China cities go dark > indicate shortage of coal

On early Jan 2021, Several major Chinese cities have reportedly gone dark as authorities limit power
usage, citing a shortage of coal. Power rationing in Hunan. Southern china cities have imposed limits

Cold winter,rapid economic recovery, limited supply

Source: https://www.cnbc.com/2021/01/05/chinese-cities-go-dark-amid-shortage-of-coal-a-key-
australian-export.html

Suppl production

But factors such as China’s aim for peak carbon emissions in 10 years give companies less incentive
to ramp up production.

Financing problems

China’s carbon-neutrality push prompts major coal-production region to beg banks for financing

Local authorities in Shanxi province have stepped in to secure financial assistance for coal miners
amid rising default risks

There is growing anxiety that the reluctance of banks and lenders to inject such funding could pose a
serious threat to local economic stability

Source: https://www.scmp.com/economy/china-economy/article/3130865/chinas-carbon-
neutrality-push-prompts-major-coal-production

More Coal plant in future

Ahead of the FYP’s publication, powerful stakeholders, such as the network operator State Grid and
industry body the China Electricity Council, are lobbying for targets that would allow hundreds of
new coal-fired power stations to be built. And a recent update to the “traffic light system” for new
coal-power construction signalled further relaxation of permitting.

This is all despite significant overcapacity in the sector, with more than half of coal-power firms
already loss-making and with typical plants running at less than 50% of their capacity.

The change is significant, as the four additional greenlighted grid regions have a total of 34GW of
coal-fired capacity in the pipeline.

https://www.carbonbrief.org/analysis-will-china-build-hundreds-of-new-coal-plants-in-the-2020s
Difficulty for china as developing country to move out of coal

Japan and South Korea are both developed economies in which overall energy demand is unlikely to
grow much, making decarbonization easier. China, on the other hand, still needs to cater to growing
energy demand, which may account for its target being set for 10 years further out, in 2060

https://www.spglobal.com/platts/en/market-insights/latest-news/petrochemicals/060221-mission-
innovation-launches-decade-of-clean-energy-development

Demand grew 3% despite COVID 19 and more coal plant built

In 2020, the country built 38.4GW of coal-fired generation. At the same time, it started the
decommissioning of 8.6GW, leaving a net gain of 29.8GW. In the same year, the country’s power
demand increased by 3%, despite the Covid-19 pandemic. As such, Chinese authorities view coal as a
“cornerstone” of meeting energy demand.

Source: https://www.power-technology.com/news/industry-news/china-five-year-plan-three-
points-nuclear-coal-energy-efficiency/

From January to November, China consumed 6,677.2 billion kilowatt-hours (kWh) of electricity,
more than the annual totals for 2017 and 2018.

https://sg.news.yahoo.com/china-suffers-worst-power-blackouts-093455971.html

Estimated demand by China National Petroleum Corp’

Consumption of coal, currently accounting for nearly 58% of China’s energy mix, will fall sharply from
2025, to 2.9 billion tonnes in 2035 and to 900 million tonnes in 2050, CNPC said.

Source: https://www.reuters.com/article/us-china-energy-cnpc-forecast-idUSKBN28R0SE

Hydro

For example, 45 per cent of electricity produced in Hunan is from

hydropower plants, but there is less water now due to the summer floods
and the massive icing in winter,” he said.
https://macropolo.org/analysis/china-energy-forecast-2025-setting-course-for-peak-emissions/
Statistia Electricity consumption in China between 2010 – 2020

https://www.statista.com/statistics/302203/china-electricity-consumption/

Coal consumption
Thermal coal is widely used for power generation, which accounted for 56.8 per cent of the
country’s total energy consumption in 2020, down from 57.7 per cent in 2019

According to China's National Bureau of Statistics, the share of “clean” energy – including natural gas,
hydropower, nuclear and wind power – rose one percentage point to 24.3 per cent of consumption in 2020. 

Import vs export

China produced 3.84 billion tonnes of coal in 2020, its highest output since 2015 and growth of 90 million
tonnes from the year before. However, last year’s coal output was below the peak of 3.97 billion tonnes
reached in 2013.

