Energy Policy ] (]]]]) ]]]–]]]

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Energy Policy
journal homepage: www.elsevier.com/locate/enpol

An analysis of China’s coal supply and its impact on China’s future

economic growth
Jianliang Wang a,n, Lianyong Feng a, Gail E. Tverberg b
a
School of Business Administration, China University of Petroleum, Beijing 102249, China
b
The Oil Drum, 1246 Shiloh Trail East NW, Kennesaw, GA 30144, USA

H I G H L I G H T S

c We analyze an issue of prime importance for the future of China’s economy.

c The decline in coal supply will present a challenge to China’s economic growth.
c Rising coal price will also have an adverse impact on economic growth.

a r t i c l e i n f o abstract

Article history: Many people believe that China’s economic growth can continue almost indefinitely. For a manufacturing-
Received 11 December 2011 based economy such as China’s to continue to grow, it needs an adequate supply of inexpensive energy.
Accepted 14 February 2013 To date, this energy growth has primarily come from coal, but China’s indigenous coal supplies are now
falling short of the amount needed to support this growth. In this situation, the status of China’s future coal
Keywords: supply will be very important for China’s future economic development. Our analysis shows that China’s
Peak coal ultimate recoverable coal reserves equal 223.6  109 MT, and its production will peak between 2025 and
Coal imports 2030, with peak production of approximately 3.9  109 MT. The extent to which China can import coal in
Economic growth the future is uncertain. With rising coal demand, this combination is likely to create a significant challenge
to China’s future economic development.
& 2013 Elsevier Ltd. All rights reserved.

1. Introduction on an adequate supply of affordable energy, typically inexpensive

As one of the dominant engines of the world’s economic
growth, the future of the Chinese economy is of great interest
to scholars around the world. The debate as to whether China’s
growth can continue usually centers on issues such as the real
estate bubble, the debt crisis of local governments, the high level
of inflation, the low efficiency of government investment, wealth
disparities, environmental pollution and destruction, and the
aging population. These problems truly exist; however, they are
not the fundamental factors that will decide the future course of
the Chinese economy.
The hidden issue that has the power to hold back economic
growth is an inadequate supply of cheap energy. China is a
country that bases its economy on manufacturing (China’s pri-
mary, secondary and tertiary industries accounted for 10.1%,
46.8% and 43.1% of its GDP in 2010) (National Bureau of
Statistics of China (NBSC), 2011a), and manufacturing depends
n
Corresponding author. Tel.: þ86 15810362167.
E-mail address: wangjianliang2010@yahoo.cn (J. Wang).
and only accounting for a small amount of the total cost. The
primary source of this affordable energy is currently coal; coal
accounts for more than 76.5% of China’s energy production and
about 68.0% of its energy consumption in 2010 (National Bureau
of Statistics of China (NBSC), 2011a), making it far more important
than oil, gas and other energy resources. We know that coal, like
any non-renewable resource, is finite, and thus, at some point the
amount extracted each year will cease to grow as the resource
gets depleted. Yet China’s energy policy today is based on the
premise that China has a virtually inexhaustible supply of coal
resources (Wang, 2007a; Li et al., 2010). In fact, China became
a net coal importer in 2009 (Pan and Wang, 2010), because its
own production is already falling short of the amount needed to
maintain economic growth. China’s inability to raise supply as
quickly as desired raises questions about China’s long-term coal
supply.
In this paper, we perform an analysis that shows that China’s
annual extraction of coal is likely to begin to decline in the 2025
to 2030 time period. This study is based on our analysis of China’s
coal resources, and how much of these resources are likely to be
ultimately recoverable. The lack of future supply, together with

0301-4215/$ - see front matter & 2013 Elsevier Ltd. All rights reserved.
http://dx.doi.org/10.1016/j.enpol.2013.02.034

