By Gabriel B. Collins, the Baker Botts fellow in energy and environmental regulatory affairs at Rice University’s James A. Baker III Institute for Public Policy, and Andrew S. Erickson, the research director in the U.S. Naval War College’s China Maritime Studies Institute.
June 7, 2022 - China is touting its renewable energy investments and has vowed to “accelerate the pace of coal reduction” in coming years. Yet in practice the country continues doubling down on coal on the back of blackouts, energy security fears, great-power competition, and Europe’s biggest land war in nearly 80 years. Fear and risk aversion both favor coal entrenchment, and both are in ample supply in Beijing these days.
As a result, millions of metric tons per day of additional greenhouse gases surge into the atmosphere. And the coal hopper is being loaded higher. Chinese policymakers recently greenlighted a coal mine capacity expansion of an additional 300 million metric tons in 2022—almost the annual production of the entire European Union. That’s enough coal to fill a train of standard rail hopper cars that would wrap around the entire equator, plus enough left to stretch from Washington, D.C., to Los Angeles.
China’s internal discourse has for years reflected broad and deep feelings of energy insecurity. Worries are now shifting into overdrive as domestic and international events hammer home the risks in unsettlingly specific ways. Chinese relations with the United States and its partners—which possess the ability to cut off maritime oil and liquefied natural gas shipments—have markedly worsened. And now, Russia’s invasion of Ukraine has simultaneously spiked international coal, gas, and oil prices and shown how rapidly a coalition of industrialized democracies can unleash damaging economic warfare in response to revisionist aggression.
Perhaps most importantly, Chinese policymakers are very likely watching the electricity space closely. China’s main competitor, the United States, now experiences increasingly frequent supply disruptions as it works to transition its electricity system, the world’s second-largest, toward renewable energy. Chinese energy security thinking views electricity and coal disruption as “social/economic problems,” which means they will likely attract especially close focus and preventative action as the 20th Party Congress looms just a few months from now.
The last thing Chinese President Xi Jinping would want are blackouts just weeks before he seeks a third term and leadership elevation unseen in decades. As Chinese officials grapple with citizens angry about extended COVID-19 lockdowns, they may reasonably wonder if their hold on political power could survive a rending energy cataclysm like the 2021 Texas blackout that caused hundreds of deaths, not to mention more severe or sustained events that could unfold repeatedly in the coming months and years. Burning more coal can help party apparatchiks manage electricity concerns as the weather heats up and grid loads rise.
Under such conditions, the siren call of energy self-reliance beckons and is congruent with the already built and paid-for infrastructure of China’s energy system. The country’s fleet of modern coal plants is increasingly located far from wealthier, more protest-prone coastal cities. Accordingly, the immediate environmental and, by extension, political costs, of doubling down on coal likely appear manageable—especially when the alternatives are greater import dependency or electricity supply disruptions.
Despite green rhetoric in recent years, Beijing has never been serious about abandoning coal. Chinese diplomats sought a “phasedown” rather than “phaseout” of coal at the COP26 climate summit in Glasgow, Scotland, while China added about 25 gigawatts of net coal-fired power generation capacity in 2021. If operated for their full 40-year service life, these new plants alone could burn 1.4 billion tons of coal (almost three times what the entire United States consumed in 2020).
The 2022 coal mining boomlet comes atop a steady coal output expansion between 2017 and 2021 that added nearly 700 million metric tons of supply (more than 1.5 times Russia’s annual production). Power plants, boilers, and chemical plants in China already consume more than half of all coal used globally. China’s current coal-fired plant fleet, the world’s largest, only runs at about 50 percent capacity, due primarily to an “equal shares dispatch” system that grants power stations of a given technology type similar operational time regardless of production costs. As such, even without building a single new power plant, coal use could still increase significantly just by running existing facilities harder.
Displacing coal from China’s energy system is a Herculean task, but it’s a critical one, given the country’s size and climate impact. China’s sheer heft means coal-fueled energy nationalism can roll back years of emissions reduction contributions other countries have made. For instance, if half of China’s expected additional coal production in 2022 were used for power generation and half to fuel industrial boilers, the resulting carbon dioxide emissions would nearly offset the emissions reduction otherwise created by China’s wind sector (the world’s largest) in 2021.
The arithmetic of an actual coal phaseout is even tougher. For China to cut coal use by a third by 2035—while holding oil and hydropower usage at today’s level and slightly reducing total primary energy use through efficiency improvements and electrification—the following would be required: expansion of natural gas use equal to what Japan and South Korea combined used in 2020, the addition of nuclear generation on a par with what France (the world’s second-largest producer) generated in 2020, the addition of wind power equivalent to about 2.5 times what the United States (the world’s second-largest producer) generated in 2020, and expansion of solar power to the tune of 3.5 times what the United States (again the world’s second-largest producer) generated in 2020. Each additional expansion of coal production and use only increases the challenge, which already requires an energy transformation moonshot to attain China’s 2060 net-zero emissions target.
Shrinking China’s coal ecosystem thus requires world-class investment to change, and deploying trillions of renminbi requires tremendous political will. Yet as we pointed out around this time last year, the main point of alignment between power brokers at the local, provincial, and national levels in China is staying in power, not launching decisive energy reforms.
If anything, the situation has regressed in the intervening 12 months. As China’s miners boost coal output, they are responding to political imperatives that engage all levels of the system but ultimately require Beijing’s buy-in—something that’s direly absent given the economic worries. It is thus unsurprising that individual party leaders and policy influencing bodies alike increasingly encourage coal-centric energy nationalism. In October 2021, Vice Premier Li Keqiang spoke of coal’s vital role to China’s energy security, and Xi himself emphasized two weeks later that China must “ensure that its energy livelihood remains in its own hands.”
