Past peak coal in China
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Key Findings
The International Energy Agency (IEA) in 2012 fairly sized up the coal industry with this statement: “Coal is China. China is Coal.”
For the nine months to September 2015, China’s domestic raw coal production was 2.73 billion tonnes, down 4.3% year-on-year. China’s coal imports in the same period were 0.16 billion tonnes, down 29.8% year-on-year.
Chinese electricity-sector transformation is driving the decline in seaborne thermal coal imports. Coal-fired power generation is down in 2015 year to date. As a result, China’s total domestic coal production in the first nine months of 2015 is down 4.3% year over year, but imports have borne a significantly greater share of the decline.
Executive Summary
A review of global coal consumption trends over the past two years suggests it is quite feasible and in fact increasingly likely that the world energy markets will look back on 2013- 2015 as having set a succession of peak demand points:
- China’s coal production and consumption looks to have peaked in 2013;
- China’s thermal coal imports peaked in 2013, having fallen 40% since then;
- World coal consumption peaked in 2013, declined 0.7% in 2014 and is on track to decline an additional 2-4% in 2015;
- Japan’s thermal coal imports likely peaked in 2014; and
- Indian thermal coal imports likely peaked in mid-2015.
On the last point, IEEFA places a significant emphasis on the news that SunEdison’s 500MW US$500m auction win in the state of Andhra Pradesh in November 2015 set a new record low solar price of Rs4.63/kWh (US7.1c). It is now clear that electricity generation sourced from a new imported coal fired power plant in India is immediately more expensive than utility scale solar. IEEFA notes also that the ~5% real price deflation implicit in this 25-year power purchase agreement is a key, lasting policy benefit.
A review of global coal consumption trends in the year to date 2015 suggests global coal consumption is on track for a 2-4% decline in 2015. Beyond China’s 5.7% year on year decline to date in 2015, U.S. domestic coal consumption is down 11%, Germany is down 3%, the U.K. is down 16%, Japan is down 3%, Canada is down 5%, and Turkey is down 13% year over year. With Russia’s economy in recession, we wouldn’t expect consumption growth coal there. Korea is flat, Indonesia is down 2% and Mexico is down 1%.
Of the major coal-consuming economies, only two are reporting positive growth in 2015. Indian coal is up 3-6% year on year. And having repealed its price on carbon pollution, Australian coal consumption is up marginally in 2015 – the first year of domestic coal growth since 2008.
History could record 2013-2014 as showing that China coal production and consumption peaked, international coal imports peaked, and global thermal coal consumption peaked as well.
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Press release: Past Peak Coal in China