Please cite this article as: Wang, J., et al., An analysis of China’s coal supply and its impact on China’s future economic growth. Energy
Policy (2013), http://dx.doi.org/10.1016/j.enpol.2013.02.034i
2 J. Wang et al. / Energy Policy ] (]]]]) ]]]–]]]

the lack of suitable alternatives and the expected rise in the price
of coal that is available can be expected to have adverse economic
consequences.
The structure of this paper is as follows. Section 2 provides a
detailed analysis of China’s ultimate recoverable reserves (URR)
for coal because of the importance of URR in forecasting future
coal production. Section 3 analyzes future coal supply, coal
demand and coal imports of China. Section 4 analyzes the
availability of other energy sources that might be used as
alternatives to coal. Section 5 summarizes the main findings of
this paper.
which was submitted by the Chinese government to theUnited
Nations (UN) (2001), indicates that the classification system was
problematic:
The above edition (i.e. old classification system), which was
different from the international well known normal practices, had
made it very difficult for mining industry of China to commu-
nicate in common language with that of other countries, and
hence, it has impeded the progress of China in developing market
economy and opening its door to the world for investments in the
mining industry.

To make its system more similar to those of market economies,

in June 1999, China’s government issued a new edition of its
2. China’s coal reserves
classification system named Classification for Resources/Reserves
of Solid Fuels and Mineral Commodities (GB/T 17766-1999) as a
While China’s authorities report very large coal resources, the
national standard (General Administration of Quality Supervision,
portion that can be produced under existing economic and
Inspection and Quarantine of the People’s Republic of China
political conditions, with existing technology, is limited. In the
(AQSIQ), 1999). This new system was established based on the
years since 1949, when the People’s Republic of China was
classification systems of the United Nations (UN) (1997) and U.S.
founded, three analyses of China’s coal resources/reserves have
Geological Survey (USGS) (1980) and was the first one which
been performed by the Ministry of Coal Industry (MCI) (Table 1).
evaluated resources based on likely economics of extraction, in
In 1998, MCI was abolished by China’s central government, and
additional to geology and feasibility of extraction.
since then, no further estimates of coal resources have been made.
The new classification system provides three major categories:
The only exception to this is a study by the Ministry of Land and
reserves, basic reserves and resources (General Administration of
Resources (MLR) that was started in 2007, covering many differ-
Quality Supervision, Inspection and Quarantine of the People’s
ent resources, but is not yet complete. This project is called The
Republic of China (AQSIQ), 1999). Resources consist of a part of
Current Situation Survey of Mineral Resource Utilization; it is being
total identified mineral resources (the same as coal reserves in
performed to carry out the guidelines of the Decision of the State
Table 1) and undiscovered resources (the same as prognostic
Council on Strengthening Geological Work (Issued by State Council
resources in Table 1); basic reserves are a part of total identified
in 2006).
mineral resources; reserves are that minable part of basic
Table 1 shows the results of the three national forecasts of coal
reserves based on all relevant considerations, including economic
resources/reserves in China. Coal reserve, which is also called
(General Administration of Quality Supervision, Inspection and
discovered resource, is the quantity of coal estimated to be
Quarantine of the People’s Republic of China (AQSIQ) 1999). Thus,
contained in known accumulations; prognostic resource, which is
reserves are the real item of interest because only they can be
also called undiscovered resource, is the estimated quantity of coal
produced under existing economic and political conditions, with
in accumulations yet to be discovered; total coal resource is the
existing technology. More information and detailed definition of
sum of coal reserve and prognostic resource (Wang, 2007).
these items on the 1999 change in classification systems can be
From Table 1, we can see that all of these forecasts were
found in Appendix A.
prepared prior to 1999 and used the old classification systems of
The question then becomes how resource/reserve data, pre-
mineral resources/reserves. These old systems were very similar
pared prior to 1999 should be modified, to be consistent with the
to the classification system of the Former Soviet Union (FSU),
new definitions, since no new analyses have been issued since
under its system of central economic control, but modified by
1999. On March 8, 2001, the circular of Modifying Technology
China to reflect its own conditions. The main purpose of explora-
Requirement of Solid Mineral Resources/Reserves, which was used to
tion activities under these old systems was to know the quantities
convert forecast results of resources/reserves under old classifica-
of mineral resources for use by the central government rather
tion systems into ones under the new classification system, was
than to exploit them directly by businesses. Therefore, these
issued by MLR (2001a). In the same year, MLR (2001b) published
systems reflect primarily the existence of coal based on geological
the modified results of basic reserves and reserves under new
conditions, with little consideration to whether it would be
economically feasible to extract these resources in the future.
This means that part of reserves assessed in these systems may Table 2
Statistics of China’s basic reserves, reserves and URR (109 MT).
never be extracted (Chen et al., 2002). Moreover, The Chinese
Mineral Resources/Reserves Classification System and its Application, Year Production Cumulative Basic Reserves Recovery URR
production reserves rate

