CHINA'S COAL ELECTRICITY

PLATTS - 22 Feb 2024 - China, the largest global consumer and producer of coal, approved a total of 106 GW worth of coal-based electricity generation capacity in 2023 -- of which 70 GW started construction by the end of last year -- a development likely conflicting with China's clean climate goal, a report by the Centre for Research on Energy and Clean Air showed Feb. 22.

The amount of capacity permitted more than quadrupled from 23 GW in 2021, CREA said, adding that China also commissioned 47 GW worth of coal-based power generation capacity in 2023.
In 2021, China announced oaths on a clean climate target, pledging to control new coal-fired power generation project as well as restrict the consumption of the fuel in an attempt to limit the carbon emission impact on the environment.

However, according to CREA's report, "The continued addition of new coal power capacity implies insufficient emphasis on overcoming the power system and power market constraints that perpetuate dependence on coal."

China saw a robust increase in its peak power demand in 2021-2022 due to an increase in the prevalence of air conditioners amid exceptionally intense heat waves. This prompted an enhancement of more coal-based power generation capacity as a "costly and suboptimal solution," the report said.

Announcements of new coal projects in China surged since 2022, when new permits for coal-based power generation capacity addition reached the highest level since 2015.

On a cumulative basis, China approved 218 GW of coal-fired electricity capacity addition in the last two years, out of which 89 GW worth capacity started construction by the end of 2023. This will keep its imports under long-term contracts quite sound in coming years, a trader based in Indonesia said, adding that China will now focus more on enhancing its domestic output.

Development in industrial activities will play a key role in the whole situation, the trader said.

In 2023, China produced nearly 4.65 billion mt of coal, the highest to date, data from the National Bureau of Statistics of China showed. As per data available in Commodities at Sea, China's total import of coal in 2023 was at 386.3 million mt, compared with 257.2 million mt in 2022.

According to a senior analysts at S&P Global Commodity Insights, China's 2024 imports will likely be similar to that of 2023, as its economy is still quite choppy amid mounting debts in the local municipalities and the crisis-hit property sector, which comprises a large portion of China's revenue.

According to data from Platts, part of S&P Global Commodity Insights, the average price of China-delivered global 5,500 kcal/kg NAR on CFR basis was at $120.26/mt in 2023, compared with $178.06/mt in 2022. Platts assessed the price at $108/mt Feb. 21. 

-----