China’s power and steel industries continue to invest in coal-based capacity, complicating carbon goals

The document finds that while China has seen record clean energy installations and a decline in coal-fired power generation, government permitting for new coal plants and investments in blast furnace capacity accelerated in early 2022. This trend creates a risk of significant stranded assets—estimated at $8.5 billion for power and $15-22 billion for steel—and complicates the economic and political transition to low-carbon energy. The report highlights that power shortages in provinces like Sichuan were driven by rigid grid management and high fuel prices rather than a lack of capacity, and recommends reforming grid operations and including the steel sector in the emissions trading system.

• Government permitting for new coal-fired power plants increased in the first half of 2022, although power companies showed a lower appetite for new projects, construction, and completions due to thermal power generation being loss-making since early 2021.
• Investments in coal-based power and steelmaking capacity in early 2022 are not aligned with carbon goals and risk creating substantial stranded assets: $8.5 billion (CNY 82 billion) for power and $15-22 billion (CNY 100-150 billion) for steel.
• In the first half of 2022, 15 GW of new coal-fired power capacity was permitted, and 30 million tonnes per annum (Mtpa) of new blast furnace capacity was announced, the highest first-half figure since 2019.
• China's power sector saw a significant increase in non-fossil fuel capacity, with total non-fossil installed capacity reaching 1180 GW by the end of June 2022, accounting for 48.2% of the total.
• Electricity shortages in Sichuan and other central provinces during the 2022 heatwaves were exacerbated by rigid grid management, where hydropower was exported to eastern provinces despite local shortfalls, and thermal plants operated below full capacity due to high fuel prices.
• The steel industry continues to rely heavily on the coal-based blast furnace-basic oxygen furnace (BF-BOF) route, with 99% of approved new ironmaking and 71% of approved new steelmaking capacity using this process between 2017 and H1 2022.
• There is a growing trend toward electric arc furnace (EAF) capacity, with the share of EAF in newly announced steelmaking capacity rising to 57.2% in the first half of 2022.

APA

Global Energy Monitor (2022). China’s power and steel industries continue to invest in coal-based capacity, complicating carbon goals. https://globalenergymonitor.org/sites/default/files/migration/reports/China-steel-and-coal-power-briefing-Sep-2022_EN_Final_11.pdf

Chicago

Global Energy Monitor. China’s power and steel industries continue to invest in coal-based capacity, complicating carbon goals. 2022. https://globalenergymonitor.org/sites/default/files/migration/reports/China-steel-and-coal-power-briefing-Sep-2022_EN_Final_11.pdf.

Wikipedia

{{cite report |author=Global Energy Monitor |title=China’s power and steel industries continue to invest in coal-based capacity, complicating carbon goals |date=September 2022 |url=https://globalenergymonitor.org/sites/default/files/migration/reports/China-steel-and-coal-power-briefing-Sep-2022_EN_Final_11.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{globalenergymonitor2022chinas, author = {{Global Energy Monitor}}, title = {{China’s power and steel industries continue to invest in coal-based capacity, complicating carbon goals}}, institution = {Global Energy Monitor}, year = {2022}, month = sep, url = {https://globalenergymonitor.org/sites/default/files/migration/reports/China-steel-and-coal-power-briefing-Sep-2022_EN_Final_11.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }