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China’s clean coal financing tool balances energy needs with emissions reduction, analysts say

  • China’s cabinet said that it will set up a special relending facility worth US$31.4 billion to support the clean and efficient use of coal
  • China plans to cap the use of coal by 2025 as part of its goal to become carbon neutral by 2060

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The coal-powered Datang International Zhangjiakou Power Station at Zhangjiakou in China’s northern Hebei province. Photo: AFP
Yujie Xuein Shenzhen

China’s latest financing initiative for clean coal technology will help the country meet its energy needs while at the same time reduce the carbon intensity of its heavy industries and meet its goal of capping coal consumption by 2025, analysts said. But some argued that it could instead prolong the use of the fossil fuel and keep the industry alive in the mainland.

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China’s cabinet, the State Council, announced on Wednesday that it will establish a special relending facility worth 200 billion yuan (US$31.4 billion) to support the clean and efficient use of coal, including advanced pre-treatment of coal, and developing a coalbed-methane value chain.

This announcement came close on the heels of COP26, the United Nations-backed climate summit in Glasgow where China did not sign up to the international pact to stop building coal-fired power plants and start phasing out coal use this decade. Beijing also rejected a clause in another pact that called for “phasing out” coal-fired plants and changed the wording to “phase down”.

“The background is clear that China cannot abandon coal, but at the same time has to reduce carbon emissions to achieve its decarbonisation goals,” said Lin Boqiang, dean of Xiamen University’s China Institute for Studies in Energy Policy. “So supporting clean coal projects to mitigate coal-related carbon emissions is one way to go.”

Lorenzo Sani, associate power analyst at Carbon Tracker Initiative, said that the State Council has yet to clarify whether funding applies to carbon capture and sequestration projects or to further subsidise unabated coal generation.

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China is the world’s largest consumer and producer of coal, accounting for 30 per cent of global carbon dioxide emissions. President Xi Jinping has set a target of peak emissions by 2030 and carbon neutrality by 2060. But China relies heavily on coal, which accounted about 57 per cent of its electricity output in 2020, according to the National Energy Administration, the energy regulator.
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