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China’s Coal Use Will Rise but It is Still Less Than Historic Highs

china_pollutionChina may have inked the Paris accords to curb carbon emissions but it’s newly developed five-year plan still indicates it will rely heavily on coal — to the tune of increasing its coal-fired capacity by as much as 20% by 2020.

The National Energy Administration said that coal-fired capacity would go from 900 gigawatts now to 1,100 gigawatts during that time frame. That means coal would be 55% of its energy portfolio, the Wall Street Journal reports. Even though there is an increase, it would still be much less than its historic highs of 75% of the electricity portfolio.

At the same time, the Wall Street Journal is reporting that China will also increase renewable energy capacity during the same time period from 12% of its electricity portfolio to 15%.

To add perspective, China’s demand for power is ticking up slightly but it is still significantly less than what it had been a few years ago. That has been indicative of the slowing economy there, which of course, impacts American coal markets.

For all the reasons one might expect, U.S. coal exports are down again for 2015: slower worldwide demand, cheap international coal prices and too much global coal production.

The result, according to the U.S. Energy Information Administration, is that the United States exported 74 million short tons in 2015. Those exports fell for the third straight year and they were 23 million short tons less than in 2014 and 50 million short tons less than the record volume set in 2012.

Coal imports to China peaked in 2013.

It’s all in the context of the Paris accord, signed by 191 countries in December 2015. Last week, it was ratified in Marrakesh.

Under the agreement, countries will submit new blueprints every five years. The goal remains to limit global temperature increases to no more than 2 degrees Celsius by mid Century and reduce net greenhouse gas emissions to near zero by 2100. While the developed world will take the lead, all countries are on board to have notable results by 2030.

“This is a pact that is difficult to translate to the level of individual power plants in individual countries because of its multilateral nature,” says Gerard Wynn, of the Institute for Energy Economics and Financial Analysis, in his blog. “But it’s safe to say the Paris Agreement probably makes less likely a return to fortune of coal-fired power plants, whose value has already fallen in Europe.”

“India and China will be importing less coal for economic and security reasons,” adds Tom Sanzillo, director of finance for the Institute for Energy Economics, in an earlier phone interview. “They don’t want to be dependent on anyone from the outside. It has negative fiscal and monetary consequences.” 

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