CHINA COAL WILL DOWN

PLATTS - 23 Apr 2021 - China announced it would curb coal consumption in its economic plans spanning the next 10 years at US President Joe Biden's global climate summit April 22, in addition to affirming its existing targets on peak carbon dioxide emissions before 2030 and achieving carbon neutrality before 2060.

The precise language around limiting coal consumption could dim the prospects for unfettered growth in coal-fired power generation, which dominates China's energy mix, and pave the way for a more aggressive push for fuels like natural gas/LNG, nuclear and renewables.

"China has committed to move from carbon peak to carbon neutrality in a much shorter time span than what might take many developed countries, and that requires extraordinarily hard efforts from China," according to a transcript of Chinese President Xi Jinping's speech at the summit.

"The targets of carbon peak and carbon neutrality have been added to China's overall plan for ecological conservation. We are now making an action plan and are already taking strong nationwide actions toward carbon peak. Support is being given to peaking pioneers from localities, sectors and companies," Xi said.

"China will strictly control coal-fired power generation projects, and strictly limit the increase in coal consumption over the 14th Five-Year Plan period and phase it down in the 15th Five-Year Plan period," he added.

China's 14th Five-Year Plan spans 2021–2025 and the 15th Five-Year Plan 2026–2030.

"Platts Analytics believes Chinese coal-fired power generation will peak by 2027, so two years later than what President Xi announced. The announcement of it tapering off in the 15th Five-year plan is consistent with our view [after 2030]," said Matthew Boyle, Lead Analyst for Global Coal & Dry Bulk Freight at S&P Global Platts Analytics.

However, he said coal was expected to remain a significant part of China's electricity generation past 2030, but the country would increase its renewables generation capacity in the future, which will see renewables gain a larger share of electricity generation.

Platts Analytics has highlighted a couple of factors to take into consideration over China's commitment to emissions reduction targets.

First, China is a leader in renewables globally, accounting for about 50% of global renewables generation growth in 2020. Second, government policy decisions around China's air quality have already contributed to meeting some of China's pledged targets under the 2010 Copenhagen Accord.

"So it is evident that China has already made some headway towards transitioning towards reduced emissions," Boyle said.

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