China: The Coal Monster
In 2012 China consumed 50.4% of all coal produced on Earth. Most, but not all of that coal was produced in China, mainly from deep underground mines. Like Europe and the USA before it, China’s industrial revolution has been founded on coal that accounts for 68% of all energy consumed.
- In the 1980s, China exported both oil and coal and continued to export coal until as recently as 2009. But the country now imports oil, coal and natural gas in exponentially growing quantities. In 2012 energy imports accounted for 14% of energy consumption. This ever-growing participation in global energy markets is likely to resume upwards pressure on global energy prices.
- China has significant oil production of 4.2 million barrels per day (mbpd) but consumption is running at 10.6 mbpd, hence the country has significant oil imports. Gas production is well below what may be expected from the oil production data and gas consumption runs at only 5% of the total. Nor does China have a mature nuclear industry with nuclear power accounting for only 1% of primary energy consumption. Recently expanded hydro accounts for 7%. We have been told that China is embracing the new renewables revolution which now accounts for an astonishing 1% of all energy consumed!
Figure 1 Since 1993, China’s energy balance has plunged into the red. Energy imports of 386 million tonnes oil equivalent per year (mtoe/y) in 2012 is roughly equivalent to 2.8 million barrels oil equivalent per day. Note how imports of coal and natural gas have begun to increase. China’s exports of manufactured goods means that it can easily pay for these energy imports.
All of the energy statistics reported here are drawn from the 2013 BP statistical review of world energy . The economic and population data are drawn from the United Nations National Accounts Main Aggregates Database  and World Bank . All data sources are referenced on charts.
Energy Production and Consumption
Figure 2 China’s main indigenous energy resource is coal and it is therefore no surprise that coal dominates China’s energy production and consumption. The low levels of nuclear and gas production are a surprise. New renewables remain irrelevant although it needs to be noted that China has developed significant hydro electric power and with a state organised electricity supply system, the country could potentially balance significant wind and solar off hydro.
Dave Rutledge once told me that China’s coal resources were “all over the map”. By that he meant there is no single geological formation or area where coal is mined. China seems to have been covered by coal swamps for extensive periods throughout geological time. A surprising feature of Chinese coal mining is that most of it takes place in deep underground mines. Millions of miners have been killed but safety standards are now much improved.
Economic growth in China has been in lock step with coal production of roughly 10% per annum. I have for a long time been expecting coal production to lag economic growth and that this lag may subsequently become a drag. The switch to coal imports is the first sign of this happening and when Chinese energy imports once again hit global energy prices this will create a drag on the global economy and China.