The Iraqi Megaproject No One Thought Would Happen Is Racing To Completion

By Simon Watkins - Feb 10, 2026

• TotalEnergies’ $27 billion four-part megaproject in Iraq is 80%–95% complete across key components, with officials saying it is ahead of schedule and could unlock major oil production gains.
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• The centerpiece Common Seawater Supply Project (CSSP) could enable Iraq to dramatically raise output by sustaining reservoir pressure at major southern fields.
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• The gas-capture element would cut Iraq’s dependence on Iranian gas, curb flaring, revive the stalled Nebras petrochemicals project, and reduce Tehran’s geopolitical leverage

Progress on the key elements in TotalEnergies’ US$27 billion four-pronged project that will define Iraq’s oil and gas sector in the years to come ranges from 80% to 95% complete, according to reports from the country’s Oil Ministry. This runs from 80% finished on the rehabilitation work on the first Central Processing Facility -- expected to double production capacity from 60,000 to 120,000 barrels per day (bpd) -- to 95% finalised on the Artawi-PS1 export pipeline project. Overall, a senior source who works very closely with the Ministry exclusively told OilPrice.com over the weekend: “It [TotalEnergies] is doing exactly what it said it would, ahead of time in several respects, as it has been allowed to get on with the projects with almost none of the usual government interference.” He added: “If the rest of the work continues like this, then we are looking at potentially enormous gains in oil production in a relatively short time.”

Indeed it is, as the key element of TotalEnergies’ four-part plan -- the Common Seawater Supply Project (CSSP), has long held out the promise that Iraq could finally deliver on its full hydrocarbons potential and become one of the world’s top three oil producers -- second perhaps to the U.S. As analysed in full in my latest book on the new global oil market order, the CSSP involves taking and treating seawater from the Persian Gulf and then transporting it via pipelines to oil production facilities in order to maintain pressure in oil reservoirs, which will optimise the longevity and output of the fields. The basic plan for the CSSP is that it will be used initially to supply around six million bpd of water to at least five southern Basra fields and one in Maysan Province, and then extended for use in further fields. Both the longstanding stalwart Iraqi fields of Kirkuk and Rumaila – the former beginning production in the 1920s and the latter in the 1950s, with both having produced around 80% of the country’s cumulative oil production – require major ongoing water injection. The reservoir pressure at the former dropped significantly after output of only around 5% of the oil in place (OIP), while Rumaila produced more than 25% of its OIP before water injection was required, according to the International Energy Agency (IEA). This was because Rumaila’s main reservoir formation connects to a very large natural aquifer that has helped to push the oil out of the reservoir.

To reach and then sustain Iraq’s future crude oil production targets over any meaningful period, Iraq will have total water injection needs equating to around 2% of the combined average flows of the Tigris and Euphrates rivers or 6% of their combined flow during the low season, according to IEA figures. While withdrawals at these levels might look manageable, these water sources also have to continue to satisfy other end-use sectors, including the enormous agricultural sector. Informative in terms of the potential timeline for the completion of the CSSP is the case of Saudi Aramco’s Qurayyah Seawater Plant Expansion. The 2 million bpd expansion of an existing facility took nearly four years from the awarding of the front-end engineering, pro­curement and design contract – in May 2005 – to the time that water first began to flow in early 2009.

Progress at the CSSP has been less straightforward, to put it mildly. It was delayed for over a decade, as the U.S.’s ExxonMobil and the China National Petroleum Corporation (CNPC) battled it out for control of the pivotal infrastructure project until the U.S. firm finally withdrew over mounting concerns over the lack of transparency across all areas of the project outside its direct control. These are alluded to in the reports around that time from the highly-respected independent non-governmental organisation Transparency International (TI) in its ‘Corruption Perceptions Index’. The publication described Iraq as being: “Among the worst countries on corruption and governance indicators, with corruption risks exacerbated by lack of experience in the public administration, weak capacity to absorb the influx of aid money, sectarian issues and lack of political will for anti-corruption efforts.” TI added: “Massive embezzlement, procurement scams, money laundering, oil smuggling and widespread bureaucratic bribery that have led the country to the bottom of international corruption rankings, fuelled political violence and hampered effective state-building and service delivery.” It concluded: “Political interference in anti-corruption bodies and politicization of corruption issues, weak civil society, insecurity, lack of resources and incomplete legal provisions severely limit the government’s capacity to efficiently curb soaring corruption.” Due to the terms of the contract, CNPC automatically found itself in the driving seat of the CSSP, but also made little progress, leaving the door open for TotalEnergies to secure the contract as part of the wider US$27 billion four-pronged deal.

