Last year, China emerged as the world’s clean energy champ, with the country accounting for $546 billion, or nearly half, of the $1.1 trillion that flowed into the sector as countries everywhere rushed to beef up their energy security. But those mammoth investments will do little to change China’s tag as the planet’s biggest polluter, if the country’s fossil fuel investments are any indication. China approved more than 50 gigawatts of new coal power in the first half of 2023, environment group Greenpeace has revealed. China is building coal-fired power plants at a record clip as it tries to counter the effects of drought on hydropower production.
"China's government has put energy security and energy transition at odds with one another. Beijing has clearly stated that coal power will still grow at a 'reasonable pace' into 2030," Greenpeace's Gao Yuhe has told Reuters.
China’s coal output increased 9% to 4.5 billion tons last year, more than half the world's total, and is set to continue to rise in the current year as Beijing looks to offset a 22.9% decline in hydropower generation.
Hydropower Crisis
China is not the only country whose hydropower sector has been hit by climate change. Electricity generation from hydro power sources has fallen quite dramatically in Europe, North America and Asia in 2023 compared to the corresponding period in 2022 with overall global hydro generation now 3% below the 2019-21 average. Reduced supplies of non-emitting hydro power in these regions means that utilities are increasingly deploying other sources of dispatchable but more polluting power, such as coal and natural gas, to meet electricity demand. Related: OPEC’s Production Drops More Than 1 Million Bpd In July: Argus
Alarmingly, North America, the United States in particular, is the hardest hit region in the world. Drier than normal conditions in Arizona, Nevada, Washington and Colorado--all key hydro states--have led to a disastrous 17% decline in hydropower generation in the country. Mexico is not much better off, with output down around 15%.
The rest of Latin America is faring much better, with Brazil, the third largest hydro producer globally, recording a 3.4% growth in production while Colombia is experiencing a roughly 10% increase.
Asia--the global hydropower heavyweight accounting for ~43% of production--has not been spared by the hydropower crisis. China--the continent’s largest producer accounting for 30% of global capacity--has recorded a worrying 7.2% drop in output so far this year while India, the second largest producer, has seen production decline 5%. Vietnam, the ninth largest global hydro producer and currently in the throes of a massive heatwave, has seen output drop by 10.5%.
Europe Goes Back To Coal
The global energy crisis brought by Russia’s war in Ukraine has triggered a coal ‘spring’ in Europe.
A key outcome of the COP26 climate summit was that dozens of nations pledged to end deforestation, curb CO2 and methane emissions and also stop public investment in coal power. Specifically regarding coal, a total of 46 countries signed the Global Coal to Clean Power Transition statement, promising to “accelerate a transition away from unabated coal power generation” and “cease issuance of new permits for new unabated coal-fired power generation projects.”
But less than a year later, all those promises went to the dogs, with dozens of countries scrambling to resume coal-based energy generation after the Ukraine crisis triggered a global energy meltdown.
According to a report by the Observer Research Foundation, energy supply disruptions triggered by Russia’s war on Ukraine took LNG prices even higher leaving coal as the only option for dispatchable and affordable power in much of Europe, including the tough markets of Western Europe and North America that have explicit policies to phase out coal.
According to the Washington Post, coal mines and power plants that closed 10 years ago have begun to be repaired in Germany in what industry observers have dubbed a “spring” for Germany’s coal-fired power plants. That’s a big U-turn considering that Germany's goal had been to phase out all coal-generated electricity by 2038.
Other European countries such as Austria, Poland, the Netherlands and Greece have also started restarting coal plants. Meanwhile, the European Commission has already given its absolution to countries replacing Russian gas with coal and producing higher emissions as a result.
The energy crisis is forcing many countries to rethink their energy strategies. The UK has decided to lift a 2019 moratorium on shale gas fracking as the country looks to ramp up domestic energy resources and help households and businesses struggling to pay soaring energy bills. Meanwhile, Japan has announced a major U-turn in its energy policy after the Asian nation adopted a new policy promoting greater use of nuclear energy, effectively ending an 11-year prohibition and phase-out that was triggered by the Fukushima disaster.
Under the new policy, Japan will maximize the use of existing nuclear reactors by restarting as many as possible, prolonging the operating life of old reactors beyond their 60-year limit and also develop next-generation reactors to replace them. The proposed legislation marks a complete reversal of the nuclear safety measures the country adopted after a powerful tsunami hit caused three of its six reactors to suffer meltdowns. Fearing a public backlash, the Japanese government has desisted from building new reactors or replacing aging ones.
By Alex Kimani for Oilprice.com
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