As the world grapples with yet another global energy shock, one reality is becoming increasingly clear: China prepared for this moment and is emerging as a winner.

China has prioritized energy security, anchoring its economy in abundant domestic coal while simultaneously investing in electrification and renewables. Today, that approach is paying dividends.

China’s resilience offers a stark contrast with the scramble unfolding across much of Europe and Asia as countries try to manage soaring natural gas and oil prices and disrupted supply chains.

The pivot to coal in Europe and Asia is happening with remarkable speed. Nations from India to South Korea and Japan are now leaning on coal to stabilize power markets and shield consumers from volatile gas prices. Even Italy has announced it is delaying a planned coal phaseout by 13 years.

China, by comparison, ready for this moment, has been reselling LNG cargoes to desperate buyers. Its vast coal to syngas, liquid fuels and chemicals industry is more competitive than ever and poised for rapid expansion. 

As Bloomberg’s Javier Blas observed last year, “the size of this obscure corner of the Chinese coal industry has reached gargantuan proportions: It consumes about 380 million metric tons of coal as a feedstock for chemical and liquid fuel production.”

For comparison, Blas wrote, “it helps to think about the segment as if it were a country. As such, it would rank as the world’s third-largest consumer, only behind the rest of the Chinese coal sector and India, but ahead of the U.S., Japan and other top coal-consuming nations like Indonesia and Turkey.”

A Structural Shift

Even before this global energy crisis, China announced plans to double its coal gasification capacity by 2030. Those plans are likely to get a significant boost.

By using coal as a substitute for oil and natural gas in key industrial processes, China has reduced its exposure to volatile global markets—especially those dependent on geopolitically sensitive chokepoints.

China’s broader energy strategy has only reinforced this advantage. Massive investments in electrification have transformed it into the world’s dominant electricity producer.

China now generates more power than the U.S., E.U. and India combined, giving it a significant leg up in managing the electricity needs of AI adoption and the data center race.

China now also accounts for more than half of global additions in solar and wind capacity and is lapping the world in EV production and adoption. China is both doubling down on its coal industry and leading in the production of renewable power. Together, they form a dual-track system: coal provides grid reliability and energy security, while China’s renewable investments are helping it meet new demand and capture a burgeoning global market.

The China energy playbook is likely to emerge from this energy shock as the template. Energy policy is being recalibrated around security, affordability and control. Europe’s pivot away from coal and overreliance on natural gas imports proved a catastrophe in 2022. This crisis, and China’s success in navigating it, has only underscored coal’s importance as a hedge against global market volatility.

The global pivot to – or reembrace of – coal could very well be far more than a band-aid but something more structural. We’ve already seen India announce a new National Coal Gasification Mission, aiming to produce 100 million tonnes of gasification by 2030. China’s success clearly hasn’t gone unnoticed, nor its coal energy security cornerstone.