Decline in China’s coal demand continues with increasing public demand for clean air


With new government figures showing China’s love affair with coal has come to an abrupt end, the future is looking grim for the world’s biggest coal mining companies. China’s coal use fell 2.9% last year, the first fall since 2000, which suggests China could have seen a 0.7 percent drop in CO2 emissions for 2014. Slowing GDP growth as well as serious concerns for environment and climate are seen as the unbearable weight sinking the global coal market.  With China crafting a new plan to cut coal use in the industrial sector amid a renewed national debate on air pollution sparked by an unprecedented “viral” film called “Under the Dome,”  tougher coal and CO2 caps in China’s 13th Five Year Plan are expected by China’s leading expert and NGOs. The shift could signal a long-term structural shift away from the dirty fuel towards clean energies. And the industry is scaling back operations at a near-record rate, with Rio Tinto, Glencore and others reiterating pessimistic views of the sector’s future, a sign that the talk of job losses and stranded assets may indeed be looming.


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Key Points

  • The bell tolls for the declining dirty fuel amid a wake-up call for energy transformation out of concerns for health and environment, generated by the viral film called “Under the Dome.”Chen Jining, China’s new Minister of Environmental Protection, compares the film to Rachel Carson’s “Silent Spring,” and he might be right about it considering the “virtual tsunami” of Chinese commentary in the social media has put environmental protection on the top of the agenda in China’s National People’s Congress starting on Wednesday. Energy transformation was highlighted by experts as key to solve the longstanding air pollution, a heavy blow for the already declining coal industry.
  • China is eyeing a structural shift away from coal, in response to the environmental challenges, with strengthened implementation and tightened caps down the road for the industry. After the first drop in coal production and use in 2014, China will launch a new plan to cut coal use in the industrial sector, except for power generators, by 80 million tonnes by 2017. And a leading expert in China expects China to adopt a tougher coal and CO2 caps in the next Five Year Plan.
  • Huge financial risks emerge from China’s bursting coal bubble, with the global industry scaling back operations at a near-record rate, a sign that the talk of job losses and stranded assets may indeed be looming.  Rio Tinto, Glencore and others are reiterating pessimistic views of the sector’s future. Previously bullish Glencore announced that it will cut its Australian coal output by 15 million tonnes in 2015, which accounts for more than 20 percent in 2014.


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Key Quotes

  • “I think (“Under the Dome” has an important role in promoting public awareness of environmental health issues, so I’m particularly pleased about this event.” – Chen Jining, Minister of environmental protection
  • “I’d never felt afraid of pollution before, and never wore a mask no matter where. But when you carry a life in you, what she breathes, eats and drinks are all your responsibility, and then you feel the fear.” – Chai Jing
  • “The trend will continue, the growth or energy demand will be continually slow as most energy intensive products reach their manufacture peak. The energy intensive products sector occupied nearly 70% of new increases in energy demand in the last 10 years. Coal consumption has decreased, and based on our quick calculation, CO2 emissions from fossil fuel also decreased.” – Kejun Jiang, senior scientist at the Energy Research Institute
  • “Chinese thermal coal peaking is like changing the direction on an escalator. It will be a shock for those who assumed the direction would always be up.” – James Leaton, the Carbon Tracker Initiative
  • “This has generated a lot of passion. Air pollution has turned to be a social and political issue. It is a threat to the thinking of political legitimacy. It is a critical moment and event.” – Professor Qi Ye, Director of the Brookings-Tsinghua Center for Public Policy

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