Given the progress being made across this deal, the scope for oil output gains is huge, and was made plain back in 2013, in the Integrated National Energy Strategy (INES). This analysed in detail three realistic forward oil production profiles for Iraq and what each would involve, as also detailed in my latest book. Specifically, the INES’ best-case scenario was for crude oil production capacity to increase to 13 million bpd (at that point, by 2017), peaking at around that level until 2023, and finally gradually declining to around 10 million bpd for a long-sustained period thereafter. The mid-range production scenario was for Iraq to reach 9 million bpd (at that point, by 2020), and the worst-case INES scenario was for production to reach 6 million bpd (at that point, by 2020). These numbers compare to the current Iraqi production of 4-4.2 million bpd.

The gas component of TotalEnergies’ four-pronged deal can also be regarded as critical to its long-term future, in that it directly impacts its ability to end its dependence on Iran for gas imports and electricity for its power grid. This provided Iran with longstanding leverage over Iraq, which it used to enable it to continue to export its own oil around the world disguised as Iraqi oil, as analysed in full in my latest book. Tehran was also able to use this leverage to allow it to build out extensive military proxies across its neighbour and to expand the influence of the Shia Crescent of Power. This was further leveraged as part of Iran’s plan to build a ‘land bridge’ that would run via Iraq all the way to the Mediterranean coast, which would then be used by Tehran to increase arms shipments to its militant proxies for use against Israel.

The gas part of TotalEnergies’ megadeal involves the collection and refining of associated natural gas that is currently burned off at the five southern Iraq oilfields of West Qurna 2, Majnoon, Tuba, Luhais, and Artawi. Comments from Iraq’s Oil Ministry last year highlighted that the plant involved in this process is expected to produce 300 million cubic feet of gas per day (mcf/d) and double that after a second phase of development. Former Iraqi Oil Minister, Ihsan Abdul Jabbar, also stated last year that the gas produced from this second TotalEnergies project in the south would help Iraq to cut its gas imports from Iran. Moreover, successfully capturing associated gas rather than flaring it will also allow Iraq to revive the also long-stalled US$11-billion Nebras petrochemicals project, which could be completed within five years and would generate estimated profits of up to US$100 billion for Iraq within its 35-year initial contract period.

Looking ahead, there appears to be every chance that TotalEnergies’ US$27 billion four-pronged energy project will be completed around the initial target year of 2028, provided that the French energy giant continues to do what it is doing. One key element of this is continuing to resists any attempts by various elements of the Iraqi establishment to muscle in on the tantalisingly enormous sums of money involved in the project to make themselves richer, at the expense of the greater good of their country. A strong case in point was TotalEnergies’ point-blank refusal to accept any involvement in the megadeal of a re-established Iraqi National Oil Company (INOC). Widely known in the West as one of the most corrupt organisations to operate in any field anywhere in the world ever, INOC’s proposed participation in some form or another in the four projects was quickly vetoed by the French energy giant ‘due to the lack of clarity on the legal status of the company’. Subsequently, in October 2022, Iraq’s Federal Supreme Court invalidated the decision to re-establish the Iraqi National Oil Company on the basis that several of its founding clauses were in breach of the constitution.

By Simon Watkins for Oilprice.com 

How a Snow Deficit in the Alps Will Put Europe’s Energy System Under Pressure

By Tsvetana Paraskova - Feb 12, 2026

• Europe’s gas storage levels have fallen sharply this winter, with stocks projected to drop to around 26% by the end of March.
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• Below-average snowfall in the Alps could curb hydropower generation in Austria and Italy, increasing gas-fired power demand.
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• Record LNG imports, led by the United States and Qatar, are expected to help Europe rebuild storage despite rising demand and the phase-out of Russian gas.
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Europe’s gas demand could rise even higher at the end of this winter, making it even more challenging to refill storage that has been depleting at the fastest pace in years.        

So far into 2026, snowfall and snow coverage in the Alps, which feed a large part of the hydropower generation in Austria and northern Italy, have been well below average, Reuters columnist Gavin Maguire notes. 