China’s National Energy Administration followed up this April with a position statement on energy security that reiterated coal’s role as a foundational resource for China and emphasized the importance of maximizing coal self-sufficiency. High-level official support for import substitution locks coal more deeply into China’s long-term energy fabric. It situates the entire value chain within national borders (and reinforces employment-rich vested interests) while also signaling that even in 2022, coal-burning and producing assets are still investments worth making. Leadership and agency statements also suggest party recognition of a harsh reality: Coal offers stable, affordable, and weather-resistant energy supplies now despite playing a key role in fostering grid-challenging weather events over the longer term.
Chinese policymakers will very likely embrace these parochial near-term benefits of coal while allowing other industrial powers to serve as energy transition crash test dummies. If the United States and EU successfully transition to lower-carbon emissions profiles with manageable impacts on economic growth and industrial competitiveness, China can cherry-pick “second-mover advantage” practices that work, without having to pay as many of the “growing pains” costs that first movers incur. Conversely, if some of China’s major industrial competitors undermine their position through a transition process that imposes major economic costs, creates energy scarcity, and triggers serious sociopolitical disruptions, Beijing’s global economic and industrial base advantages would be further entrenched without China having had to incur anywhere near the same costs.
China’s coal double life epitomizes the complexity of its energy system. It consumes around 1.5 times what America’s own colossal energy economy does. While renewables have grown sharply in recent years, coal still supplies about 60 percent of primary energy in a system that is 3.4 times larger than it was in 2000 and 40 percent larger than in 2010. Disparate political timetables pose a core challenge as the party emphasizes keeping the lights on today while also seeking to improve tomorrow’s geopolitical position vis-à-vis the United States and other rivals. Climate concerns appear to matter more to Beijing than they did five or six years ago, but much less than in American and European politics, or even in that of U.S. allies and partners in Asia.
The disparity in political urgency coupled with an emerging Sino-American cold war incentivizes Beijing to weaponize climate cooperation against Washington, a risk of which we warned in these pages last year. On the economic front, China’s much-discussed “dual circulation” policy remains largely aspirational given that energy-intensive basic materials continue to underpin the country’s economic model at a fundamental level that could require decades to change meaningfully. Simultaneously, the intensifying Cold War-style strategic competition between China and the United States encourages the Chinese Communist Party’s neo-autarkist resource security instincts.
China, according to data from the BP Statistical Review of World Energy, imports 70 percent of its oil and over 40 percent of its gas supply. It is thus in a much more sensitive position in what some are terming the “Second Cold War” than the Soviet Union, invulnerable due to oil, gas, and coal self-sufficiency, was in the first. Moreover, by adopting a more militarized forward oil supply defense posture, such as deploying forces capable of high-intensity naval combat against nation-state foes and the necessary supporting infrastructure, Beijing would risk diluting combat power available in its highest-priority operational theaters: the Taiwan Strait, East China Sea, and South China Sea.
Beijing’s response to date instead emphasizes maintaining larger oil inventories, managing fuel demand through price, and seeking to become an “electrostate” that substitutes electrons for oil. Renewables will play a key role in this endeavor (as might nuclear, eventually) but coal is currently the only fuel whose supply can be reliably sourced from within Chinese borders.
Energy system evolutions require a dynamic mindset and willingness of actors throughout all levels of the party to take risks and creatively experiment. It’s the same formula that helped fuel the country’s stunning economic rise over much of the past four decades.
Yet Xi’s increasingly personalistic rule and revival of mass struggle-oriented political thought takes China the opposite direction. An ideological monoculture stifles the bureaucratic and technological risk-taking and experimentation necessary to reform a gargantuan energy system. Risk aversion would be amplified if China’s renewables build-out triggered any grid instability, especially given the power blackouts of late 2021 and the disastrous attempted transition in winter heating from coal to gas in 2017-2018.
However much “green leadership” the party talks in international forums, it keeps leading the world in burning coal. It treats climate change as a source of leverage in its unrelenting quest to retain a monopoly on political control domestically and deference abroad. The disasters of the global commons can be easily blamed on the rest of the world; power and economic failures at home demand responsibility, or at least scapegoats. Meanwhile, as Chinese policymakers continued allowing King Coal to undercut Queen Green, millions of metric tons per day of additional greenhouse gases would surge skyward.
Cooperating with Beijing requires trusting in the good faith of a dictatorial regime that backslides on binding international environmental commitments and appears to be copping out on COP26’s call to accelerate the phasedown of unabated coal combustion. Worse still, Beijing demands tangible upfront geopolitical concessions by Washington in exchange for ephemeral half-promises on China’s own part—promises that have never materialized in the past.
Domestic economic and political survival imperatives will consistently shunt aside foreigners’ hopes and aspirations for a cleaner Chinese energy system—just as they are now with Beijing’s approval of one of the biggest annual coal production increases in decades. “Trust but verify” falls apart fast when an interlocutor is structurally disincentivized from sustained positive action and treats entreaties for cooperation as opportunities for exploitation.
Accommodations or self-limitations made to coax China to discuss climate issues would, in fact, make the United States, East Asia, and the world lose twice. America would weaken its economy and stress its social fabric while forfeiting its ability to effectively confront China’s ongoing coercive envelopment efforts in the Indo-Pacific, as Chinese interlocutors stall at the negotiating table. Beijing would win on the geopolitical front, but all parties would ultimately lose from degradation of our shared atmospheric and maritime biosphere.
China’s doubling down on coal so soon after the Glasgow summit makes it clear that climate cooperation simply won’t work with Xi and the party pursuing parochial priorities in ruthless Leninist fashion. The only way to avoid continual cop-outs is clear: It’s time for climate competition.