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China’s gas demand will grow but so will its need for coal

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World Coal,

China’s tightening environmental policies will not result in the decline of coal in the country, according to new analysis by Wood Mackenzie. Its new report – “A moving target: assessing the impact of China’s environmental policies” – analyses the impact of China’s Air Pollution Prevention and Control Action Plan (APPCAP) and concludes that, although coal’s role in the country’s energy mix will decline, it will remain the primary fuel for electricity generation, supporting demand.

Wood Mackenzie forecasts an absolute increase in coal demand of 2 billion t in China to 2030, although coal’s share of China’s energy market will drop from 72% to 64% with gas the big winner of this change. Gas demand is expected to grow to 335 billion cubic meters by 2017 from 335 billion cubit meters this year and then 4% per year from 2020 – 2030.

While some had viewed the rise in gas use as a threat to coal, Wood Mackenzie believes that such fears are exaggerated: “Although initial policy goals focused on expanding the use of gas through demand targets of caps on coal consumption, policy releases throughout 2014 have now evolved to focus on emissions control raher than mass fuel switching to gas,” said David Brown, Northeast Asia power markets manager at Wood Mackenzie.

"The latest APPCAP policies are not aimed at penalising coal, but are a major step towards sustainable policies encouraging clean-coal use,” agreed Roahn Kendall, Wood Mackenzie’s Northeast Asia mining and metals manager. “The impact of APPCAP policies will affect the type of coal consumed by coastal power plants and emissions control rather than absolute demand volumes. With a reduced emphasis on switching coal-fired plants to gas for example, utilities will become more prudent in plant operations and coal selection – supporting low-ash and low-sulfur imports".

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