By Samantha James
A new report claims that a 5 per cent drop in Chinese coal consumption year on year, slow electricity demand growth of 0.5 per cent and an increase in non-thermal electricity generation has resulted in the ‘snuffing out’ of the seaborne thermal coal market.
The Institute for Energy Economics and Financial Analysis (IEEFA) report stated Chinese coal imports in calendar 2015 had dropped by 30 per cent and predicted another 30 per cent decline in global traded thermal coal demand by 2021.
“With the collapse in both Indian (down 34 per cent year on year) and Chinese (down 35 per cent year on year) coal imports in December 2015, the seaborne thermal coal industry is entirely beleaguered,” IEEFA director of energy finance studies Tim Buckley said.
“This telling import data confirms the last flicker of hope has been snuffed out, not least for Australia’s Galilee Basin.
“It also carries massive negative implications for Indonesia’s coal export market, given the concurrent collapse in Indian demand.”
China’s total coal consumption in 2015 was an estimated 5 per cent lower in volume terms, indicating an acceleration of the 2.9 per cent decline in coal consumption reported for 2014.
China’s National Energy Administration (NEA) stated that China was successfully diversifying away from thermal power generation at a faster than expected rate in 2015.
Wind, solar, hydro and nuclear power continued to grow at coal’s expense, consistent with the trend evident since 2011.
IEEFA’s report forecast that China would install an additional 24 gigawatts of wind, 16GW of new hydro, 6GW of nuclear and a new record of 18GW of solar this year.
The combined 64GW of additional renewable electricity capacity was expected to be more than sufficient to meet the country’s projected electricity demand growth of between 3 and 4 per cent in 2016.
The China Academy of Sciences expected coal production to fall another 4 per cent in 2016 to 3.6 billion tonnes of coal, down from an estimated 3.76bt of coal in 2015.
In late 2015 the head of China’s NEA announced that it would not approve any new coal mine projects for the next three years, in addition to closing down 1000 small mines.
“The implications of these changes are huge: China’s total country emissions are on track to peak potentially a decade earlier than their official target of no later than 2030,” Mr Buckley said.
“This comes at the same time that America has confirmed a 10 per cent year-on-year decline in coal consumption in 2015 (and down 29.7 per cent to-date in early 2016), plus a three year moratorium of new federal coal mine leases.”