China Briefing, 3 March 2022: Impacts of Ukraine invasion; Annual statistical report; Bitcoin ‘getting even dirtier’

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Snapshot

Chinese media outlets have analysed how Russia’s invasion of Ukraine might impact global energy supplies. An opinion piece in a state-run newspaper said the “Ukraine crisis” highlighted the EU’s “short-sightedness” on its energy security, while a financial outlet assessed how the situation would impact China’s presence in Ukraine’s renewable sector.

On Monday, the Chinese statistical bureau released a series of preliminary energy and economic figures for 2021 in its annual report. Calculations based on the data suggest that China’s carbon dioxide (CO2) emissions likely amounted to 10.38 gigatonnes (Gt) last year, according to estimates shared with Carbon Brief by researchers. Separate calculations show that China’s coal consumption set a new high in 2021, surpassing 2020.

Furthermore, China’s ban on crypto mining last year “significantly worsened bitcoin’s environmental impact”, CNN reported, citing a new commentary. Miners have taken their businesses elsewhere, “including countries using significantly dirtier energy than China”, the US network said.

Key developments

Chinese media examines impacts of ‘Ukraine crisis’  

WHAT: A host of Chinese media outlets have discussed how the Russian invasion of Ukraine – which they call the “Ukraine crisis” – would impact the global energy supply. Most focused on analysing the prospect for Europe – especially Germany – should there be an interruption to gas supplies from Russia. Some analysed the possible consequences for Chinese investments in Ukraine’s renewable sector. Below is the coverage from a variety of publications. (Carbon Brief has analysed what the conflict means for energy and climate change in this Q&A.)

XINHUA: The Chinese state news agency examined if an “escalation” of the “Ukraine crisis” would “choke” Europe’s energy supplies. Xinhua said that the conflict would “undoubtedly” push up Europe’s energy prices and lead to a possible gas cut. It stated that a consensus from experts is that Europe is unlikely to find replacements in the short term if it loses stable Russian supplies. It added that Europe could face a “disastrous situation” in the worst-case scenario, which would see its gas storage drop to nearly zero in winter. But the piece stressed that Russia might also lose “crucial international income”. A separate Xinhua report said that the EU’s sanctions against Russia could result in it facing “even higher” energy prices and inflation, but they could wean Europe off Russian gas “by force”. 

CHINA NEWS SERVICE: The Chinese state-run newswire focused on Germany’s reaction, including its halting of the Nord Stream 2 pipeline and acceleration of two LNG terminals. Prof Shi Shiwei from the Institute of Chinese Studies at the Freie Universität Berlin told the newswire that Germany’s attitude towards sanctioning Russia was “cautious”. He explained that only several “major” Russian banks had been hit and energy transactions were still going through. The piece quoted Lars Feld, advisor to German finance minister Christian Lindner. It said that, according to Feld, Germany must ensure energy security and reassess its plans to phase out coal and nuclear power.

GLOBAL TIMES: The state-run newspaper ran an opinion piece penned by Prof Zhao Yongsheng, director of the French Economic Research Centre at the Academy of China Open Economy Studies, University of International Business and Economics, in Beijing. The author said that the EU faces a dilemma from a geopolitical perspective. In his view, the “Ukraine crisis” showed that, while the EU “had no choice but to” follow the footsteps of the US, the “leader” of NATO, it also faced “urgent demand” for maintaining European stability. Prof Zhao also underlined the EU’s “short-sightedness” on energy security and its “insufficient knowledge” about renewable energy. Prof Zhao noted that he “truly hope[s] Europeans could turn its ‘helplessness’ from energy supplies being ‘weaponised’ by geopolitics into driving forces of achieving energy ‘self-sufficiency’”.

TIME FINANCE: The financial publication said the “surging gas price” ignited by “geopolitics” – especially the suspension of Nord Stream 2 – could eventually “trigger a restructuring of the global industry chain”. It also pointed out that Russia enjoys a “particularly important role” in the global energy supply chain and, as a result, the West had to be “lenient” in its financial sanctions against Moscow. Prof Bao Jianyun from the School of International Studies at the Renmin University of China told the outlet that excluding Russian energy from sanctions was a “consensus reached [by the West] in special times under special circumstances” and “left room” for further negotiations. 

NATIONAL BUSINESS DAILY: The state-affiliated financial newspaper assessed China’s role in Ukraine’s renewable energy industry after noticing most companies trading in China’s domestic stock market that deal with Ukraine are in the wind and solar energy sectors. According to the outlet, the Chinese investments have been spurred by Ukraine’s efforts to restructure its energy system since the 2014 war in Donbas, to reduce its energy dependence on Russia. Prof Lin Boqiang – director of the China Centre for Energy Economics Research at Xiamen University in China – told the outlet that the whole of Europe, not just Ukraine, would need to develop wind and solar power to be less Russia-reliant. Prof Lin told the reporter that this would bring a “positive impact” for Chinese wind and solar energy firms. 

