HAS CHINA GOT A COAL PROBLEM?
This has nothing to do with emissions (the Chinese are using the ESG bullshit to laugh at their enemies causing their own demise. I assure you, they don’t care). Rather, it’s China’s dependency on coal as some 64% of their electricity comes from coal.
China produces (from domestic sources) about 85% of the coal it consumes (granted, this includes both coking and thermal coal).
With respect to coal, China has two big problems, and few appreciate the magnitude of the problems.
Firstly, China only has 35 years of coal reserves at today’s consumption levels, and secondly, the grade of those reserves is deteriorating. In other words, it is taking more coal to produce the same amount of heat.
Keep in mind our discussion last week where China wants to increase coal-fired power stations by 20-30% over the next 10 years (something like that). So where is all this coal going to come from if the volume and quality of China’s reserves are deteriorating?
This Bloomberg article highlights the deterioration in China’s coal grades.
From the article:
China’s coal imports, including low-grade lignite, climbed to an all-time high of 44 million tons in August, while domestic production of 382 million tons was also a record for the time of year. Imports over the first eight months have nearly doubled to 306 million tons, more than the country usually takes in a whole year.
The increases in supply come as the government seeks to avoid the power shortages that have crippled the economy in recent years. China’s rush to extract more coal has also degraded the quality of its domestic output so that more fuel is needed to generate the same amount of heat.
When energy security is discussed, few pay second thought to coal (particularly in light of today’s climate change ideology). China is going to have to source an increasing amount of coal from other countries, and there is only a few they can source it from (unlike oil).