China's Coal Consumption Fell in 2014
- Jan 28, 2015 7:00 pm GMT
- 2709 views
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.
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.
Photo Credit: China Coal Consumption/shutterstock