China's coal consumption surged by 100 million tonnes in H1 2018

Terminated hydropower generation projects and a natural gas shortage fuelled demand.

China’s thermal coal consumption in the electric power sector increased by 100 million tonnes in the first six months of 2018 compared with the same period in 2017, a report by the Asia Pacific Energy Research Centre revealed.

The country’s overall coal consumption was also found to have risen slightly in 2017 after three years of continual decline.

The report, which analysed energy demand and supply across Asia Pacific (APAC), noted that coal demand received a boost from hydropower generation projects that were aborted because of weather conditions, an especially cold winter and a natural gas shortage.

Nonetheless, China has been implementing a policy to curtail coal consumption for environmental reasons.

China’s State Development & Investment Corporation (SDIC) has finalised its complete exit of the coal industry and will remove coal-related investments that have been one of its leading profit contributors. SDIC has $1.46b of assets under management. It has focused on reform and innovation, facilitating and guiding the development of new industries across China.

Also read: China eyes removing coal from green bond standards: report

China’s National Energy Administration (NEA) has issued its final policy paper on the renewable portfolio standard (RPS), which will become effective in 2020 for five years. The new RPS is expected to increase the consumption of renewable energy and reduce curtailment rates to strengthen the operating environment for renewable energy companies.

“Therefore, thermal coal demand is expected to decline gradually up to 2021. Specifically, thermal coal demand would be held in check by the operation of large-scale high efficiency coal-fired thermal power plants, the closure of small- and medium-sized power plants, the closure of power plants with aging facilities that fail to meet environmental standards, and the improvement of generating efficiency,” the report’s authors noted.

That said, a separate report noted that 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 still solid demand stemming from its power, steel and petrochemical industries.