With potentially lower hydropower generation, if snowfall continues to be scarce, gas consumption in the power sector could rise to make up for the gap, Maguire argues. 

Hydropower Decline? 

Reduced hydropower generation could hit Austria and Italy, where this electricity source makes up a large part of the mix.

In Austria, hydropower plants account for more than 60% of electricity output. If we add to this wind, biomass, and solar, renewable power generation in Austria makes up more than three-quarters of the country’s total electricity production. Austria’s last coal-fired power plant was shut in 2020.

In Italy, hydropower accounts for 12% of total power generation, which is still being led by gas-fired power plants.

So far in 2026, gas power generation has jumped by 24% in Italy and 17% in Austria, per data from LSEG cited by Reuters’ Maguire. 

Much lower than average snow coverage – if it persists – could complicate Europe’s efforts to refill gas storage sites this summer. 

This winter, gas storage sites in Europe are draining at the fastest pace in five years, amid below-average winter temperatures that are driving heating and power demand higher. The faster rate of depletion suggests stocks would end this winter at their lowest level since 2022.

EU gas storage sites were estimated to be just 35% full as of February 10, according to data from Gas Infrastructure Europe.

Analysts forecast that EU gas storage would be only about 26% full by the end of March, when the winter season officially ends. 

EU Set for Record Gas Demand

End-of-winter supply in storage at the lowest in four years means that Europe will need very high imports in the shoulder seasons and the summer to replenish the stocks to adequate levels of 80-90% full storage by November 2026, as per the EU regulations.  

U.S. LNG exports are set for a rebound following the weather-related disruptions during the winter storm Fern at the end of January. 

Moreover, global LNG supply is expected to remain abundant and even tilt into excess later this year as new export projects in the top exporters, the United States and Qatar, come on stream. 

Thankfully for Europe, this supply wave is expected to continue until at least 2029 as the U.S. and Qatar boost export capacities. 

Europe is expected to import a record-high volume of LNG this year as stronger demand for replenishing storage sites, the phase-out of Russian supply, and continued pipeline exports to Ukraine will drive increased demand, the International Energy Agency (IEA) said in its Gas Market Report Q1 2026 last month.

After setting a record in 2025, European LNG imports are poised to reach a new all-time high of over 185 billion cubic meters (bcm) in 2026, the agency noted. 

Europe’s LNG imports hit a record-high of more than 175 bcm in 2025, surging by 30%, or by 40 bcm, from 2024, the report found. Key factors in the record imports were stronger domestic demand, lower piped gas imports, and higher storage injections in April-October. 

As a result of the jump in LNG imports, the share of LNG in Europe’s primary natural gas supply surged from 30% in 2024 to 38% in 2025, the IEA noted.

Most of the incremental LNG supply to Europe came from the United States, which boosted deliveries to Europe by 60% year over year. 

This year, the phase-out of Russian gas, which the EU member states agreed on in December, will create an additional market for non-Russian LNG suppliers to the EU, the agency said. 

LNG Supply Growth to Help Europe’s Storage Refill 

In the quarterly report, the IEA also pointed out that a surge in global LNG supply is expected to play a key role in rebalancing global gas markets in 2026, leading to stronger demand growth after a slowdown last year.

The jump in supply, mostly from North America, is expected to reduce market pressures at a time of heightened geopolitical uncertainty, the IEA said. 

Global LNG supply growth is set to accelerate in 2026 to more than 7%, its fastest pace since 2019, the agency said, echoing expectations from other forecasters.

The constant growth of solar and wind power generation in Europe could offset some gas demand in the power sector. But if hydropower output in central and southern Europe falters due to a lack of snow, the acceleration of LNG supply growth would be welcome news for the EU’s efforts to refill gas storage sites after the end of this winter. 

By Tsvetana Paraskova for Oilprice.com

Europe's Clean Energy Push Creates New Geopolitical Risks

By Haley Zaremba - Feb 12, 2026

• Europe's decades-long dependence on Russian energy is being replaced by new, compounding threats to sovereignty from the United States' energy dominance and China's technological monopoly.
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• The rapid expansion of renewable resources and increased liquefied natural gas (LNG) imports from the U.S. have created new risks, including strain on power grids and potential systemic risk from the U.S. using energy for leverage.
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• To pursue energy independence, European leaders are intensifying the development of large-scale offshore wind projects in the North Sea to create a multi-nation connected grid.
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Europe is still suffering from the consequences of its decadeslong dependence on Russian energy imports. But as the bloc continues to wean itself off of Russian oil and gas, Europe is facing new and compounding energy dependence threats from the United States and China. European policymakers are in a tough spot, literally and figuratively sandwiched between a massive and high-stakes battle for global energy supremacy. 

