Coal news and updates

There are many arguments about equity and climate change, such as the contribution to cumulative emissions, and the end use of products produced by country of consumption rather than production. But in the end they are arguments about who is to blame.

At the moment who is to blame is less important than fixing the problem. And the problem is China’s consumption of coal mostly for coal fired electricity. India, Vietnam, South Korea are all in the mix, but China is the big prize.

We have previously argued that China’s demand for electricity is driven mostly by the change in demand for infrastructure construction, including housing  and heavy industry. In this view there are two ways for China to change.

Firstly, you could dramatically change the economy to move away from construction. This will happen naturally but perhaps, from a global carbon perspective, not fast enough. Secondly, you could do what most economies attempt and that’s to decarbonise electricity production

China reports monthly data on electricity production and coal production reasonably promptly. The data is not seasonally adjusted and neither January nor February data are reported separately. Instead a combined January February total is reported for the month of February.

Typically, for much of the data a monthly number and a year to date total are reported. ITK makes a crude assumption that Jan and Feb numbers are equal and we have made our own seasonal adjustment of some key series.

As everyone knows China with 1.35 billionn people is about 17% of world population, but China produces 50% or more of many global primary products such as steel , cement and coal. China’s electricity consumption remains very heavily biased towards industry.

We produced the following chart for which the key point to note is that, after years of decline coal production is now at the highest point it’s been for five years and is running about 300 mt (annualised) above last year.

The question now is whether production will stay at its current level. China imported 281 million tonnes of coal in 2018 by way of comparison. In the 8 months ended August China had actually produced 118 mt of coal more than for the same 8 months last year.

Since thermal electricity production, which we’ll get to, is pretty flat it means that the extra coal is either going to steel or replacing imports. And, guess what, the US dollar Newcastle coal price is down to $65/tonne. That’s not just China but all the other things going on.

 

Source: https://reneweconomy.com.