Chinese coal draw-down gathers pace

Mining restrictions imposed in March 2016 resulted in a 9.4% drop in local production and a surge in prices. (Image of Lao Ye Temple Mine By LHOON | Flickr Commons)

Coal continues to be the sector in the cross-hairs of Chinese plans to shift its energy mix away from fossil fuels and into cleaner renewables.

In his annual report delivered Sunday, Premier Li Keqiang said the country would do away with over 50 gigawatts of coal-power capacity – an amount equivalent to over the entire capacity of South Africa – through new measures to wean itself off coal, MarketWatch reported.

The Chinese leader also said China would cut 150 million tonnes of coal capacity this year, about half of the 290 million tonnes cut in 2016.

China may also soon reinstate coal production curbs in an effort to avoid the return of an oversupply and improve the profitability of its heavily indebted coal industry. The curbs would come in the form of limiting mines’ operations to 276 days a year, from the current 330 days.

Coal, particularly the steelmaking kind, rocketed last year after Beijing introduced production restrictions.

Meanwhile China’s coal consumption dropped in 2016 for a third year in a row, official data showed last Tuesday, as the world’s top consumer and producer of the fossil fuel continued tightening environmental rules aimed at dealing with pollution.

Beijing has made public its intention of modernizing its coal-fired power plants by 2020 in an effort to cut “polluting” emissions by 60%. The government also aims to add over 20 million kilowatts of installed wind power and more than 15 million kilowatts of installed photovoltaic power by the end of the decade.

Coal accounted for 62% of the nation’s energy mix last year, down from 64% in 2015, and it is expected to fall further under the current five-year plan of capping it at 55% by 2020, the National Bureau of Statistics said.