China uses more coal than the rest of the world combined, with just over half of global consumption. Most of the roughly 3.8 billion tons of coal consumed in China in 2017 was burned for power or heat. Coal is also used as a feedstock in several industries, including chemicals, iron, and steel.1
In 2017, coal accounted for 60.4% of primary energy and 64.7% of electric power production in China, according to official sources.2 Coal combustion is responsible for roughly 70%–75% of China’s CO2 emissions.3
For decades, coal has helped fuel China’s extraordinary economic growth. Between 2001 and 2013, coal consumption in China 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.4 However, coal use also created extraordinary environmental problems. Due in large part to coal burning, some Chinese cities became among the most polluted in the world. Air pollution levels in many cities caused significant health problems.5
In 2014, Chinese coal consumption dropped for the first time in 15 years, falling 2.9% from 2013 levels, according to government statistics. Coal consumption fell again in 2015 and 2016 (by 3.7% and 4.7%, according to government statistics). The principal reasons for these declines were (1) policies to discourage coal consumption, (2) a shift in economic activity from manufacturing to the service sector and (3) lower rates of economic growth than in prior years.6
In 2017, Chinese coal consumption increased from 2016 levels. Most estimates are in the range from 0.3% to 1.0%. Factors contributing to this growth included a cold winter, hot summer, drop in hydropower productivity and an increase in heavy construction activity.7
There are considerable uncertainties with respect to data on Chinese coal consumption.
In recent years Chinese government agencies have revised their official estimates of domestic coal consumption on several occasions. A 2015 revision increased estimates of Chinese coal consumption for the prior decade by up to 17%.8
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).9
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.10
Notwithstanding the foregoing, there appears to be broad consensus that China’s coal emissions grew steadily until 2013, dropped for each of the next three years and then grew slightly in 2017.
Coal-fired power plants
As of year-end 2017, China had roughly 981 GW of coal-fired electric generating capacity. (This is almost as much electric generating capacity as in the United States from all sources.) China’s coal-fired power fleet grew by roughly 35 GW (3.7%) in 2017.11
In 2017, 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.)12
China’s fleet of coal-fired power plants is among the most efficient in the world. 90 of China’s 100 largest coal-fired power plants are ultra-supercritical.13
China is the world’s leading coal producer, with just under half of global production. In 2017, according to official statistics, Chinese coal production increased by roughly 3.3% to reach 3.5 billion tons.14
China’s proved coal reserves are roughly 138 billion tons—39 years of production at current rates. The main coal-producing provinces are Inner Mongolia, Shanxi and Shaanxi.15
Chinese coal imports have fluctuated significantly in the past decade—surging between 2009 and early 2014, falling steeply until early 2016, and then starting to climb again in 2016 and 2017. In recent years China has been the world’s largest or second largest coal importer, after India.16
Chinese coal production produces methane emissions. In 2005, these emissions were over 135 million tons of CO2 equivalent (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.17
Cutting coal use is a top priority 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, CO2 emissions standards for power plants and orders to close tens of thousands of inefficient coal-fired boilers.18
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.”19
Several Chinese government plans and directives have addressed coal consumption in recent years, with increasingly stringent provisions:
In 2013, the State Council’s Action Plan for Air Pollution Prevention and Control called for “managing air pollution by managing coal” as the first of five major themes.
In 2014, the State Council’s Strategic Action Plan for Energy Development capped coal consumption nationwide at 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.
In December 2016, NDRC and the National Energy Agency issued the 13th Five-Year Energy Development Plan, which calls for coal to provide for no more than 58% of primary energy by 2020.20
In March 2017, the State Council announced plans to phase out, stop construction of and postpone more than 50 GW of coal-fired power generation capacity.21
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 1,100 GW.22
These plans and directives, as well as others, require large urban areas to significantly reduce coal consumption in the years ahead. New coal-fired power plants and other industrial projects are banned in many areas, including Beijing and the Yangtze River Delta.23 In January 2017, the National Energy Administration canceled plans to build 103 coal plants with 130 GW of capacity, including dozens of plants already under construction. From Q1 to Q3 2017, China phased out 2.4 GW of old coal-fired power generation.24
These policies have slowed but not stopped new coal plant construction in China. Despite considerable overcapacity in the power sector and central government policies discouraging coal use, new coal plant construction continues:
In 2016, at least 38 GW of new coal power plants were commissioned.
