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China is racing to shore up its supply of home-grown electricity, but that doesn’t necessarily put i͏‌  ͏‌  ͏‌  ͏‌  ͏‌  ͏‌ 
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March 1, 2023

Net Zero

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Tim McDonnell
Tim McDonnell

Hi, and welcome back to Net Zero.

China just crossed two seemingly paradoxical milestones in its electricity market, the world’s largest. Low-carbon sources (renewables, hydro, and nuclear) recently overtook coal as the country’s top form of electricity capacity. But new data indicate that China’s buildout of new coal power capacity is the most frenzied it has been in years — a potentially catastrophic development for climate change. What gives? As Xiaoying You explains below, the sometimes conflicting political mandates faced by local planners have them desperate to stave off any risk of blackouts. But the emissions implications may not be as bad as they seem.

Also on deck: EVs are gobbling up the lion’s share of climate investment, words of legal warning to carbon-heavy companies, and the Russian energy export that’s flying under the sanctions radar.

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Energy talent wars are heating up. As oil and gas companies tighten their belts and cut back on new exploration and production, their laid-off engineers and other workers are finding an open door at wind and solar companies that are hiring feverishly. Between 2016-2021, employment in the U.S. oil and gas industry fell by about the same amount — 20% — that wind industry employment increased.

The EV industry is flooring it. EV startup Fisker said it’s on track to make its first deliveries in the spring, leading to a 30% jump in its share price. Nissan also said it will accelerate its rollout of new electric models. And Stellantis announced a $155 million investment in an Argentinian copper mine, in a bid to consolidate its battery supply chain. But German officials said they hope to water down the EU’s plan to ban the sale of new non-electric vehicles by 2035.

Afolabi Sotunde/Reuters

Nigeria’s new president faces an early climate test. When Bola Tinubu takes office in May — assuming his election victory is confirmed — one of his first challenges will be to fulfill a promise to scrap the country’s popular gasoline subsidy. The subsidies make Nigeria one of the world’s cheapest places to fill a gas tank — or, more importantly for a country with a notoriously shoddy electric grid, a generator. But they cost the government about $13 billion a year, and undermine the investment case for clean energy.

Congressional Republicans notch an anti-ESG victory. The House passed a bill to undo a Biden administration regulatory tweak meant to make it easier for managers of pensions and retirement funds to consider ESG factors, such as a company’s exposure to climate risk, in their investment decisions. In the Senate, Democrat Joe Manchin said he will support the bill as well, raising the odds that it will land with Biden, who has promised to veto it.

Xiaoying You

Why China keeps building coal power plants

An aerial view of the machinery at the coal terminal of China's Huanghua port. China Daily/Handout via REUTERS


China permitted more new coal power capacity in 2022 than any year since 2015, and all signs indicate that the surge will continue this year.

It OKed 106 gigawatts (GW) of new capacity last year, equivalent to two large coal power plants per week, and a fourfold increase from 2021, according to data published this week.

That’s about half of the U.S.’s total coal capacity.

Analysts expect the spike to stretch into 2023. At least 60 GW of coal power capacity could be permitted this year, one told me.


The coal surge is China’s fight or flight response to two years of domestic power shortages and the energy crisis that resulted from Russia’s invasion of Ukraine.

In 2021, widespread power shortages paralyzed factories in manufacturing hubs, such as Guangdong, and left residents facing sudden electricity cuts.

As a result, the central government ordered provincial governments to prioritize energy security and boost coal production. Chinese leader Xi Jinping also emphasized that large-scale power cuts “must not happen again” at a key economic meeting at the end of 2021.

Then, when power shortages hit Sichuan — a hydropower hub that sends electricity to more economically developed regions — last summer, forcing the local government to cut the power supply to factories for two weeks to keep residential lights on, other provinces, especially those that do not produce their own electricity, realized the importance of being self-sufficient.

The second half of 2022 saw a “steep acceleration” in the amount of coal capacity permitted, as the new data shows. The jump is likely to be a response from provinces, which have the power to sign off new coal plants.

Europe’s energy crisis, caused by the invasion of Ukraine, meanwhile made China wary of relying on foreign supplies of energy. So it turned to a resource it has in abundance: coal.


Permitted capacity isn’t the only figure that jumped last year, according to the new data, which was jointly published by Global Energy Monitor (GEM), a U.S.-based non-profit, and the Centre for Research on Energy and Clean Air (CREA), a Finland-based think tank.

Last year also saw construction begin on 50 GW of coal power capacity, six times the rest of the world combined, and the most since 2015. Many of these projects had their permits “fast-tracked” and moved to construction within months. Plant retirement also “slowed down further.” China’s latest statistics, meanwhile, show domestic coal production saw a 10.5% year-on-year increase last year, and coal consumption went up 4.3% compared to 2021.

