China
tries to ditch its coal addiction, reduce energy
intensity
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[March 05, 2015]
By Chen Aizhu, Dominique Patton and Kathy Chen
BEIJING (Reuters) - China will boost
efforts this year to rid itself of a strong addiction to coal in a bid
to reduce damaging pollution as well as cut the energy intensity of its
economy, which is expected to grow at its lowest rate in 25 years.
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The National Development and Reform Commission (NDRC) said in its
annual report on Thursday that it would implement policies aimed at
reducing coal consumption and controlling the number of
energy-intensive projects in polluted regions.
China is trying to strike a balance between improving its
environment and restructuring away from an economy dominated by
energy intensive industries like steel making and construction
towards one focused more on consumption and the service sector.
China's Premier Li Keqiang said the government planned to cut the
country's energy intensity, the amount of energy used per unit of
GDP growth, by 3.1 percent in 2015, compared with a 4.8 percent fall
in 2014.
Li said the world's second-largest economy would target growth this
year of around 7 percent, signaling the lowest expansion for a
quarter of a century.
"This mark-down in growth and three quick monetary stimulus programs
across the last four months reflects the state of slowdown China is
in," said Howie Lee, analyst at Singapore-based brokerage Phillip
Futures.
Premier Li made fighting pollution a priority. "We will strive for
zero-growth in the consumption of coal in key areas of the country,"
he said to parliament.
"Environmental pollution is a blight on people's quality of life and
a trouble that weighs on their hearts," Li said.
"For areas affected by severe smog, regions where conserving energy
is difficult, and industries with overcapacity, we will strictly
control the number of energy-intensive projects and implement
policies for reducing coal use, and for replacing coal with
alternative energy sources," the report said.
China's top energy official, Nur Bekri, said in comments published
by the National Energy Administration that improving efficiency and
environmental standards for coal would be a key component of China's
energy policy this year.
He said the country would aim to raise wind power capacity to 200
gigawatts (GW) and solar to around 100 GW by 2020, up from 95.8 GW
and 26.5 GW respectively at the end of 2014.
China is also aiming to raise natural gas output to more than 245
billion cubic meters a year by 2020, up from 161.6 bcm in 2013.
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China plans to cap coal use to below 65 percent of total primary
energy consumption by 2017 and move towards 50 percent by the middle
of the century. The government wants natural gas and renewables to
take up most of share lost by coal.
PRICE IMPACT
As the world's biggest consumer of energy and raw materials, China's
slowing growth and restructuring is having a big impact on
commodities markets.
Brent crude oil prices have fallen by around 50 percent since June
2014 as rising global production clashes with slowing economies,
especially in Asia, as well as improving energy efficiency.
Iron ore prices, used for steel making, are hovering close to levels
last seen during the financial crisis in 2008/2009, and thermal
coal, the main power generation fuel, is close to 10-year lows.
Almost 70 percent of China's total energy needs currently come from
coal, compared with developed economies like the United States,
Japan or Germany, where oil is the biggest energy source. In China,
oil contributes less than 20 percent.
Both are seen as dirty compared with gas, the third most used fossil
fuel, or alternative fuels such as nuclear power or renewables.
(Writing by David Stanway and Henning Gloystein; Editing by Tom
Hogue and Richard Pullin)
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