China Cuts Coal Use Dramatically

As the world prepares for a major climate conference in Paris in December, China is reporting encouraging news – sharply falling coal consumption and more centralized and cleaner uses of the fuel, considered to be one of the biggest contributors to greenhouse gases in the atmosphere.

The amount of coal burned by China began to fall last November for the first time in more than a century, making the first reduction in coal use a major affair. The fall in coal use has since accelerated, an indication of the seriousness with which China’s leaders view the danger to the planet from the release of carbon dioxide into the atmosphere.

Economic deceleration, industry restructuring, and new energy and environmental policies all have contributed to the slowdown in coal use, according to the United States Energy Information Administration in a recent report. Including those factors, China is moving with astonishing speed for such a large economy to reverse its production of greenhouse gases.

Source: US EIA

“Total energy consumption in China has slowed as its economic growth has eased and as the composition of gross domestic product has shifted. In 2013,” according to the EIA report, “the service sector share (47 percent) of GDP surpassed the industry sector share (44 percent) for the first time in Chinese history. The service sector share increased to 48 percent in 2014, already exceeding the government's 47 percent goal for 2015. Policies to accelerate the development of service industries are likely to sustain the transition away from industry, especially heavy manufacturing. As heavy manufacturing becomes less prominent, growth in coal consumption is expected to weaken.”

China, closely followed by the United States, has long been identified as the world’s biggest emitter of grenh9ouse gases. The fall in coal use recorded by the IEA contrasts sharply with growth rates of 5 percent to 10 percent as China’s breakneck industrialization got underway over the past three decades. The country’s capital of Beijing has been choked with coal smoke so thick in the winter that particulate matter often exceeded safe limits for human habitation by a factor of three or four.

It is possible, given that China’s economic slowdown is responsible for at least some of the declining coal use, that it could pick back up again on an economic turnaround. Nonetheless, under the stewardship of Prime Minister Li Keqiang, the nation is turning away from industry-led growth, with high levels of emissions, to a service-oriented one. The country is also investing heavily in hydropower and other forms of renewable energy including solar and wind farms.

Source: U.S. Energy Information Administration, UNCTADstat, NBS, National Development and Reform Commission (NDRC, September 2014), Development Research Center of the State Council (DRC, 2013) Note: Shares are based on nominal dollars. Developed economies based on UN definition.

“The Made in China 2025 blueprint unveiled by the State Council in May 2015—China's first action plan to modernize manufacturing through information technology and other innovations—could accelerate reductions in energy intensity and changes in energy consumption patterns, if successfully implemented,” the IEA reported. “Coal use is likely to be even more concentrated in large and more efficient energy conversion facilities, mainly power and heat generation plants, as scattered, inefficient, and highly polluting small coal boilers are phased out. Coal directly burned at industrial facilities accounts for more than 20 percent of the coal consumption in China (compared with less than 5 percent in the United States), suggesting significant potential for reduction.”

As with Beijing, severe air pollution challenges in other areas have led to new policies and regulations to restrict coal use, to upgrade the nation's coal-fired power generation fleet, and to accelerate the increase of alternative energy technologies, according to the IEA. In particular, strict standards for existing and new coal-fired power plants require the adoption of advanced coal technologies. Another action plan aims to reduce coal consumption in absolute terms in four non-power industries.

China's Energy Development Strategy Action Plan (2014-2020) sets binding caps—at absolute levels for the first time—on annual primary energy and coal consumption until 2020. It also specifies targets for reducing coal's share in primary energy consumption to 62 percent and for increasing nonfossil energy's share to 15 percent by 2020 and to 20 percent by 2030.

Despite changes in China's coal consumption patterns and the likely decline of coal's share of the energy mix, the long-term use of coal depends on the country's future energy demand. Even with weaker economic growth, coal consumption could continue to grow until sufficient alternatives can economically serve China's energy needs.

The stakes in Paris are high as world leaders – on their 21st round of talks – attempt to come up with a universal agreement among the world’s major countries that would keep global warming from rising by more than 2C. Although the science is not completely settled, many climate scientists attribute extreme weather events including super typhoons, drought and other the melting of the world’s Arctic and Antarctic glaciers to climate change. An attempt to come up with an omnibus agreement failed disastrously in Copenhagen in 2009, setting back progress for years. At UN-sponsored negotiations that took place in Bonn, Germany in 2014, ministers and senior officials representing over 60 countries supported a long -term directional goal to move to a low or zero carbon economy.