China likely emitted 10.38Gt of CO2 in 2021

WHAT: China’s National Bureau of Statistics published its annual statistical report on Monday, releasing a series of key figures for the nation’s social and economic activities for 2021. Based on the report’s preliminary energy consumption and economic estimates, two researchers from the University of Groningen in the Netherlands have calculated that China’s national CO2 emissions for 2021 likely reached 10.38Gt, up from an estimated 9.93Gt from 2020. The calculations include, according to them, the territorial CO2 emissions from 17 types of fossil fuel combustion and cement production. (Preliminary estimates from the Global Carbon Project calculated last year projected China’s CO2 emissions in 2021 to be 11.07Gt.)

WHO: The calculations were carried out by Dr Shan Yuli and Guan Yuru, a research fellow and a PhD student at the University of Groningen, respectively, and shared with Carbon Brief. Dr Shan and Guan are key members of the team behind an open-access dataset called CEADs, or “Carbon Emission Accounts and Dataset for emerging countries”. They work on the accounting methods and applications for the emissions of China and other emerging economies.

STATS: Here is a glimpse of the report’s key energy stats in 2021. China’s total energy consumption recorded a 5.2% year-on-year rise, reaching 5.24bn tonnes of standard coal equivalent (tce). The electricity consumption jumped by 10.3%. The consumption of coal, crude oil and gas increased by 4.6%, 4.1% and 12.5% year-on-year, respectively. Despite this, the share of coal use in the energy mix was 0.9 percentage points down from 2020, standing at 56%. Renewable energy made up 25.5% of the energy mix, up 1.2 percentage points year-on-year. 

CARBON INTENSITY: According to the statistical report, China’s gross domestic product (GDP) – a measure of the overall size of the economy – reached 114.4tn yuan (£13.6tn) last year, measuring an 8.1% increase from 2020. China’s carbon intensity declined by 3.8% last year, compared to the previous year, it said. According to China’s last annual statistical report, the country’s carbon intensity had registered a 1% year-on-year decrease in 2020. Dr Shan told Carbon Brief that China’s carbon intensity has been on a “declining trend” and this indicates that “China is getting closer to meeting its carbon intensity targets”. (In its updated nationally determined contribution, China pledged to cut its carbon intensity by more than 65% from 2005 levels by 2030.)

COAL: According to Reuters, the figures for total energy consumption and coal consumption in 2021 both represent the “biggest increase” China has seen “in a decade”. The newswire compared the official data with its own records. Dr Yang Muyi – senior electricity policy analyst of Asia at Ember – told Carbon Brief that China’s coal consumption had “reached a new high” in 2021, amounting to 2.93bn tce, based on his preliminary calculations of figures in the latest statistical report. In comparison, China’s coal consumption in 2020 – the previous record year – was 2.83bn tce, Dr Yang said. He added: “The share of coal in China’s energy-consumption mix continues to fall, from over 70% in the mid-2000s to 56% in 2021. This suggests that the country is gradually reducing its reliance on coal for satisfying the rising energy needs.” (Carbon Brief will publish Dr Yang’s analysis on why China’s coal consumption has grown in next week’s China Briefing.)

INDUSTRY: In terms of industrial manufacturing, the report shows that China produced 4.13bn tonnes of raw coal last year, increasing by 5.7% year on year. The country also produced just over 1bn tonnes of crude steel in 2021, a 2.8% decrease compared to 2020. Of the 8,534 terawatt hours (TWh) of electricity generated in 2021 (up 9.7% year on year), 5,806TWh was thermal power (mostly coal), 1,339TWh was hydropower and 407.5TWh nuclear power, with the remaining 982TWh from wind, solar and other renewables. 

CAPACITY: As of the end of 2021, the total installed capacity for electricity generation in China amounted to 2,377 gigawatts (GW), a 7.9% rise from the end of 2020, the report said. The installed capacity for thermal power generation was 1,297GW, up by 4.1% year on year. Hydro and nuclear power generation capacity increased by 5.6% and 6.8%, respectively, reaching 391GW and 53GW, in order. The amount of solar power generation capacity that has been connected to the grid grew by 20.9%, clocking in at 307GW, while the two figures for wind power stood at 16.6% and 328GW, respectively.

Other news

BITCOIN: A new commentary has shown that China’s crypto crackdown last year “significantly worsened bitcoin’s environmental impact” because miners have now taken their businesses to countries “using significantly dirtier energy than China”, according to CNN. Alex de Vries – one of the authors and a PhD candidate at the Vrije Universiteit Amsterdam – told Carbon Brief that bitcoin miners in China had been able to access “substantial amounts of hydropower” during the rainy season. He said that the Chinese crypto crackdown forced the miners to relocate to other countries, mainly the US and Kazakhstan, and “that seasonal hydropower has now been replaced with natural gas”. 

