BY FRANK CLEMENTE AND FRED PALMER:
The stark reality: in China, 55% of power is produced by coal and the cost of household electricity is 8 cents per kWh. In the UK, coal’s percentage of electricity was 30% in 2010 but that has declined to less than 1%. Consequently, the cost of electricity for families has increased 250% — from 16 cents to over 40 cents per kWh — and is still on the rise. No wonder 37% of England’s families pay over 10% of their income on energy.
In the U.S., the closing of coal plants for political reasons has led to coal’s role declining from 45% in 2010 to just 15% today. Accordingly, the cost of electricity increased 70% to 19 cents per kWh and is projected to keep rising: “Retail electricity prices have increased faster than the rate of inflation since 2022, and we expect them to continue increasing” — U.S. Department of Energy. Moreover, after the closure of over 300 coal plants, reliability is at serious risk in the U.S.: “coal-fired generator retirements… have caused a sharp decline in anticipated resources … new generation is insufficient to make up for generator retirements and load growth.” — North American Electricity Reliability Corporation (NERC)
Electricity is the sine qua non of modern society. In 2000, the National Academy of Engineering identified electrification as the greatest engineering achievement of the 20th Century. Coal-based electricity brought the U.S. to the center of the world’s economic stage and China has followed that same pathway to modernity and societal progress. In 2000, coal produced about 990 Terawatt Hours (TWh) of electricity in China. By 2025, coal produced upwards of 6,000 TWh. This dramatic rise in coal power stimulated massive improvements in the quality of life of the population. In 2000, the Infant Mortality Rate in China was 30, it is now 5. Access to clean cooking fuels increased from 41% of the population to well over 90%. Availability of clean water grew from 45% of households to 99%. Life expectancy rose from 72 to 78, and the Food Production Index grew from 63 to over 112. No wonder the International Energy Agency (IEA) declared: “Coal has underpinned China’s massive and unprecedented growth in output, fueling an economic miracle.”
The growth of the middle class in China is the largest the world has ever seen, increasing from 39 million people in 2000 to almost 1 billion today. The middle class is the backbone of any society and coal-based electricity was the material foundation for this progress in China. In 2000, electricity use per capita was 993 kWh, it is now over 7,400 — far more than Germany. In essence, through the benefits of coal-based electricity, China, with over 1.4 billion people, became a modern nation in a little more than two decades. Since 2000, over 70% of humans lifted out of poverty were Chinese. Coal made the difference and propelled China to ever higher in the World’s socio-economic hierarchy.
China imports about 550 million metric tons of coal per year. These imports, along with its own substantial supply, have provided the energy to make China the world’s leading manufacturer and exporter. China produces over one billion tons of steel — 54% of global production, of which over 90% is produced using coal. China provides 52% of cement, 97% of which uses coal energy. China produces 80% of the world’s solar panels and coal provides at least 75% of the electricity for their manufacture. By 2030, China’s coal to gas capacity will grow from 9.4 billion cubic meters to 28 billion. The world’s policymakers need to be mindful of their dependence on China’s use of coal and the benefits that have spread across the globe.
And now China has built an electricity system for the next leap forward. The PRC is basing its electric supply on a foundation of coal — a fuel that has demonstrated abundance, availability, affordability and reliability. By 2030, China will have over 1,500 GW of coal-based electricity compared to the DOE projection of a mere 88 GW in the U.S. The idea that intermittent wind and solar will replace coal power in generation or manufacturing in China is wishful thinking indeed. Over 500 GW of coal capacity is already under development compared to an insignificant 4 GW in the U.S.
And these are not your grandfather’s coal plants. Rather, China is building advanced stations that produce significantly lower emissions. As Clare Richardson of the National Bureau of Asian Research pointed out: “China is rapidly deploying ultra-supercritical and supercritical coal technology, which can operate at higher temperatures and pressures to improve thermal efficiency.” The country has also pursued widespread adoption of flue gas desulfurization and selective catalytic reduction systems to cut sulfur dioxide and nitrogen oxide emissions.
