Alarm bells are ringing as China falls back in love with coal

White House sanctions policy since the invasion of Ukraine has crystallised these fears in Beijing, although Xi Jinping had already ordered officials to secure imported fuel as a national emergency, and at any price, after a string of blackouts late last year. He told the People’s Congress this month that energy security must take priority over the climate. “We can’t be detached from reality. We can’t throw away what is feeding us now, while what will feed us next has yet to arrive,” he told a key gathering known as the “Two Sessions”.

The mantra is now an “orderly” energy transition. Accounting rules have been changed to allow more fossil fuels to be burned. The energy intensity target for this year has been dropped. The new policy is being called “smart decarbonisation”: it is a euphemism for coal.

Liu Hongqiao, an energy analyst from Shuang Tan, said the official “Plan on National Economic and Social Development” has fundamentally reframed energy policy as a national security issue. The focus is on securing the supplies of coal, gas, and oil, and on holding down prices. “Ensuring economic stability, with fossil fuels, trumps all,” she said.

China produced 687 million tonnes of coal in the first two months of this year, a 10 per cent rise from a year before. Caixin reports that closed coal plants in Gansu have been reopened. Five new coal-fired power plants with a capacity of 7.3 gigawatts were cleared for construction over the first six weeks to mid-February, following 33 gigawatts cleared last year.

Citigroup thinks China could increase coal output by 100 million tonnes as soon as this year, and 300 million tonnes thereafter. Mr Yuen expects a production “ramp-up” by April or May, potentially setting off a crash in global coal prices a few weeks later. Citigroup forecasts a halving of European gas prices to $US14 by the summer in its base case, and down to $US4 by next winter if Russia then floods the market.

Should it happen, the UK energy price cap will return to normal levels, and analysts will soon be talking about plummeting inflation.

We could see an absolute fall in prices of traded goods, allowing relieved central banks to abandon plans for staccato rate rises. This would set off a violent unravelling of crowded “inflation trades” and a torrid reawakening of the “tech trade”.

“Ensuring economic stability, with fossil fuels, trumps all,”

Energy analyst Liu Hongqiao

China is schizophrenic on energy policy. It has just unveiled plans to build 450 gigawatts of renewable power in the Gobi desert, doubling total solar and wind capacity to 1,200 gigawatts by 2030. Carbon Brief said it installed more offshore wind last year than the rest of the world combined over the last five years.

But Xi’s return to coal is alarming for those who take global warming seriously, and not to take it seriously at this stage of accumulated science is nihilistic hedonism and a betrayal of Burkean conservative principles.

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The urgent conclusion of COP 26 is that the world must halve emissions by 2030 to have a fair chance of averting runaway climate change. The days when we could talk airily of doing something by mid-century have long since passed.

China already accounts for over half the world’s coal use, and a third of carbon emissions. If it now mines and burns an extra 300 million tonnes a year over the early 2020s, it brings forward another upward lurch in carbon dioxide parts per million, with methane leakage to match.

We are close to the threshold of unpredictable feedback loops, if we have not passed several already. China may now push us over the brink whatever the rest of us do.

The awful concatenation of Vladimir Putin’s adventurism is getting worse with every week that passes.

Telegraph, London

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