2001 1.38 32.82 334.09 189.12 56.61% 221.94

Table 1 2002 1.45 34.27 331.76 188.64 56.86% 222.91
Results of three national forecasts of coal resources/reserves in China (109 MT). 2003 1.72 35.99 334.20 189.27 56.63% 225.26
2004 1.99 37.98 337.34 188.03* – 226.02
First Second Third 2005 2.21 40.19 332.64 184.24 55.39% 224.43
(1958–1959) (1973–1980) (1992–1997) 2006 2.37 42.56 333.48 182.54 54.74% 225.10
2007 2.53 45.09 326.13 176.80 54.21% 221.89
Total coal resources 9377.9 5059.2 5569.7 2008 2.80 47.89 326.14 181.79* – 229.69
Coal reserves – 566.5 1017.6 2009 3.05 50.94 318.96 177.79* – 228.73
Prognostic resources – 4492.7 4552.1 2010 3.24 54.18 279.39 155.73* – 209.91
Average – – – – 55.74% 223.59
Note: The results of the second forecast of coal resources are at the end of 1975;
the results of the third one are at the end of 1992. Source: Department of Geology Note: Recovery rate¼ reserves/basic reserves; URR (ultimate recoverable reser-
in Beijing Institute of Mining (DGBIM) (1961), Yang and Han (1979), Han and Yang ves)¼ cumulative production þreserves. Reserves with * ¼ basic reserves
(1980), China Coal Geology Bureau (CCGB) (1999), Hu and Jiang (2000).  average recovery rate.

