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Chinese coal demand heads lower on high renewables growth

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World Coal,

China is turning away from coal it a faster-than-expected pace, according to new figures from the China National Energy Agency, as the country’s economic slowdown reduced electricity demand growth. Official GDP growth was 6.9% in 2015, its lowest level in a quarter of a century, but many analysts believe that the actual rate of growth could be much lower – and could get much worse.

Overall growth in power generation was also anemic at best as the economy continues its transition away from energy-intensive heavy industries and towards growth based on the service sector and household consumption.

As a result, Chinese coal demand again fell in 2015, building on the decline reported in 2014, and is expected to fall again in 2016 with the China Academy of Sciences forecasting a fall in Chinese coal production of 4%. Meanwhile, Chinese coal imports plummeted by around a third in 2015.

In contrast, investment in renewable generation hit an all-time high of US$110 billion in 2015, according to Bloomberg New Energy Finance, with low-carbon electricity generation (hydro, wind, nuclear and solar) growing by more than 20%.

And that pace of growth is expected to continue into 2016. According to the IEEFA’s Tim Buckley, China will add 24 GW of wind, 16 GW of new hydro, 6 GW of nuclear and 18 GW of solar in 2016 – more than enough to meet total demand growth. Meanwhile, the National Energy Agency has announced a moratorium on new coal mine projects for up to three years and the intent to close thousands of small mines.

Yet Benjamin Sporton, CEO of the World Coal Association, was more positive about China’s coal outlook, telling the Guardian that “coal will remain the backbone of the Chinese electricity mix for decades to come”.

“Rather than focusing on short-term fluctuations and wishing coal way, it is important to focus on making sure coal is used in the cleanest possible way with high-efficiency low-emission plants using modern emission control technologies and working to develop carbon capture and storage,” Sporton concluded.

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