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Predicting China's peak coal demand and response (No 138, 2014)


By China gas clean energy development prospects and policy outlook group, compiled by Li Weiming, Research Institute of Resource and Environment Policies, Development Research Center of the State Council (DRC)

Report No 138, 2014 (Total 4637)


In view of the fact that the resource and environment situation is increasingly serious, there is good reason to try to predict China's peak coal demand and do related planning in advance, which would benefit coal consumption controls and the coal industry development.

This research uses data from the post-reform-and-opening-up period (1978-2013) to build a co-integration model (CM), an error correction model (ECM), and a vector error correction model (VECM), based on econometric theories. The error correction model was found to have better performance and better fit, so the research does a prediction and analysis of China's coal demand peak with the result showing that the peak could appear in 2020, at 4.5 billion tons. Before 2020, average annual growth of coal demand will stay at 3.9 percent, and start dropping by 0.76 percent annually after 2020. Demand will drop to 4.2 billion tons, by 2030. The government needs to plan in advance, to promote the transformation and upgrade of the coal industry and its sustainable development.