Please cite this article as: Wang, J., et al., An analysis of China’s coal supply and its impact on China’s future economic growth. Energy
Policy (2013), http://dx.doi.org/10.1016/j.enpol.2013.02.034i
 J. Wang et al. / Energy Policy ] (]]]]) ]]]–]]]
classification system, which were 334.1  109 MT and 189.1 
109 MT, respectively. Thereafter, National Bureau of Statistics of
China (NBSC) has reported basic reserves each year in its annual
publication, i.e. China Statistical Yearbook, but does not report data
on reserves. Some scholars and the Chinese government claim
that reserves can be calculated by multiplying basic reserves by
a recovery rate, but they do not give the average recovery rate
for the whole country (Xu and Sun, 2008; Project Office of the
Current Situation Survey of Mineral Resource Utilization (PO),
2011).
Table 2 shows some discontinuous reserve data from various
data sources. Based on these discontinuous reserve data and
corresponding basic reserves, the average recovery rate can be
calculated. Then, the average recovery rate will be used to
calculate other unknown reserve amounts from corresponding
known basic reserves. After making these calculations, we obtain
continuous reserve data, and then, estimate ultimately recover-
able reserves (URR), which are defined in this paper as reserves
plus cumulative production (Table 2).
Data sources: production data: Rutledge (2010) (data before
2010) and National Bureau of Statistics of China (NBSC) (2011b)
(2010 data); basic reserves data: MLR (2001b) (2001 data) and
China Statistical Yearbook (National Bureau of Statistics of China
(NBSC), 2003–2010, 2011a) (2002–2010 data); reserves data: MLR
(2001b, 2004) (2001 and 2002 data), International Energy Agency
(IEA) (2009) (2003 data), Wang et al. (2009) (2005 data), MLR
(2006, 2007) (2006 and 2007 data).
In summary, according to the 3rd national prediction of coal
resources/reserves, the total coal resources are 5569.7  109 MT,
however, the total identified coal resources (named coal reserves
before 1999) are only 1017.6  109 MT at the end of 1992. In the
identified coal resources, basic reserves and reserves at the end of
2001 are 334.1  109 MT and 189.1  109 MT, respectively, and
these two data decline slowly after 2001, with the average decline
rate of 2.1% and 0.6%. For the estimated URR, the results are
basically constant except a slight decline in 2010, with an average
URR of 223.6  109 MT. Therefore, the actual reserves that can be
produced under existing economic and political conditions, with
existing technology, are limited and are less than many scholars
assumed.
3. Outlook for China’s coal supply, demand and imports
3.1. Coal supply
Because of the importance of coal in China, many scholars have
studied China’s domestic coal supply and developed models to
forecast future coal production. Their research can be divided into
two major categories. The first category is research on short-term
(less than five years) coal supply; this work is mainly done by
Table 3
Forecast results of China’s future coal production (Unit:109 MT).
Author Model
Höök et al. (2010a) Logistic model
Tao and Li (2007) STELLA model
Logistic model
Lin and Liu (2010)
Gaussian model
Patzek and Croft (2010) Multi-cyclic logistic model
Mohr and Evans (2009) Demand-supply model
Zittel and Schindler (2007) Logistic model
Li (2008) Logistic model
Li (2010) Logistic model
This article Logistic model
Please cite this article as: Wang, J., et al., An analysis of China’s coal supply and its impact on China’s future economic growth. Energy
Policy (2013), http://dx.doi.org/10.1016/j.enpol.2013.02.034i
3
Chinese scholars (Wang and Zhao, 2003; Huang and Shao, 2007;
Liu and Wu, 2008; Wang et al.,2010, 2011a, 2012). They usually
adopt an output elastic coefficient method, simple linear regres-
sion and Gray Model (1,1) (GM) framework to forecast future coal
production without considering the limitation of coal resources.
The results of all of these analyses show rapid growth in China’s
coal production in coming years.
The second category is research on long-term (more than 15
years) coal supply, performed by both international scholars and
Chinese scholars (Zittel and Schindler, 2007; Mohr and Evans,
2009; Höök et al., 2010a; Patzek and Croft, 2010; Tao and
Li, 2007; Li, 2008, 2010; Lin and Liu, 2010). These researchers
usually consider the limitation of coal resources when they
forecast future coal production because they consider coal as a
non-renewable mineral resource. As such, they expect that coal
production in a given region would be expected to follow a
