The United States and China are going in the opposite direction on coal.
I’m a little surprised by the optimism in this week’s “World Energy Outlook 2022” from the International Energy Agency. For the first time, the IEA is predicting that “coal demand peaks within the next few years”. David Wallace-Wells in this weekend’s New York Times Magazine has a similarly optimistic view, arguing that the worst climate outcomes are now much less likely, largely because the world is shifting away from coal.
I’d like to believe this. But, I am having trouble reconciling this optimism with recent data on coal consumption. Total global coal consumption increased 5% in 2021, and global electricity generation from coal last year reached an all-time high.
This continued reliance on coal reflects, in part, a multi-decade coal plant building binge in China. Last year over half of all coal-fired electricity generation came from China, so understanding the country’s trajectory for coal consumption is critical for global efforts to address climate change.
For today’s post, I want to look at data on electricity generation from coal in China. How much electricity does China generate from coal? How has this changed over time? And, to put this into context, I want to compare this to the United States, where the industry is going in a sharply different direction.
The figure below plots annual electricity generation from coal. Other sectors use coal too, but electricity generation is the most important.
In 2000, the United States generated 2,000 TWhs of electricity from coal. This was peak U.S. coal consumption, with just under one billion tons of coal burned for electricity generation, the equivalent of 3.5 tons of coal per person.
Since that time, U.S. electricity generation from coal has declined steadily, reaching 770 TWhs in 2020. This is still a lot of coal, but the overall pattern since 2000 is a remarkable decline that has been widely studied (here, here, and here).
China Powers Up
China has been going in the opposite direction. From below 1,000 TWhs in 2000, electricity generation from coal in China reached 4,775 TWhs in 2020. I’m struck both by the rapid growth in China, and by the wildly divergent patterns for the two countries. China goes from 0.5x the United States, to 6x the United States by 2020.
The biggest single factor explaining the divergent patterns is that China’s demand for electricity is soaring, while U.S. demand is practically flat.
To meet this massive increase in demand for electricity, China has built more of everything. More wind, solar, hydro, and nuclear than any other country, and yes, much more coal.
This continued dominance of coal has many implications. For example, it makes me think about the environmental impact of electric vehicles. From a climate change perspective, electric vehicles in the United States make more sense than they did even just a few years ago. But the case is harder to make in China with a coal-dominated grid, even as the country leads the world in new electric vehicle sales.
What’s Next for China?
It is always hard to predict the future. Nicholas Stern and coauthors predicted in 2016 that China’s coal use had already peaked, and that economic growth in China had been “decoupled” from growth in coal. Now with the benefit of a few more years of data, those predictions seem pretty clearly wrong.
If anything, coal in China seems to be gathering momentum. While coal recedes in other parts of the world, China is adding dozens of gigawatts of coal generating capacity each year, the equivalent of one new large coal plant per week. And a recent report finds that China has 247 gigawatts of new coal power plants under development.
On the other hand, a recent study by Energy Institute alum Amol Phadke and coauthors finds large opportunities for China to substitute away from coal. In their analysis, large-scale investments in solar, wind, and battery storage create a Chinese power sector that is both lower-cost and much lower-emitting.
I’m not sure what is going to happen, but I do know that much is at stake. One of the authors of a recent related study spoke about the inherent inertia in electricity markets, “China is like a big ship, and it takes time to turn in another direction.”
One important element of this inertia is coal plants themselves. Coal plants have a typical operating lifespan of 35 years or more, so every time a new coal plant is built, this threatens to lock in decades of future carbon dioxide emissions.
It is a reminder, as well, to take any predictions with a large grain of salt. Yes, there are reasons for optimism, and opportunities for decarbonization that simply did not exist a few years ago. But coal and other fossil fuels are still cheap, convenient, and used in vast quantities around the world.
Keep up with Energy Institute blogs, research, and events on Twitter @energyathaas.
Suggested citation: Davis, Lucas. “Putting China’s Coal Consumption in Context,” Energy Institute Blog, UC Berkeley, October 31, 2022, https://energyathaas.wordpress.com/2022/10/31/putting-chinas-coal-consumption-in-context/
Lucas Davis is the Jeffrey A. Jacobs Distinguished Professor in Business and Technology at the Haas School of Business at the University of California, Berkeley. He is a Faculty Affiliate at the Energy Institute at Haas, a coeditor at the American Economic Journal: Economic Policy, and a Research Associate at the National Bureau of Economic Research. He received a BA from Amherst College and a PhD in Economics from the University of Wisconsin. His research focuses on energy and environmental markets, and in particular, on electricity and natural gas regulation, pricing in competitive and non-competitive markets, and the economic and business impacts of environmental policy.