China is on track to meet its target to cut coal production capacity this year－and would likely top the goal－with further reductions expected in the second half, according to a leading expert on the sector.
“By the end of April, China had cut its coal capacity by 68.97 million metric tons, meeting 46 percent of this year’s target,” said Wu Lixin, deputy director of the strategic planning research department at the China Coal Research Institute.
Speaking at a workshop hosted by the institute on coal industry reform in Beijing on July 13, Wu said that cutting overcapacity remained one of the core issues for the industry, as well as the increasing debt of coal enterprises, high tax and transportation costs, and the lack of a scientific management system to analyze and synthesize workflows to improve economic efficiency.
She suggested that the coal industry should focus on closing mines with annual production capacity below 300,000 tons to reduce accidents due to unsafe work conditions, eliminate outdated technology and equipment, and prevent resource depletion and non-compliance with industry policies.
Early this year, detailed plans were released by State-owned central enterprises to cut coal overcapacity by 24.73 million tons.
China Huaneng Group pledged to cut 9.14 million tons of coal production capacity annually by the end of 2018, while dealing with 16 of its “zombie companies”－commercially unviable businesses that only survive because of financing from the government and banks.
China Poly Group Corp, a State-run conglomerate, has also promised to close inefficient coal mines and reorganize 39 of its zombie companies to improve profits in three years.
“While phasing out backward coal capacity, it is also important to promote high-quality coal production capacity”, said Wu, who defined this as safe, high-efficiency and green coal capacity.
“China needs high-quality coal for its economic growth and the coming electricity peak season in the summer,” Wu said.
Green coal capacity cooperation with economies participating in the Belt and Road Initiative has also been highlighted in the industry’s reform plans.
A green coal capacity cooperation index was proposed at the workshop, which included subindices on resource saving, energy conservation, production safety, environmental protection, and ecological restoration and treatment.
Wu said this index system would be transparent and dynamic and economies involved in the Belt and Road could make adjustments based on their national conditions and resource conditions.
Guo Zhonghua, vice-director of the Policy Studies Department of the China National Coal Association, said it is the first quantitative index system on green coal capacity cooperation put forward by China.
“We should accelerate its implementation in China and make it an international standard through the Belt and Road Initiative,” Guo added.