roughly bell-shaped curve. Based on the production characteris-
tics of nonrenewable mineral resources, many scholars adopt
a logistic model (a typical bell curve model which was first
proposed by Hubbert, 1956) (Zittel and Schindler, 2007; Höök
and Aleklett, 2009; Höök et al., 2010a; Lin and Liu, 2010, Li, 2008,
2010), or modified logistic model (Patzek and Croft, 2010; Maggio
and Cacciola, 2012), or some other bell curve model, such as
Gaussian model (Lin and Liu, 2010) or Gompertz model (Mohr
et al., 2011), to forecast future coal production.
This paper mainly relates to expected long-term coal produc-
tion. The forecast results of China’s long-term coal production are
shown in Table 3. Based on Table 3, we can see that expected peak
production and peak time differ depending on the URR adopted
by scholars. Mohr and Evans (2009) adopt a very low URR to
forecast China’s future coal production, indicating peak produc-
tion of 2.3  109 MT in 2010. However, China’s actual production
in 2010 was 3.2  109 MT (National Bureau of Statistics of China
(NBSC), 2011b). Compared with a low URR used by Mohr and
Evans (2009), Li (2010) adopts a very high URR to forecast future
production, with the result of a peak production of 6.1  109 MT
in 2039. The reason why URRs adopted by different scholars
sometimes differs sharply is the poor data quality of China’s coal
reserves and resources (Hu and Jiang, 2000; Thomson, 2003; Zittel
and Schindler, 2007; Huang and Shao, 2007). Sometimes, the
reported Chinese resources/reserves data by some well-known
institutions or companies, such as World Energy Council (WEC)
and BP, are also not available (Zittel and Schindler, 2007; Höök
et al., 2010a). Therefore, if researchers want to make an accurate
analysis of China’s future coal supply, they cannot quote others’
results directly. Instead they must make a detailed analysis of
China’s coal reserves/resources, as done in Section 2.
In Section 2, our analysis showed that the URR of China’s coal
is basically constant at an average level of 223.6  109 MT. There-
fore, we use this value of URR and the logistic model to forecast
future coal production (the logistic model is briefly introduced in
URR Peak time Peak production
165.4 (standard case)  2020  3.37
279.9 (high case)  2030  4.86
222.6 2025–2032 3.34–4.45
2025 3.83
222.9
2027 3.67
191.8 2011 3.62
136.1 (best guess case) 2010  2.34
135.6 2015 2.40
250 2030 –
380 2039 6.09
223.6 2027 3.97
4 J. Wang et al. / Energy Policy ] (]]]]) ]]]–]]]
Appendix B). The forecast shows that China’s coal production will
peak in 2027, with peak production of 3.97  109 MT (Table 3),
which is very close to results of Lin and Liu (2010) and Tao and Li
(2007). Based on a comprehensive consideration of the results of
Lin and Liu (2010), Tao and Li (2007) and this article, we
anticipate that China’s coal production will reach its peak
between 2025 and 2030, with peak production of approximately
3.9  109 MT.
One important thing of note is that the forecast result is based
on an estimate of URR and does not consider other factors, such as
technology. Theoretically, improvement of technology will tend
to increase the value of URR and then increase the production and
delay the peak time, which means that URR estimates need to be
considered in relation to technological improvements over time.
However, in the last ten years, as we can see from Table 2, the
value of URR of China’s coal has been stable and even shows some
slight decline in 2010. Besides, other factors, such as water
availability, land availability, transportation capacity and climate
change are likely to also affect future coal production (Wang and
Guo, 2007; Zhang et al., 2008; Yang, 2007; Shealy and Dorian,
2010; Xie et al., 2011). Taking water availability as an example,
producing coal not only pollutes groundwater (in China,
2.2  109 m3 of groundwater resources are polluted every year
due to producing coal), but also consumes huge amounts of water
(Xie et al., 2011). However, China is already facing a serious
problem of water resource scarcity (Wang, 2001). Rong and Victor
(2011) claim that water constraint is one of the chief reasons
behind the coal-to-liquids (CTL) policy reversal in China after
2006. For coal mining, 71% of 96 key state-owned mines are short
of water, and 40% of them have serious water shortages (Xie,
2011). If a person considers water constraints, China’s coal
productive capacity is only 3.4–3.8  109 MT (Xie et al., 2011;
Xie, 2011). If these additional constraints are considered, max-
imum coal production may be even lower still.
