Coal is still king in China despite the renewables boom with record additions of solar and wind power generation.
Thermal power generation, which is overwhelmingly dominated by coal, rose by 1.5% in 2024 from a year earlier, to a
record high of 6.34 trillion kilowatt-hours (kWh), data from China’s National Bureau of Statistics showed. Growth in thermal power generation was the weakest in nearly a decade, excluding the pandemic years 2020-2022 when China was under lockdowns.
Nevertheless, coal consumption in the electricity sector continues to grow and so are China’s production and imports.
The persistent growth in Chinese coal demand, including for power generation, goes to show that coal remains the baseload of China’s power system to back up the
surge in renewables and will stay such for years to come as power demand jumps with the increasing electrification of homes and transport. The Chinese growth in coal consumption defies previous views that coal use is peaking in the world’s biggest consumer of the fossil fuel.
As China began installing record solar and wind capacity year after year over the past few years, forecasters, including the International Energy Agency (IEA), began projecting the beginning of the plateau of Chinese coal demand.
China’s capacity installations of
solar and wind power jumped last year as the country continued to lead in global additions and beat its own record of annual installations. Last year, China’s solar power generation capacity surged by 45.2%, while wind power generation capacity rose by 18% compared to 2023, data from the country’s National Energy Administration
showed this week. Soaring renewable power generation ate at the coal’s market share of total electricity output. Coal is estimated to have accounted for about 67% of Chinese power generation last year, down from 70% in the prior year, energy analyst John Kemp
notes. Renewables have started to replace a small part of coal-fired power generation, but during prolonged heat waves and at peak winter demand, it is coal that is keeping the lights and heating/cooling on in China.
The rising numbers of the middle class in cities boost electricity consumption, and so does industry, although at a slower pace due to the weaker Chinese economic growth in recent months.
Power consumption in primary industry rose by 6.3% last year from 2023, while residential electricity demand jumped by 10.6%, official data
showed. At peak demand periods and hours, coal provides security of power supply in China. Therefore, authorities are pushing for higher domestic coal production and are boosting imports, especially at the current low international seaborne prices.
In 2024, Chinese imports are estimated to have jumped by 14.4% from a year earlier
to a record high of 542.7 million tons. Analysts attributed the rise in Chinese coal imports to falling international seaborne coal prices, which opened up the import arbitrage to China. As China purchased record volumes of coal overall in 2024, it
widened its lead over the second-largest buyer, India, to the highest in more than a decade. This year, China’s coal demand and production are expected
to continue rising , and the fuel is set to remain the backbone of the country’s energy system, according to China Coal Transportation and Distribution Association. Chinese coal production is forecast to increase by about 1.5% this year from 2024, for the ninth straight annual rise, the association said at a briefing earlier this month, as quoted by
Bloomberg. At the same time, coal demand is also set to rise, by around 1%, according to the main coal industry group in the world’s largest coal consumer. The power sector and higher demand from the chemicals industry will push up coal demand this year, the association said.
China’s coal demand trends will ultimately determine global coal consumption levels in the near term, after another record high in global demand in 2024, the IEA
says.