Uncertainty Over China's Coal Use Clouds Global Forecasts

An analysis by Michael Lelyveld
2013-12-30
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Workers transport coal at a mine in  Huaibei, Anhui province, July 16, 2013.
Workers transport coal at a mine in Huaibei, Anhui province, July 16, 2013.
AFP CHINA XTRA

Questions about the growth of coal consumption in China are creating uncertainties for the global environment, energy experts say.

In its recent outlook for the world coal market through 2018, the Paris-based International Energy Agency (IEA) hinged its forecast on developments in China.

"Given China's absolute dominance over coal markets, our projections are strongly subject to Chinese uncertainties," the IEA said in its Medium-Term Coal Market Report.

"In the end, it is all about China," the agency said.

China uses as much coal as all other countries combined, making any changes in its consumption critical both to the world market and emissions of global warming gases.

Shaping world demand

The study estimates that world demand for coal will grow at an average annual rate of 2.3 percent during the forecast period, a tad slower than the 2.6-percent pace predicted last year, due largely to China trends.

China's coal demand is predicted to rise at an annual rate of 2.6 percent over the period from 2011, after posting its second-lowest growth rate of the past decade in 2012.

The IEA cites the pledges of China's new government to pursue more sustainable economic growth policies and tackle the air pollution problems that have smothered cities with smog.

But the estimates on China are "subject to highly uncertain developments," the IEA warns.

Questions abound about the extent of China's economic growth, energy efficiency efforts, and the shift to cleaner fuels over the coming five years.

With coal consumption likely topping 3.6 billion metric tons in 2013, any changes in China can shape world demand.

"You're talking about 50 percent of the world's coal consumption every day, so if there's a significant change in Chinese consumption, it really ripples through the global coal market," said Mikkal Herberg, energy security research director for the Seattle-based National Bureau of Economic Research.

China's demand is likely to reach 4.3 billion tons in 2018, the IEA said.

Climate change

Variations in China's enormous coal volumes also create uncertainties for climate change and emissions of carbon dioxide (CO2).

China's releases of CO2 from coal burning alone exceed the emissions from all sources by the second-place United States, Herberg said.

In September, China's government announced a five-year plan to fight urban smog by reducing coal's share in the country's energy mix from 68.4 percent in 2011 to 65 percent by 2017.

But as long as China's total energy use keeps growing, so will coal consumption and the pollution it causes.

"The overall coal consumption will continue to rise pretty dramatically in absolute terms, even though they may be reducing a couple of percentage points in the share," Herberg said.

How much remains open to question, the IEA indicated.

Coal conversion

One big uncertainty is the pace of China's coal conversion projects, which would transform coal into other fuels on a massive scale.

By 2018, the projects could consume 325 million tons of coal equivalent (a measure of energy content), the IEA said, but it noted that progress is uncertain due to high costs, water usage and environmental effects.

According to a Duke University study released in October by the journal Nature Climate Change, China has over 40 planned projects to convert coal into some 200 billion cubic meters (7 trillion cubic feet) of synthetic natural gas per year.

The largest coal gasification project was recently announced in Xinjiang Uighur Autonomous Region, calling for investment of 183 billion yuan ($29.7 billion) to turn 90 million tons of coal per year into 30 billion cubic meters of gas annually.

Pollution sources

Such projects may supply a cleaner-burning fuel to China's cities, but at the cost of using more coal in remote areas and producing more CO2 in China as a whole.

Because high amounts of CO2 are generated in the conversion process, the Duke study concluded that the projects would emit about seven times more greenhouse gases than using conventional natural gas during operation over 40 years.

"It doesn't matter where you emit CO2 from. It still goes into the atmosphere," said Herberg. "In terms of air pollution, they're just moving the point source pollution problem from one place to another."

The IEA said it is "highly uncertain" that all the conversion projects will be realized because of high capital requirements and other problems like using scarce water sources in the production process.

"However, coal conversion could be a source of huge coal demand in the future and it is likely we will revise upward our current projections of 100 million tons of coal equivalent," the report said.

Mammoth volumes


The combination of China's mammoth coal volumes and the uncertainty of such projects make the job of accurate forecasting "extraordinarily difficult," Herberg said.

In its report, the IEA also tried to demonstrate China's importance to the world coal market with a series of illustrative facts.

If all of China's annual coal demand were loaded onto a single train, it would measure 550,000 kilometers (341,000 miles) long, or 1.5 times the distance from Earth to the moon, the report said.

CH. 1: MANDARIN | CANTONESE

CH. 2: VIETNAMESE | BURMESE | KOREAN

CH. 3: KHMER | LAO | UYGHUR

CH. 4: TIBETAN

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