3.2. Coal demand
Based on the previous analyses, it can be concluded that
China’s actual reserves and production will be lower than many
scholars have forecast, especially Chinese scholars. In contrast,
China’s future coal demand may be higher than most scholars and
institutions’ have forecast. For example, a few years ago, most
forecasts of coal demand in 2010 were between 2.51  109 MT
and 2.89  109 MT (Lin et al., 2007; Wang and Li, 2008; Yu and
Deng, 2008), including an estimate of 2.56  109 MT from the
official 11th Five-year Plan (2006–2010). However, actual coal
consumption in 2010 was 3.39  109 MT (Lin and Yu, 2011),
which was 32.4% higher than the official plan.
The phenomenon of actual coal demand being higher than
forecast can be explained by indirect impacts of the importance of
GDP growth in China. The central government needs a high GDP
growth rate to alleviate income disparities and to maintain social
stability. Furthermore, local officials need high GDP growth rates
to be promoted because GDP is the chief measure of progress in
their performance reviews (Ma, 2005; Xia and Wang, 2006; Xu,
2007; Wang 2007b). Therefore, when the central government
targeted an annual average GDP growth rate of 7.5% in the 11th
Five-Year Plan (Lin et al., 2008), local governments seemed to be
inclined to pursue higher GDP growth rates than targeted. Con-
sequently, China needed more energy than its original plan to
achieve the higher growth rates, especially coal. Domestic coal
was favored over other energy resources because local govern-
ments believed that China had plenty of coal and because coal
was commonly less expensive than other energy sources. How-
ever, coal is also associated with environmental degradation
and even deaths (Chen and Li, 2011; Shealy and Dorian, 2010;
Please cite this article as: Wang, J., et al., An analysis of China’s coal supply and its impact on China’s future economic growth. Energy
Policy (2013), http://dx.doi.org/10.1016/j.enpol.2013.02.034i
Xie et al., 2011; Tu, 2011). For example, in the period of 11th Five-
year Plan (2006–2010), average annual fatalities reported by
China’s authority are 3362, and average annual production is
2.88  109 MT in the same period, implying a death rate per
million metric tons of 1.17 (Tu, 2011). In comparison, the United
States, which is the second largest coal producer in the world,
reported average annual fatalities of 35.4 and average annual
production of 1.02  109 MT (Department of Labor (DOL) of
United States, 2012; Energy Information Administration (EIA),
2011a), implying a death rate per million metric tons of 0.03.
However, these problems were overlooked. Thanks to the large
amount of energy consumed, especially coal, China’s actual
annual average GDP growth rate was 11.2% over the last five
years (Wen, 2011).
Looking ahead, the 12th Five-year Plan establishes an annual
GDP growth target of 7% (National People’s Congress (NPC) of
People’s Republic of China, 2011), with projections that coal
demand could reach 3.9  109 MT in 2015 (National Develop-
ment and Reform Commission of China (NDRC), 2012). Based on
the experience of the last five years, it seems likely that actual
coal consumption will exceed official projections. Shealy and
Dorian (2010) also claim that most other forecasts of China’s
future coal demand are too low. Using a relatively conservative
annual GDP growth target of 6.5% for the next fifteen years, they
forecast that coal demand will reach 4.13  109 MT in 2015, 5.9%
higher than official data. With respect to coal demand in 2025,
their result – 6.12  109 MT – is 35.5%, 36.3% and 47.6% higher
than the results of the International Energy Agency (IEA) (2010),
U.S. Energy Information Administration (EIA) (2010) and National
Development and Reform Commission of China (NDRC) (2009),
respectively (Fig. 1). With a 6.5% growth target, the estimated
annual average growth rate of coal demand from 2011 to 2020 is
only 4.8%, which is far lower than 11.3% of the last 10 years.
3.3. Coal imports
The year of 2009 was a turning point for China. Up until 2009,
China was self-sufficient in coal, and even exported coal to other
countries. However, in 2009, domestic demand first exceeded
supply, making China a net coal importer despite having arguably
the world’s second largest coal reserves. According to EIA statistics,
in 2009, China’s net coal imports reached 102.16  106 MT (based on
imports of 136.95  106 MT (Energy Information Administration
(EIA), 2011b) and its exports reached 34.79  106 MT (Energy
Information Administration (EIA), 2011c)), or 3.24% of China’s coal