In 2017, at least 35 GW of new coal power plants were commissioned.
As of March 2018, according to one study, roughly 95 GW of new coal power plants were under construction in China and another 116 GW were in preconstruction planning.25
These new coal plants reflect 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 on many companies in the Chinese power sector.
Chinese coal plants are subject to CO2 emissions standards. In 2015, large power generation companies were prohibited from emitting more than 650 grams of CO2 per 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 the low-carbon generation or both. In 2016, average emissions across the Chinese electricity system as a whole were 620 grams of CO2 per kWh. Chinese coal-fired power plants are now substantially more efficient than US coal-fired power plants.26
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 8%, 9% and 6.1% respectively.27
1. “BP Statistical Review of World Energy” (June 2018) at p.39, https://www.bp.com/content/dam/bp/en/corporate/ pdf/energy-economics/statistical-review/bp-stats-review-2018-full-report.pdf (China 2017 coal consumption = 50.7% of world total); Michael Lelyveld, “China’s Coal Consumption Clouded in Mystery,” Radio Free Asia (May 21, 2018), https://www.rfa.org/english/commentaries/energy_watch/chinas-coal-consumption-clouded-in- mystery-05212018100931.html (reporting estimate of 3.79–3.80 billion tons in 2017); Ye Qi and Jiaqi Lu, “China’s Coal Consumption Has Peaked,” Brookings (January 22, 2018), https://www.brookings.edu/2018/01/22/chinas- coal-consumption-has-peaked/ (3.82 billion tons in 2017).
2. National Bureau of Statistics, “Statistical Bulletin 2017” (February 28, 2018) at part XII, http://www.stats.gov.cn/ tjsj/zxfb/201802/t20180228_1585631.html; “2017 electricity and other energy statistics (update of June 2018),” China Energy Portal, https://chinaenergyportal.org/en/2017-electricity-other-energy-statistics-update-of- june-2018/ (accessed June 26, 2018).
3. UNFCCC, “First Biennial Update Report on Climate Change” (December 2016) at p.1, https://unfccc.int/sites/default/ files/resource/chnbur1.pdf and IEA, “CO2 Emissions from Fuel Combustion” (2016) at p.67, https://www.iea.org/publications/freepublications/publication/CO2EmissionsfromFuelCombustion_Highlights_2016.pdf (in 2014, 83% of Chinese CO2 emissions from fossil fuel combustion came from coal). 83% × 93% = 77.19%. Since 2014, coal’s share of fossil fuel consumption has likely dropped in China.
4. Data collected from National Bureau of Statistics of China, http://www.stats.gov.cn/tjsj/ndSj/ (data shown in graph); World Bank GDP data, http://data.worldbank.org/indicator/NY.GDP.MKTP.KD?locations=CN.
5. See The Lancet, “Doctors blame air pollution for China’s asthma increases” (December 2016), http:// theasthmafiles.org/content/doctors-blame-air-pollution-china’s-asthma-increases; American Thoracic Society, “Chinese air pollution linked to respiratory and cardiovascular deaths,” ScienceDaily (February 10, 2017), http:// www.sciencedaily.com/releases/2017/02/170210084550.htm.
6. See NDRC, “Notice of Reducing Coal Consumption in 2016” (July 11, 2016), http://www.sdpc.gov.cn/gzdt/201607/ t20160726_812319.html; “China says coal consumption falls for third year” (February 28, 2017), https://phys.org/ news/2017-02-china-coal-consumption-falls-year.html; Ye Qi, Nicholas Stern et al., “China’s Post-Coal Growth,” Nature Geoscience (August 2016) at p.4.
7. National Bureau of Statistics, “Statistical Bulletin 2017” (February 28, 2018) (0.4% increase); International Energy Agency, “Global Energy and CO2 Status Report 2018” (March 2018) at p.7, http://www.iea.org/publications/ freepublications/publication/GECO2017.pdf (0.3% increase); Qi and Lu, “China’s Coal Consumption” (January 22, 2018) (1.0% increase).
