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China coal mine approvals surge despite climate pledges

Tue, 06th Aug 2019 06:39

* China approves 141 mln T of new capacity in H1 -govtdocuments

* That compares to 25 mln T in whole of 2018

* Coal production up 2.6% in first-half of 2019

* China energy targets allow up to 300 GW of new coal power

By David Stanway and Muyu Xu

SHANGHAI/BEIJING, Aug 6 (Reuters) - Approvals for new coalmine construction in China have surged in 2019, governmentdocuments showed, with Beijing expecting consumption of thecommodity to rise in the coming years even as it steps up itsfight against smog and greenhouse gas emissions.

Long-term cuts in coal consumption are a key part of China'senergy, environment and climate goals, but the fivefold increasein new mine approvals in the first-half of 2019 suggests China'stargets still provide ample room for shorter-term growth.

China's energy regulator gave the go-ahead to build 141million tonnes of new annual coal production capacity fromJanuary to June, compared to 25 million tonnes over the whole oflast year, Reuters analysis of approval documents showed.

The projects included new mines in the regions of InnerMongolia, Xinjiang, Shanxi and Shaanxi that are part of anational strategy to consolidate output at dedicated coalproduction "bases", as well as expansions of existingcollieries, the National Energy Administration (NEA) documentsshowed.

The NEA did not immediately respond to a request forcomment.

Beijing aims to raise the share of non-fossil fuels in itsoverall energy mix to 15% by the end of next year from around14.3% currently, and to 20% by 2030. It cut the share of coal to59% last year, down from 68.5% in 2012.

It has also promised to adopt the "highest possibleambition" when it reviews its climate change pledges next year,with one government think tank recommending China imposes amandatory cap on coal consumption in its 2021-2025 five-yearplan.

But while smog-prone regions like Hebei and Beijing havealready cut coal use and shut hundreds of small mines and powerplants, China is still allowing for significant increases incoal production and coal-fired power generation.

That has piled pressure on utilities to use clean combustiontechnology.

Lauri Myllyvirta, senior energy analyst with environmentalgroup Greenpeace, said many of the newly approved projects wouldlikely replace small or depleted old mines.

"However, it is alarming that China's energy planning seemsto be driving at roughly maintaining current levels of coaloutput for the coming decade or two, which is very hard toreconcile with the goal of the Paris agreement (on climatechange)," he said.

"Especially given that oil and gas consumption is stillincreasing, it's imperative that coal use starts falling againafter rebounding for the past three years."

Chinese coal output rose 2.6% in the first-half of 2019 to1.76 billion tonnes.

MORE TO COME?

Industry groups still expect coal-fired power capacity toincrease over the next few years, with investments in nuclearand renewables still insufficient to cover rising energy demand.

The research unit of the China State Grid Corporation lastmonth forecast that total coal-fired capacity would peak at1,230-1,350 gigawatts (GW), which would mean an increase ofabout 200-300 GW.

A study published earlier this year also suggested China'stargets would allow the construction of another 290 GW ofcoal-fired capacity in the coming years.

China is convinced it can continue to raise coal productionand consumption while significantly reducing emissions. It hasmade "ultra-low emissions" technology mandatory in all new coalpower plants an is also improving mine zoning regulations toensure pollution is minimised.

By the end of last year, 80% of total coal-fired powercapacity had installed "ultra-low emissions" equipment,amounting to 810 GW, the government said.

Michelle Manook, chief executive of the World CoalAssociation, an industry lobby group, told Reuters that coalremains a crucial element in the world's transition to cleanerenergy, and the focus should be on cutting emissions rather thanbanning coal entirely.

"It's not about transitioning away from any one source ofenergy. it's about transitioning to cleaner energy. And withinvestment, coal has a significant role," she said.(Additional reporting by Beijing and Shanghai newsrooms;Editing by Joseph Radford)

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