Growing Chinese coal use: Dramatic resource and environmental implications

Chinese coal consumption continues to rise as the countryʹs economy and industry expand. Coal is particularly critical for Chinaʹs fast-growing power sector, generating about 80% of electricity output. Notwithstanding the importance of coal and electricity, many international forecasts today underestimate their rising use in China. This paper acknowledges the current world financial crisis and assumes that Chinese GDP growth to 2025 will not again approach double-digit levels. Using the scenario analysis, this paper demonstrates that even with conservative assumptions about Chinese GDP growth and income elasticity of electric demand to 2025, the country will likely experience much higher coal demand and emit much greater volumes of carbon dioxide than forecast by various international energy agencies. The paper also analyzes how Chinaʹs domestic coal reserves may be threatened within two decades, possibly affecting long-term economic growth in China, as well as world coal prices.