Coal: The Next Chokepoint - The Honest Sorcerer

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Coal: The Next Chokepoint<br>How 'peak coal' could become China's Achilles' heel

The Honest Sorcerer<br>Aug 14, 2026

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Coal power plant, China. Image via Unsplash<br>China has a growing coal supply problem marketed as “peak demand.” And while the public’s attention is drawn to the growth in “renewable” electricity generation and lower CO2 emissions from the building material industry, China’s increasing dependence on coal-to-chemical processes spells strategic vulnerability and forebodes a worsening economic and environmental predicament in the decades ahead.<br>As a reader funded publication your one time and regular donations help keep this newsletter going. If you value this article or any others please share it far and wide and consider a subscription. You can also support this work by buying a virtual coffee. Thank you!

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Share<br>The Coal Powered Civilization

Coal has made the Chinese economy what it is today. It provided all the cheap electricity and high heat needed to turn a poor agrarian economy of the mid 20th century into the high-tech, highly industrialized nation we know today. Without it’s massive domestic coal industry China could not have possibly made ‘the great leap forward’ let alone turning itself into the manufacturing hub of the world. Despite the massive deployment of “renewables” and a push to electrify, China’s economy has remained utterly dependent on coal. Just take a look at the chart below:

In 2025 fossil fuels still accounted for more than 87% of China’s primary energy consumption. Source: Our World in Data<br>No wonder China is still the number one consumer of coal worldwide—by a long shot. In 2025 the East Asian country consumed 55% of all coal mined on planet Earth, 70% of which was turned into electricity.1 It’s no surprise that China tries to reduce its massive dependency on coal by deploying more and more solar panels and wind turbines... But did it help? To a certain extent yes it did, with “clean energy growth” now accounting for all energy additions to the grid there. On the other hand, feeding so much weather dependent, intermittent electricity to the grid has only reduced the utilization of new and existing coal fired power plants—but did not see their gates closed in droves.2 Phasing out coal power generation will not be nearly as easy as the headlines might suggest.<br>Coal consumption in China is not just about electricity, though. 30% of all coal burned there is consumed by the industry and heating applications (mostly in northern provinces). Metallurgy—especially steel making—requires a lot of high heat, as well as those dirty carbon atoms themselves. Coking coal used by smelters is a cheap, abundant and very effective reducing agent, removing the oxygen content of metal ores, while also providing the heat needed to extract pure iron. Or silicon, for that matter, required by solar manufacturers and wafer fabs alike. No wonder the country generated only 10% of its total steel output in 2025 from costlier electric arc furnaces, which is well below the goal of 15% set by the government and the global average of 30%. The irony is hard to escape here: the Chinese government wants the industry to use electricity largely generated by coal to reduce the coal consumption of making steel. And no, you can’t provide the stable electric current needed to that with “renewables” either, only hydro and thermal power plants cut it, with the former facing geographic as well as climatic limitations.

Source: Carbon Brief<br>So, if you take a look at year-on-year changes in China’s CO2 emissions from fossil fuels and cement you can clearly see where the industry is headed. Emissions from building materials (mostly cement and steel) are down not because China have made a breakthrough in the making of these essential building blocks of modern civilization via electrified processes, but because demand from the construction sector has continued it’s almost decade long decline. Real estate investment fell 11% and the floor area of new construction starts slid by 20% in 2025 alone. Traditional targets of government infrastructure investment, such as transportation, also showed relatively slow growth. Power sector demand for coal was also reduced by 3% in 2025, but then bounced back up by a similar margin this year due to restricted LNG flows from the Persian Gulf.<br>China’s coal dependency, as demonstrated by a slowly but steadily rising demand from the industry and the power sector, is going nowhere. The recent stall in coal demand increase came from lower coal power plant utilization and a weak construction sector, not a revolution in electrification and “clean energy.” All those solar panels and wind turbines came on top in the form of an energy addition, not substitution.<br>The Dependency Deepens

The only real, tangible change in coal use has come in the shape of a rapid rise in coal-to-chemicals processing.3...