Coal supply challenges for China
AUTHOR: Andrew Minchener
DATE: September 2007
This report examines the production, transportation and subsequent use of coal in China, with emphasis on the power sector since the ever-growing industrialisation of the country is dependent on the rising demand for electricity being met. Coal continues to dominate the energy mix, but it is proving difficult to supply enough coal to the end users due to production and transport infrastructure problems, with coal increasingly being mined in regions far away from the industrial centres of Southern and Eastern China.While coal production has more than doubled in the last six years, it has still not been possible to fully meet demand, in part due to transport bottlenecks.
Although these problems have eased recently, the weaknesses inherent within the Chinese macro-control system for energy production and utilisation mean that the fundamental problems remain. There are also potential adverse knock-on effects to other economies in the Asian-Pacific region. The Chinese State Government has started to implement a series of policy, institutional and regulatory initiatives, to correct the imbalances within the coal production and supply chain. It remains to be seen whether these initiatives will be successful.