If you're looking for a culprit for the choking smog that's engulfed China this week, there's a clue in customs data released by the government Wednesday.
Coal imports in November amounted to nearly 22 million metric tons, their highest level in almost three years. Combined with domestic production at a year-high and thin exports, China's apparent coal demand looks to be roaring back. Down as much as 14 percent from a year earlier in July, it was off less than 1 percent last month.
Some of this is to be expected. Despite having the biggest installed renewable-energy capacity of any country, China still depends on coal for as much as three-quarters of its power generation. One reason thermal-coal prices have surged over the past year is the sheer difficulty of changing that equation.
With winter biting, alternative sources of energy haven't stepped up to the plate. Natural gas is constrained in terms of import capacity and priced to be uncompetitive with coal. To make matters worse, at present it's being rationed. As for renewables, solar isn't such a big contributor to electricity supply when the days grow shorter and smog darkens the sky, and the slow wind speeds that have contributed to the blanket pollution will be hampering wind-energy generation, too.
Politicians in Beijing can't be blamed for the weather that's accentuating the smog, and they can be forgiven for the state of the legacy generation systems they've inherited. The same can't be said of their plans for the future, however.
China's 13th Five Year Plan for energy, released last month, sharply reduces installation targets for renewables, meaning coal could take the lion's share of new generation installed by 2020. The 216 gigawatts of new capacity that thermal-power stations will be able to add before reaching a 1,100 gigawatt cap are greater than the plan envisages from all forms of non-fossil energy put together.
The plan isn't all bad. Increased investment in the country's grid will help find markets for the renewables that are going unused at present. Bloomberg New Energy Finance estimates that such curtailed energy amounts to 21 percent of wind and 23 percent of solar generation capacity. It also reckons that renewables will overshoot the government's targets while fossil fuels will undershoot thanks to projects already in train, meaning coal will end up adding only 113 gigawatts, while wind and solar PV will add 103 gigawatts and 60 gigawatts respectively.
Still, for all the justified concern about the new direction of U.S. energy policy under President-elect Donald Trump, it's worth reflecting that China is also sliding backward in its commitments to clean up its energy mix.
Xinhua quoted President Xi Jinping Wednesday as saying that officials need to promote clean energy for heating in winter in order to avoid the pollution problems China is currently experiencing. He could start by overhauling the government's own planning. Without a faster transition toward renewables, the smog will only get worse.
This column does not necessarily reflect the opinion of Bloomberg LP and its owners.
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