing year on year coal production by 6%. In 2020, China both produced and consumed over half of the coal in the world. Over the year, China produced 80.91 Exajoules (8.091 × 1019 J) and consumed 82.27 Exajoules, representing 50.7% and 54.3% of the world's coal respectively. [3] Fig. 1 shows an image of one of China's coal power plants. While the country has made significant progress in its climate change efforts, China's staggering coal usage is disproportionately high relative to other developed countries.

Future Outlook

Following moves from large financial institutions and other foreign governments, Chinese President Xi Jinping announced plans at the September UN General Assembly to stop financing and building new coal power plants abroad. [4] Though specifics were not given, the comment suggests that we can expect to see a reduction in global coal production as a result of China's refusal to fund new projects. Between 2013 and 2018, China provided over half the financing for all overseas coal power plant production. The move away from these projects does not have any immediate impact on China's domestic consumption or production of coal. Ideally, China will leverage its capability and shift investment towards both foreign and domestic wind and solar power. The equipment, population, and manufacturing capacity it has will allow for this transition, though policy change both inside China and beyond will be required to speed up the process.

© Daniel Begovich. The author warrants that the work is the author's own and that Stanford University provided no input other than typesetting and referencing guidelines. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.

References

[1] S. Hua and P. Dvorak, "China's Ambitious Climate Goals Collide With Reality, Hampering Global Efforts," Wall Street Journal, 27 Oct 21.

[2] K. Bradsher, "China Hurries to Burn More Coal, Putting Climate Goals at Risk," New York Times, 28 Oct 21.

[3] "BP Statistical Review of World Energy 2021," British Petroleum, July 2021.

[4] C. Early, "How China Shapes the World's Coal," BBC, 2 Nov 21.