Fossil fuel production will increase to shore up energy security

To shore up domestic energy supply in light of turbulence in the global market, China will further increase coal output, stabilising it at 12 million tonnes per day, the National Development and Reform Commission announced during the Two Sessions.

If this target is achieved, it will mean an annual output of 4.38 billion tonnes, a 6% increase on 2021’s 4.13 billion. The same day, the head of the National Energy Administration said the agency will ramp up oil and gas production too. 

The Government Work Report presented at the Two Sessions reiterates calls for China’s decarbonisation to be achieved in an “orderly” manner. It emphasises securing energy supplies with consideration for the country’s “natural endowments”, meaning an abundance of coal and a general lack of gas and oil.

The annual meeting coincided with imported gas and oil prices surging due to the war in Ukraine.

In keeping with the emphasis on energy security, “clean and efficient utilisation” of coal and measures to maintain a role for coal power in the energy system were both high on the agenda.

In his address to the delegation from Inner Mongolia, President Xi stressed the importance of better pacing the decarbonisation push and improving coordination at the national level. This implied a more flexible approach to energy consumption caps, in which some provinces (like coal-rich Inner Mongolia) can burn more fossil fuels while others make deeper cuts. “We need a clean and green environment,” he said, “but at the same time we also need to ensure that business and production can be carried out normally.”