We have written on several occasions recently about the huge investment China is making into green or alternative energy sources, particularly wind power and photovoltaic cells in which they are world leaders. China is making much of a very rapid investment in wind power production as a way to reduce green house gas emissions and has set ambitious production capacity targets of 100 GW by 2020. They currently produce 12 GW and are on course to produce 20 GW by next year.
Having said the above it is interesting to note that active (and noisy) as China is about its wind power investments the real money is still going into coal production. China Shenhua, one of many coal producers in China, is reported in the Telegraph newspaper as announcing an investment program over the next four years of a mind boggling $39.5bn. The program will allow development of not one but two 100m ton/year coal mines doubling the company’s current production from 200m tons to 400m tons. In addition, the company plans to build a 50,000 ton coal shipment facility in Huanghua port; new port facilities in Fuzhou, coal fired power stations, engage in overseas investments and aggressively bidding for Mongolia’s Tavan Tolgai coal project in the Gobi desert, estimated to be the world’s largest untapped coking coal seam. The investment would see Shenhua take 12% of the Chinese coal market which is clearly set to grow further. Such an investment would not be announced without clearance by and approval of the authorities. Coal is therefore clearly seen as the largest source of energy for the foreseeable future. China already produces more than 70% of its electricity from coal fired power stations and with this investment is unlikely to significantly dent that number anytime soon. Fine words regarding the environment are one thing but hard RMB invested in creating new mines say something else. For China coal is here to stay.