Peak coal in China last year?

From the Huff Post:

Good news! China’s coal consumption fell by 2.9 percent in 2014, the first drop in 14 years, according to official Chinese energy statistics released yesterday. Glen Peters of the Global Carbon Projectcalculates that China’s CO₂ emissions have also fallen, by 0.7 percent, for the first time this century. So contrary to grumbling in the U.S. Congress about the strength, or even existence, of China’s climate commitments, it’s clear that China’s efforts to cut its coal consumption and carbon emissions are not only real but already producing results.

There is a debate about whether this is the result of efficiency policy or economic slowing. Radio Free Asia has more:

China may have made a major breakthrough in its pattern of energy consumption last year, but questions about its slower-growing economy make it hard to tell.

In January, the National Bureau of Statistics (NBS) reported that China used 4.8 percent less energy to produce each unit of economic output in 2014, beating its annual efficiency target of 3.9 percent for the first time in years.

China’s struggle to cut “energy intensity” has been at the heart of its efforts to trim waste, curb pollution and reduce reliance on smokestack industries for economic growth.

Last April, a member of the National People’s Congress Standing Committee, Wang Qingxi, noted that despite the efficiency efforts, China still used one-fifth of the world’s energy while accounting for only 11 percent of its gross domestic product (GDP), the official Xinhua news agency said.

Although China has routinely lowered its energy use on a per-unit-of-GDP basis, its total consumption has grown along with economic expansion, adding to emissions and smog.

But while last year’s GDP grew at a 24-year low rate of 7.4 percent, energy intensity fell at the fastest estimated pace since 1999, suggesting a significant efficiency gain.

By comparison, the intensity index dipped by a more modest 3.7 percent in 2013 as GDP rose 7.7 percent.

Analysts have waited years for signs of “decoupling” in the Chinese economy that would break the near-lockstep link between growth in GDP and total energy demand.

…The IEA also estimated that oil demand increased only 2.5 percent last year.

Diesel use fell 0.7 percent, declining for the first time in over a decade, Wood Mackenzie said.

Coal production was down 2.5 percent in the first drop since 2000, according to the China National Coal Association.

Overall energy use rose by a mild 2.7 percent, a research arm of state-owned China National Petroleum Corp. (CNPC) said.

The numbers all appear to tell the story of less energy consumed in creating economic growth.

But the numbers could also be signs that GDP growth has been considerably weaker than official estimates indicate.

In that case, lower increases in energy use may be largely the result of a sharper-than-reported economic slowdown rather than a greater efficiency gain.

This debate is somewhat academic from my viewpoint. Given I see Chinese growth slowing much further in the next three years, peak coal is very likely to have both structural and cyclical drivers.

The latest thermal coal price is down a dollar or so to $65.90. I expect it fall into the $40s in the long term: