China’s coal mine ban: A preview of the “new normal” for growth

Intro

While the US and India sealed a deal this week to massively boost renewables, China has moved to ban new coal mines in its eastern regions just as its coal production nationwide has fallen for the first time since 2000. As China begins to cut back on its addiction to coal, the nation is ushering in what has been dubbed a “new normal” of development, aiming to deploy more renewables, clean up the air, and peak emissions and coal use by 2030 and 2020, respectively. The China National Coal Association (CNCA) predicts that with tightening environmental protection laws and greener development, the grim situation for coal in China will continue through 2015. While some experts warned it was too soon to say whether the production drop represented a turning point, an analysis shows that China’s coal consumption appears to has fallen due to progress four areas: a rapid increase in emphasizing renewables, a shift in China’s economic development model, improvement in energy efficiency practices, and favorable hydropower conditions. Although there are concerns over the accuracy of statistics, China’s latest move to ban new coal mines, along with its order for more regions to cut coal use to curb pollution, Shanghai’s abandoning GDP targets for healthier growth, and Premier Li Keqiang’s speech in Davos, gives new reason to hope that China’s commitment to tackle carbon pollution might be fruitful.

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RT@UOITEnergyEng: For the first time this century, China’s coal consumption fell http://fw.to/IMO035  pic.twitter.com/XMTi1R6cKW  https://twitter.com/UOITEnergyEng/status/560822999029280768

Key Points

  • China’s “new normal” of slower but healthier growth continues to hit the coal industry hard, with coal production dropping for the first time ever in 2014. China’s pledge of capping coal at around 4.2 billion tons by 2020 means that the coal industry is in serious overcapacity, leading to drops in imports and a collapse in coal prices that has cut the profits of major coal companies by nearly 50 percent. Between China’s move to ban new coal mines in the eastern region and the decision to halt new mines in coal-rich Shanxi province, the world’s largest consumer of coal appears to be making solid moves to curtail its addiction to dirty fuels.
  • Coal may have been the engine of growth in the past, yet a shift from fossil fuels to renewables are key and inevitable for developed and developing countries in a world “three minutes to midnight.” Coming off the momentum created by the China-US climate deal and US-India agreement on developing renewables, it’s critical that countries to walk the talk in the lead up to the UN climate conference in Paris. Meanwhile, the urgency of accelerating the transition to renewable energy sources is only becoming clearer, with one recent study showing that keeping global warming beneath the 2DegC threshold means keeping 88 percent of the world’s known coal reserves, 52 percent of gas and 35 percent of oil in the ground.

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Key quotes

  • “We will spare no efforts to pursue low-carbon development.” – Chinese Premier Li Keqiang
  • “The fact that China‘s coal consumption finally starts to decouple from its GDP growth, shows that a peak in coal use is within reach. With political determination on an energy revolution, and strong targets and measures, the peak can be realized well before 2020. This is not only critical for China to win the battle against air pollution, but will also speed us towards a global CO2 emissions peak.” – Fang Yuan, spokesperson at Greenpeace East Asia
  • “End of China’s coal boom is evident. Global coal industry should brace for impact.” – Fang Yuan, spokesperson at Greenpeace East Asia
  • “The most we can say right now is that we might have come close to the peak.” – He Jiankun, Professor and Director of Low Carbon Economy Lab of Tsinghua Universtiy, Deputy Director of National Expert Committee on Climate Change

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  • MT@World_Cement: China’s coal production fell by 2.1% y/y in the first 11 months of 2014 http://bit.ly/15Kcu6k
  • RT@CourierMail Business: Finance news you need to know today: CHINA recorded its first drop in coal production since 2000 last year, as… http://bit.ly/1uNAy3I