Chinese coal consumption just fell for first time this century | Hacker News Reader

Chinese coal consumption just fell for first time this century

reneweconomy.com.au

95 pointsph0rque29 comments

It's not just coal. China is frankly the future as far as energy consumption goes.

They produce and consume most of the world's solar equipment, produce extensive hydropower, and lead the world in the deployment of rechargeable electric vehicles (primary scooters) by an extremely long way.

To be clear, Australia, the nominal location of the source of the article, supplies much of China's natural gas and coal so has a strong economic interest in limiting such developments.

A new solar technology developed at Australia's University of New South Wales (UNSW) in Sydney, was famously ready for commercialization but when prompted the university turned down the opportunity. A smart ethnic Chinese researcher, aghast at the unthinkable degree of risk aversion of the university in the face of demonstrated efficiency gains, promptly returned to China, raised a few million, and became the world's largest solar producer virtually overnight.

While I dearly hope this is the result of China emerging from a very short industrial revolution analog, there's lots of reason to believe that this is merely a leading indicator for an economic downturn.

What are those reasons?

Electricity and oil consumption generally goes down during an economic downturn.

China's renewable energy generation capacity (hydro, solar + wind) is about half of its coal capacity, though, and going up all the time - so I wouldn't say that it's all about the downturn.

Its wind output (90 GW) is actually significantly more impressive than solar (18 GW), which is still higher than its nuclear output (15 GW).

Coal is still a whopping 800GW, but I'm pretty confident that it's peaked and they can drag it down significantly over the next 25 years now that renewable energy is pretty much cost-competitive even without subsidies - we're at the point now where your model for the lifetime cost of any form of power (coal/wind/solar) basically depends upon what kind of assumptions you plug in to your cost models, and sensible assumptions usually put all of those forms of power at roughly the same cost and have done since last year.

China doesn't seem averse to using subsidies to tip the market's cost balance in renewables' favor, either, whereas the US is steadily pushing subsidies and tariffs to tip the balance in favor of the oil/fracking companies. Now renewable energy is cost-competitive, politics is primariliy driving its growth (or lack thereof).

There's lots of information coming out of China that as the standard of living has significantly increased, the days of cheap factory labor are over (or rather, it's spreading out to more countries rather than being super concentrated in China). There's also considerable evidence that China's housing bubble has burst along with this economic shift. But the bizarre nature of China's housing market has hidden this effect for a while.

However, getting reliable statistics out of China on these matters is notoriously difficult. So some economic analysts have even resorted to hanging around coal piles and seeing if they're growing or shrinking and trying to correlate and infer larger macroeconomic notions from that.

So a reduction in coal usage, could be a leading indicator of trouble elsewhere in the markets. It won't show up in most of the rest of the market immediately as inventory still exists to sell.

Note: China has a robust, mixed, coal reduction energy plan, with a huge emphasis on replacement via nuclear. Last I read it was on the order of 350GW of nuclear in the long-term plans. Which is huge. So this could just be that, but the percentage of existing non-coal energy infrastructure is very small, not statistically significant yet compared to the 800+GW of coal power China is producing.

Again though, it's very hard to get reliable statistics for just about anything in China. It's getting better, but it's very difficult to analyze the country when local administrators just make up numbers to look good.

On your question of coal reduction - a major part of the coal reduction strategy is small plants - those mainly used in winter or for other reasons of tight heat / electricity demand. They are incredibly inefficient, being wiped out at a vast rate, and couple with poor quality coal (stuff like 3000 calorie, high sulfur, dusty) from small dangerous mines, but... these are probably coincidental to the article's statistics, as this coal usage is largely off the officially reported map.

I agree this could be a leading indicator. The article paints no indication if the change is for steam coal (5000-6000 calorie) or coking (8000 calorie, for example alumimium production - industrial use), and neither indicates if a change is influenced by seasonal or seasonally affected policies. It does mention a fall in imports, but imported coal prices are under the reign of the NDRC, therefore directly influence import rates (Australia / Indonesia export flows would probably be more reliable indicators for China import).

What seems clear, though, is that Xi Jinping is pushing a lot of change in a lot of areas.

This is why as an Australian I mourn at the way we've approached mining and carbon emission reduction. We've consistently treated the issue as though we'll be able to export coal to China in perpetuity, and are not in the midst of a short-term boom which absolutely will not last. Tellingly, a year after the debate on whether to tax profits of mining companies more highly ended, all the mining companies are now cutting jobs amidst falling exports to China.

Sure - you can blame the economy. But it's also pretty obvious China is not going to be okay with the situation of being literally unable to breathe the air in Shanghai long term, and the dependence of the economy on this one industrial sector (to the utterly negligent exclusion of any interest in others) is insane.

It's not only nuclear, China also heavily invests in renewables. The installed wind power is even more than nuclear

>There's also considerable evidence that China's housing bubble has burst along with this economic shift. But the bizarre nature of China's housing market has hidden this effect for a while.

We get a lot of bizarre financial news about China over here. The other day there was some sort of corporate bond default (I believe it was China's first, if you can imagine that) that pundits on Bloomberg thought was the start of the end for China, as if businesses don't default for some reason or another, all the time.

The fallacy is in comparing the Chinese housing market to that of the US. China manages (or at least is trying to) real estate prices, and much of the inflated price kicks back to the government as a form of consumption tax which is used to fund further infrastructure development. This housing infrastructure is important when millions of people are moving from rural to urban areas.

Who knows if these policies will continue to work, but there is no doubt they are currently working. There has never been a growth story like this, and they are still only 1/5 the GDP per capita of the US.

