COAL use in China could peak earlier than previously forecast as slower economic growth cuts power demand and the government clamps down on energy-intensive industries to meet its emissions reduction goals.

    Organizations such as the government-affiliated Energy Research Institute (ERI) and the U.S.-based Natural Resources Defense Council (NRDC) are predicting coal use will peak before 2020. Previous industry forecasts have ranged from 2022 to 2027.

    As well as hitting domestic miners, a quicker shift away from coal will also threaten sales by Australia and Russia — among the top coal exporters into China.

    Citigroup, which cut its forecast for Chinese “peak coal” to 2020 last year, has also said China’s fight against pollution, together with efforts to improve energy efficiency and restructure its economy, could bring the date further forward.

    “We expect this combination of factors to actually slow the power sector’s use of coal, leading to a possible flattening and peaking before 2020,” Michael Eckhart, Citi’s global head of environmental finance, told a conference in Beijing this month.

    China has said it aims to restrict consumption to around 4.2 billion tons by 2020, up about 10 percent from 3.8 billion tons in 2013, but some government researchers, including ERI’s Jiang Kejun, predict it could start falling much sooner.

    After years of blistering growth, coal use is already being slashed in smog-hit regions like Beijing and Hebei as part of China’s “war on pollution,” and action is also being taken to consolidate or shut smaller mines.

    China mines most of its own coal and the earlier target will likely increase pressure to tackle chronic overcapacity.

    Coal production in the first three quarters of 2014 fell for the first time since the Asian financial crisis, declining 1.3 percent to 2.85 billion tons.

    Coal accounts for about 60 percent of China’s CO2 pollution and the government has pledged to bring emissions to a peak and double the share of zero-carbon sources in its energy mix to 20 percent by “around” 2030.

    Xie Zhenhua, vice chairman of China’s National Development and Reform Commission (NDRC), responsible for climate policies, promised strong measures to tackle coal, adding that consumption “should fall gradually.”

    China is already seeing signs of a peak in some energy-intensive industries. Top steelmaker Baoshan Iron and Steel Group expects crude steel production — which requires huge amounts of coking coal and thermal power — to peak in 2018 at around 850 million tons and then taper off to around 700-800 million tons.

    (SD-Agencies)