The report’s lead author, CREA’s Lauri Myllyvirta, told me he expects 2023 to be “another big year” for permits, barring a backlash from other parts of the central government, such as the financial regulator. Provinces could hand out permits for at least 60 GW of coal power capacity this year to hit a target set by the country’s energy watchdog, he said.

Shandong province — which has the largest coal fleet in the country — has announced plans to add six more coal power projects this year, while Jiangsu province has “prepared” 13 coal power units under six projects in January, according to GEM senior researcher Yu Aiqun, the report’s co-author. “These are all likely [to be] permitted in 2023,” Yu said.


The policy signals from the central government seem to have set off a rush of permitting, with provinces scrambling to issue as many permits as possible while the floodgates stay open.

— Lauri Myllyvirta


China may be ramping up coal power capacity, but some experts I spoke to said that the country would control actual generation from the fossil fuel. Beijing views the expanded capacity more like an insurance policy, to help its inflexible power grid — which cannot easily handle large, unpredictable, inputs of renewable energy — and ensure reliable supply when wind, solar, and hydropower resources are unavailable.

After all, the country last year passed a notable milestone, with renewable power capacity surpassing that of coal power, according to Caixin, an independent Chinese financial outlet.

Wu Wei, an assistant professor at the China Institute for Studies in Energy Policy at Xiamen University, said coal power plants could operate fewer and fewer hours once renewables become the primary energy source. “Even if [coal power] capacity is increasing, if its operating hours are decreasing, its emissions will decrease accordingly,” he explained.


India is in a similar position to China. It also relies on coal for electricity, and plans to build more coal plants this decade to meet growing energy demands, while concurrently working to increase renewable power capacity. India is preparing to expand its coal power fleet by a quarter — equivalent to nearly 56 GW in capacity — by 2030 unless there is a “substantial drop” in the cost of energy storage, its power minister Raj Kumar Singh told Bloomberg in September.


  • Instead of focusing on relentlessly expanding coal power capacity, China should devote its attention to improving electricity transmission and distribution nationwide, Shen Xinyi, a researcher at CREA, argues in Sixth Tone, a Shanghai-based outlet.
One Good Text

… with Laura Clarke, the chief executive of ClientEarth, which recently personally sued the directors of the energy giant Shell for a climate strategy the NGO claims is insufficient to meet net-zero targets and which puts the company at risk.

Corner Office

Executives might do more about their companies’ carbon footprint if they were paid to care. At least, that’s becoming a common refrain in European boardrooms, where a growing number of firms are offering executives bonuses when they hit designated emissions reduction milestones.

Based on the amounts those execs are pocketing, you might think the climate crisis is solved. Among the 39 largest European companies that offer a carbon-linked executive bonus, the average payout in 2022 was 89% of the maximum, according to a new analysis this week. But in most cases, the criteria were vague, opaque, and weak, the analysis found — meaning execs are earning a cushy new benefit with marginal benefit for the climate.

Semafor Stat

Price for a permit to emit one ton of CO2 for the industrial facilities and airlines covered by the EU’s carbon trading system, a record high. Carbon prices, a key EU policy to drive down emissions, are rising as manufacturing picks up pace in response to falling natural gas prices.

WikimediaCommons/RIA Novosti

U.S. and EU sanctions targeting Russia’s energy sector are ignoring a major industry through which the Kremlin reaps profit and geopolitical leverage: Nuclear power. Russia’s state-owned Rosatom was the supplier in half of all international nuclear power plant construction deals between 2000 and 2015, according to a study this week in Nature, more than the U.S., Japan, France, and China combined. Its current portfolio of contracts, spanning 29 countries, is worth $139 billion, and has not been targeted by sanctions.

This arrangement leaves countries that plan to rely on Russian-supplied nuclear plants and fuels as important tools for their low-carbon transition, such as Hungary, Slovakia, Turkey, and Egypt, vulnerable to the same type of supply disruption and extortion Russia deployed against Europe’s natural gas market before and during the Ukraine war. And it provides Russia a means to exercise a form of soft-power diplomacy across South America, Africa, and elsewhere that Western countries, with less robust and proactive nuclear export abilities, are ill-prepared to counter.


Friday’s newsletter incorrectly labeled a chart illustrating how the populations of G20 countries variously perceived the threat of climate change. The question and the answers did not correspond to one another. We’re very sorry for the error, but thank you to those of you who wrote in to point it out.

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— Tim (with Prashant Rao, Jeronimo Gonzalez, and Preeti Jha)