China Pledges to Stop Funding Coal Abroad, but what about its Domestic Coal Consumption?

As the largest producer of greenhouse gases in the world, China has, in recent years, taken steps to minimize its carbon footprint. Vowing to become carbon neutral by 2060, China has begun to introduce stricter and more environmentally friendly regulations on its power sector, specifically on the coal and steel markets. As China takes another major step with the announcement of their divestment from coal power plants abroad, it is becoming increasingly obvious that the road to renewability is not as easily travelled as it may initially seem. 

On September 21, 2021, during the 76th U.N. General Assembly, China’s General Secretary Xi Jinping delivered a speech where he expressed China’s commitment to the “harmony between man and nature.” Further, he affirmed China’s commitment to supporting developing countries with green energy, and, most importantly, that China would cease to finance all coal-fired power plants abroad.  

 In 2020, China was the world’s largest public financier of coal based power plants. According to General Energy Monitor, China commissioned 38.4 gigawatts of coal plants last year, which accounted for 76 percent of the global share of new coal power plants. Christine Shearer, GEM’s coal program director, states that this divestment is “one of the most significant developments on the climate front this year, as it may well mark the end of international public financing for coal plants.” Affecting $50 billion in investment and potentially stopping the production of 200 million tonnes of carbon dioxide per year, China’s actions may set precedence for the financing of clean energy and incite global interest in the reduction of funding for greenhouse producing power plants as a whole. 

However, although these new promises are a clear sign of progress, the policy only begins to scrape at a small part of China’s contribution to the climate crisis and its own reliance on polluting fuel sources.

President Xi’s statement only targets coal abroad, and says nothing about Chinese domestic production of coal and greenhouse gas pollution. Accounting for roughly half of the 7.7 billion tonnes of coal produced in 2020, 51.7 percent of China’s power output comes from the world’s highest carbon emitting fuel. Production has decreased by 15 percent in the past 15 years, but the pandemic has shown how its economy remains reliant on coal.

The economic crisis caused by the pandemic resulted in surging coal prices. With the tightening of restrictions on carbon emissions, many power stations, refusing to operate at a loss, have had to reduce output in order to meet China’s energy efficiency targets. Thus, in recent weeks, districts across China have experienced blackouts and power rations, leaving residential areas in the dark and factories operating at reduced capacity. In order to combat this, according to The Wall Street Journal, China’s economic planning agency, the National Development and Reform Commission, plans to “increase coal production, import more coal, and increase domestic gas production.”

China’s coal crisis demonstrates not only its own domestic addiction but also shows us how reliant the world still is on high emission fuels to fuel growing economies. To many parts of the world, renewable energy remains a luxury. “Many developing countries don’t even have electricity,” says Li Gao, director general of the Chinese ministry’s department of climate change, “In this situation, if you don’t use coal, what will you use?”

By: Raymond Ge