China produced more coal than ever last year as its power stations struggled to meet demand for electricity, undermining plans to curb carbon emissions.
While the surge in output helped bring the power crisis under control, coal prices are creeping up yet again this year amid expectations that China is going to need even more of the fossil fuel to power its economic recovery
Coal output hit a record 4.07 billion metric tons last year, up 4.7% from 2020, according to data released by China’s National Bureau of statistic’s earlier this week. Imports of coal also rose last year, to their highest level since 2013.
In September 2020, Chinese President Xi Jinping declared that it would become carbon neutral by 2060, and his government took drastic steps in the first half of 2021 toward making that a reality — including shutting down hundreds of coal mines.
Those ambitions — which analysts already suspected will be tough to achieve, especially as China’s economy recovered — were challenged by a power crunch last year, as coal supply fell sharply. The country recorded widespread power outage, including household blackouts. Factories were also forced to cut production, causing disruption to supply chains.
To ease the crisis, China ordered mines to boost coal production last fall. By December, production had jumped more than 7% from a year earlier to an all-time monthly high of 385 million metric tons, recent statistics show. That was also the third straight month of increases.
Meanwhile, prices in China for thermal coal — which is mainly used to generate electricity and provide heating — have shot higher in recent days. Thermal coal futures surged nearly 7% on Wednesday to about 775 yuan ($122) per metric ton, according to the Zhengzhou Commodity Exchange. The contract has soared 13% so far this year.
China expects its power consumption “to continue its rapid growth in 2022,” said Li Yunqing, an official with the National Development and Reform Commission, at a press conference on Tuesday in Beijing. Consumption in 2021 was already strong, increasing 10.3% from 2020, according to government statistics.
Chinese policymakers have made it clear that ensuring stability is a top priority in 2022 and pledged to take proactive measures to support growth. Earlier this week, China reported its GDP grew 8.1% in 2021, outstripping the government’s own targets. But growth slowed to half that pace in the last quarter, and may not accelerate much this year, according to some economists.
Leaders of China’s ruling Communist Party said last month that they would prioritize investments in infrastructure to bolster economic growth, as such projects can create more jobs. But such work is heavily reliant on fossil fuels.