When Russia illegally invaded Ukraine in February of 2022, Europe as a whole depended on the Russian producers for 40 percent of its natural gas. Setting and following sanctions on Russian energy and finding more reliable and responsible supply chains over the last four years has not been easy. Only last week, European leaders finally agreed to end imports of Russian gas to the bloc – but that total ban still won’t take effect until next year.

In the wake of these overnight embargoes on Russian energy, Europe has scrambled to intensify buildout of renewable resources. But this rapid expansion has led to major hiccups in the continent’s energy security, placing major strain on power grids and causing extreme volatility in electricity prices. To fill these gaps and shore up energy security over the past few years, Europe has eagerly increased its imports of liquefied natural gas from the United States. But now that decision, too, is seeming increasingly risky for European sovereignty and resilience. 

“Europe’s energy security is being redrawn by shifting global power plays – from America’s energy dominance to China’s technological monopoly,” the German Council on Foreign Relations warned in a memo published earlier this week. “Once considered tools of cooperation, energy resources and technologies are again being used for leverage.”

In general, global geopolitics are trending toward an era of protectionism and nationalist policy, with potentially disastrous results for net energy importers. And Europe, which has clung to a free-trade ethos, is at risk of being caught in the crossfire between the United States and China as the world’s two biggest economies pull in opposite directions – one toward being the world’s first electrostate and the other toward petro-dominance. And both want to ensure that the entire world follows suit. 

While the United States was once considered a safe lifeline away from the tyrannical and unstable energy powers of Russia and China, experts contend that those dynamics are rapidly changing. The Council expresses genuine concern that the United States will now do anything to ensure its own energy dominance – including but not limited to the aggressive annexation of Greenland – without a second thought for its European alliances. But the alternative, cozying up to China, isn’t sounding so great either. 

As a result, the Council contends that “Germany should begin to consider US energy dominance, alongside Russian fossil statecraft and Chinese technological consolidation, as a potential systemic risk.”

Trump’s aggression toward Greenland, in particular, has been a major pivot point for European leadership, pushing the continent to pursue energy independence with renewed vigor. Accordingly, nine countries with stakes in the North Sea have doubled down on the development of large-scale offshore wind projects that would include the development of a grid connected to multiple European nations. 

While this new agreement is focused on strengthening Europe’s energy independence, leaders say that it doesn’t signal a desire to end trade relations with the United States. EU energy commissioner Dan Jørgensen has said: “We are not against trading with the US — on the contrary. But we are of course aware — and this goes for all countries, not only the US — that we are not aiming at replacing one dependency with a new dependency. We want to grow our own energy and our strategy in the future is to become free of gas.”

In the meantime, Europe is also keen to develop more diverse suppliers and “mutually beneficial energy partnerships with like-minded partners eager to avoid asymmetrical and transactional dependencies,” according to the German Council on Foreign Relations. 

By Haley Zaremba for Oilprice.com 

 

Global Electricity Demand Is Surging—The Grid Isn’t Ready

By Tsvetana Paraskova - Feb 10, 2026

• International Energy Agency says global electricity demand is growing at its fastest pace in 15 years, set to rise more than 3.5% annually through 2030.
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• While renewables, nuclear, and natural gas are expanding rapidly, grid infrastructure is becoming the key bottleneck, with over 2,500 GW of power and load projects stuck in connection queues worldwide.
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• Grid investment must rise about 50% above current levels to keep pace, with BloombergNEF and Goldman Sachs warning that persistent grid constraints could trigger power shortages and even undermine the U.S. position in the global AI race.
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Global electricity demand is rising at the fastest pace in 15 years and will continue to do so at least until the end of the decade as AI infrastructure, advanced manufacturing, and electrification have ushered in The Age of Electricity, the International Energy Agency (IEA) says.

Global power demand is expected to grow by more than 3.5% per year on average through the end of the decade, the agency said in its new Electricity 2026 report.