Consider, for example, Pingshan Phase II in Anhui Province, a cutting-edge 1.35-GW ultra-supercritical coal-fired unit with a net efficiency of about 50% — making it the world’s most efficient coal-fired power plant and a continuing model for the ongoing wave of plants under construction not only in China but also India and the rest of the world. China is the architect of 21St Century coal power.
There is widespread recognition that progress in Artificial Intelligence (AI) will determine a large part of a nation’s future. RAND Corporation projects countries will see their influence rise or fall depending on how they manage the development of AI. Scholars at the University of Miami School of Law concluded: “The global race for AI dominance is shaping the future of economies, governance, and national security.” Finally, this cogent comment from Arab News: “Artificial Intelligence is no longer just a technological breakthrough: it is quickly becoming a linchpin of global power.”
Thus, the race is on and now we consider the realities: The U.S. aspires to global dominance in AI. In July of last year, the White House published: Winning the Race: America’s AI Action Plan as well as three executive orders designed to promote and maintain leadership in AI. But China has the same aspiration. Through a series of Five-Year Plans, China has become a formidable technological competitor of the U.S. As The New York Times put it: China Is Spending Billions to Become an A.I. Superpower.
The competition between the U.S. and China is intense and China is steadily eroding the initial gap. In 2023, the Stanford AI Index reported the performance gap between U.S. and Chinese model benchmarks was about 25%. By 2026, that gap has narrowed to 3% and is closing further. Daniel Hook, CEO at Digital Science, found that China is now ahead in the development of large language models with an AI talent pool that dwarfs its rivals — 30,000 active AI researchers and a massive graduate student and postdoctoral population. China has filed at least 70% of all global AI related patents and leads on research article volume with 23 % of all global AI publications versus 13 % for the U.S. And the American talent pool is diminishing. The number of AI researchers moving to the U.S. has dropped 89% since 2017. The U.S. is ahead today, but the momentum belongs to China.
No country will meet its AI goals without reliable and affordable electricity. The U.S. is increasingly falling behind on both fronts. Consider the PJM Interconnection with 67 million customers in the East. Due to the closure of coal generating capacity, the reserve margin for the system will continue to fall from 23% in 2020 to a risky 14% in 2027. Incredibly, utilities in the PJM system are planning to retire over 11 more GW of coal. Hard to believe.
The U.S. has been closing coal plants willy-nilly for over a decade with nary a thought to the implications. Yet the consequences of higher rates and reduced reliability are real and meaningful to the competition between China and the U.S. — and will be even more so as India’s 1.5 billion coal-based population enters the AI picture — India’s electricity is 70% coal. “The difference in the cost of energy around the world is going to become really quite extreme,” Michael Brown, global investment strategist at Franklin Templeton, told CNBC. “If you’re making energy-intensive investments, then you’re going to go to where the cheapest energy is.”
In terms of rates, U.S. household power prices have risen nearly 25% in just four years. In 2025-26 a total of 47 states endured electricity price increases and dozens of additional rate increase requests are still pending. The American people are increasingly victims of an array of poor energy policy decisions at both the Federal and state level — and even utilities themselves have failed to think ahead, closing productive coal plants to get in on the government dole of “renewables” like expensive wind and solar. Families suffer, businesses suffer and the next generation of Americans will pay a heavy price with a diminishing role on the world’s economic stage.
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This article originally appeared at RealClear Energy
Fred Palmer Esq. has served as CEO of Western Fuels and Peabody Energy’s Senior Vice President for Government Affairs. He chaired the World Coal Association Board and was a member of the National Coal Council. He received the American Institute of Mining Award for “Distinguished Achievement in Coal Technology.” He also was awarded a Statement of Appreciation from the National Coal Council in 2015 with a plaque for “Guidance since 1990”
Frank Clemente PhD. specializes in the socio-economic impact of energy policy and is author of The Global Value of Coal published by the International Energy Agency (IEA) as well as numerous articles in energy journals and reports for the National Coal Council. Professor Clemente has served on the faculty at the University of Kentucky, the University of Wisconsin and Penn State. His work is presented independently from any University affiliation.
