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China has few options, but will increase coal use, analysts say.

The chimney of the Wujing coal-fired power plant in Shanghai, China, on September 28, 2021.

Hector Retamaru | AFP | Getty Images

China may need to set aside ambitious plans to reduce carbon emissions, at least in the short term, to survive the worsening electricity crisis, analysts said.

“Like other markets in Asia and Europe, China will show its urgent need to keep lighting through more coal and its commitment to an increasingly ambitious decarbonization goal. We must take action to balance between, “said Gavin Thompson, Vice-Chair of Asia Pacific. Energy consultancy Wood Mackenzie.

“But the short-term reality is that China and many others have little choice but to increase coal consumption to meet electricity demand,” Thomson wrote in the report.

But in the short-term reality, China and many others have little choice but to increase coal consumption to meet electricity demand.

Gavin Thompson

Wood Mackenzie Asia Pacific Vice-Chair

China’s environmental goals

President of China Xi Jinping Last year, it announced that China’s carbon dioxide emissions would begin to decline by 2030 and reach carbon neutrality by 2060. In short, China balances carbon dioxide emissions by removing the same amount from the atmosphere, reducing net carbon dioxide emissions to zero. ..

To achieve these goals, China “Dual control” policy This requires the state 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 in early 2021 that 20 states failed to meet at least one of the two goals.

Last month, the agency updated its “dual management” policy with stricter measures — and it partially Contributed to widespread electricity distribution throughout the county.

Barclays Research estimates that rigorous implementation of these goals will reduce China’s economic growth by 1-3 percentage points in the fourth quarter of 2021 and the first quarter of 2022. Therefore, Chinese officials are likely to relax two goals this year, Barclays economists said.

“It’s only three months until the end of the year, and I think it’s very difficult to reach the’dual control’goal this year,” they wrote in the report.

“We believe governments are likely to take a more flexible approach to their goals, especially given that growth has already slowed and could be a colder winter than usual. “They said.

Coal imports “significantly increased”

It may include mitigation Australian coal import restrictions, Some said Analyst.

“The ban on coal imports from Australia has exacerbated the domestic coal shortage,” said an economist at Barclays.

According to the bank, Australia was China’s largest coal supplier in 2019, accounting for 39% of China’s total coal imports.

Barclays expects China to “significantly increase” coal imports, especially from major coal exporters, in the fourth quarter.

China stopped buying coal From Australia last year. Bilateral relations between the two countries have deteriorated after Australia supported China’s call for an international investigation into the handling of Covid-19.

China has been in the last few weeks Release Australian coal left behind in Chinese ports Reuters reported that it was banned from imports. About a million tonnes of Australian coal remain in a bonded warehouse along the coast of China, the news agency said.

Do you want to boost renewable energy?

Increasing coal use will help China avoid a prolonged power crisis and a sharp recession. But that will come at the expense of the country’s goal of reducing carbon emissions-at least temporarily, analysts said.

Wood Mackenzie’s Thompson said such balancing could be “unpleasant” for China.

Like many countries, China is preparing COP26 Climate Change Summit In Glasgow, Scotland. At the November Summit, world leaders and environmentalists will set national emission targets and adapt to the effects of climate change.

Increased coal usage in China will occur in the coming weeks. Xi said the country will not build new coal-fired power projects abroad, Thompson was added.

Xi pledged to an overseas coal project at the UN General Assembly last month.

Read more about clean energy from CNBC Pro

Morgan Stanley said boosting coal supply could not be a permanent solution to address electricity shortages, given the need to reduce carbon emissions in the long run.

This means that China and other Asian economies could accelerate investment in renewable energy, says Wall Street banks. As of August, China said it had already invested about 69% of its investment in wind and hydropower (on a three-month moving average basis).

“Therefore, we expect investment in renewable energy to continue at a steady pace over the next few years,” the bank said in a report.

“The recent emergence of shortages should provide local governments with additional incentives to accelerate their plans.”

China has few options, but will increase coal use, analysts say.

Source link China has few options, but will increase coal use, analysts say.

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