China emerging from a very short industrial revolution analog

You could rephrase that as China rapidly refactoring the lion's share of global industrial production and doubling down the profits to realise the true potential of modern infrastructure with arguably greater accuracy and outlook. Arguably... but definitely there's some truth to it in areas such as energy sustainability.

That said, the economic challenges in China are real, but they do have the best possible toolset: centralized governance with a capable medium term planning capacity that is unencumbered by election terms, technical prowess, a population and capital base that make extremely large projects and investments feasible, and a population that has endured great hardship in living memory but emerged with concrete benefits such as mass literacy and for the most part improved material wealth. Those factors alone give them a tremendous degree of options.

I'm not an apologist: they certainly do put a foot wrong pretty often, and people do get sidelined and mistreated. Overall, however, the job they are doing is an extremely difficult one and the outcomes insanely impressive. It is a country that - at least to me - is in modern times one of the greatest wonders in human history.

> [...] and a population that has endured great hardship in living memory but emerged with concrete benefits such as mass literacy and for the most part improved material wealth.

Sort-of. The concrete benefits came when they stopped the greatest self-inflicted hardships.

Agreed, there was definitely a lot of needless suffering. Most places go through that at some point though... look at America's war against drugs, pharmaceutical industry out of control and gun laws for instance. Or the great depression. The communist period was China's way out of what had in some measurable senses degenerated in to a highly insular and corrupt feudal aristocracy punctuated by armed, roving wardlord bands and extreme religious groups declaring the nth coming of the lord... so you could look at it as an extended great depression for the average Joe, not really too far from more familiar experiences in America, without being too far off the mark. Much of China was something a lot more like poorer parts of like India a hundred years ago... people dying on the street.

>centralized governance with a capable medium term planning

Most people underestimate just how powerful a tool competent, forward-thinking government is, especially in the US, where it's thought government can do no right in many circles.

What China has accomplished in such a short period of time is truly amazing, I agree. And they aren't the only case: South Korea and Singapore are also good examples.

Yes, Australia (especially the current government) has a strong interest in coal though the site hosting that article is interested in renewables and thus a decline in coal power.

You can see how big an export coal is for Australia in this graphic here: http://upload.wikimedia.org/wikipedia/commons/1/12/Australia...

Our coal is primarily exported to Japan, China, Korea, India and Taiwan.

@contingencies, do you have more info on that solar tech story? Keen to read more. Sounds like a massive opportunity missed.

Investment decisions aren't as clear cut as the original commenter made it seem. The company was spectacularly successful at raising capital, became one of the lowest cost producers in the world, but still went bankrupt due to massive overcapacity in the market. Their strategy was to use economies of scale to manufacture a $5 product for $1. Unfortunately everyone else had the same idea, forcing a minor pivot: make something for $1, sell it for 80 cents, and hope the competition goes bankrupt first.

FWIW, I think the same thing happened with hard drive manufacturing 30 years ago.

http://www.themonthly.com.au/eric-knight-shi-zhengrong-sun-k...

http://en.wikipedia.org/wiki/Shi_Zhengrong

Thanks for the info and links.

Company must have been http://en.wikipedia.org/wiki/Suntech_Power I think.

Nice comment, but minor nit-pick:

If you hyphenate ethnic-Chinese, it looks less like a Chinese person who is also ethnic, which is how I first read your comment (which distracted me for a moment). The alternative would be to use an adverb, as in ethnically Chinese (describing 'is').

Or maybe Chinese economy is short of breath after years of debt stimuli.

Yep, because nothing good will ever come out of China. /s

Agreed. This is like a press release from the department of not-getting-the-joke.

It is known that China "misstates" GDP and a variety of economic metrics on a regular basis. Don't take my word for it - thank WikiLeaks:

http://www.reuters.com/article/2010/12/06/us-china-economy-w...

China's economy is slowing and the electricity consumption is the best un-manipulated evidence we have. As the above commenter references, this slowdown is likely the result of the credit spigot getting turned off.

Anecdotally, I have to be very cynical that an uptake in "green energy" technology is the cause. I live in Fuzhou and almost never see solar panels in use anywhere, and electric bikes are being replaced by cars owing to increasing wealth and government policies discouraging their use. China is investing in green technology so it can be no1 producer, not as no1 user.

Bizarre they bring up hydropower not accounting for it, but don't mention nuclear power at all. Where other countries ran from nuclear power, China embraces it: http://www.world-nuclear.org/info/Country-Profiles/Countries...

20 reactors now, 28 in construction, 58 by 2020, 150 by 2030. Seems like a poorly researched article.

Reading the article, it's interesting that it doesn't seem to match up well with the Economist article from last year: http://www.economist.com/news/briefing/21583245-china-worlds... TheEconomist seems to show CO2 (and coal consumption) tripling and rising steadily over a period where the article shows it slowing down in 2007-11. I don't know which is correct, but now I don't particularly trust either of these.

Do not underestimate advanced renewables in the medium to long term, but the only thing that can scale fast enough to displace coal in an energy market as gigantic as China is nuclear.

China might be able to simply import nuclear technology. But it is also possible that China's nuclear power program will fund the development of new safer, less-expensive reactor designs. That could help the world even more than cheap solar panels.

How trustworthy are the sources for these statistics? I don't know anything about how reliable numbers from the China National Coal Association are, but I was under the impression that data from the China National Bureau of Statistics should generally be treated as suspect. Is there a way to independently verify that consumption actually fell?

Using "this century" to describe the last fourteen years isn't incorrect, but sure feels a bit baitey.

There was a small dip in the mid 1990's, but this is indeed significant if true:

http://www.energytrendsinsider.com/wp-content/uploads/2013/0...

http://en.wikipedia.org/wiki/1997_Asian_financial_crisis

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