Britain’s green transition is powered by Chinese coal.

Exclusive New Statesman analysis of climate and trade data exposes how much the UK’s net-zero agenda depends on cheap foreign coal power, particularly from China.

The UK’s top four trade partners are Germany, the US, China and the Netherlands. All four of these countries have a significantly larger share of coal-fired electricity in their energy supply than the UK does. This means that goods produced in factories in those countries will typically have a higher emissions footprint than those produced in UK factories.

China’s power grid is particularly carbon-intensive, with coal-fired power plants running 60 per cent of its grid. The UK has capitalised on cheap imports made using low-cost Chinese coal power, with imports from China to the UK more than doubling in value over the past decade.

For its part, China has positioned itself as a leader in the production of clean technologies such as batteries and solar panels (80 per cent of the global supply of which is manufactured in China). These too are made using cheap coal-fired electricity, which helps China to undercut other countries. China is also trying to dominate the extraction and processing of minerals key to the energy transition. It is responsible for 60 per cent of global production of rare earth elements, which are crucial for low-carbon technologies.

“For other countries, the choice is between making use of China’s low-cost supply chain, but with the risk of reliance on China, or building their own supply chains using a combination of trade protectionism and subsidies to offset China’s subsidies and cost advantages,” said Lauri Myllyvirta of the Centre for Research on Energy and Clean Air.

The UK’s reliance on China’s low-cost clean tech and mineral exports can be seen in HMRC trade data, which reveals how the UK imported large shares of its energy transition technologies and products from China in 2022 – including 64 per cent of rare earth metals and 49 per cent of lithium batteries.

Via its Belt and Road initiative, China was for many years by far the largest financier of new coal power plants worldwide – until Xi Jinping, the Chinese president, told the UN General Assembly in September 2021 that China would build “no new coal power plants abroad”. There have been loopholes, however, that have enable China to finance the construction of some coal-fired plants that power industrial facilities rather than the national grid. These are known as “captive” power plants.

China-backed captive power plants are a particularly significant phenomenon in Indonesia. The country uses captive coal power to smelt nickel, a metal central to the production of batteries used in electric vehicles. Indonesia is the world’s largest producer of nickel. A 2020 ban in Indonesia on the export of unprocessed nickel ore, designed to maximise the value of Indonesian nickel within Indonesia itself, has further increased demand in the country for nickel smelters powered by captive coal power plants.

Captive coal power capacity has risen eightfold in the last decade in Indonesia, from 1.4 GW in 2013 to 10.8 GW in 2023. Seventy per cent of investment in captive coal power in the country comes from China, with Chinese funding for Indonesian coal power over $5bn in 2022.

The UK is highly dependent on Indonesian nickel for its own industry, importing nearly 80 per cent of processed nickel from Indonesia in 2021.