China’s coal industry unflinching over 2060 zero-carbon goal

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China’s massive coal industry isn’t worried about the nation’s plan to drastically cut carbon emissions by 2060.

It will likely be business as usual for years to come for coal companies even after President Xi Jinping’s surprise announcement that China wants to be carbon neutral by 2060, according to industry officials who declined to be named. With China adding new mines and power plants through 2025, the fuel will continue to dominate the country’s power sector, so consumption won’t see a significant hit, said the people, who asked not to be identified discussing the new target.

Xi’s newfound climate ambition will eventually have to reckon with the dirtiest fossil fuel, which currently provides more than half of China’s energy and supports 3.5 million jobs. But that could be years away, as the country is still investing in new mining capacity and power plants.

“The 2060 time-frame leaves the possibility of building more coal and fossil fuel plants in the next five years and peaking emissions by 2030,” said Alex Whitworth, a research director with Wood Mackenzie. “It also implies a huge technological revolution is going on, and after 2030 it’s going to accelerate.”

?It’s hard to overstate the importance of coal to China, and to the fight against climate change. The country mines and burns half the world’s supply, and it’s the reason the power sector there is the single biggest contributor to new greenhouse gases in the atmosphere every year.

A carbon-neutral future is incompatible with that level of coal burning, which reached 3.9 billion tons last year alone. Researchers from Tsinghua University’s Institute of Energy, Environment and Economy say coal power will have to be eliminated by 2050 for China to reach Xi’s goal.

New Investments

Utility giants that for years relied on coal power for their revenue have seen the writing on the wall. Companies like China Resources Power Holdings and the China Huaneng Group have invested aggressively in renewable energy in recent years, said Jennifer Song, an analyst with Morningstar.

Still, that’s not stopping China from digging new mines and building new power plants. Coal production capacity may rise to 5 billion tons a year by 2025, from 4.1 billion currently, according to Daiwa Capital Markets. Meanwhile the country is set to expand coal electricity capacity by more than 10% to 1 200 gigawatts by 2025, according to Wood Mackenzie.

The country is currently dealing with signs of a looming shortage just as winter approaches, which has pushed up prices to near a two-year high.

The main reforms going on within the coal industry until now have focused on consolidating and aiming for higher efficiency. The country is shutting older and smaller mines while allowing new advanced capacity to be built. Last year, it opened the $30 billion Haoji Railway line to haul coal directly from central mining basins to energy hungry regions in the southeast.

A similar shift is happening within the coal power sector, which may help air quality though not eliminate climate-change inducing carbon emissions. The government is shutting or upgrading less-efficient plants with more advanced facilities that spew relatively fewer PM2.5 particles that are hazardous to human health.

“We think a combination of a falling share of coal-fired generation and a more efficient coal-fired fleet would drive material nationwide reduction in PM2.5 emissions over the next decade,” Morningstar’s Song said.

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