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    China Business
     Dec 10, '13


China's coal use forecast to surge
By Michael Lelyveld

China's coal use will rise sharply by the end of the decade despite government plans to limit consumption, the country's mine owners say.

Last month, the China National Coal Association (CNCA) forecast that consumption of the high-polluting fuel will reach 4.8 billion tonnes by 2020, the official Xinhua news agency reported. That would be an increase of more than 36% over 2012 levels, based on figures cited by the industry group.

Last year, China produced 3.65 billion tonnes of coal and consumed 3.52 billion tonnes, CNCA said.

China already burns more coal than the rest of the world combined, according to the BP Statistical Review of World Energy. But if the industry's forecast comes true, China would add another 1.28 billion tonnes annually, or about 60% more than total



US coal consumption recorded by the Department of Energy last year.

The enormity of China's coal use has already choked China's cities with smog. But an increase of that size could blacken the skies over the longer term.

"If they are right, air pollution will only get worse," said Philip Andrews-Speed, a China energy expert at the National University of Singapore's Energy Studies Institute.

Questions raised
The forecast raises a host of questions, starting with implications for the government's attempts to set limits on coal.

In September, the State Council issued a five-year plan to fight air pollution, promising to reduce coal's share in the country's energy mix to 65% by 2017, compared with 68.4% in 2011. Cuts in coal use were ordered for Beijing and regions near the largest cities. But the industry forecast is a reminder that the total volume of China's coal consumption will still grow.

How much may be a matter for both policy and political pressure.

The CNCA forecast implies average growth in consumption of over 4% a year, more than double the rate that the International Energy Agency (IEA) projects for the decade in its recent World Energy Outlook.

The Paris-based IEA forecasts a significant easing of coal use over the longer period to 2035, with average annual growth declining by 0.6%, assuming cautious implementation of conservation policies.

"It looks like a back-of-the-envelope calculation rather than the output of detailed modeling of demand," Andrews-Speed said of the CNCA forecast.

The industry figure also appears greater than the forecast of China's own National Energy Administration (NEA), which has estimated 4.5 billion tonnes of consumption in 2030, according to a China Daily report in March.

"First, we should note that this projection comes from the coal producers, who obviously want coal production to keep rising," said Andrews Speed.

Government pressure
The industry has been under government pressure for years to consolidate operations and close smaller, more dangerous mines. The government has also ordered cuts in industrial overcapacity, affecting big coal-burning sectors including steel, aluminum, and cement.

The coal industry's forecast assumes little will come of the government's initiatives, leaving smokestack industries to keep growing as before.

The projection may also show skepticism about the government's five-year plan for the coal industry, which calls for limiting production and consumption to 3.9 billion tonnes by 2015.

"It implies that the CNCA puts little faith in the government's plans to cap coal production in both absolute terms and as a share of the energy mix," Andrews-Speed said.

In an article posted earlier this year by the Carnegie Endowment for International Peace, energy expert Kevin Jianjun Tu argued that the caps are only guidelines, not legally binding targets. Some coal-producing provinces had exceeded their regional caps for 2012 by as much as 18%, Tu said.

The forecast also highlights a shortcoming of the government's plan to limit coal consumption with a guideline only through 2015, since the industry is already planning for major increases over the following five years.

The cap policy may do little for air pollution as long as the volume of coal keeps rising. The industry forecast implies that the government cap will only be replaced by higher caps in the future, while annual coal consumption grows by nearly 1 billion tonnes.

The IEA expects coal use to stabilize, but only near the end of its forecast period to 2035, as electricity demand growth wanes and China turns to other fuels.

Reprinted with the permission of Radio Free Asia. For original article, see here

Copyright (c) 2013, Radio Free Asia.





 

 

 
 



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