In the coming decade, China’s coastal regions will move away from coal for energy generation in a significant way, according to Xizhou Zhou, senior director of IHS Energy gas and power research in Asia-Pacific. However, he added Tuesday, coal plants will continue to be built inland for some time. IHS tracks every proposed coal plant around the world, Zhou explained during a panel discussion at the U.S. Energy Information Administration’s 2016 Energy Conference.
According to the IHS data, it is easy to see that “quite a bit of coal consumption growth in the inland area but the coastal area has already peaked,” he said. “The net effect, we believe, is that sometime in the mid-2020s we’ll probably see a peak in national coal consumption. We do not believe that coal consumption in China has peaked already. With that, we’ll see probably in tandem a peak in carbon emissions before 2030.”
This projection is likely for a couple reasons, according to Zhou. First, China’s heavy industry sector is slowing amid the nation’s economic restructuring. Second, innovation of non-fossil technology is booming.
The heavy industrial sector in China has begun to slow, taking its high energy demand with it and contributing to a projected decrease in coal consumption in the nation, Zhou said.
“In our view, this economic restructuring will continue, we see more heavy industries going through a slowdown period, and some of them may even leave the country or just disappear from the overall economy. That, in the long term, will provide a bigger drag on energy consumption, and coal of course is a very big part of that,” Zhou said.
The nation is also investing in massive amounts of solar and wind capacity. “In the near term, we see continued weakness in coal consumption, and a part of the reason is that the power business is building a lot more non-coal technologies,” he said.
This shift to non-fossil energy sources is not market-driven, he said, as made clear by the fact that coal remains the least expensive fuel source in the nation. “If you look at economics, coal is by far still the cheapest fuel in the system,” he said.
Trending toward a more expensive power source has been accepted in coastal regions, Zhou said. “For China, the country does have enough economic power today to deal with some of the [cost] issues and the consumers seem to be OK with that kind of difference and the premium that they’re paying today, especially in coastal China,” he said.
That sentiment has not carried inland, however, according to Zhou. “In western China it’s not so much the case we still see coal being built in western provinces and in the long term we still see a slight increase in coal-fired power generation,” he said.
