A chimney at the Wujing coal-electric power plant in Shanghai, China on September 28, 2021.
Hector Rétamal | AFP | Getty Images
China may need to put aside its ambitious plans to cut carbon emissions – at least in the short term – in order to weather its worsening energy crisis, analysts said.
“Like other markets in Asia and Europe, China must strike a balance between the immediate need to keep the lights on – via more coal – and show its commitment to increasingly ambitious decarbonization goals,” he said. said Gavin Thompson, Asia-Pacific vice president of energy consulting Wood Mackenzie.
“But the short-term reality is that China and many others have no choice but to increase the consumption of coal to meet the demand for electricity,” Thomson wrote in a report.
China’s environmental goals
Chinese President Xi Jinping announced last year that China’s carbon emissions will begin to decline by 2030 and that the country will achieve carbon neutrality by 2060. This means that China will balance its carbon emissions by removing an equivalent amount from the atmosphere, resulting in a net zero. release of carbon dioxide.
To achieve these goals, China has introduced a “double check” policy that requires provinces to limit energy use and reduce energy intensity – defined as the amount of energy used per unit of GDP.
In mid-August, China’s Economic Planning Agency announced that 20 provinces had failed to meet at least one of the two targets in the first half of 2021.
Last month, the agency updated the “double-checking” policy with more stringent measures – and this in part contributed to the widespread rationing of electricity throughout the county.
Strict implementation of these targets would reduce China’s economic growth by 1 to 3 percentage points in the fourth quarter of 2021 and the first quarter of 2022, Barclays Research estimated. Thus, Chinese authorities are expected to relax both targets this year, Barclays economists said.
“With three months to go until the end of the year, we think it will be very difficult to meet the goal of ‘double checking’ this year,” they wrote in a report.
“We believe the government is likely to take a more flexible approach to its targets, especially given the already experienced slowdown in growth and the possibility of a colder-than-usual winter,” they said.
Coal imports will “increase considerably”
This could include easing restrictions on imports of Australian coal, some said. analysts.
“The ban on coal imports from Australia… has exacerbated national coal shortages,” Barclays economists said.
Australia was China’s top coal supplier in 2019 and accounted for 39% of China’s total coal imports, the bank said.
Barclays expects China to “significantly increase” its coal imports in the fourth quarter, especially from major coal-exporting countries.
China stopped buying coal from Australia last year. Bilateral relations between the two countries have deteriorated after Australia backed a call for an international investigation into China’s handling of Covid-19.
In recent weeks, China has started releasing Australian coal blocked at Chinese ports due to the import ban, Reuters reported. About one million tonnes of Australian coal remained in bonded warehouses along China’s coast, the news agency said.
A boost for renewable energies?
The increased use of coal will help China avoid a protracted energy crisis and a sharp economic downturn. But that will come at the expense of the country’s goal of reducing carbon emissions – at least temporarily, analysts said.
Such a balancing act could be “uncomfortable” for China, said Thompson of Wood Mackenzie.
Like many countries, China is preparing for the COP26 climate change summit in Glasgow, Scotland. At the November summit, world leaders and environmentalists will set each country’s emissions targets and adapt to the effects of climate change.
Higher coal use in China would also come just weeks after Xi said the country would not build new overseas coal-fired power projects, Thompson added.
Xi made the pledge on overseas coal projects at the United Nations General Assembly last month.
Increasing the supply of coal may not be a permanent solution to alleviating power shortages, given the need to reduce carbon emissions in the long run, Morgan Stanley said.
This means that China and other Asian economies could accelerate investments in renewables, the Wall Street bank said. He noted that in August, China was already channeling about 69% – on a three-month moving average basis – of its investments in power generation to wind and hydropower.
“Therefore, we expect investments in renewable energy to continue at a strong pace in the years to come,” the bank said in a report.
“The recent emergence of shortages should provide an additional incentive for local governments to accelerate their plans.”