Chinese Coal Demand Approaches Its Peak

China's coal consumption is approaching its peak, but this fossil fuel will remain crucial in addressing the country's energy security concerns, said the China National Coal Association (CNCA). This comes at a time of increasing concern over the use of polluting energy sources and the rise of cleaner alternatives.

The shift away from coal in the power sector is being driven by a substantial increase in wind and solar installations. Additionally, the cooling demand from heavy industry, partly influenced by the real estate crisis, has contributed to the displacement of coal. However, Zhang Hong, Deputy Secretary General, CNCA, highlighted that while coal demand is expected to plateau, its essential role in supporting China's energy supply safety will persist in the short term, mainly to balance out intermittent generation from renewables.

Hong emphasized that a sharp drop in coal consumption is not imminent. "The role of coal as primary energy and a fallback for ensuring energy security remains unchanged, even when it is close to reaching a plateau," he stated at the China Coal Import International Summit in Xiamen.

China, which mines and burns more than half of the world's coal, faces pressure to reduce greenhouse gas emissions from its power sector. Despite this, coal consumption rose by 5.6% last year, outpacing the previous year's increase. The country's hydropower generation was affected by a historic drought, leading to a greater reliance on coal.

The International Energy Agency (IEA) predicts that coal consumption in China will decelerate in 2024 and plateau over the next two years. China’s President Xi Jinping committed to a decline in the country's coal use starting from 2026. However, there are differing opinions on the fuel's trajectory. Wu Wenbin, Head of Coal Management, Guangdong Energy Group, expects a 4% increase in consumption this year. The coal industry research firm, Fenwei Digital Information Technology, forecasts a 2% rise in power-station coal consumption in 2024.