China’s largest coal plant building has a different climate logic

LAUNCHESTON, Australia, Sept 19 (Reuters) – China is building two-thirds of the coal-fired power generation capacity currently under construction globally, and it won’t be catastrophic for the climate.

The world’s largest producer and importer of coal generated 136.24 gigawatts (GW) of coal-fired generation, the Global Energy Monitor released in July.

This is 66.7% of the global total of 204.15 GW, and China is ahead of second-placed India, with 31.6 GW built, and third-placed Indonesia, with 14.5 GW.

These three countries represent 89% of the coal-fired plants currently under construction, and it is no coincidence that they all have large populations, growing energy demand and vast domestic coal reserves.

China’s under-construction coal generation is about 12% of its current capacity, and adding coal-fired power is incompatible with the 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 crude oil importer.

The massive coal-fired construction project can be seen in a broader context of China’s shift away from electric vehicles and internal combustion engine (ICE) cars and trucks.

Sales of new energy vehicles (NEVs), which include all-electric vehicles and hybrids, are rising, accounting 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 sales.

Sales of NEVs, which accounted for less than 5% of total sales in January 2021, have accelerated as carmakers ramped up production, resulting in lower costs and improved availability.

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Given its leadership in mass-producing these vehicles and the batteries that power them, China is likely to continue to move forward with a rapid transition to NEVs.

There is also an economic reason why China has encouraged the transition to electric vehicles as it reduces its reliance on imported crude oil.

China’s crude imports for the first eight months of 2023 were 11.4 million barrels per day (bpd), which at current oil prices would cost the region $250 billion.

It makes sense for China to reduce its crude imports over time, which lowers its import tariffs and reduces its energy dependence on countries like Saudi Arabia and Russia.

Powering China’s vehicle fleet using domestic electricity rather than imported crude oil makes sense from an economic and geopolitical perspective.

Reuters Graphics

Coal-burning cars

The question is whether China can meet its climate goals by increasingly switching to coal-intensive electric grid-powered NEVs for decades to come.

By 2022, China will use coal for about 63% of its electricity generation, with hydropower a close second at 14%, and other renewable energies such as wind at 9% and solar at 5%.

China is installing the world’s largest renewable energy sources and is also expanding its nuclear fleet, but coal is expected to remain the bedrock of electricity generation, with its share of generation gradually declining.

But using a predominantly coal-fired grid to charge NEVs is better from a climate perspective, with a 60% coal-fired grid-powered electric vehicle producing lower life-cycle emissions than a similar ICE vehicle.

A model developed by the US Department of Energy’s Argonne National Laboratory shows that in a country with China’s power generation profile, a battery electric vehicle would need to drive 78,700 miles (125,900 km) before it would be as clean as an ICE.

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However, the average car will drive about 170,000 miles over its lifetime, meaning that an electric vehicle will have better emissions than an ICE equivalent.

While it would be good for China’s environment to stop building coal-fired power plants and accelerate renewable power generation, there is some logic to current policy.

Using mainly domestic coal and some relatively low-cost imports will allow China to reduce crude oil imports over time and increase the penetration of NEVs, which will have a lower emission profile than the predominantly ICE vehicle fleet.

The views expressed here are those of the author, a Reuters columnist.

Editing by Christian Schmollinger

Our Standards: Thomson Reuters Trust Principles.

The views expressed are those of the author. They do not reflect the views of Reuters News, which is committed to integrity, independence and freedom from bias under the Principles of Trust.

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Clyde Russell is an 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 resource boom and its current struggles. Born in Glasgow, he has lived in Singapore, Sydney, Johannesburg and now splits his time between Tasmania and Asia. He writes on trends in commodities 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.

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