When the largest coal producer in China puts out the kind of numbers China Shenhua Energy Co. has recently reported, it’s an unmistakable signal that the most populous country on the planet is continuing to step back from coal.
That’s according to the Institute for Energy Economics and Financial Analysis (IEEFA), having ran the rule over the company’s 2014 results and 2015 business targets.
The numbers reveal a strategic shift by Shenhua as it reduces its volumes, its operating costs and its capital spending, IEEFA says, and the 2015 numbers in particular signal an acceleration in this strategy.
The company sees a 10% drop in its domestic coal sales in 2015 (a 47 million tonne reduction), 2015 capital expenditure plans for coal and power generation down 25% over 2014, and expects its ports and rail investment to drop 12% year-over-year.
For IEEFA, these trends are bigger than Shenhua. The company has a 15% share of the Chinese coal market and is, therefore, a key barometer of the larger picture – its cutbacks send a clear signal that China is intent on curbing its emissions by a rapid diversification away from coal.
Coal and China
Coal had certainly been in demand in recent years, as gasworld had previously discussed in features exploring the growing coal-to-liquids (CTL) in China.
In 2011, coal was the fastest-growing form of energy outside renewables (World Coal Association) and almost half of the world’s additional energy demand over the past 10 years was provided by coal, largely driven by Asian demand and the regional abundance of the fuel. In the same timeframe, most of the coal-fired power plants were built in China.
The industrial gases industry has benefited from various coal gasification projects in China in recent years, with several plants coming on-stream in the country in the coming years. Examples include six major air separation units (ASUs) that The Linde Group will make operational this year under contracts with businesses of the Shenhua Group, and Air Liquide’s complex of eight units – including an ASU of 2,000 tonnes of oxygen per day – to be commissioned at the beginning of 2016 in South-East of China.