Confusion Reigns over China’s Energy Policy

China’s energy policy seems perplexing:  coal use reductions at home, while abroad it is helping to build coal-fired power plants.

With the US under Donald Trump indicating it wants to withdraw from the Paris Agreement on climate change, China is increasingly seen as a world leader in the battle to cut carbon emissions and prevent climate catastrophe.

Beijing is implementing ambitious renewable energy schemes at home and has announced plans to reshape its energy sector and reduce its use of coal – by far the most polluting fossil fuel.

But overseas, China is pursuing a very different policy.  Here in Serbia a Chinese enterprise, China Machinery Engineering Corporation (CMEC), recently started work on a multi-million dollar project to enlarge the coal-fired Kostolac power station on the banks of the Danube river in the east of the country.

Under the terms of the US$715m contract, the Chinese will build an additional 350 MW unit at Kostolac and expand operations at a nearby opencast mine producing lignite – the “dirtiest” coal.

Urgewald, a Berlin-based environmental group, calculates that Chinese companies are at present involved in plans to build about a fifth of new coal-fired energy capacity around the world – in countries including Pakistan, Egypt, Iran, Vietnam and Malawi.

In some of these countries there is little or no coal-powered generation at present; building coal plants is likely to prevent the development of other, less polluting energy sources and lock in high emission power structures for years to come.

China has used its considerable financial muscle to back up its global coal campaign; Chinese state banks are estimated to have provided more than US$40bn in loans over the past 18 years for building coal-fired power plants overseas.  The majority of the funding for Serbia’s Kostolac project is being provided by China’s state-owned Export-Import Bank.

More than 70% of Serbia’s energy comes from coal.  Elektroprivreda Srbije (EPS), the Serbian state company which has a monopoly on electricity production, says the new plant, to be in operation by 2020, will meet the highest environmental standards and is necessary to satisfy ever-rising domestic energy demand.
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Chinese companies are heavily involved in developing coal power projects elsewhere in the Balkans region, most recently advancing millions of dollars in loans for the expansion of coal-fired power in Bosnia. 

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