Opinion | Don’t let China’s ‘coal boom’ enable backsliding on climate pledges

Name: Old mining towns in China left behind despite coal-price boom
Uploaded: 2022-09-25T17:30:14.000Z
Duration: 3 min 21 s
Description: Old mining towns in China left behind despite coal-price boom

China’s surge in coal production to handle rising electricity demand is an act of crisis management rather than a boom

The sight of new coal power plants being built and Beijing having second thoughts about its climate commitments should be a huge concern

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The Wujing coal power station is pictured across the Huangpu River, in the Minhang district of Shanghai, on August 22. China’s coal output hit record levels earlier this year. Photo: AFP

Byford Tsang

Published: 1:30am, 26 Sep 2022

By some measures, the coal sector is experiencing a boom in China. The government continues to grant permits to new coal power projects. Coal production hit record levels this year, and more coal plants were switched on this summer to meet electricity demand amid heatwaves.

But the financial reality is less rosy. Around 80 per cent of state-owned coal power producers were loss-making in 2021, costing about 100 billion yuan (US$14.2 billion). This is a result of rising coal prices and a rigid electricity pricing system that means power generators cannot pass on growing costs to consumers.

While utilities have been more cautious in starting new projects, miners have received the political mandate to raise production. China’s planning agency targeted a 300-million-tonne rise in production, with output hitting record levels earlier this year. But this is no coal boom – it is crisis management.

China is reeling from last year’s power crunch, which left 20 Chinese provinces rationing power. The crisis focused the minds of leaders on energy security, and the government has doubled down on coal.

It is a crucial year, politically, for the Communist Party and President Xi Jinping. A note from China’s planning agency in March said, “Major coal-producing provinces and relevant state-owned enterprises should make every effort to expand coal mining … to ensure stable supply of coal during the 20th National Congress of the Communist Party of China and the peak electricity periods in summer and winter.”

03:21

Old mining towns in China left behind despite coal-price boom

The latest energy statistics support the assessment that the rise in coal production and project approvals is a crisis response rather than a policy shift. From January to August, the amount of power generated by coal, which is directly linked to greenhouse gas emissions, stagnated. However, coal stockpiles at power plants are more than double those of August last year.

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