BEIJING, June 4 (UPI) -- China's thermal coal demand is expected to double by 2030, says a new report.
Wood Mackenzie, in its "'China: The Illusion of Peak Coal," report notes even though China aims to limit its coal consumption and seeks alternative fuel options, its industrial demand for thermal coal is expected to grow from 1.5 billion to nearly 2.1 billion tons annually by 2030.
"It is very unlikely that demand for thermal coal in China will peak before 2030," said William Durbin, Wood Mackenzie's Beijing-based President of Global Markets in a statement Tuesday. He noted the government's investment in nuclear, natural gas and renewables is focused on the coastal region while coal-fired capacity continues to grow in the central and western provinces.
"Indeed, there are also a plethora of coal-intensive conversion projects being built or planned that are significantly adding to demand," Durbin said.
Durbin added if Beijing imposes a cap on coal consumption, "it will come at a cost to provincial economies."
In 2012, China imported 290 million tons of coal, a 59 percent increase year-on-year, data from China's General Administration of Customs shows.
Although Chinese coal-fired power generators are benefiting from cheaper imported coal, the domestic coal sector is grappling with overcapacity, weak demand and a slump in profits.
The Wood Mackenzie report comes as Beijing considers tightening its coal import standards.
In a move thought to be driven by pollution concerns, China's National Energy Administration released draft regulations to the domestic coal sector last month that would ban the import and domestic delivery of poor-quality thermal coal, with a net calorific value of 4,540 kilocalories per kilogram or less, Platts has reported.
But some analysts say any such policies would not help China's struggling coal production sector.
"The overcapacity in the domestic market cannot be eased by limiting these imports because the new rules will stop the import of inferior coal, not that of good-quality coal at better prices," Liu Dongna, an analyst at Sublime China Information Co. Ltd., a commodities consulting firm in Shandong province, told China Daily.
Last year, China imported 90 million tons of thermal coal from Indonesia, accounting for nearly 30 percent of Indonesia's coal exports. Half of the 90 million tons was for lower-rank coal.
In response to any possible Chinese ban on the lower-grade coal, Indonesian Energy and Mineral Resources Minister Jero Wacik said Monday the government would increase coal exports to other countries, look for new markets and encourage domestic consumption, the Jakarta Post reported.