China's hits roadblock in ambitions to cut coal reliance by 2020

Solid demand from its mills are expected to stoke coal consumption to about 4.49 billion tonnes.

Whilst China is expected to achieve its national coal consumption cap targets to reduce the proportion of coal in its energy mix to below 58% by 2020, its ambitions could be tempered due to solid demand stemming from its power, steel and petrochemical industries, a report by Reuters revealed.

Coal accounted for only 59% of China’s overall energy consumption in 2018, down 1.4 ppt from 2017, whilst gas, nuclear power and renewable energy combined accounted for 22.1%, up 1.3 ppt.

In 2018, coal consumption in China grew by 34 million tonnes from a year earlier to 3.83 billion tonnes.

“The national coal cap targets will only be reached if China strictly implement its current policy,” a group of researchers from government think-tank and industrial association said in a study under China Coal Consumption Cap Plan and Policy Research Project said.

Despite continuous capacity reduction, Chinese mills churned out 928 million tonnes of crude steel in 2018 and are expected to produce 900 million-930 million tonnes in 2019 and 2020, which will stoke coal consumption to about 4.49 billion tonnes of standard coal equivalent, according to the study.

“With stable steel demand, mills need to restrain their impulse for production expansion, otherwise, coal control situation in the steel industry will remain grim,” said Chen Yu, senior engineer at China Iron and Steel Association, who also participated in the project.

Read the full report here.