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China’s $30 billion investment in coal hurts its climate goals

China’s increased spending this year on coal-fired electricity and steel production threatens its climate goals and could even turn them into a missed investment, according to clean air campaigners.

The acceleration in approvals for a package of projects in the first half of 2022, which represents up to 230 billion yuan ($32 billion) in investment, comes despite declines in coal power generation and steel production, according to a report jointly prepared by the Energy Research Center. Clean Air and the Center for Global Energy Monitoring.

According to the report, much of that investment may end up being left behind, as announcements of new coal projects have slowed, indicating a reluctance on the part of the electricity companies because coal-fired electricity has recently been “incurring heavy losses”. Meanwhile, China’s renewable energy capacity continues to expand rapidly, approaching the size of the market needed to peak and reduce emissions.

Avoiding an electricity crisis
Suffering from electricity shortages that have crippled the economy over the past year, China has raised coal production to record levels to prevent a repeat of the crisis. However, expanding its adoption is at odds with scientists who say the world needs to rapidly phase out its use of the most polluting fossil fuels to avoid the worst effects of global warming.

“While the coal increase may be a short-term policy adjustment, it poses a risk to China’s long-term climate commitments, with its goal of reaching carbon neutrality by 2060, time is running out,” says Shenny Chen, a researcher at the Center for Research on Energy and Clean Air. Beijing has to shift away from fossil fuels.”

China’s coal reserves are enough for five decades

China is the world’s largest producer and consumer of both coal and steel.

The new permits include 15 gigawatts of coal-fired electricity and 30 million tons per year of coal-fired blast furnaces.

The steel industry, which China has said will peak emissions by 2025, is China’s second-worst emitter after electricity generators.

In this context, the report stated that “there is an urgent need to harmonize investments in new production capacity in the steel sector in order to reach the peak and reduce carbon dioxide emissions.”


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