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Is Coal Demand Falling In China?

November 3, 2014
tags: ,

By Paul Homewood


h/t Le Gin


It appears that Greenpeace have been getting excited about a slowdown in coal production in China.


China’s coal use doubled in the past 10 years, causing more than half of rapid global CO2 growth over the period, bringing the country’s per capita emissions at par with the EU and culminating in the current air pollution crisis.

As we have highlighted before, China’s response to the public outrage on air pollution has led to some very ambitious policies to curb coal consumption on the provincial level, from absolute cuts in coal use by 2017 to bans on new coal-fired power plants and factory shutdowns. We might now be beginning to see the impacts: China’s coal consumption was seems to have dropped in the first half of 2014. The growth of imports ground almost to a halt, while domestic production dropped by 1.8% [in Chinese]. While there is uncertainty over the changes in coal stockpiles – running down stockpiles could have enabled consumption to grow while production and imports declined – stockpiles are reported to be high and increasing, making it very likely that consumption did indeed drop.





One of the  main factors is that prices are ultra low, because of a supply glut and slower economic growth. As a consequence, producers are keeping output low to force prices back up, just as OPEC do with oil. (See here)


There is no doubt economic growth has slowed in China, particularly in the coal intensive sectors, as this graph from the Sierra Club shows.




It has long been expected that, as Chinese economic growth slowed in heavy industry and picked up in low energy intensive sectors, rapid growth in coal consumption would also slow down. None of this means, however, that China’s coal production and consumption are about to start falling anytime soon.



Indeed, it was only last week that China announced the discovery of another massive coal field:


Local authorities said that a massive coal field with 11.6 billion tonnes of coal has been discovered in northwest China’s Xinjiang Uygur Autonomous Region, providing a fresh supply for the country’s energy strategies.
According to Xinjiang’s coalfield geology bureau, located in the southern part of the Sandaoling Mining Area, Hami Prefecture, the coal field boasts high-quality steam and civil coals. Extraction work began last year within an area of 913.22 square kilometer.
Hami Prefecture is one of the five major coal bases in Xinjiang, with an estimated reserve exceeding 570 billion tonnes.
In recent years, a dozens of state-owned energy enterprises have moved to tap the coal resources there, steering coal power and increasing Hami’s strategic status in China’s energy industry.
Beginning in 2012, the local government stepped up development in seven coal mining areas in the prefecture, expecting its coal production capacity to top 150 million tonnes by 2015.

Source – Xinhua News Agency


At current rates of consumption, the Xinjiang’s estimated reserves are enough to supply the whole of China’s requirements for 140 years.


Last December, the International Energy Agency forecast that coal demand would continue to grow in the next five years. 




And in May, He Jiankun, a top climate adviser to the government, said at a conference that he expected consumption to peak at around 4-4.5 billion tonnes between 2020 and 2025.

It should also be remembered that natural gas output in China is rising rapidly, up 8% year on year.

Meanwhile, as prices fall, India is taking full advantage and importing the coal China does not want.

The reality is that coal remains by far the cheapest source of energy, and will continue to remain so for some time to come. This can only be good news for billions around the world who need access to cheap energy and all the benefits it will bring.

  1. November 3, 2014 11:13 pm

    Malaysia and Indonesia also both have plans to shift their electricity consumption more to coal to take advantage of cheaper prices.

  2. John F. Hultquist permalink
    November 4, 2014 1:23 am

    In the previous post, I wasn’t clear: you meant to write 2012 – 2014 but did not. It reads 2012 – 2012.

    • November 4, 2014 11:16 am

      OH!!! Thanks John, I thought you referring to the post, not my comment!

      I meant 2012 to 2013, and have now changed.

  3. Le Gin permalink
    November 5, 2014 10:45 am

    Wow, ask a question and you get a straight answer, with illustrations!
    Thanks for this.
    Only just checked back as I have been “otherwise engaged”.


  1. Is Coal Demand Falling In China? | The Global Warming Policy Forum (GWPF)

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