The end of king coal?

As delegates prepare to leave these halls, many may be feeling that there’s only been a lot of talk. ECO turns its eyes back to the real world—and sees actions that offer a glimmer of hope. China’s “war against pollution” may be one of those, with Chinese President Xi urging an“Energy Revolution”. It’s signs that China’s transition away from dirty coal is gaining momentum. For the first three quarters in 2014, both production and consumption of coal in China have decreased by over 1% compared to last year, pushing down the price of coal to its lowest level in many years (due to a lack of demand). As a result, the coal industry, often referred to as “King Coal”, is suffering from huge profit loss and ominous future prospects.

China’s coal use was booming until 2012. Now, a potential coal peak is seen as possible in the coming years. Cement, iron and steel production could also peak by 2020. ECO hardly needs to point out how significant such a shift would be to the global effort to limit carbon emissions.

The main driver of these developments is China’s economic restructuring efforts. However, there have also been recent environmental and low-carbon policies that may lead to a sustained transition and enable a more appropriate and strong price signal to the market. Such policies include resource taxation reform, a renewed tariff on coal imports, and efforts to address air pollution. If such efforts are maintained with strong political support, they could hedge against potential market fluctuation and renewed coal growth in the future, and stimulate faster growth in renewable energy and energy efficiency solutions to climate change.

If this continues, these recent developments could put China below previously assumed emission trajectories. Perhaps on the road to Paris, we might hear ambitious statements relating to regional emission peaks from Chinese delegates?

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