Chinese analysts eye CO2 peak in 2025, sharp drop in coal use

Published 09:12 on March 2, 2016  /  Last updated at 09:12 on March 2, 2016  /  China, China's National ETS  /  No Comments

China’s CO2 emissions will peak in 2025 as a sharp drop in coal consumption by industrial users means the carbon intensity of the Chinese economy is set to fall 54% over the next fourteen years, according to the China Energy Outlook 2030 released this week.

China’s CO2 emissions will peak in 2025 as a sharp drop in coal consumption by industrial users means the carbon intensity of the Chinese economy is set to fall 54% over the next fourteen years, according to the China Energy Outlook 2030 released this week.

The report was released by the China Energy Research Society, a think-tank made up of energy researchers and high-level officials at China’s biggest energy companies.

The conclusions echo findings in a number of international studies carried out over the past year, but show that the consequences faced by fossil fuels from China’s shifting economy are now also widely anticipated among traditionally more conservative Chinese academics.

When China was preparing its Paris pledge in the first half of last year, a number of domestic researchers voiced doubts that the world’s biggest greenhouse gas emitter would be able to stop emissions from growing by 2030, the peak year that ended up being China’s goal.

However, with energy-related CO2 emissions falling in two consecutive years and the government implementing aggressive new policies to cut coal generation while working to involve the financial sector in the clean-up of the economy, China is now seen as on track to beat the CO2 peak target by several years.

This week’s report said carbon emissions per unit of GDP would drop 54% from 2016 levels by 2030. In comparison, China’s international pledge is to cut carbon intensity 60-65% below 2005 levels by 2030, and it is already halfway to meeting that target.

However, the falling CO2 output is creating challenges for the NDRC as it draws up the allocation plan for the first trading period of the national ETS, set to start next year.

According to officials, the number of CO2 permits that will be issued will at least partly be based on historical emissions, increasing the risk of over-allocation.

Here are some of Carbon Pulse’s main takeaways from the report:

– China’s energy demand will continue to slow down, and total consumption will reach 4.8 billion tonnes of standard coal equivalent in 2020, and 5.3 billion tonnes in 2030. Coal’s share of that will fall to 60% in 2020 and to 49% in 2030, from current levels of around 67%.

– Most of the drop in coal consumption will come from efforts to slash the over-capacity in industry. The report said coal consumption by iron, steel and building material manufacturers would fall to less than half their peak levels by 2030. Power sector consumption will plateau near current levels, while use of coal to produce oil, gas and chemical products is set to grow.

– Coal imports will fall to 100 million tonnes in 2020 and 30 million tonnes in 2030, down from just over 200 million in 2015. However, exports to other East Asian countries are set to increase.

– Oil use will continue to grow, albeit at a slower rate of 2% per year, while gasoline demand will peak in 2025.

By Stian Reklev – stian@carbon-pulse.com

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