Coal

China uses more coal than the rest of the world combined, with just over half of global consumption. Most of the roughly 3.9 billion tons of coal consumed in China in 2018 was burned for power or heat. Coal is also used as a feedstock in several industries, including chemicals, iron and steel.^[2]

In 2018, coal accounted for 59% of primary energy consumption in China, according to official sources.^[4]

For decades, coal has helped fuel China’s extraordinary economic growth. Between 2001 and 2013, Chinese coal consumption more than tripled. This played a central role in the growth of the Chinese economy, which grew by almost exactly the same amount during this period.^[5]

However, coal use has also created extraordinary environmental problems. Due in large part to coal burning, some Chinese cities are among the most polluted in the world. Air pollution levels in many cities cause significant health problems.^[6]

In 2014, Chinese coal consumption dropped for the first time in 15 years, falling roughly 3%. Coal consumption fell again in 2015 and 2016—by almost 4% and almost 5%, according to official statistics. The principal reasons for these decreases were (1) policies to discourage coal consumption; (2) a cyclical slowdown in coal-consuming sectors including iron, steel and cement; (3) a shift in economic activity from manufacturing to the service sector; and (4) lower rates of economic growth than in prior years.^[7]

In 2017, Chinese coal consumption began to climb again, increasing in the range of 0.3%–1.0%. In 2018, the increase continued, with coal consumption rising roughly 1% according to official estimates. Factors contributing to these increases included a cyclical rebound in energy intensive manufacturing sectors, cold winters, hot summers, a drop in hydropower productivity and growth in heavy construction activity.^[8]

Several leading Chinese energy experts, including former National Energy Administrator Zhang Guobao, project that China’s annual coal consumption will never again reach its previous peak (4.2 billion tons in 2013).^[9]

Coal-Fired Power Plants

Roughly half of China’s coal consumption is for electric power. (The other half is for heat, chemicals, manufacturing and other purposes.) In 2018, roughly 67% of China’s electric power was from coal.^[11]

As of year-end 2018, China had roughly 1000 GW of coal-fired electric generating capacity—almost as much electric generating capacity as in the United States from all sources.^[12]

Between 2006 and 2016, China’s coal-fired power fleet grew by an average of 50–60 GW per year. (Estimates vary.) Some press reports described this as “two coal-fired power plants per week.” Significant construction of new coal-fired power plants continues in China, although at a slightly slower pace. Capacity additions were:

• 28–35 GW in 2017,
• 28–33 GW in 2018, and
• 18 GW in the first half of 2019.

As of March 2019, more than 125 GW of new coal-fired capacity was under construction in China.^[13]

In 2018, China’s coal-fired power plants operated at less than 50% of capacity. (Overcapacity is widespread throughout Chinese industry, not just in the power sector.)^[14]

China’s fleet of coal-fired power plants is among the most efficient in the world. In early 2017, 90 of China’s 100 largest coal-fired power plants were ultra-supercritical.^[15]

In recent years roughly 11% of global CO₂emissions have come from Chinese coal-fired power plants.^[16]

Coal Production

China is the world’s leading coal producer, with just under half of global production. In 2018, Chinese coal production increased by 4.5% to reach 3.68 billion tons, according to official statistics.^[18]

China’s proved coal reserves are roughly 139 billion tons—38 years of production at current rates. The main coal-producing provinces include Inner Mongolia, Shanxi and Shaanxi.^[19]

Chinese coal imports have fluctuated significantly in the past decade—surging between 2009 and 2013, falling in 2014 and 2015, and climbing in 2016, 2017 and 2018. (In 2018, Chinese coal imports were 281 million tons—7% of total coal consumption—according to official statistics). In 2018, China was the world’s third-largest coal importer, after Japan and India.^[20]

Chinese coal production produces methane emissions. In 2005, these emissions were over 135 million tons of CO₂equivalent (just over 1% of China’s current emissions), according to US EPA. Since then, Chinese coal production has increased by roughly 75%. Considerable investments have been made in capturing coal mine methane during this period as well. Current data on methane from Chinese coal mining are lacking.^[21]

Coal Data Uncertainties

There are considerable uncertainties with respect to Chinese coal data.

• Chinese government agencies have revised their estimates of domestic coal production and consumption on several occasions, including after each National Economic Census (in 2004, 2008 and 2013). Some of these revisions have been substantial. Official estimates of coal production in 2000 are now 39% higher than the original number released by the National Bureau of Statistics. In 2015, official estimates of Chinese coal consumption for the prior decade were revised upward by 17%.^[22]
• Aggregate data from provincial authorities generally exceed national figures from the central government, sometimes by as much as 20%. Reasons may include double-counting of coal traded among provinces and inflated figures from provincial officials (whose promotion often depends on hitting GDP targets that have historically been correlated with coal consumption).^[23]
• Some Chinese coal consumption statistics are based on tonnage while others are based on thermal content. Trends with respect to each can vary, causing confusion. Estimates of the thermal content of Chinese coal sometimes differ, which can compound the confusion.^[24]
• Official estimates of a roughly 1% increase in Chinese coal consumption in 2018 are difficult to reconcile with electricity consumption and coal production data, both of which suggest a greater increase.^[25]

Notwithstanding the foregoing, there appears to be broad consensus that China’s coal consumption grew steadily until 2013, dropped or held steady for each of the next three years and then began growing again in 2017 and 2018.

