Green drive may see China's coal use peak by 2020

Coal use in China, the world's biggest polluter, could peak earlier than previously forecast as slower economic growth cuts power demand and the government clamps down on energy-intensive industries to meet its emissions reduction goals.

Organisations such as the government-affiliated Energy Research Institute and the US-based Natural Resources Defence Council are predicting coal use will peak before 2020. Previous industry forecasts have ranged from 2022 to 2027.

As well as hitting domestic miners, a quicker shift away from coal will also threaten sales by Australia and Russia - among the top coal exporters to China. Citigroup, which cut its forecast for Chinese "peak coal" to 2020 last year, has also said China's fight against pollution and efforts to restructure its economy could bring the date further forward.

"We expect this combination of factors to actually slow the power sector's use of coal leading to a possible flattening and peaking before 2020," Michael Eckhart, Citi's global head of environmental finance, told a conference in Beijing this month.

China has said it aimed to restrict consumption to about 4.2 billion tonnes by 2020, up about 10 per cent from last year, but some government researchers, including the energy institute's Jiang Kejun, predict it could start falling much sooner.

After years of blistering growth, coal use is already being slashed in smog-hit regions like Beijing and Hebei as part of China's "war on pollution", and action is also being taken to consolidate or shut smaller mines. The country mines most of its own coal and the earlier target will likely raise pressure to tackle chronic overcapacity.