China ramps up coal-based steel and power plants despite net-zero goals

China has continued to invest in coal-based power plants and steel facilities at “alarming rates” that are antithetical to climate change goals, research from the Helsinki-based Centre for Research on Energy and Clean Air (CREA) has found. When mapping new coal power and steelmaking projects from 2021, CREA discovered that China is investing in more new projects than the rest of the world combined.

Construction was started on 33GW of new coal power plants in 2021, the most since 2016 and almost three times as much as the rest of the world put together. The body said that once completed and operational, these projects will emit as much CO2 annually as Florida, the third-highest emitter among US states. After accounting for plant retirements, which slowed down from 2020, China’s coal power capacity continued to increase while the rest of the world’s continued to fall.

The coal power and steel sectors are China’s two largest emitters of CO2, and there is no sign of investment in coal-based capacity being scaled back yet, despite the country’s carbon neutrality targets. “A complete shift of new investments into clean capacity is needed to put China on track to peak CO2 emissions and avoid a glut of unneeded power and industrial capacity,” CREA said.

Permitting new coal power projects was essentially frozen in 2021, as the Chinese leadership emphasised strictly controlling “high emissions” projects. However, reflecting shifting political signals, permitting of new coal power projects restarted in 2022, with five totalling 7.3GW of capacity cleared for construction in just the first six weeks of the year.

China is also rapidly replacing ageing coal-based steel plants with new capacity, the study showed. Seventy-four million tonnes of new coal-based steelmaking capacity was approved in just one year, rebounding from a hiatus in 2020, and 15 times the annual average capacity additions in the rest of the world in 2016-2020. The capacity approved in 2021 also exceeds all of the coal-based steel capacity under development in the rest of the world. New coal-based power plants and integrated steel plants have a typical lifetime of 20-40 years and will lock the sectors further into coal dependency. There is no space for this new capacity to be used under the goals of the Paris Agreement.

The new coal-based steel projects initiated in 2021 alone will entail approximately $70bn-$110bn (£52bn-£81bn) in stranded assets when the carbon-emission reduction targets are realised, and the coal power plants imply a further stranded investment of $20bn.

CREA urged China to direct all of its new power-generation investments into clean energy, and increase scale of these investments to match the projected growth in electricity demand.
Sun Shouliang, director of the general department at China’s Ministry of Ecology and Environment, told a briefing on Wednesday that the country had to “prioritise stability” and should “not set goals too high”.

China currently plans to start cutting coal consumption from 2026 but is likely to put an additional 150GW of coal-fired power into operation before then according to researchers with the State Grid Corp of China.