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China pledges to reduce fossil fuel reliance while increasing coal use

NOEL KING, HOST:

China pledged to reduce its reliance on fossil fuels as part of a global effort to fight climate change. But this year, facing long power shortages, it is actually increasing its use of coal. NPR's Emily Feng brought us this story from the heart of China's coal country.

EMILY FENG, BYLINE: The sharp Loess hills of China's Shanxi province hide fortunes in coal. This plant in Hejin county is accessible only by winding mountain roads, and it is flush with coal. Trucks line up on ground dark with coal dust, each waiting patiently to receive its load of precious black cargo. Driver Yuan Fuping watches as a tractor dumps huge piles of thermal coal into his truck.

YUAN FUPING: (Speaking Chinese).

FENG: Last year, he says coal prices were so low he didn't work at all. This year, Yuan is getting paid double to drive the coal to a power station where it'll be burned to generate electricity. Drivers like Yuan are back at work because prices for coal, especially the kind destined for power plants, are at a premium this year. And Shanxi province, China's Appalachia, if you will, is now a hive of activity. Coal mines are back at capacity. Coal imports are ramping up, and coal is being stockpiled.

UNIDENTIFIED COAL PLANT DIRECTOR: (Speaking Chinese).

FENG: This plant director says producers like him were ordered to ensure a national stockpile of thermal coal. He didn't want to go on record because the topic is considered politically sensitive.

UNIDENTIFIED COAL PLANT DIRECTOR: (Speaking Chinese).

FENG: He points to a huge depot filled with coal behind him and complains he's having difficulty selling at all while prices are still high.

This coal surge is a step backward for a country that wants to use less coal. This year, analysts estimate China will burn about 4%, or 160 million tons, more coal than the year before. Why is this? Well, first, a jump in power demand - as China's economy recovered, demand for goods produced there has surged. And second, COVID - to understand that, we need to zoom out and look outside China to Mongolia.

NARANTSETSEG NYAMJAV: (Speaking Mongolian).

FENG: "Our livelihood depends completely on selling coal to China," says Narantsetseg Nyamjav, the manager of Mongolian coal transport business. Mongolian coal is more needed than ever in China because China cut off Australia, its other source of coal imports, as political punishment. But China has also shut its borders to Mongolia to stop COVID transmission. And to ferry coal to China, Mongolian drivers must first live in sealed quarantine bubbles, really just tent camps, to prove they do not have the virus.

DAVAASUREN TSOGTSAIKHAN: (Speaking Mongolian).

FENG: Mongolian driver Davaasuren Tsogtsaikhan says in his bubble, people have quarantined for two to three months just to drive coal into China and earn a paycheck. Mongolian coal exports to China have plummeted to just a third of what they were last year, pushing Chinese coal prices even higher. China has also tried to boost its own coal production, but it spent years closing down smaller, dirtier, unsafe mining facilities, meaning it can't just press a button and order more coal to be produced. The upside is, this year's power shortages have made it painfully clear to Beijing it needs to accelerate power reform measures.

LI SHUO: And frankly, measures that environmental groups, progressive think tanks have been advocating for the last two decades.

FENG: This is Li Shuo, a senior campaigner and carbon expert at China's Greenpeace office. He's talking about long-awaited measures which finally allow flexibility in setting electricity prices. Before, the state set prices once a year. Now the power market is liberalized.

LI S: And what will a more liberalized power market do? It will make coal price less competitive than, for example, the price of renewable energy sources.

FENG: Meaning coal-fired electricity prices are now allowed to rise to reflect higher coal prices while renewables will get even cheaper in China.

LI S: So I think that's going to provide a pretty substantive economic incentive for China to embrace more wind and solar projects.

FENG: While that happens, coal still remains king. This conundrum between the need for coal and the desire to use less of it is exemplified by coal trader Li Lianchao. He buys up wholesale coal directly from the mines in Shanxi's Hejin county and sells it to power plants and steel mills. And this year, he says, has been a roller coaster.

LI LIANCHAO: (Speaking Chinese).

FENG: He says, "The coal shortage was so dire, everyone was competing to buy coal low and sell high," which meant he made some money.

LI L: (Speaking Chinese).

FENG: But now, he says, the power sector reforms have kicked in, which means the long-term commercial outlook for coal looks dim. That is why Li is looking to change jobs next year. Coal, he says, is no longer the future.

Emily Feng, NPR News, Shanxi province, China. Transcript provided by NPR, Copyright NPR.