China aims to cap coal consumption but demand remains high

June 3, 2019

Despite plans to cap coal consumption targets by 2020 in accordance with its commitments to the 2015 Paris accord, China remains the world’s top consumer of coal. Solid demand from power, steel and petrochemical industries is likely to keep demand for coal high, a government-backed study showed.

Reuters reported that China is the world’s biggest source of greenhouse gases, and has pledged to bring emissions to a peak by around 2030, however, this would require coal consumption to be cut or replaced by renewable energy, and the growth of coal usage in the past four years has raised concerns over China’s ability to fulfill its commitment.

China, also world’s biggest coal consumer, has aimed to reduce the proportion of coal in its energy mix to below 58 percent by 2020.

Coal accounted for only 59 percent of China’s overall energy consumption last year, down 1.4 percentage points from 2017, while gas, nuclear power and renewable energy combined accounted for 22.1 percent, up 1.3 percentage points.

Last year, coal consumption in China grew by 34 Mt (37.5 million st)from a year earlier to 3.83 Gt (4.2 billion st). Beijing has kept a target for coal usage at 4.1 Gt (4.5 billion st) by 2020.

“The national coal cap targets will only be reached if China strictly implement its current policy,” a group of researchers from government think-tank and industrial association said in a study under China Coal Consumption Cap Plan and Policy Research Project said.

“However, if the country eyes a higher goal of keeping coal consumption below 3.5 Gt (3.8 billion st), stricter measures and tighter inspections will be needed,” the study added.

Researchers have also asked the government to promote coal consumption-control targets in different industries, as some manufacturers are shifting from key coal-controlled regions to places that do not fall under the national targets.

Expanding coal-fired utilities and record-level crude steel output have helped to ratchet up coal consumption, the study showed. The expansion of coal-chemical and petrochemical industry in China are expected to further boost the usage of coal in the country.

By 2018, China installed coal-fired power capacity of 1,144 GW, up 3 percent from 2017.

Despite continuous capacity reduction, Chinese mills churned out 928 Mt (1 billion st) of crude steel in 2018 and are expected to produce 900 Mt-930 Mt (992 to 1.02 billion st) in 2019 and 2020, which will stoke coal consumption to about 4.49 Gt (5 billion st) of standard coal equivalent, according to the study.

“With stable steel demand, mills need to restrain their impulse for production expansion, otherwise, coal control situation in steel industry will remain grim,” said Chen Yu, senior engineer at China Iron and Steel Association, who also participated in the project.

 

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