Australia’s coal industry doubts China will be able to cap its coal use by 2015, without abandoning its commitment to economic growth.
There’s a long way to go before (China’s) coal demand peaks. It’s certainly not going to peak in this five-year plan.
BusinessDay today reported that China’s coal consumption was predicted to peak close to current levels as the leadership in Beijing shifted priorities towards energy conservation.
“Coal consumption will peak below 4 billion tonnes,” Jiang Kejun, who led the modelling team that advised the State Council on energy use scenarios, told BusinessDay.
But UBS commodities analyst Tom Price said it was ”too late” for China to cap coal use at 4 billion tonnes, as in 2012 it consumed 4.05 billion tonnes, counting raw production of 3.8 billion tonnes plus net imports of 227 million tonnes. China’s gross coal imports jumped 32 per cent last year, he said.
Price said China’s monthly raw coal production statistics did not factor in coal washing which could reduce yields and increase calorific values.
”It will be hard to pin them down on this,” he said.
China announced its target of capping total energy demand at between 4-4.2 billion tonnes of ”standard coal equivalent” by 2015 in late 2010*, before ratifying its twelfth five-year plan for 2011-15.
Price said the National Development and Reform Commission’s targets basically called for ”flatlining” energy use, an unreasonable forecast because China depended on coal for 80 per cent of its power.
”It’s highly likely their coal consumption rate will continue to lift by at least a couple of per cent,” he said, describing the 4 billion-tonne target as a ”nice academic exercise”.
One senior energy industry executive based in Australia said China’s aim of achieving a peak in energy demand below 4 billion standard coal equivalent tonnes was an ”aspirational target”.
The real question, he said, was whether China’s leaders were ”ever going to ration energy in order to achieve some emissions objective… (and) throttle economic growth”.
The executive said China was trying to find as much gas as it could, emulating the unconventional oil and gas boom in the US, and was building the world’s largest fleet of nuclear power stations.
But China had conflicting policy objectives with evident tension between the economy, security of supply and the environment.
The executive said air pollution was ”a much higher priority than CO2, as you’d know if you’d been to Beijing lately”.
While much of the media coverage of the recent air pollution in China’s north concentrated on emissions from burning coal, about a third of the pollution was from transport fuels and Beijing’s electricity came mostly from gas-fired power stations.
”They want to try and put a limit on coal? We’ll have to see how they go with that,” he said. ”There’s a long way to go before (China’s) coal demand peaks. It’s certainly not going to peak in this five-year plan”.
* China’s ‘standard coal equivalent’ measure assumes coal has a calorific value of 7000kcal per tonne. In reality Chinese thermal coal has a much lower calorific value, about 5000-5500kcal/t, while thermal coal shipped from Newcastle typically has a calorific value of 6000-6300kcal/t – meaning it takes more than a tonne of coal to generate the energy of one standard coal equivalent.