Renewables, nuclear, and natural gas are the big winners of the electricity demand boom, but the rise in all these power-generating sources would not mean anything if they struggle to connect to the grid.

Power Demand Surge

Global electricity demand increased by 3% annually in 2025, following growth of 4.4% in 2024, the IEA said in the report.

Between 2026 and 2030, the annual average growth rate would be 3.6%, driven by higher consumption from industry, electric vehicles (EVs), air conditioning, and data centers, according to the agency.

While emerging economies, including China, India, and the Southeast Asian region, will drive 80% of the additional power demand by 2030, advanced economies see growth in electricity demand after 15 years of stagnation, the IEA said. Artificial intelligence, data centers, and advanced manufacturing support the return to growth in power demand in advanced economies.

U.S. electricity demand rose by 2.1% in 2025 and is expected to grow by nearly 2% annually through 2030. The rapid expansion of data centers will drive half of the increase, the agency noted.

EU demand is forecast to increase by around 2% per year through 2030, and many other advanced economies – such as Australia, Canada, Japan, and South Korea – are also expected to see faster electricity demand growth through 2030.

Grid Investment Lagging Behind Power Generation Boom

As demand grows, developers of new capacity, especially renewables and natural gas, face constraints in connecting to the grids. Regional and country-specific trends are not the same, but the need for rapid and efficient expansion of grids is a pressing global issue. Without increased system flexibility and rapid grid expansion, the Age of Electricity could roll out slower than expected.

Today, global investments in grids are about $400 billion per year. If the world is to meet the expected growth in power demand through 2030, it would need to boost annual grid investment by about 50% from $400 billion, according to the IEA.

The Age of Electricity will also need “a significant scaling up of grid-related supply chains,” the IEA said.

Currently, more than 2,500 gigawatts (GW) worth of projects – renewables, storage, and projects with large loads such as data centers – are stalled in connection queues worldwide.

A total of 1,600 GW of queued projects could be integrated in the near term through grid-enhancing technologies and regulatory reforms that enable more flexible grid connections and usage, the agency reckons.

But increased flexibility and grid expansion need more investment than the current spending.

Last year, grid investment was on track to top $470 billion for the first time, up by 16% from 2024, a December analysis from BloombergNEF found.

The U.S. accounted for a quarter of global grid spending with the highest investment level in 2025, at $115 billion. China and the EU/UK followed as other major contributors, each with around 20% of the global sum, according to the report.

However, rising equipment costs compounded by high inflation have started to affect overall spending figures, BNEF said, adding that increased spending “will not fully eliminate ongoing grid-infrastructure bottlenecks, meaning delays to new generation and demand connections are likely to continue in the coming years.”

“We’ve seen that even with increased investment, there are significant barriers to meeting the needs of new generation and power demand on time,” Peter Wall, Head of Grids Research at BloombergNEF, said.

“With data centers and industrial electrification driving sharp increases in power demand, investors need to factor in how essential timely grid expansion is for not only connecting new demand but also connecting all of the generation we will need to ensure a secure and reliable supply to this demand after over a decade of stagnation.”

Additional grid investment is hampered by supply chain and labor constraints, BloombergNEF notes.

In the U.S. specifically, the aging grid infrastructure in key regional U.S. markets cannot cope with all requests, with grid investments lagging behind soaring power demand.

At the current rate of interconnection requests and grid capacity, the U.S. could face a power crunch by 2030, Samantha Dart, Goldman Sachs’ co-head of global commodities research, said at a conference last month.

“We aren’t adding enough capacity,” Dart said in January at the Goldman Sachs Energy, CleanTech and Utilities Conference in Miami.

Nearly all power grids in the U.S. may lack critical spare capacity by the end of the decade. If the issue with grid constraints remains unaddressed, China could pull ahead of the U.S. in the AI race, Dart noted.

