There may be a light at the end of the long dark tunnel: It appears China’s coal boom is over.
While positive signs have been emerging from China for well over a year, it appears the ‘war on pollution’ is not just talk. According to analysis produced by Lauri Myllyvirta and Greenpeace International in the first half of this year, China’s coal use dropped for the first time this century - while the country’s gross domestic product (GDP) actually grew.
You read that right: coal and GDP growth have decoupled in China.
At the same time, the growth of imports -- the seemingly endless source of optimism for the moribund U.S. coal industry -- ground almost to a halt, with only 0.9 percent growth so far this year, as opposed to more than 15 percent yearly figures we have seen since China first became a net importer. Topping off the trifecta of good news is that domestic production dropped by 1.8 percent [article is in Chinese]. While uncertainty over the changes in coal stockpiles still exists, we’re confident that the unbelievable may be at hand: peak coal consumption in China.
It’s hard to understate just how historic this shift is. Analysts have been arguing over if, and when, Chinese coal consumption would peak. Some were forecasting a peak before 2020 while others -- including Wood Mackenzie -- have been loudly claiming Chinese coal demand may not ever peak but would instead double by 2030. This new data exposes the wide gulf between reality and hype that those predictions rely on.
In a sign of just how dramatically the tables have turned on the previously skyrocketing projections for the coal industry in China, consider this: the China National Coal Association is now calling for a 10 percent reduction in second half domestic coal output in many of the main coal-producing provinces. That about face comes as quite a shock considering as recently as December, the Association was busy advocating for a billion tonnes of coal to be added to the Chinese coal market by 2020. My what a difference a year makes.