Save for later Print Download Share LinkedIn Twitter As the Chinese economy roared ahead of the rest of the world with 12.7% growth in the first half of 2021, the country is consuming more energy across all fuel sources -- whether greener ones like renewables or highly polluting fossil fuels. Wind and solar power output continued to post robust growth rates of 45% and 23%, respectively, in the first six months, but their advances were still insufficient to hold the dirtiest fossil fuel in check. Demand for coal soared by over 10% during January-June, fueled by the country’s hunger for more electricity and its usage as a raw material in producing construction materials such as iron and steel, according to latest data from the National Energy Administration (NEA). Chinese oil products consumption also remained in an uptrend with a first-half growth rate of over 15%. Gasoline demand, in particular, has “recovered to pre-Covid levels,” said the NEA, despite the threat from explosive sales growth in electric vehicles (EVs) (NE Jul.15'21). Natural gas -- which China is promoting as a substitute for direct coal burning -- also persisted in a “rapid growth” trajectory with consumption soaring above 20%, driven by higher usage in industrial processes and power generation, according to NEA. Power Crunch Buoys Coal China’s fleet of “thermal” power plants that burn combustible fuels (mostly coal) maintained their stranglehold over the electricity market. Despite the strong increases in wind and solar output, thermal power plants -- comprising about 85% coal-fired and 8% gas-fired plants (by capacity) -- still retained a combined market share of nearly 71% (by output) during January-June, barely changed from the same period a year ago, an analysis of official data from the China Electricity Council showed. The country’s power demand has been smashing records during each of the first six months this year on the back of strong recoveries in the industrial and manufacturing sectors. This has resulted in what the NEA described as a “tightly balanced” electricity market that has pushed coal to a pivotal position. The power sector consumed nearly 16% more coal during January-June, which contributed to over 76% of the increment in national coal consumption. China’s electricity demand grew by 16% year on year over January-June, translating into an absolute increment of over 540 terawatt hours. Renewable power from wind, solar and hydro sources was able to meet only about 27%, or just over a quarter of that increment, leaving coal to do the heavy lifting. Power produced from thermal plants supplied about 66%, or two-thirds of the extra electricity needed. This suggests China still has some way to go in meeting its clean energy targets, which envisage renewables instead of coal being the “mainstay” for satisfying any increases in demand. The NEA said in March that by 2025, it expects renewable energy to contribute to “about two-thirds” of incremental power consumption (NE Apr.15'21). Gasoline Rebounds Despite EVs China’s consumption of oil products has been in recovery mode, maintaining a “steady” growth since April, said NEA. Demand in the first half of 2021 rose by 15.7% year on year, led by gasoline which surged ahead at 22.3%. This came even as transport oil demand is under siege from wider public acceptance of EVs, which have been smashing sales records for 13 straight months in China. Total EV ownership in China reached 6.03 million as of end-June, but this accounted for only 2.06% of the national automobile fleet, according to data from the traffic department. The growth momentum, however, is reaching a tipping point, posing a threat to future gasoline demand. Monthly EV sales penetration has not only sailed past the 10% milestone but reached 12% in June, which could set the stage for exponential growth as the market approaches critical mass. Wind/Solar Exceed Target In output terms, power generated from wind and solar photovoltaic (PV) sources are to supply 11% of the national electricity needs by the end of 2021, according to goals set by the NEA earlier this year. Based on the half-year data, wind and PV output have already exceeded that goal, rising to 12.8% of electricity generated, from around 10% during the same period a year ago (NE May13'21). In capacity terms, the NEA also envisaged that renewables -- which include hydro -- should “grow significantly each year” to account for “over 50%” of the installed national total by end-2025, up from around 41% currently (NE Apr.8'21). Kimfeng Wong, Singapore China Power Output By Fuel Type (TWh) Jan-Jun '21 Y-o-Y
