Decline of the coal industry in China: who is the next giant?

Analysts all over the world are predicting the end of the «Golden Age» of Chinese coal production. Experts of the International Energy Agency (IEA) noted that the consumption of raw materials in China reached a peak in the year of 2013. At the end of the thirteenth five-year plan (2010-2015) Beijing launched a new five-year plan for economic and social development. According to the final version of it, which was dated November 3, 2015, the transition to renewable energy turned to be one of the priority issues. President Xi Jinping has announced plans to implement the Cap-and-Trade system, which involves the establishment of maximum rates on CO2 emissions, the promotion of «clean» industries whose emissions are within acceptable values, as well as fines for the «dirty» businesses. The implementation will be completed in the year of 2017. Within the framework of a new environmental policy on January 18, 2016 Beijing has decided to suspend the issue of permits for the development of new coal deposits for three years. Against the background of low demand from Chinese end-manufacturers and the weak performance of coal on the world stage due to a serious crisis of overproduction raw materials quotes are steadily falling. Under these conditions non-competitive producers are living the market, while others, with lower break-even prices, significantly reducing staff. Because of the need to follow the new environmental standards, Beijing is looking for new opportunities for the development of the coal sector outside the country, particularly in Pakistan. According to the information provided by the Climate Home, Chinese banks and state-run companies like Power Construction Corp of China Ltd will finance two separate coal-fired power projects in Pakistan - 660 megawatts Thar coal project and 1,320 megawatts projects near Pakistan’s port city Karachi - worth US$4.15 billion. These projects are part of a broad bilateral deal called as China-Pak Economic Corridor under which the Chinese government and banks will finance Chinese companies to invest $45.6 billion worth of energy and infrastructure projects in Pakistan over the next six years. The abovementioned agreement will help Pakistan to overcome the electricity crisis which rises to 6,000 megawatts in summer. China will get the opportunity to develop the coal sector on the territory of the partner country. Analysts predict that in the long term, India will become the leading producer and net exporter of coal in the world.