Therefore, the question remains: What caused the loss of profitability? Moreover, what accompanying side-effects were there? How long will this state of affairs last? And, given the rapid changes in energy markets, what do we need to watch out for? But, obviously, China’s particular approach over the past three years – directly controlling coal power prices – is different.

So, how did coal come to be unprofitable? We could turn to the environmental economics textbooks and refer to experience in Europe and the US for answers. If the necessary emissions-reduction policies and measures were actually in place however, such losses would simply be inevitable. The climate clock is ticking and coal needs to be phased out as soon as possible.Īs external factors such as market forces change, coal power may well regain its lost profitability. Coal may be cheaper than oil and natural gas, but it is also more carbon-intensive. In other words, business as usual will mean burning through the 400GT carbon budget in less than eight years. Current annual CO2 emissions from burning fossil fuels, industrial processes and land-use change are estimated at 42.2GT.

Research has shown that to limit global warming to 1.5☌ above pre-industrial levels, the atmosphere must not absorb more than 400 gigatonnes (GT) of CO2, calculated from the beginning of 2020. In terms of emissions reduction and climate security, this was good news.

The loss of coal power profitability was accompanied by a tight balance between supply and demand, with power cuts in multiple parts of China between 20. The business situation did not improve for the sector in 2022, according to the latest annual report from the China Electric Council, a sector-wide watchdog. While most global energy businesses watched the money roll in, China’s state-owned coal power enterprises suffered losses of over 100 billion yuan (US$13.9 billion) in 2021. Rocketing energy prices, in particular, have had significant impacts. The general global turmoil since 2020 has sent many markets and sectors on rollercoaster rides.

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