China leans on coal amid energy security push

China Prioritizes Coal for Energy Security amid Rising Global Prices

As energy prices surge worldwide following Russia’s invasion of Ukraine and domestic supply disruptions, China is focusing on energy security to ensure a reliable and secure energy system. In its recent report to the annual gathering of parliament, the National Development and Reform Commission (NDRC) emphasized a greater role for coal in China’s power supply to improve the reliability and security of its energy system.

China, the world’s second-largest economy, relied on coal to generate 56.2% of its electricity last year, as per data from the National Bureau of Statistics. However, in recent years, it has significantly increased its use of renewable energy and natural gas to reduce carbon emissions. Despite this, the country still faces fluctuating output from renewable plants, leading policymakers to turn to coal power to support the country’s baseload supply, which is reliable and easily dispatchable.

To ensure energy security, China approved the construction of 106 gigawatts of coal-fired power capacity last year, four times higher than a year earlier and the highest since 2015, with 50GW going into construction. This rapid approval of coal plants is a result of the energy security narrative, which has gained impetus from the country’s need to ensure a secure energy supply.

The NDRC’s report also stressed the importance of ramping up domestic oil and gas supply. “We will intensify the exploration and development of petroleum and natural gas at home to discover more untapped reserves and increase production,” it said. However, China is slowing its aggressive campaign started in 2017 to replace coal with gas, as it faces supply shortages amid high global prices. The planner pledged to “strictly control the expansion of projects to replace coal with natural gas.”

China’s reliance on coal is considered temporary by some to cover supply shortfalls as the country develops renewables. David Fishman, senior manager of China-based energy consultancy the Lantau Group, said, “In 2023 or 2024, we might see the first year where renewable generation totally covers new demand growth. After this, coal consumption should start to decrease year-on-year.”

China’s focus on energy security has led to the prioritization of coal for its power supply. While the country has significantly increased its use of renewable energy and natural gas to reduce carbon emissions, the fluctuating output from renewable plants has led policymakers to turn to coal power to support the country’s baseload supply. China’s dependence on coal is expected to decrease gradually as the country develops renewables to cover its demand growth.