How China, Not Obama, Waged The War On Coal

Global coal production is down record amounts thanks largely to China, BP's chief economist said Thursday, and coal's probably not coming back.
"I think we are seeing a significant and decisive shift in coal, a break from the past in terms of coal," said BP Group Chief Economist Spencer Dale at a Washington D.C. forum sponsored by the Atlantic Council on Global Affairs.
"Many of the factors driving that—the key, the heart of that shift—are structural, long-term factors: the growing competitiveness of natural gas and renewable energy combined with mounting government and societal pressure to move towards cleaner, lower-carbon fuels."
That pressure has been strongest in China, he said. Chinese coal production has declined for three consecutive years, coinciding with the slowing of industrial growth, but according to BP's Statistical Review of World Energy 2017, released this week, it has never declined more than it did in 2016. At the beginning of 2016 China enacted a series of policies designed to reduce a supply glut, including closing 1,000 mines and restricting mining days to improve the profitability of the ones that remained open.
"The impact of these measures was really stark," Dale said, calling it a "magnificent policy."
"Coal production in China fell dramatically, by far the biggest fall we've ever seen in coal production in China. And coal prices increased very sharply as production was pulled off, increasing by more than 60 percent during the course of 2016."
Those higher prices not only crushed coal consumption in China, they affected coal consumption worldwide.
"The nature of the global coal markets meant that global prices then took their cue from what was happening in China," Dale said, "with coal prices around the world all following a similar trend. And that fed through to squeezing coal demand around the world, where we saw the second consecutive fall in global coal production and the largest ever fall in our records in terms of global coal production."
While China's policy may be temporary, coal is unlikely to recover from it because of the long-term changes that are happening simultaneously, such as declines in the cost of natural gas and renewables and the growing preference for renewables in developing countries such as India.
China still consumes a lot of coal. About two thirds of its energy is coal fired, though it plans to push that number below 50 percent over the next 20 years. So the effect of China's war on coal can often be observed more clearly in other countries.
In the United Kingdom, for example, the last three coal mines closed in 2016, consumption dropped to levels last seen 200 years ago at the start of the industrial revolution, Dale said, and this April the UK power sector celebrated its first coal-free day.
"It's sort of an end of an era for coal in the UK," Dale said.
Watch Spencer Dale's U.S. Launch of the BP Statistical Review of World Energy 2017 at the Atlantic Council:

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