By Tsvetana Paraskova for Oilprice.com

China’s Clean Energy Boom Still Rests on Coal, Oil, and Gas

By Alex Kimani - Feb 10, 2026

• China has built a world-leading clean energy sector, but fossil fuels still underpin energy security.
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• Coal remains the backbone of China’s power system and industry, while oil and natural gas are critical for transport, petrochemicals, and grid stability.
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• China’s clean-energy dominance is reinforced by its near-monopoly over rare earth mining and processing.
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Over the past decade, China’s renewable energy and related clean technologies have emerged as the fastest-growing sectors of the economy, significantly outpacing the overall economy. Last year, China’s clean energy investments hit a record 7.2 trillion yuan ($1 trillion), with the sector accounting for over 11% of GDP and growing three times faster than the overall economy. Indeed, China’s "new three" namely solar, batteries, and electric vehicles contributed over 90% of the rise in the country’s overall investments. China continues to be particularly dominant in solar and wind energy technologies, with the nation installing 315 GW of solar and 119 GW of wind, exceeding the rest of the world combined. Still, fossil fuels remain critical to China's energy security and industrial base, providing over 80% of primary energy and over 60% of electricity production.  

Coal is the ornerstone of China’s energy sector, providing over 50% of electricity generation and roughly 60-70% of total primary energy consumption. China consumes over 4 billion tons of coal annually, accounting for more than 50% of the entire world's coal consumption. In 2023, data indicated that China's coal consumption continued to rise, with imports reaching a record 474 million tons. This makes China the world's largest coal consumer and importer.

Despite massive investments in renewables, coal continues to play an outsized role in fueling the economy, ensuring energy security and powers industrial sectors like steel, with new coal-fired power projects continuing to be built at a rapid clip. Construction of new coal-powered plants hit a 10-year high in 2024, with the country initiating development of 94.5 gigawatts (GW) of new coal-power capacity and also resumed building of 3.3 GW that was previously suspended. The heavy reliance on coal has led to significant air pollution and carbon emissions, despite China’s President Xi Jinping pledging to "strictly control" coal expansion and "phase down" consumption.

And oil, too, remains critical to China’s energy security and industrial growth, representing roughly one-fifth of its energy mix and powering transport and petrochemical sectors. China consumes approximately 16.3 to 16.4 million barrels per day (b/d) of oil, making it the world's second-largest consumer. As of 2024, the country imported roughly 11.1 million b/d of crude oil to meet this demand, representing about 74% of its consumption.

Projections for 2025 suggest total oil demand averaged around 16.74 million b/d. Russia, Saudi Arabia, and Iraq are China’s key suppliers of crude, with imports from Russia exceeding 2 million barrels per day (bpd), representing roughly 20% or more of China's total imports.  Around 900,000 bpd of Russian oil is delivered via pipeline, with the rest coming by sea, often using a "shadow fleet" to bypass Western sanctions.

Not surprisingly, China is also aggressively expanding domestic oil production, with output reaching a record high of 4.3 million b/d in 2025 from 3.8 million b/d in 2020, thanks to intensified exploration, particularly in offshore and unconventional reserves. Offshore oil production is a major driver of China’s domestic oil production, accounting for over 60% of new output for five consecutive years in large part due to increased investment by state-owned companies, including CNOOC, CNPC, Sinopec. 

The push is part of the 2019-2025 "Seven-Year Action Plan" which focused on increasing upstream, domestic production to ensure energy security, even with the parallel push for green energy and electric vehicles. However, the high cost of extracting from mature fields means domestic output cannot keep pace with demand, leaving a large gap that must be filled by imports.

Meanwhile, natural gas acts as a critical "bridge fuel" in China's energy transition, helping to reduce reliance on coal, improve air quality and balance intermittent renewable energy. As the world’s third-largest consumer of natural gas, China is growing its natural gas usage for industrial, residential, and power generation, with projections indicating that gas will play a major role in achieving carbon neutrality.

China's natural gas consumption hit ~428 billion cubic meters (bcm) in 2024, marking a steady increase from 330 bcm in 2020. China relies on a mix of domestic production and imports, with demand driven largely by the industrial and city-gas sector. China's imports of Liquefied Natural Gas (LNG) imports are projected to rebound in the current year, with projections of up to a 10% Y/Y increase to nearly 76 million metric tons, following a ~10% decline in 2025 due to high domestic production and weaker demand. China is the world's largest importer of LNG, with Australia, Qatar, and Russia supplying the bulk of imports. China also imports large amounts of gas via pipeline, primarily from Russia and Turkmenistan via the Power of Siberia (Russia) and the Central Asia-China Gas Pipeline.

That said, China is poised to maintain its dominance in the global clean energy sector not only due to heavy investments and technological leadership but also due to its rare earths hegemony. 