Cutting coal use is a goal of the Chinese government. The many policies for achieving that goal include a national cap on coal consumption, targets for reducing coal’s share of the energy mix, requirements to dramatically reduce coal use in many urban areas, investments in coal-to-gas switching, CO₂emissions standards for power plants and orders to close tens of thousands of inefficient coal-fired boilers.^[26]

At the same time, several Chinese government policies promote coal use. These include grid dispatch rules that favor coal over variable renewables, cheap shipping costs for coal on state-owned railroads, cheap capital for coal power plants from state-owned banks and payments for the use of pollution control technologies without regard to whether facilities are in compliance with pollution control regulations. In addition, the promotion criteria for provincial and local officials, which have historically been heavily weighted toward GDP growth, have provided incentives for those officials to approve new coal plant construction even in the absence of a long-term need for power.^[27]

China’s coal policies receive attention at the highest levels of government. In August 2015, Premier Li Keqiang said, “We will strive for zero growth in the consumption of coal in key areas of the country,” adding that “environmental pollution is a blight on people’s quality of life.”^[28]

Several Chinese government plans and directives have addressed coal consumption in recent years.

• In 2013, the State Council’s Action Plan for Air Pollution Prevention and Control focused on coal as the first of five major themes, calling for the elimination of small coal-fired boilers, energy efficiency standards for large coal-fired boilers and other steps to address air pollution from coal.”^[29]
• In 2014, the State Council’s Strategic Action Plan for Energy Developmentcapped coal consumption nationwide at around 4.2 billion tons per year and called for cutting coal’s share of the primary energy mix to 62% by 2020. (That goal was achieved three years early, in 2017.)
• Also in 2014, NDRC released Interim Provisions on Replacing Coal Consumption with Cleaner Energy Sources in Key Regions, calling for reducing coal consumption in many cities, including Beijing.^[30]
• In December 2016, NDRC and the National Energy Agency issued the 13th Five-Year Energy Development Plan, which calls for coal consumption of no more than 4.1 billion tons and 58% of primary energy by 2020.^[31]
• Throughout 2017, the Chinese government moved vigorously to convert coal heating to natural gas in many northern Chinese cities.
• Throughout 2017, the Chinese government also cut back on existing and planned coal power plant capacity.

1. In January 2017, the National Energy Administration cancelled to build 103 coal plants with 130 GW of capacity, including dozens of plants already under construction.^[32]
2. In March 2017, the State Council announced plans to phase out, stop construction of or postpone more than 50 GW of coal-fired power generation capacity.^[33]
3. Also in March 2017, the last coal-fired power plant in Beijing shut down.^[34]
4. In July 2017, NDRC announced plans to cancel or postpone construction of 150 GW of coal-fired power generation capacity, close over 20 GW of coal-fired power plants and limit total installed coal-fired generation capacity to 1100 GW by 2020.^[35]

These policies have not stopped new coal plant construction in China. Coal plant capacity has been growing at a rate of roughly 30 GW per year for several years, as noted above. More than 125 GW of new coal-fired power plant capacity is currently under construction. This reflects the continuing priority GDP targets have in promotion criteria for provincial and local officials, the potential tax revenues new coal plants provide such officials and the lack of market discipline in the Chinese power sector, among other factors.^[36]

In 2018 and early 2019, policies to reduce coal consumption received somewhat lower priority than in previous years. In part this was due to the cold winter of 2017/2018, when ambitious policies to convert heating from coal to natural gas led to natural gas shortages and buildings without adequate heat in north China. In part, it was due to concerns about a slowing economy. 

• In summer and fall 2018, the pace of conversions from coal heating in northern China slowed. In part as a result, air pollution levels in northern China were higher in the winter of 2018/2019 than the year before.^[37]
• In March 2019 the China Electricity Council, a trade association serving the state-owned power sector, called for an increase of coal-fired generating capacity to 1300 GW by 2030.^[38]
• In March 2019, the National Energy Administration relaxed restrictions on building coal-fired plants in 11 provinces, including Hebei, Chongqing and Guangdong, based on projections of power demand in relation to generation capacity in 2022 and other factors.^[39]

Chinese coal plants are subject to CO₂emissions standards. In 2015, large power generation companies were prohibited from emitting more than 650 grams of CO₂per kWh on average across all their plants. That figure falls to 550 grams by 2020. These standards require Chinese power companies to improve the efficiency of coal production, invest in low-carbon generation or both. In 2016, average emissions across the Chinese electricity system as a whole were 620 grams of CO₂per kWh. The largest Chinese coal-fired power plants are now substantially more efficient than US coal-fired power plants.^[40]

Coal production in China is subject to a tax of 2%–10%, with the exact rate set by individual provinces. In 2015, Inner Mongolia, Shanxi and Shaanxi, which together account for roughly two-thirds of Chinese coal production, set their rates at 9%, 8% and 6.1%, respectively.^[41]