The Chinese government has announced to local coal mines that they must maintain their production at a steady level. This request came after thermal coal prices in the spot market increased to their highest level in the past three years.
Impact of Rising Coal Prices on Energy
According to reports, thermal coal prices surged earlier this month, putting significant pressure on the Beijing government to take action. Despite a decrease in the share of coal in China's energy mix, this fuel remains highly significant, accounting for 49.7 percent of electricity generation in the first half of this year. This is the first time that coal has constituted less than 50 percent of China's total electricity production.
New Trends in Energy Production
This decrease in coal's share is due to the growth in the installation of wind and solar power plants, in which China is significantly leading. However, even as a leader in renewable energy investment, China is not able to consistently supply wind and solar energy on demand, which is why it remains dependent on coal. China's goal is for clean energy to account for 30 percent of its electricity generation by 2030, up from about 22 percent currently.
According to analysts, coal will remain a key resource in China's energy mix, and with a high number of new coal power plants approved and some under construction, this situation will continue. This makes China vulnerable to fluctuations in thermal coal prices, which are used for electricity generation, necessitating action when these fluctuations occur.
The recent price increases have led to a 1.5 percent decrease in coal imports in August, while experiencing double-digit growth in the two months prior. These changes clearly reflect China's dependence on coal and the impact of price fluctuations on the country's economy.
