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China Coal Group Says Peak Demand Imminent as Clean Power Grows

China is rapidly approaching peak coal consumption, but the fossil fuel’s role in helping to address energy security concerns means its use will plateau for some time after that, according to the nation’s top industry association.

Coal is being displaced in the power sector thanks to a huge surge in wind and solar additions last year, while the real estate crisis is helping to cool demand from heavy industry, said Zhang Hong, deputy secretary-general of the China National Coal Association. At the same time, the growth of renewables means coal is in demand to help balance out intermittent generation.

A sharp drop in consumption, therefore, will not come swiftly.

“Coal demand is reaching a plateau period, but its fundamental role in supporting China’s energy supply safety is hard to change in the short-term,” Zhang said at the China Coal Import International Summit in Xiamen, southeastern China. “The role of coal as primary energy and a fallback for ensuring energy security remains unchanged, even when it is close to reaching a plateau.”

China mines and burns more than half the world’s coal, making its power sector the single biggest contributor to planet-warming greenhouse gas emissions. A series of power shortages in recent years led the government to boost mining to a record and go on a spree building new coal power plants, even as it invests more than any other country in clean energy.

Coal consumption rose 5.6% last year, a faster increase than the prior year, as the country left Covid-19 restrictions behind at a time when hydropower generation was hit by an historic drought. Still, the International Energy Agency forecasts coal consumption in China will fall in 2024 and plateau through the next two years. President Xi Jinping has promised that the country’s use of the fuel will begin to decline from 2026.

The debate over fuel’s trajectory continues, though. At the same conference, Wu Wenbin, head of coal management at Guangdong Energy Group, said he expects a 4% increase in consumption this year. Fenwei Digital Information Technology Co., the conference organizer and a coal industry research firm, forecasts a 2% rise this year for power-station coal.

By Bloomberg News