China’s Coal Expansion Starts to Slow Down

The growth in coal power generation in China is beginning to slow down as regional authorities seek to redirect investments to low-carbon energy, Bloomberg reports.

The report notes the continual increase in coal production and coal-powered generation in China over the past seven years, with generation reaching a record in 2023. At the same time, however, Bloomberg reports that this growth has led to a glut that has pushed down coal companies’ bottom lines.

China has set itself 2025 as a deadline for its coal demand peak. With just a year to go, coal growth does indeed need to slow down and according to one stock broker, it will. Guosheng Securities Co. said in a note cited by Bloomberg that China’s coal production growth this year could shrink to 1.4%.

The country’s four biggest coal-producing regions have all given indications they are not bent on continuing with the explosive production growth seen over the past seven years. Instead, the authorities of these regions are betting more on wind and solar, Bloomberg wrote.

The province of Shanxi, for instance, plans to boost coal production this year by 57 million tons, which is a substantial reduction from last year’s 100 million tons. Shanxi is the biggest coal-producing province in China, with 2023 output seen at 1.23 billion tons.

While reducing production growth targets, Shanxi authorities will expand solar capacity by covering land previously used in coal mining with solar panels.

Last year, China was single-handedly responsible for 96% of global coal power capacity construction, cementing its position as the biggest coal builder in the world.

Per data from Global Energy Monitor China, last year also accounted for 68% of new coal generation capacity that came online last year and 81% of newly planned coal generation projects. Authorities say that most of the new capacity would be used only as a backup for wind and solar installations.

By Charles Kennedy for Oilprice.com

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