China posts record fossil fuel output as security trumps climate

Fossil fuel production in China soared in 2022, with coal and gas hitting record highs, as environmental targets took a back seat to energy security after a tumultuous year for prices. 

That swamped some good news for the climate from the steel sector, where China cut output for a second consecutive year to make good on its promise to rein in emissions from the worst-polluting industry after power generation.

The world’s top coal mining nation dug up nearly 4.5 billion tons of the dirtiest fuel last year, an increase of 9 per cent on 2021, the statistics bureau said on Tuesday. Production of cleaner-burning gas rose 6.4 per cent to 218 billion cubic meters, while crude oil rose above 200 million tons for the first time since 2015, helping to cut China’s reliance on pricey imports.

As early as January last year, President Xi Jinping had flagged that China’s ambitious climate goals shouldn’t clash with its economic objectives, which include securing adequate supplies of commodities. Energy security became an even bigger priority after Russia’s invasion of Ukraine the following month put a rocket under international prices. 

Drought and a power crunch over the summer highlighted the nation’s ongoing vulnerability to insufficient energy supplies. Now, China’s reopening after three years of harsh Covid restrictions has put the onus on producers to ensure they have the fuels at hand that the government deems necessary to power the economy’s recovery.

Steel production fell 2.1 per cent in 2022 to just over 1 billion tons, although it’s uncertain whether the decline could have occurred without the slowdown in growth and the crisis in the metals-intensive property market. Output of aluminum, a lightweight material important to the green transition that nevertheless takes a lot of power to produce, topped 40 million tons for the first time as the industry closes in on the government’s capacity ceiling of 45 million tons.

The figures for December showed little impact from China’s abrupt exit from Covid Zero and a mounting wave of infections. Fossil fuels all showed output gains over the month compared with the prior year, including records for coal and gas. Aluminum also increased as the impact of drought in the south abated, while steel production fell.

© 2023 Bloomberg L.P.

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