The China coal market is expected to grow at a CAGR of more than 5% during the forecast period. Factors such as increasing power generation capacity plans and increasing electricity demand, owing to rapidly increasing industrial and infrastructural development activities, are expected to drive the market during the forecast period. However, the uses of coal are squeezed out of the energy mix in many developed nations across the globe, the reason being the generation of air pollutants due to coal combustion. Moreover, power from coal is getting mixed up with other alternative sources including renewables and natural gas, which help to reduce the environmental impact as compared to coal. These factors, in turn, are expected to restrain the growth of the China coal market.
- Coal is extensively used in the country to fire the thermal power stations and, in turn, meet the demand for various sectors, such as industry, transport, residential, commercial, and public services. The power generation segment is expected to dominate the market supported by China's extensive plan for adding additional coal-fired plants during the forecast period.
- With the growing demand for electricity, coal power plants in China is expected to be a significant consumer of coal. The Asia-Pacific region is expected to have a demand of around 4,400 megatons of coal equivalent by 2040, with the majority of demand from the power sector. This demand for coal is expected to create an opportunity for the market players in the upcoming years.
- Rising environmental concerns over greenhouse gas emissions and global warming are expected to restrain the growth of the coal market in China during the forecast period.
Key Market Trends
Power Stations Segment to Dominate the Market
- In 2019, China accounted for more than 51% of the global share in the total coal consumption, and about 57% of primary energy consumption in the country was attributed to coal.
- The robust economic growth in China reached nearly 7%, and the gross electricity consumption grew by 6.6%, exceeding 6,000 TWh, for the first time in 2017.
- Further, of the new coal-fired power plants commissioned in 2019, nearly two-thirds (64%) of the newly commissioned capacity was in China (43.8 GW). Currently, about half of the capacity currently under construction is in China (99.7 GW). Hence, with China majorly increasing coal consumption globally, the market is expected to be driven during the forecast period.
- Utilities and governments in China are developing new generation projects to meet the rising electricity demand. At over 1,000 GW, China constitutes about half of all global coal power capacity, and 41% of global capacity under construction and in pre-construction development (205.9 GW).
- Although, there are several restrains in China leading to decreased use of coal, the construction of coal power plants by China is bolstering the market growth in the region.
Rising Environmental Concerns to Restrain the Market
- China has witnessed high rates of demand for electricity, owing to the unprecedented growth of the economy, coupled with factors such as rapid industrialization and urbanization electricity. This has led to a high growth rate in the usage of coal in recent years.
- In recent times, China has been facing severe pollution problems, especially in winter, leading to heavy fog and related health issues. This has forced the citizens and the government to think and act on the problem.
- With the rising environmental concerns over pollution and greenhouse gas emissions from coal-based power plants and China's huge steel industry, the growth rate has slowed down. The country reduced the coal share in total energy from 68% in 2012 to around 57% in 2019. This drop is expected to continue during the forecast period.
- In China, the amount of capacity in pre-construction development has also increased as the central government began placing restrictions on new coal plant proposals and permits in 2016. The increase is due to the power industry in China continuing to advocate for a capacity target in the upcoming five-year plan that would make room for up to 200 new coal-fired generating units by 2025.
- The decrease in the growth rate of coal consumption due to environmental policies and increasing renewable share, the market for coal in China is expected to hamper the growth of the market during the forecast period.
The China coal market is moderately fragmented. Some of the major players in this market include China Coal Energy Group Co., Ltd., China Shenhua Energy Co. Ltd., Huadian Power International Corporation, China Power International Development Limited, and Huaneng Power International, Inc.
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