China expects to hit 2020 coal cap targets; demand overshadows: study

BEIJING (Reuters) - China expects to achieve its national coal consumption cap targets in 2020, but the country’s aggressive goals could be tempered due to solid demand from power, steel and petrochemical industries, a government-backed study showed on Wednesday.

FILE PHOTO: Cranes unload coal from a cargo ship at a port in Lianyungang, Jiangsu province, China December 8, 2018. REUTERS/Stringer

China is the world’s biggest source of greenhouse gases, and has pledged to bring emissions to a peak by “around 2030” as part of its commitments to the 2015 Paris accord.

This would require coal consumption to be cut or replaced by renewable energy, but the growth of coal usage in the past four years has raised concerns over China’s ability to fulfill its commitment.

China, also world’s biggest coal consumer, has aimed to reduce the proportion of coal in its energy mix to below 58% by 2020.

Coal accounted for only 59% of China’s overall energy consumption last year, down 1.4 percentage points from 2017, while gas, nuclear power and renewable energy combined accounted for 22.1%, up 1.3 percentage points.

Last year, coal consumption in China grew by 34 million tonnes from a year earlier to 3.83 billion tonnes. Beijing has kept a target for coal usage at 4.1 billion tonnes by 2020.

“The national coal cap targets will only be reached if China strictly implement its current policy,” a group of researchers from government think-tank and industrial association said in a study under China Coal Consumption Cap Plan and Policy Research Project said.

“However, if the country eyes a higher goal of keeping coal consumption below 3.5 billion tonnes, stricter measures and tighter inspections will be needed,” the study added.

Researchers have also asked the government to promote coal consumption-control targets in different industries, as some manufacturers are shifting from key coal-controlled regions to places that do not fall under the national targets.

Expanding coal-fired utilities and record-level crude steel output have helped to ratchet up coal consumption, the study showed. The expansion of coal-chemical and petrochemical industry in China are expected to further boost the usage of coal in the country.

By 2018, China installed coal-fired power capacity of 1,144 gigawatts (GW), up 3% from 2017.

Despite continuous capacity reduction, Chinese mills churned out 928 million tonnes of crude steel in 2018 and are expected to produce 900 million-930 million tonnes in 2019 and 2020, which will stoke coal consumption to about 4.49 billion tonnes of standard coal equivalent, according to the study.

“With stable steel demand, mills need to restrain their impulse for production expansion, otherwise, coal control situation in steel industry will remain grim,” said Chen Yu, senior engineer at China Iron and Steel Association, who also participated in the project.

Reporting by Muyu Xu and Shivani Singh, Editing by Sherry Jacob-Phillips