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China has "no selection" however to depend on coal energy in the meanwhile, the official mentioned

A coal-fired power plant in Jiayuguan, Gansu province, China, on Thursday April 1, 2021.

Qilai Shen | Bloomberg | Getty Images

BEIJING – China has ambitious targets to reduce its CO2 emissions, but it won't give up coal power as quickly as it keeps its economic goals firmly in mind.

President Xi Jinping said in September that the country's carbon emissions would start falling from 2030, and he said the country will be carbon neutral by 2060 – four decades from now.

In the meantime, policy makers are making it clear that economic growth remains a top priority – and that growth depends largely on coal power. Beijing has a GDP target of 6% this year, a level that analysts say would allow authorities to address long-term issues such as the country's high debt level.

Many developing countries don't even have electricity. If you are not using charcoal in this situation, which one are you going to use?

Li Gao

China's Ministry of Environment on China's Financing of Coal Power Outside of China

"China's energy structure is dominated by coal power. This is an objective reality," said Su Wei, deputy secretary-general of the National Development and Reform Commission. CNBC translated its Mandarin-language comments it made after Xi's separate remarks at a US-led climate change summit of world leaders late last week.

"Because renewable energies (like wind and solar power) are intermittent and unstable, we have to rely on a stable source of energy," said Su. "We have no other choice. For a period of time we may need to use coal power as a flexible adjustment point."

He added that coal is readily available while renewable energies need to be developed in China.

Financing coal power outside of China

When asked by CNBC whether Beijing could follow South Korea's promise to end public funding of overseas coal-fired power plants, the Chinese Department of Environment announced Tuesday that China's funding of coal power in developing countries will continue.

"China has helped some developing countries build coal-fired power plants overseas," Li Gao, director general of the ministry's climate change division, told reporters in Mandarin that CNBC had translated. "China offers this support according to the local situation."

"Many developing countries don't even have electricity," he said. "If you're not using charcoal in this situation, which one are you going to use?"

According to Boston University's Global Development Policy Center, the China Development Bank and Export-Import Bank of China funded $ 474 million in coal projects outside of China in 2020 alone.

However, the same report shows that China's funding of energy projects beyond its borders has steadily declined since 2016.

Li said coal accounted for 56.8% of domestic power generation in China in 2020, compared to 72.4% 15 years ago. According to the Union of Concerned Scientists, a nonprofit organization founded at MIT, China was the world's heaviest carbon emitter last year. The United States was second and India third.

During last week's climate summit, Xi called for international cooperation on reducing CO2 emissions, adding that different countries should play different roles in this reduction. He did not identify any countries by name.

Xi said China will "strictly control coal-fired power plants" and limit the increase in coal consumption over the next five years. He said there would be cuts over the next five years.

System "favors coal combustion"

The Chinese authorities have deliberately tightened restrictions on CO2 emissions this year, for example by calling for production cuts at the steel production center in Tangshan City.

However, China is still building more coal-fired power plants. Analysis by the US-based Global Energy Monitor shows that China built more than three times the amount of new coal-fired power capacity last year than the rest of the world combined.

China is the world's largest consumer of coal. Late last year, some parts of the country reported a shortage of coal to limit local electricity consumption as the demand for electricity soared. According to official figures, China's electricity consumption rose by 3.1% last year.

The Chinese government intends to cut the share of carbon-intensive fuels in national energy consumption to 20% by 2025, analysts of the Chinese renaissance said in a report last month. However, they found that falling renewable energy costs were not enough to fuel a significant industry relocation.

"We believe that the current system predominantly favors coal-burning, also because it is more stable and less exposed to fluctuations in wind and solar energy," the report said. "Insecure market access has already slowed investment in renewable energy. Given the power of coal and construction interests, the reforms needed are likely to require significant political will."

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