China's green-energy revolution is losing $60 billion a year. Why are investors still throwing money at it?

By Charlie Garcia

China is praised for being a global alternative-enegy innovator. But its coal mining industry holds the real power.

China burns 56% of the world's coal, has tripled consumption since 2000 and is building coal plants at the fastest pace in a decade.

China's vice premier, He Lifeng, took the stage at Davos this week to position Beijing as the world's reliable partner on global trade and renewable energy. The World Economic Forum obliged, declaring this year "a high-stakes execution test" after celebrating China in a December 2025 report for "cementing its status as the world's clean-energy powerhouse."

The spreadsheets tell a different story.

The financial newsletter Doomberg recently published a devastating analysis of China's energy reality versus its media portrayal. The core finding: China burns 56% of the world's coal, has tripled consumption since 2000 and is building coal plants at the fastest pace in a decade. Yet the Davos crowd continues to celebrate Beijing's "climate leadership" with the enthusiasm of a golden retriever greeting a burglar.

The Doomberg piece was excellent. But it was too polite. Allow me to add a few observations that transform the story from merely damning to genuinely absurd.

The solar industry is bleeding out

China installed a record-setting 277 gigawatts of solar capacity in 2024. Headlines everywhere. The energy transition is here, they told us, and China is leading it.

What nobody mentioned: China's solar industry lost $60 billion that same year.

This is not a typo. Sixty billion dollars. China's solar industry's total losses exceeded the GDP of Luxembourg. More than 40 solar manufacturers have gone bankrupt or delisted since 2024. One-third of China's 121 listed solar producers are operating in the red. The top four manufacturers - the giants that were supposed to dominate the 21st century - collectively lost $1.5 billion in the first half of 2025 alone. The previous year was worse. This year looks worse still.

The industry has responded by laying off 87,000 workers from five major companies, according to a Reuters analysis of company filings. In a country where employment is considered essential to social stability, these layoffs are politically sensitive enough that most companies won't even acknowledge them publicly.

This is what happens when central planners decide solar panels are a "strategic emerging industry" and redirect capital accordingly. Factories multiply. Overcapacity explodes. Prices collapse. Everybody loses money. The spreadsheet eventually fights back, and the spreadsheet always wins.

The solar panels that do nothing

China's solar installations are the world's most expensive decorations - a clean-energy Potemkin village stretched across the provinces.

Here's the detail that should make investors spit out their coffee: China's solar-capacity factor, according to the Atlantic Council, stood at just 14.7% in 2023, compared with 23.3% in the United States.

And it's getting worse. In 2024, solar capacity grew by 45% while generation increased only 28%. Do the math and the implied capacity factor drops toward 11% or 12%. IEEFA data shows utilization hours collapsed from 1,030 in 2020 to just 473 in 2024.

That means that roughly five-sixths of the time China's solar installations sit there doing nothing. They are the world's most expensive decorations - a clean-energy Potemkin village stretched across the provinces.

China is building solar capacity faster than it can use it, faster than its grid can absorb, faster than any economic logic would justify. The result is panels producing power that nobody can buy, connected to a grid that cannot handle the load, owned by companies that cannot turn a profit.

This is not an energy transition. This is an energy traffic jam.

The coal contract lock-in

China's power system is not designed to optimize for clean energy. It is designed to protect coal.

The Doomberg article mentioned rising curtailment rates for renewables. China's solar curtailment hit 6.6% in the first half of 2025, up from 3.9% the year before. Wind rose to 5.7% from 3%. The official explanation involves grid constraints and transmission bottlenecks.

The real explanation is more illuminating: contracts.

China's power system runs on medium- and long-term coal purchase agreements. Utilities commit to buying specific volumes of coal-fired electricity, often years in advance. Miss your quota? Pay a penalty. These contracts guarantee coal's market share regardless of whether cleaner alternatives are available.

