China’s energy policy will be both clean and dirty

Significance

For several years, China has been the world’s leading manufacturer, installer and user of renewable energy. However, investment in coal mining and coal-fired power continues apace amid rising calls to enhance energy security. Carbon emissions therefore continue to increase, despite the slowing economy.

Impacts

• The government is likely to increase the role of market forces, including in the carbon market, to support the use of renewable energy.
• If summer temperatures continue to rise and droughts become more frequent, annual power crises may still occur.
• In the longer term, Beijing will need to design policies to compensate mining and power companies and their staff as coal is phased down.
• The government may choose to reinforce energy efficiency measures to curb coal consumption and carbon emissions.