China is entering the peak coal consumption phase during the fifth development plan (2026-2030). According to a new report released by the China Electric Power Planning and Engineering Institute, this shift is occurring due to advancements in green energy and fundamental changes in the country's economy.
Coal Consumption Trends in the Fourth Development Plan
During the fourth development plan (2021-2025), coal consumption in China was 4.76 billion tons, which was only a 0.1% increase compared to the previous year. With this weak growth, the share of coal in China's primary energy consumption mix decreased to 51.4%, indicating a 1.8% reduction compared to the previous year.
During the fifth development plan, China is rapidly building a new energy system that includes the clean and efficient use of coal. This program involves upgrading traditional industries and replacing scattered low-quality coals used in the residential sector.
Declining Demand in Industrial Sectors
According to the report, by 2025, coal-fired electricity generation, which accounts for about 63% of coal consumption, is expected to decrease by 1.9%, leading to a 2% reduction in demand for thermal coal. Additionally, the steel and construction materials sectors, which account for 15% and 6% of coal consumption respectively, also experienced declines. Crude steel production fell by 4.4%, and cement and flat glass production decreased by 6.9% and 3%, respectively.
In contrast, the coal chemical sector remains strong. Due to high operational loads in new coal chemical facilities and robust production of key chemical products, demand in this sector increased by more than 10%, which is a higher growth rate than in 2024. The chemical sector currently accounts for about 9% of total coal consumption in China.
Structural changes in coal-fired electricity generation in China are moving towards a supportive and flexible source. Leo Zhiqiang, deputy director of the Planning and Development Department of the China Electricity Council, stated that coal-fired power plants must gradually give way to renewable energy sources as their annual usage hours decrease. However, their role in maintaining grid stability remains crucial.
Leo also warned that although renewable energy capacity has reached its peak, installed capacity does not necessarily equate to actual energy production. Due to fluctuations and fewer operating hours of solar energy compared to fossil fuels, coal will continue to serve as a cornerstone for ensuring reliable operation of the national grid in the short term.
The institute noted that the absolute volume of coal consumed has continued to increase over the past five years, with total coal consumption rising from 4.05 billion tons to 4.76 billion tons. This indicates the sustainable yet transitioning role of coal in ensuring national energy security, even as its share of the overall energy mix steadily declines.
