* China could cut coal consumption in Beijing, Hebei by 100
* Steel and other industrial expansions banned in major
* Measuring and monitoring could be major challenge
By David Stanway
BEIJING, June 6 China is considering plans to
cut coal consumption in some major industrial regions, people
familiar with the policy said, as part of measures to reduce air
pollution - an issue that has triggered a surge in public
In a plan to be released this month, China may set a target
to reduce coal use in a heavily polluted region in the north
spanning Beijing, Hebei and Tianjin by a combined 100 million
tonnes a year by 2015, said a person who has been involved in
the policy discussions. That region consumed an estimated 375
million tonnes of coal last year, around a tenth of the national
total, with Hebei province, China's main steel producer, alone
responsible for about 300 million tonnes.
Tackling a dependence on coal - a major cause of smog and
acid rain - though, will test China's resolve to clean up its
air, water and soil after decades of rapid industrial growth.
Previous attempts by Beijing to rein in its industrial
polluters have not always succeeded, with growth-obsessed local
governments often turning a blind eye to violations. Fierce
lobbying by powerful state-owned utilities also appears to have
put paid to a recent plan to raise national coal standards and
ban low-grade imports.
Jiang Kejun, a senior researcher at the Energy Research
Institute, a think-tank run by the National Development and
Reform Commission, said precise targets were still being
debated, but a decision was expected soon. "These targets should
be included in the plan, but we are actually still in the
process of setting the precise numbers - it isn't a particularly
easy thing to do," said Jiang, who is involved in drawing up the
China was previously committed to slowing the rate of coal
consumption growth, but recent pollution scares appear to have
increased its resolve to tackle problems caused by excessive
In January, thick, hazardous smog shrouded Beijing and other
industrialised northern Chinese cities for more than a week,
with many blaming excessive coal-burning by power plants, steel
mills and other industrial facilities.
STEEL CAPACITY CURBS
The new pollution plan is also expected to ban capacity
expansions in steel and other polluting industries in major
cities, and force firms to run emissions control equipment.
Companies that fail to comply face higher power prices and the
threat of having their power and water supplies cut off,
officials familiar with the policy told Reuters last week.
China has sought to use the growing public clamour against
air pollution to get tough on high-polluting, high-energy
consuming industries like steel, cement and aluminium, which
have been sapped by crippling levels of overcapacity.
Local industry is responsible for 49 percent of Beijing's
pollutant emissions, vehicles 22 percent, and drift from
surrounding provinces, including Hebei, 24.5 percent, according
to a 2011 study. Coal-burning makes up more than 90 percent of
sulphur dioxide emissions.
China is also looking to reduce coal consumption in the big
manufacturing regions of the Pearl River and Yangtze River
deltas by 50 million tonnes each - though analysts say those
figures are unlikely to be enough to change China's overall
energy consumption patterns.
"Those are relatively small numbers in the grand scheme of
things," said Bill Durbin, analyst at consultancy Wood Mackenzie
in Beijing. "We're looking at total coal consumption of nearly 4
billion tonnes and expect to see that rise, simply because there
is a lack of alternatives for baseload power generation,
particularly as you move to the central and western regions."
Last October, in its 5-year plan on air pollution, China
identified the Beijing-Tianjin-Hebei region and the Pearl and
Yangtze river deltas as "pilot zones" to control coal
It also said China would seek to reduce the share of coal in
the national energy mix by promoting renewables and building new
gas storage facilities in key cities. Around half of China's
total energy comes from coal, far more than anywhere else in the
China has already said it aims to keep national coal
production capacity to within 4.1 billion tonnes by 2015, up
from 3.24 billion tonnes in 2010.
According to the China Coal Industry Association, China's
total consumption is still likely to hit 5 billion tonnes by
2020. Wood Mackenzie, in a report published on Tuesday, said
China's coal demand would double to 7 billion tonnes by 2030.
"If they cap coal consumption then they will have to raise
investment in natural gas, but we're not seeing enough
investment that would allow gas to displace coal," said Durbin.
The lack of reliable data is likely to make coal cuts
difficult. In Hebei, unregulated private steel mills with a
history of underreporting output use large amounts of coal.
Monitoring nationally will be an even bigger challenge.
Last year's 5-year plan said special emissions restrictions
would be imposed in 47 big cities, banning capacity growth in
thermal power, steel, construction materials, coking,
non-ferrous metals and chemicals.
(Editing by Tom Hogue and Ian Geoghegan)