China’s Coal Boom Slows as Top Mining Hubs Focus on Renewable Energy

By Bloomberg

Feb 21, 2024

image is BloomburgMedia_S955ITDWRGG000_21-02-2024_08-00-11_638440704000000000.png

(Bloomberg) -- China’s coal boom is slowing as top mining regions limit growth and steer investment to the clean energy that will replace the dirtiest fossil fuel.

Seven straight years of rising output, including a 10% surge in 2022 after nationwide power outages crippled industry, have produced a glut of coal. That’s kept prices low. But record production, which reached 4.7 billion tons in 2023, has incurred other costs, from increased fatalities among miners to poor financial performance at mining companies.

At the same time, China is running up against a deadline to peak coal consumption by 2025 to meet its climate goals. It means output growth could slow to 1.4% this year, Guosheng Securities Co. said in a note, which would be the weakest since 2017.

The four biggest coal hubs, accounting for over 80% of output, have eschewed the ambitious targets that characterized previous years, according to annual plans released by local governments. Instead, much of their efforts are on supporting China’s explosive growth in renewables. The reports will set the tone for discussions at Beijing’s annual legislative meeting early next month, where energy security is likely to be a focus.

Shanxi province, the top coal miner, has cut its annual growth target to 57 million tons, from over 100 million tons last year. Notably, it plans to deploy solar panels on vast swathes of land now too polluted from mining to grow crops or build houses, according to its report.

Inner Mongolia, the second-biggest producer, didn’t set a target for coal output but said it would fund 300 billion yuan ($42 billion) in clean energy expansions. The plan is to take its capacity to generate renewable power above thermal for the first time. The authorities also vowed to accelerate the construction of four desert mega bases as a part of China’s grand strategy to triple clean power by 2030.

No. 3 miner Shaanxi province said it plans only a marginal increase in coal production, while cutting coal burning to improve air pollution. It will also support the 100-gigawatt expansion of China’s biggest solar panel maker, Longi Green Energy Technology Co.

The Xinjiang region, which has been a prime contributor to China’s coal output growth, said it’ll slow its expansion to 9%, from last year’s 11% increase, while pledging to keep pushing on renewables and hydrogen.

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