China to Restrict Coal Demand, Output to 3.9 Billion Tons

China, the world’s biggest user and producer of coal, will limit domestic output and consumption of the commodity in the five years through 2015 to reduce pollution and curb reliance on the fuel.

Production and demand will be restricted to about 3.9 billion metric tons a year by 2015, according to a five-year plan for the coal industry released by the National Energy Administration at a briefing in Beijing today. The nation produced about 3.8 billion tons in 2011, according to Helen Lau, a Hong Kong-based analyst at UOB-Kay Hian Ltd.

China, the world’s biggest producer of carbon emissions, will strengthen control of air pollution and take an “active part” in international cooperation to tackle climate change, the National Development and Reform Commission said on March 5. The government aims to cut carbon dioxide emissions by as much as 17 percent per unit of gross domestic product in its five-year plan through 2015.

“Demand and output growth will definitely slow because of environmental concerns,” David Fang, a director at the China Coal Transport and Distribution Association, said by telephone from Beijing today. “The goals look difficult though, unless the government can substantially reduce economic growth and suppress enough energy-intensive industries,” he said.

The Chinese government is targeting average economic growth of 7 percent a year during the so-called 12th five-year plan, which covers 2011 through 2015. Annual coal demand in the period should expand by at least the same rate, Fang said.

Air Pollution

Coal as a proportion of China’s energy demand will fall “significantly” because of adjustments to the nation’s energy structure, environmental protection measures and restrictions on particulates, according to the document today, which didn’t specify the proportion.

Local governments including those in Beijing, Shanghai and Guangdong have pledged this year to release readings of air pollutants smaller than 2.5 micrometers in diameter, known as PM2.5, which can penetrate lungs and enter the bloodstream. The government was criticized last year for a plan to make data on PM2.5 publicly available by 2016. A Dec. 8 editorial in the state-owned China Daily newspaper called that “too slow.”

New Capacity

China will add new coal-production capacity of 750 million tons a year in the five years ending 2015, with the total capacity limited to 4.1 billion tons, according to the NEA. “Large” mines will account for 2.6 billion tons, while 900 million tons will be at pits that can produce 300,000 tons a year or more, it said in the document.

The country will build 530 million tons a year of new capacity in the western regions in the five-year period, accounting for 72 percent of total construction, the NEA said. About 25 percent of new-builds will be in central regions and 3.3 percent will be in the east and northeast, it said.

The government will continue to encourage coal imports, according to the document, without elaborating. China imported 20.6 million tons of coal in February, down 7.2 percent from the record set in November, according to customs data

— With assistance by Baizhen Chua

Before it's here, it's on the Bloomberg Terminal. LEARN MORE