China’s growing demand for power means that coal will remain an important source of fuel for many years to come. Although coal’s share in power is expected to gradually fall as the government’s desire to shift to gas increases. However, soaring gas import prices and insufficient infrastructure, according to CRU, are limiting the extent to which gas can replace coal in the medium term.
In early 2016, China ratified its 13th five-year plan. It included more stringent environmental policies designed to reduce air pollution by promoting the use of natural gas. Power demand in China has been rising rapidly. During the first five months of 2018, power demand grew by 8.5%, up from 6% in 2017. CRU attributes this rise to the growing demand for power from the residential sector, which increased by 13% yoy since the start of 2017. They also believe that improving environmental efficiencies has forced industry to become more power intensive to meet specific requirements. As such, CRU said it expects total power generation to continue to rise at a similar rate, with coal power generation also increasing from current levels. However, its share in the power mix is expected to fall over time.