Demand for coal in China grew by 10 percent annually over the decade to 2011, but that halved to between 4 percent and 6 percent annually in 2012 and 2013. In 2014, according to the most recent government figures, demand actually declined by 2.1 percent.
This is no small thing for global coal markets, and the implications are enormous.
The latest data is consistent, however, with IEEFA’s prediction last fall that China’s demand for coal will permanently peak by 2016 —if not earlier—and will gradually decline thereafter.
Digging a littler further into the most recent trove of economic data from Beijing helps explain what’s happening.
China’s overall GDP growth in 2014 is expected to come in about the same 7.3 percent growth reported for the first nine months of the year. But China’s electricity demand, as seen in the newest numbers, grew by only 3.9 percent year-over-year through November. What these two figures demonstrate in tandem is that the combined impact of energy-efficiency initiatives and structural economic changes toward less electricity-intensive industry sectors has reduced the ratio of electricity-demand growth to GDP from above 1.0x over the past 13 years to 0.53x in 2014.
Of equal importance is that China’s domestic coal production declined by 2.1 percent in the year to November compared to 2013, while coal imports were down by 9 percent, meaning that coal consumption dropped roughly 2.3 percent. This contrasts with an electricity-production growth rate of 3.9 percent year over year, reflecting a rapid loss of market share for coal in 2014 against all other sources of electricity generation across China – wind, solar, hydro, nuclear, biomass and natural gas.
The rise of renewables in China is significant. IEEFA forecasts that in 2014 alone China will install 22 gigawatts of hydropower electricity capacity, 18 gigawatts of wind-powered capacity, 13 gigawatts of solar, 5 to 7 gigawatts of nuclear, and 4 to 6 gigawatts of gas-fired capacity. Combined with 22 gigawatts of net new coal-fired capacity, IEEFA sees China’s total electricity capacity installs totaling 90 gigawatts in 2014 (a more than 6 percent year-over-year increase in total capacity growth).
The result is that coal-fired average utilization rates have declined from an estimated 60 percent in 2011 to about 56 percent in 2014. Given this excess capacity, new installations of coal power are expected to slow rapidly, and China could well see net annual coal-fired power capacity reductions from 2016 onwards.
[Read more here]
[Read more here]
Given China's importance to global carbon emissions, these developments suggest that global emissions may peak this year or next. It's true that transport also produces emissions and that is rising strongly in China. So I'm not sure. But China is pushing EVs with large ($8000+ ) subsidies, and in any case, as the percentage of renewables in total electricity generating rises exponentially, the rapid decline in emissions from electricity will offset the rise in emissions from transport before EVs become widespread.
My calculations suggest global emissions will peak in 2018 or 2019, fall slowly at first and then start an accelerated decline as coal-fired power stations and petrol- and diesel-driven vehicles are replaced by clean energy. More of those forecasts in a later post. Just to give your a foretaste: wind plus solar as a percentage of total global electricity generating, currently 3.6%, is doubling every 3 years, driven by ever cheaper renewables.