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Page added on January 28, 2015

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China’s Coal Consumption Fell in 2014

China’s Coal Consumption Fell in 2014 thumbnail

china coal and fuel source change

For the first time this century China’s coal consumption has fallen, according to preliminary data from both the Chinese Coal Industry Association and the National Energy Administration. The amount by which coal use declined last year remains an open question, with the Coal Industry Association reporting a reduction of around 3.5% but NEA data showing a fall of only 0.4%.

 

Applying the two growth rates to corresponding official statistics for 2013 yields very similar numbers for absolute coal consumption in 2014, however, which may suggest that the NEA’s small reduction is likely due to under-reporting of consumption in previous years.

China's implied coal demand

Climate impact

News of the coal fall represents a major step-change on two fronts: China’s war on air pollution, and global efforts to peak CO2 emissions.

China burns half of world’s coal and has been responsible for well over half of total CO2 growth globally for the past 10 years.

How did this momentous drop happen? There are six key reasons: 1) record increase in CO2-free power generation capacity and 2) better-than-usual operating conditions for hydropower, resulting in a very large increase in CO2-free power generation; 3) implementation of ambitious coal reduction targets in key economic regions as a part of air pollution action plans; 4) slower growth in heavy industry output, resulting in slower growth in power demand and direct coal demand; 5) ongoing improvements in energy efficiency; and 6) increase in the use of natural gas.

Only one of these six factors – high hydropower utilization rates – is a yearly fluctuation, the rest potentially reflecting long term structural shifts.

China’s new energy targets suggest that the annual increase in non-fossil power generation will be close to 2014 levels until 2020 and beyond (although there might be slower increase for a year or two after 2015, before additions pick up again to meet the 2020 target). Similarly, gas use will have to grow at or above 2014 rate.

And china’s coal reduction targets just got tougher as the government announced absolute caps will be set for coal consumption in two key economic regions, the Yangtze River Delta and the Pearl River Delta.

Economic rebalancing gaining traction

China’s leadership is also engaged in a conscious policy to rebalance the economy that has become overly reliant on large investment projects and heavy industry.

The leadership resisted the urge to kick up another round of investment spending to prop up the energy intensive industry sectors, opting to focus on quality rather than quantity of growth.

As a result, the steel industry association said that China’s steel consumption has “already entered a period of peaking”. China appears to have also dramatically cut down its ambitions for coal-to-gas and other coal conversion projects (the last potential source of rapid coal demand growth) over concerns about water impacts and economic viability.

Energy efficiency improvements will also need to continue to meet China’s total energy consumption control target for 2020.

Together, these factors will very significantly constrain coal use. With full implementation of the targets China has set for 2020, it’s expected that coal demand will peak and decline during this decade.

China has a long way to go to guarantee breathable air to its citizens and to bring its per capita CO2 emissions to sustainable levels. However, the precipitous changes in the outlook for coal and CO2 emissions in China are the opportunity of the century for countries to work together to peak and reduce global emissions and get on track to avoiding the worst effects of climate change.

energy collective



9 Comments on "China’s Coal Consumption Fell in 2014"

  1. Plantagenet on Wed, 28th Jan 2015 1:44 pm 

    Good to hear that China has slightly cut their coal consumption. However, they are still the worlds largest CO2 producer—by far.

  2. Speculawyer on Wed, 28th Jan 2015 1:54 pm 

    That is GREAT news. Especially for the Chinese people living in smog shrouded cities that are literally losing years off their lifespans.

    I hope they can keep up progress. Switching to Solar PV, wind, natural gas, and nuclear is much better for them and the world.

    Australia am cry . . . but screw Tony Abbott. They need to build an economy not dependent on exporting toxins.

  3. Perk Earl on Wed, 28th Jan 2015 4:41 pm 

    Is the 3877 in million of tons?

  4. eastbay on Wed, 28th Jan 2015 5:03 pm 

    I do not believe this.

  5. Political Economy on Wed, 28th Jan 2015 5:55 pm 

    Too early to celebrate. Similar reduction of China’s coal consumption happened in late 1990s, followed by explosive growth in the early 2000s.

    The reduction of coal consumption in 2014 was mostly due to a 20% growth of hydroelectricity (which is not sutainable). Without the hydroelectricity growth, coal consumption was likely to have grown by 3-4%

  6. Davy on Wed, 28th Jan 2015 6:53 pm 

    The primary reason China’s coal consumption is down is the rate of growth in China is down. All the other efforts together are insignificant because of the huge role coal plays in China’s economy. Coal as an energy source dwarfs all other energy use in China. When we see 2015 the numbers will be startling I imagine.

    China is in the worst possible position of any major economy with stalling hyper growth in an export driven economy. This is dangerous socially and ruinous economically. China has huge heavy industry overcapacity that represents massive mal-investment. These are precisely the areas that will reduce the Chinese coal consumption numbers.

    The government has been kicking the bad debt can down the road and allowing loss making heavy industry to limp along. This is nearing a breaking point. A hard landing is coming to China. This is true everywhere globally but China has always been seen as a growth engine. This will soon no longer be the case

  7. Makati1 on Thu, 29th Jan 2015 3:57 am 

    Davy, you better hope China does not crash or it is the end of BAU for you and everyone else. There are four trillion reasons.

  8. Davy on Thu, 29th Jan 2015 7:23 am 

    Makster, China does not have your 4TRIL because that is not real wealth just as China’s 25TRIL credit creation is not real. China and US are in a vast distorted economic relationship that has allowed both countries to rape the world in overconsumption, over production and in China’s case population overshoot. All that faux digital wealth is a disconnect of the real with the digital. You are right Makster China’s failure is the end of BAU. I am sure glad I am not in your shoes with 100MIL in the space of AZ in the Philippines and in a neighborhood of 4BIL in a space smaller than Russia. I feel for you because you are crazy old man in a crazy region.

  9. Kenz300 on Thu, 29th Jan 2015 10:11 am 

    China is investing heavily in wind and solar production. They are also shutting down older and inefficient pollution generating factories.

    They have come to realize that their pollution levels are unacceptable and are now moving to address it.

    They are taking many small steps to move toward alternative energy sources and clean up the environment.

    China rolls out the world’s largest electric car charging network – YouTube

    https://www.youtube.com/watch?v=UkYHxiSrsHY&spfreload=10

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