Date
21 January 2017
Under new government policies, China's coal industry may play a decreasing role in powering its economy. Photo: CNSA
Under new government policies, China's coal industry may play a decreasing role in powering its economy. Photo: CNSA

China’s push for cleaner air suggests coal prices will stay low

China uses thermal coal for about four-fifths of its electricity consumption and was responsible for about 30 percent of global carbon dioxide output in 2013.

Hence the country has the world’s most polluting electricity industry and the highest emissions.

Its massive coal power complex, which produced 4,204.9 terawatt-hours last year, drives regional thermal coal prices and has been a huge source of emissions for both the country and its neighbors.

China’s government has successfully implemented several policies to address its overreliance on coal and the resulting emissions.

It has begun to cut its reliance on coal-fired generation, the cheapest source of power after hydroelectric power, by raising its capacity for wind, nuclear, solar and gas power.

Beijing has encouraged the country’s power generating firms — which include China Huaneng Group Corp., China Huadian Corp. and China Guodian Corp. — to build plants with higher environmental standards and shut down their smaller, inefficient ones.

The government has also sharply increased its monitoring of power plant emissions.

These policies have led coal miners such as China Shenhua Energy Co. to raise their investment in power generation while working to increase their exports.

This may mean falling emissions for the region.

It may also mean that domestic and regional coal prices will stay depressed for the foreseeable future.

The views expressed in this article are those of Joseph Jacobelli and Michelle Leung, analysts at Bloomberg Intelligence.

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