Chinese Coal & US-China Coal Trade

Kevin Jianjun Tu, Senior AssociateCarnegie Endowment for International Peace

The Energy Bar Association & Asian Americans in Energy, the Environment, and Commerce

Washington DC

May 13th, 2013

Drivers Underlying Global Energy Trend

Source: BP World Statistical Review 2012, NBS, U.S. Census Bureau.

70%

30% 23%

4.0%

24% 27%

0.7% 5.2% 8.4%

18% 34% 37%

Category Absolute Per capitaCoal 3.66 0.85Oil 0.55 0.13Gas 0.19 0.04Nuclear 0.10 0.02Hydro 2.11 0.49Renewables 0.39 0.09Energy 1.15 0.27CO2 1.49 0.35

China/U.S. in 2011

China: a Hybrid Economy at Crossroad

Source: World Bank, IEA, own estimation

Concern of Energy Security

Source: China Customs.

Dependency on Foreign Oil: China vs. US

Source: NBS, US EIA.

CNOOCUnocal (2005)

CNOOCNexen (2012)

China U.S.

Source: US EIA, NBS, ERI, IEA, own estimation.

Environmental Constraints

68%

64%

64%

24%

13%

19%

17%22%10%

Gt of CO2 Emissions

7

Chinese Coal Value Chain

• 2nd largest coal reserves behind U.S.

• Distribution of coal resources

• Lack of coking coal

• Quality deterioration of thermal coal

Coal Production Coal TransportCoal Resources Coal Use• 46% of global total• 80% global

fatalities in early 2000s

• Half by key SOEs, 1/3 by private mines

• Half by ultra-small mines in 1995 -> minimal

• 47%of global total• half Chinese coal

used for power generation, 9% for iron & steel, 7% for non-metal minerals, 5% for coal chemicals

• National coal consumption cap

• 48% of national coal output was shipped by rail

• 36% by major coastal ports

• 15% by inland• Integrated

railway + coastal marine transport

• Bottlenecks

Coal Exports Peaked in 2003

China encouraged

coal exports

Source: NBS and China Customs.

Chinese Coal Imports/Exports Global coal trade is about

one third of China’s domestic coal market.

China became a net coal importer in 2009.

China passed Japan as the world’s largest coal importer in 2011.

China’s coal imports in 2012 up 58%, reaching 289Mt.

Source: China Customs.

China’s Coal Imports by Country

Mt

At least 6 coal export facilities proposed along the West Coast with aggregate capacity at >120 Mt/annum

Source: Energy Review.

Sources of China’s Gas Supply

bcm • Can conventional fields deliver as expected?

• Problem with CBM development. • Is coal-to-gas compatible with

China’s conservation goals?• Can shale gas be kicked off?• Can pipeline gas deal with Russia

overcome pricing dispute?• Is U.S. a potential LNG supplier?

Thank You !