8. Ayaka Jones, “Recent statistical revisions suggest higher historical coal consumption in China,” Today in Energy, US Energy Information Administration (September 16, 2015), https://www.eia.gov/todayinenergy/detail. php?id=22952; Chris Buckley, “China Burns Much More Coal Than Reported, Complicating Climate Talks,” New York Times (November 3, 2015), https://www.nytimes.com/2015/11/04/world/asia/china-burns-much-more-coal- than-reported-complicating-climate-talks.html; Ye Qi and Tong Wu, “Putting China’s Coal Consumption into Context,” Brookings (November 30, 2015), https://www.brookings.edu/blog/up-front/2015/11/30/putting-chinas- coal-consumption-into-context/.
9. Xinyu Chen, Junling Huang, Qing Yang, Chris P. Nielsen, Dongbo Shi and Michael McElroy, “Changing carbon content of Chinese coal and implications for emissions of CO2,” Journal of Cleaner Production (May 20, 2018), https://chinaproject.harvard.edu/files/chinaproject/files/1-s2.0-s0959652618314690-main.pdf.
10. See generally Zhu Liu et al., “Reduced carbon emission estimates from fossil fuel combustion and cement production in China,” Nature (August 20, 2015), https://www.nature.com/nature/journal/v524/n7565/full/ nature14677.htmlhttps://www.nature.com/nature/journal/v524/n7565/full/ nature14677.html; Jan Ivar Korsbakken et al., “Uncertainties around reductions in China’s coal use and CO2 emissions,” Nature Climate Change (February 16, 2016), http://www.nature.com/nclimate/journal/v6/n7/full/ nclimate2963.html; Lelyveld, “China’s Coal Consumption” (May 21, 2018).
11. China Energy Portal, “2017 electricity and other energy statistics” (accessed June 26, 2018).
12. China Energy Portal, “2017 electricity and other energy statistics” (accessed June 26, 2018); Gabriel Wildau and Emily Feng, “China Broadens Campaign Against Overcapacity,” Financial Times (November 23, 2017), https:// www.ft.com/content/cd2fe8f0-cf70-11e7-b781-794ce08b24dc.
13. Melanie Hart, Luke Bassett and Blaine Johnson, “Everything You Think You Know About Coal in China Is Wrong,” Center for American Progress (May 15, 2017), https://www.americanprogress.org/issues/green/reports/2017/05/15/432141/ everything-think-know-coal-china-wrong; Ben Caldecott et al., “Stranded Assets and Thermal Coal in China,” Smith School, Oxford University (February 2017) at p.12, http://www.smithschool.ox.ac.uk/research/sustainable-finance/ publications/Stranded-Assets-and-Thermal-Coal-in-China-Working-Paper-February2017.pdf.
14. National Bureau of Statistics, “Statistical Bulletin 2017” (February 28, 2018) at table 3. See also “BP Statistical Review of World Energy 2018” at p.38 (2017: 3.6% increase, 3.4 billion tons).
15. “BP Statistical Review of World Energy (June 2018)” at p.38; See also NDRC and NEA, “Coal Industry in “13 Five-Year” Plan” (December 2016) at p.5, http://www.ndrc.gov.cn/zcfb/zcfbghwb/201612/W020161230423526650781.pdf.
16. “China Imports of Coal,” Trading Economics, http://www.tradingeconomics.com/china/imports-of-coal (accessed June 26, 2018); Mike Mellish, “China and India drive recent changes in world coal trade,” Today in Energy, US Energy Information Administration (November 20, 2015), http://www.eia.gov/todayinenergy/detail.php?id=23852; William Gao, “China 2017 thermal coal imports rise 8.08pct,” sxcoal.com (January 24, 2018), http://www.sxcoal. com/news/4567715/info/en.
17. International Energy Agency, “Coal Mine Methane in China” (February 2009) at p.7, https://www.iea.org/ publications/freepublications/publication/china_cmm_report.pdf; “China Coal Production by Year,” Index Mundi, http://www.indexmundi.com/energy/?country=cn&product=coal&graph=production (accessed June 26, 2018) (Chinese coal production in 2005 = approximately 2 billion tons).
18. See Nathaniel Taplin, “The Real ‘War on Coal’ is in China,” Wall Street Journal (November 14, 2017), https://www. wsj.com/articles/the-real-war-on-coal-is-in-china-1510644712; Sylvie Cornot-Gandolphe, “China’s Coal Market: Can Beijing Tame “King Coal”?,” Oxford Energy Inst (December 2014) at pp.3 and 11.
19. RT Business, “China to slash coal consumption by 160mn tons in 5 years” (March 6, 2015), http://www.rt.com/ business/238301-china-energy-pollution-coal/.
20. State Council, “Energy Strategic Plan” (November 2014), http://www.gov.cn/zhengce/content/2014-11/19/ content_9222.htm; State Council, “Action Plan for Air Pollution Prevention and Control” (September 2013), http:// www.gov.cn/zwgk/2013-09/12/content_2486773.htm; NDRC, “Interim Provisions on Replacing Coal Consumption with Cleaner Energy Sources in Key Regions” (December 29, 2014), http://www.sdpc.gov.cn/gzdt/201501/ W020150114391791364418.pdf; NDRC and NEA, “13th Five-Year Energy Development Plan” (December 2016), http://www.ndrc.gov.cn/zcfb/zcfbghwb/201701/W020170117350627940556.pdf; Alvin Lin, “Understanding China’s New Mandatory 58% Coal Cap” (March 17, 2017), https://www.nrdc.org/experts/alvin-lin/understanding- chinas-new-mandatory-58-coal-cap-target.
21. State Council, “Report on the Work of the Government” (March 16, 2017), http://www.gov.cn/premier/2017-03/16/ content_5177940.htm.
22. National Energy Administration, “China stopped 2400MW aged coal-fired power generators” (October 31, 2017), http://www.nea.gov.cn/2017-10/31/c_136717010.htm.
23. Alvin Lin, “China’s New Plans Deepen Action on Climate Change” (December 19, 2016), https://www.nrdc.org/ experts/alvin-lin/chinas-new-plans-deepen-action-climate-change; Cornot-Gandolphe, “China’s Coal Market” (December 2014) at p.20; Edward Wong, “In Step to Lower Carbon Emissions, China Will Place a Limit on Coal Use in 2020,” NY Times (November 20, 2014), http://www.nytimes.com/2014/11/21/business/energy-environment/ china-to-place-limit-on-coal-use-in-2020.html?_r=0.
24. Michael Forsythe, “China Cancels 103 Coal Plants,” New York Times (January 18, 2017), https://www.nytimes. com/2017/01/18/world/asia/china-coal-power-plants-pollution.html?_r=2; National Energy Administration, “China stopped 2400MW aged coal-fired power generators” (October 31, 2017), http://www.nea.gov.cn/2017- 10/31/c_136717010.htm.
25. “2017 electricity and other energy statistics” (accessed June 26, 2018); Christine Shearer, Neha Mathew- Shah, Lauri Myllyvirta, Aiqun Yu and Ted Nace, “Tracking The Global Coal Plant Pipeline,” Coal Swarm (March 2018), https://endcoal.org/wp-content/uploads/2018/03/BoomAndBust_2018_r6.pdf; Lauri Myllyvirta, “China keeps building coal plants despite new overcapacity policy” (July 13, 2016), http://energydesk.greenpeace. org/2016/07/13/china-keeps-building-coal-plants-despite-new-overcapacity-policy/; Lin, “China’s New Plans” (December 19, 2016); Cornot-Gandolphe, “China’s Coal Market” (December 2014) at p.20.
26. State Council, “Work Plan for Controlling Greenhouse Gas Emissions in the 13th Five-Year Plan” (October 27, 2016), http://www.gov.cn/zhengce/content/2016-11/04/content_5128619.htm; “National Plan for Addressing Climate Change (2014-2020)” (November 25, 2014) at p.3, http://www.scio.gov.cn/xwfbh/xwbfbh/wqfbh/33978/35364/xgzc35370/Document/1514527/1514527_2.htm. See Lin, “China’s New Plans” (December 19, 2016); Hart, Bassett and Johnson, “Everything You Think You Know” (May 15, 2017)
27. “China Imposes a New Coal Production Tax” (January 13, 2015), https://www.stratfor.com/analysis/china-imposes- new-coal-production-tax.