So when the sun shines bright over Shandong province and solar panels are ready to deliver cheap electrons, the grid often says, "No, thank you." The coal contracts must be honored. Renewables get curtailed. The system is not designed to optimize for clean energy. It is designed to protect coal.

The officially reported curtailment rate for late 2024 was 3.2%. Independent analysts at Carbon Brief who examined the data believe the actual figure was closer to 5.5%. The gap is not a rounding error. It is the distance between propaganda and reality.

Vertical integration, coal-miner style

The structural lock-in gets worse. In 2024, more than 75% of newly approved coal-power capacity in China was financed by coal-mining companies or energy groups with coal-mining operations.

Read that again. The companies digging coal out of the ground are now buying the power plants that burn it. They are not hedging against the energy transition. They are building walls against it. By owning both supply and demand, they guarantee themselves customers for decades regardless of what happens to solar costs or battery technology or climate policy.

This is vertical integration as survival strategy. It is also, from a pure business standpoint, fairly clever. If you suspect the government might eventually restrict your product, the smart move is to own the entities legally obligated to purchase it. Lock in the demand before the regulators arrive.

Coal miners watched the "dual carbon" pledges and concluded, reasonably, that talk is cheap but contracts are enforceable.

The methane nobody mentions

China's coal mines are responsible for 70% of global coal-mine methane emissions.

Climate coverage loves a solar-farm photograph. Blue panels gleaming under blue skies. Very shareable. Very inspiring.

Nobody photographs methane.

China's coal mines are responsible for 70% of global coal-mine methane emissions from large-scale operations. If all currently proposed mining projects are completed, that share rises to 75%. Methane is roughly 80 times more potent than carbon dioxide as a greenhouse gas over a 20-year horizon. It is the silent partner in every coal operation, and China's operations are enormous.

Satellite data recently caught Shanxi province, China's largest coal-producing region, emitting an estimated 1.2 million tons of methane annually from just 82 facilities. That is four times the integrated emissions from the Permian Basin and Four Corners hotspots in the United States, two of the most notorious oil and gas methane sources on Earth.

The International Energy Agency estimates that countries globally underreport energy-related methane emissions by approximately 80%. The gap between what governments tell the United Nations and what satellites actually observe is not subtle. It is a chasm.

Record coal imports during the 'transition'

China is not reducing coal dependence. China is increasing coal dependence while building solar panels it cannot use.

One final data point for those still clinging to the clean-energy-transition narrative: China's coal imports hit a record 543 million metric tons in 2024. That was up 14.4% from the previous year, which was also a record.

China is not reducing coal dependence. China is increasing coal dependence while building solar panels it cannot use, manufactured by companies that cannot survive, connected to a grid that cannot absorb them.

This is not an energy transition. This is an energy addition. Coal plus renewables, with coal protected by contract and renewables bleeding cash.

The strategic reality

Coal provides baseload power, grid stability and employment for millions of Chinese workers.

None of this is accidental. Chinese policymakers are not stupid. They never bought the Western argument that reducing emissions would cause economic harm - because they never intended to reduce emissions. They intended to say they would reduce emissions, which is a different thing entirely.

The solar-manufacturing boom served multiple purposes: generate exports, absorb capital fleeing the property sector, create jobs and provide talking points for international climate conferences. Whether the panels actually displaced coal was never the primary objective.

Meanwhile, coal provides baseload power, grid stability and employment for millions of Chinese workers. It has institutional defenders across every level of government. It has contracts that guarantee market share. It has mining companies willing to finance new plants to secure their own futures.

Solar has bankruptcy filings and press releases.

The green-energy transition will eventually arrive. Physics and economics guarantee it. Battery costs will fall. Grid technology will improve. Solar efficiency will increase. The math will eventually become undeniable even to bureaucrats with coal contracts to protect.

But China will not lead this transition. China is not the future of clean energy. China is the present of coal, dressed in solar-panel camouflage, marketed to a Western audience eager to believe that someone, somewhere, is solving the climate problem.

China is selling the T-shirt, pocketing the markup and burning coal to print more.

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