China maintains a commanding, near-monopolistic hold on the global rare earth elements (REEs) supply chain, controlling approximately 60-70% of mining and over 90% of processing and refining. Neodymium and dysprosium are essential for high-strength permanent magnets in electric motors, significantly increasing power density and efficiency.

Permanent magnets (using neodymium, dysprosium, and praseodymium) are used in wind turbines to improve performance, particularly for offshore, direct-drive turbines that require no gearbox. While not used directly in PV modules, REEs like yttrium, lanthanum, and cerium are used in specialized solar inverters, sensors and converter components.

By Alex Kimani for Oilprice.com

Solar Set to Surpass Coal in China, But There’s a Catch

By Andrew Topf - Feb 06, 2026

• China is set to see solar capacity overtake coal for the first time this year, with wind and solar expected to make up about half of total installed power capacity by end-2026.
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• Despite rapid renewables growth, additions are slowing after a shift to market-based pricing, and Rystad Energy forecasts China will drive a global decline in new solar capacity in 2026 even as renewables overtake coal in total power generation.
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• Coal is far from phased out: Carbon Brief reports a record surge in new coal plant proposals, risking long-term coal lock-in even as many existing plants run at low utilization.
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China’s solar generating capacity is poised to exceed coal for the time this year, the China Electricity Council said in a report this week.

The country, long dependent on coal, should get about half of its installed generating capacity from solar and wind by the end of 2026, whereas coal’s use is expected to fall to about one-third of the total.

More specifically, the electricity council puts total coal capacity at about 1,333 gigawatts by Dec. 31. Solar ended 2025 at 1,200 GW and has averaged 270 GW of growth each year for the past three years.

The Los Angeles Times reports the country is expected to build out more than 400 GW of new generation in 2026 to keep up with electricity demand, with most of the new capacity to come from wind and solar, which combined would account for about 300 GW.

These figures seem to indicate that China is transitioning away from coal. But that would be a wrong assumption. The first number to look at is the 300 GW of renewables. It is smaller than last year, when solar alone accounted for 315 gigawatts of new capacity in China.

The reason has to do with a change to China’s power regulatory regime. Local developers wanted to get their projects operational before the change came into effect last June 1. After that date, the country shifted its renewable energy pricing from government-set feed-in tariffs to a market-based auction system. The idea was that by forcing new wind and solar projects to compete in the power market, it would encourage efficiency and lower prices.

According to Rystad Energy, in 2026 China is forecast to commission 235 GW of solar and 98 GW of wind capacity, reducing global renewable power generation capacity from 703 GW in 2025 to 650 GW in 2026.

In other words, China will be largely responsible for the forecast reduction in new global solar capacity, which reached a record 703 GW in 2025, largely driven by new solar capacity coming online in China during the first half of the year.

However, total renewable sources, not just solar, are expected to reach 11,900 terawatt-hours in 2026, overtaking coal as the largest source of power generation — a position it has held for decades.

Again, quoting Rystad Energy, coal contributed to almost 40% of the energy mix in 2000, and given that practically all the new demand is being met with renewable sources, coal generation has plateaued.

Here comes the catch. This week Carbon Brief reported that proposals to build coal-fired power plants in China reached a record high in China.

The report by the Centre for Research on Energy and Clean Air and Global Energy Monitor says that in 2025, developers submitted new or reactivated proposals to build a total of 161 gigawatts (GW) of new coal-fired power plants.

The new proposals come even as China’s buildout of renewable energy pushed down coal-power generation and carbon dioxide (CO2) emissions in 2025, meaning many coal plants are already running at just half of their maximum capacity.

The co-authors argue that while clean-energy growth may limit emissions from coal power in the short term, the surge in proposals could lock in new coal assets, “weaken…incentives” for power-system reform and help keep coal capacity online in spite of China’s climate goals. 

According to Carbon Brief, the country is continuing to add significant coal-power capacity, with a record 95 GW added to the grid last year and another 291 GW in the pipeline.

Around two-thirds of coal-powered capacity proposed in China since 2014 has either been commissioned or is set to be built.

This is the reverse of what is happening outside of China, where roughly two-thirds of proposed coal capacity never makes it to construction.

Coal may be down in China, but it’s not yet out.

By Andrew Topf for Oilprice.com