The country imported 304 million tonnes of coal in 2020, up 4 million tonnes from a year earlier

In 2019, China produced about 3.7 billion tonnes of coal and imported 300 million tonnes, according to
pricing and research group Fastmarkets.
Seeking alternative suppliers which have never been considered

A month earlier, Chinese buyers also snapped up coal from Colombia, which had never been a big seller
to China because of long shipping times when compared to regional suppliers such as Australia and
Indonesia.

Historically, South African coal has not been allowed into China because it contains restricted trace
elements like fluorine, while Colombian coal is usually viewed as a back-up option when regional prices
blow ou

Indo China can increase thermal coal imports from Indonesia, the world’s biggest
exporter of the fuel. In November, it extended the relationship by striking a deal
with Southeast Asia’s largest economy to buy US$1.46 billion more thermal coal
over the next three years.
Domestic supply

China also has the ability to boost domestic production from its hubs in the provinces of Shanxi and
Shaanxi, as well as the autonomous region of Inner Mongolia, according to analysts.

Analysts are confident China can increase domestic production of thermal coal, but local energy blackouts
at the end of 2020 due to lack of coal supplies, which coincided with colder-than-usual winter weather,
suggest domestic supply might not yet be sufficient to meet emergency supply needs. AND THIS IS IN
SPITE OF China produced 3.84 billion tonnes of coal in 2020, its highest output since 2015 and growth
of 90 million tonnes from the year before

More than a dozen cities in Zhejiang, Hunan, Jiangxi, Shaanxi and Guangdong provinces have imposed
limits on off-peak electricity use for factories since mid-December. Week-long blackouts in different areas
have been imposed in Shenzhen, China’s tech capital, which has the nation’s highest gross domestic
product per capita.

A source close to the national power system told the South China Morning Post that electricity restrictions
will be imposed this week in the eastern province of Jiangsu, as well.

Impossible goals of cutting carbon out

China will need to spend up to 130 trillion yuan (US$19.8 trillion)
COMPARED TO ANNUAL GDP to hit the net zero goal, Ding Zhimin, the
former deputy director of the Policy & Law Department of the National
Energy Administration, told the International Energy Executive Forum 2021
in November 2020.
It will also need to slash the share of coal in the energy mix to less than 5
per cent from 57.7 per cent in 2019 and raise new energy sources to more
than 85 per cent, she said. Currently, around 15 per cent of energy is drawn
from non-fossil fuels, including nuclear power.
Source: https://www.scmp.com/economy/china-
economy/article/3121426/china-coal-why-it-so-important-economy

The power suppliers hardest hit are the coastal utilities in populous eastern China, which are far from
China’s coal mines in the north and typically rely on imported coal.”

For coastal utilities, imported coal – including from Australia – is more accessible via ports than local coal
from faraway Shanxi, Shaanxi and Inner Mongolia

Reasons for falling domestic production

China tightened standards this year for the reopening of mines closed after accidents, which has
been a blow to domestic coal production.

In the first 11 months of the year, 13 accidents occurred in Shanxi, China’s coal mining hub, killing
26 workers. As a result, the province is expected to shut down all of its small coal mines with
annual capacity below 600,000 tonnes by the end of the year.

Coal production in Inner Mongolia, home to a third of China’s coal output, has been disrupted,
too. Corruption probes launched this year into the development of mines over the past two
decades have hurt output in the autonomous region, which has 523 mines with a combined
capacity estimated to be 1.3 billion tonnes a year

https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/china-
diversifies-coal-supply-amid-import-ban-on-australian-coal-62450989
GDP growth

https://tradingeconomics.com/china/gdp-growth-annual

https://chinadialogue.net/en/energy/can-controlling-energy-use-drive-chinas-green-transition-
during-the-next-five-years/
Difficult to replace Australia

China has an even tougher challenge when it comes to diversifying is supplies of coking coal away from
Australia, as few exporters have the ability to provide both high volume and high quality.

Higher quality steel production requires higher quality coking coal.

“Only Mongolia has the scale to replace Australian coking coal by volume, but its lower quality does not
make it a 100 per cent replacement

Industrial Added Value refers to the final results of industrial production of t industrial enterprises in money terms
during the reference period 
Source: National burea of statistics (Don’t to label axis)

https://data.stats.gov.cn/english/easyquery.htm?cn=A01

https://www.scmp.com/business/companies/article/3135517/china-rations-electricity-supply-
southern-manufacturing-regions