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Is Coal Demand Falling In China?

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Paul Homewood, Not A Lot Of People Know That

It appears that Greenpeace have been getting excited about a slowdown in coal production in China.

China’s coal use doubled in the past 10 years, causing more than half of rapid global CO2 growth over the period, bringing the country’s per capita emissions at par with the EU and culminating in the current air pollution crisis. As we have highlighted before, China’s response to the public outrage on air pollution has led to some very ambitious policies to curb coal consumption on the provincial level, from absolute cuts in coal use by 2017 to bans on new coal-fired power plants and factory shutdowns. We might now be beginning to see the impacts: China’s coal consumption was seems to have dropped in the first half of 2014. The growth of imports ground almost to a halt, while domestic production dropped by 1.8%[in Chinese]. While there is uncertainty over the changes in coal stockpiles – running down stockpiles could have enabled consumption to grow while production and imports declined – stockpiles are reported to be high and increasing, making it very likely that consumption did indeed drop.

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One of the  main factors is that prices are ultra low, because of a supply glut and slower economic growth. As a consequence, producers are keeping output low to force prices back up, just as OPEC do with oil. (See here)

There is no doubt economic growth has slowed in China, particularly in the coal intensive sectors, as this graph from the Sierra Club shows.

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It has long been expected that, as Chinese economic growth slowed in heavy industry and picked up in low energy intensive sectors, rapid growth in coal consumption would also slow down. None of this means, however, that China’s coal production and consumption are about to start falling anytime soon.

Indeed, it was only last week that China announced the discovery of another massive coal field.

At current rates of consumption, the Xinjiang’s estimated reserves are enough to supply the whole of China’s requirements for 140 years.

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