China's political economy of coal

Han Cheng; Eikeland, Per Ove
November 2015
FNI Reports;Nov2015, Issue 10, preceding pvi
This report presents an overview of Chinese policies and policy drivers that signal a potential discontinuation of the golden age of continued coal growth in China. It also briefly discusses the counterforces and challenges facing China in shifting its energy system from coal to low-carbon solutions. The coal industry has proven its long-lasting significance by contributing to the national economy, to local opportunities and livelihoods, to poverty alleviation and employment. Forces at the central and local governance levels, as well as many other political and socio-economic factors, need to be carefully taken into account when analysing whether or when China will reach a peak point in its coal consumption, an issue currently subject to considerable debate. Structural developments in 2014 are interesting. In that year, China had its slowest growth rate of overall energy consumption since the turn of the century, due largely to the significant decrease in energy intensity since 2009. China also witnessed a milestone drop in coal consumption, together with a decline in domestic production and import. Further, 2014 was a year of exciting growth in alternative energy sources. The Chinese government declared its ambition of a 15% target of non-fossil fuel sources by 2020 and 20% by 2030. With its investment in renewable energy rising China signalled its leadership regarding a low-carbon energy future. Developments in 2014, specifically the decline in coal consumption (continuing in 2015), were the combined result of policy efforts made by the Chinese government aimed at reducing its energy consumption and shift its energy system, while continuing to secure high economic growth, urbanize the economy, improve people's livelihoods and deal with the turbulence in international energy markets.


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