COAL POLICY: Commenting on how the Ukraine-Russia conflict would impact China’s coal policy, Li Shuo – senior global policy advisor at Greenpeace East Asia – told Carbon Brief that China had already been “pivoting back to coal as a source of energy security before the Ukraine crisis” because of “deeply rooted domestic reasons”. He noted: “Any rush toward simple conclusions on how the Ukraine crisis will reshape China’s energy system is probably not doing justice to such a profound geopolitical development. But a safe bet might well be that, when the world suffers from turbulence, China’s instinct will always be to achieve self-sufficiency. That, unfortunately, might mean coal’s position is at least not weakened.”

COAL PRICES: China’s state economic planner, the National Development and Reform Commission (NDRC), has given more instructions to stabilise the prices of coal. It has called for further improvement on “the price-formation mechanism” in the coal market to guide price movements “within a reasonable range”, Xinhua reported on Tuesday. In a video shared by the NDRC, Prof Zhang Hong – director of the office of legal affairs at the Beijing Normal University – said the directives could help stabilise China’s coal and electricity prices, as well as its economy. 

COAL POWER: China’s state energy regulator has said that, “in principle”, the country will not build any more coal-fired power projects whose sole purpose is to generate electricity. But the agency highlighted two types of exceptions: those that would be mainstays for ensuring electricity supply and those that would help support flexible peaking services to facilitate the development of renewable energy. It added that it would allow “a certain capacity” of both in line with “arrangements”. China Energy News had the story.

RUSSIAN COAL: Chinese power plants and steelmakers were “looking for alternatives” to Russian coal after some Chinese domestic banks “suggested” they “avoid purchases” due to the “mounting sanctions” against Russia, Bloomberg reported. The report cited “people with knowledge of the matter who asked not to be named as the issues are commercially sensitive”. Reuters had a similar piece, saying that Chinese traders were “scaling back” imports of Russian coal. The newswire noted that Chinese traders “struggle[d] to secure financing from state banks” because the latter was worried about potential sanctions against Moscow. 

RENEWABLES: The NDRC has announced a new initiative, which will see 455GW of renewable energy capacity installed by 2030. The authority said that the new scheme would see large wind and solar power plants being constructed mostly in desert regions in northern China. This is the second “batch” of renewable energy projects China has announced in about three months. The first “batch” aims to install 97GW of renewable capacity in desert and barren regions. Chinese financial outlets Yicai and China Securities Journal had the story.

Extra reading

• IPCC warns China will be hit hard by climate change – Yuan Ye, Sixth Tone
• China’s energy sector methane emissions dwarf US and Russia – Aaron Clark, Bloomberg
• China finds coal a hard habit to break as power plants, steel mills stall pledges to scale back – Yujie Xue, South China Morning Post
• Comment: War in Ukraine is a severe test of China’s new axis with Russia – Yu Jie, The Guardian

New science

Air quality and health co-benefits of China’s carbon dioxide emissions peaking before 2030
Nature Communications

A new paper has found that around 118,000 deaths “attributable” to PM2.5 – an air-borne particulate less than 2.5 microns in size – could be avoided in 2030 in China if the country peaks its CO2 emissions “early” before 2030 and if the peaking is in line with the 1.5C target under the Paris Agreement. The avoided deaths could amount to around 614,000 in 2050, the study estimated. “We found that the more stringent the climate policy, the greater the health co-benefit of air pollution, and the more pronounced the long-term synergies in China would be,” the paper’s corresponding author, Prof Wang Haikun from Nanjing University in China, told Carbon Brief. He added that the co-benefit of climate policies alone “would not be sufficient to offset the rise in PM2.5-related deaths due to the population ageing” and China “needs to continue to enhance its air pollution prevention and control efforts to effectively protect public health”.

Will China achieve its 2060 carbon neutral commitment from the provincial perspective?
Advances in Climate Change Research

New research has analysed the “feasibility” of China’s goals of peaking emissions before 2030 and achieving carbon neutrality before 2060 by assessing the emissions trajectories of Chinese provinces. It found that “most” provinces “can” achieve the peaking targets, but the carbon neutrality target would be “challenging”, even when considering the carbon uptake from “forests, grassland and cropland”. Most provinces are projected to hit carbon neutrality around 2058-70 without carbon capture, utilisation and storage (CCUS), the study found. It also noted that “it would be hard” for China to achieve its neutrality goal before 2060 without CCUS. Dr Cui Huijuan, the paper’s corresponding author, is an associate professor from the Institute of Geographic Sciences and Natural Resources Research at the Chinese Academy of Sciences. She told Carbon Brief that the paper “highlights the challenges China is now facing and the need for CCUS to achieve the carbon neutrality goal”.

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