consumption. However, even this small figure caused China’s
imports to exceed those of many traditional net coal importers,
such as South Korea (99.7  106 MT), India (67.3  106 MT), and
8
Historical production
Supply and demand, 10 9 metric tons
Modeled production (this study)
Forecast consumption(Shealy and Dorian,2010)
6
Forecast consumption(IEA/WEO2010)
Forecast consumption(EIA/IEO2010)
Forecast consumption(NDRC,2009)
4
2
0
1950
1955
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
Fig. 1. Domestic coal supply and coal demand in China.
 J. Wang et al. / Energy Policy ] (]]]]) ]]]–]]]
Germany (41.2  106 MT), leading China to become the world’s
second largest importer after Japan (164.3  106 MT). This fact
shows that even a slight change in China’s coal supply/demand
can have a big impact on the international coal market (total world
coal trade in 2009 was 943.25  106 MT).
Based on our analysis, it appears likely that China’s coal
imports will continue to rise in future. We estimate that China’s
coal production will peak between 2025 and 2030. However,
China’s coal demand, even with conservative assumptions about
Chinese GDP growth, will keep increasing rapidly in the future.
Comparing forecast demand of 6.12  109 MT with an estimated
supply of 3.9  109 MT in 2025, China’s net coal imports will reach
2220  106 MT in 2025 (Fig. 1), with a degree of dependence on
foreign coal of 36.3%. According to EIA statistics, total coal trade in
international markets was 943.25  106 MT in 2009 (Energy
Information Administration (EIA), 2011b). Therefore, world coal
trade must increase by 135.36% over the next 15 years to meet
China’s coal demand, even under the assumption that other coal
importers do not import any coal from the international market.
And after 2025, the amount of world coal trade must increase
even more rapidly than before to meet China’s need for imported
coal because China’s domestic coal supply will stop increasing
and then decline after 2030.
Unfortunately, it is doubtful that China will be able to import
enough coal to meet domestic demand for two reasons. First,
some scholars have argued that world coal resources are poten-
tially more limited than that assumed by policy makers to date
(Mohr and Evans, 2009; Höök et al., 2010a; Patzek and Croft,
2010). Therefore, actual peak of world coal production may come
earlier than policy makers thought. For example, one study even
forecasts that the global peak of coal production from existing
coal fields will occur in the year 2011 (Patzek and Croft, 2010).
Second, it is not realistic to assume that other importers will
not import more coal. In fact, coal imports for other importers are
also likely to increase rapidly. Taking India as an example, the
rapid development of the economy leads to rapid growth in coal
consumption. However, the growth of domestic coal production
cannot rise as rapidly as the growth in coal demand. As a result,
India’s coal imports will also need to increase rapidly. In fact,
India’s net imports have been rising at an average annual rate
of 21.08% for the last seven years (2003–2009) and reached
67.32  106 MT in 2009 (Energy Information Administration
(EIA), 2011b, 2011c). According to the statistics of International
Monetary Fund (IMF) (2011), India’s GDP growth first exceeded
China’s rate, and reached 10.4% in 2010. With respect to future
economic growth, India plans to target GDP growth of 9% for the
next Five-Year Plan period, which is higher than China’s target
GDP growth rate of 7%. Therefore, it is reasonable to expect that
India’s net coal imports will continue to rise rapidly in the future.
Furthermore, the nuclear power capacity of Japan and Europe
seems unlikely to expand as planned because of the Fukushima
nuclear crisis, and this lack of expansion may result in shortages
of electricity in the future. To compensate for this shortage, Japan
and Europe may import more thermal coal, even though in the
recent past their net coal imports have remained stable or
declined slightly. Therefore, as we have shown in this section,
a 135.36% increase of world coal trade over the next fifteen years
is rather extreme and does not appear very likely, especially with
increasing transportation costs caused by peak oil (Curtis, 2009).
4. What will replace coal?
China has been trying to reduce the proportion of coal in its
primary energy consumption in order to reduce its carbon
emissions and improve its mix of energy sources. Such a change
Please cite this article as: Wang, J., et al., An analysis of China’s coal supply and its impact on China’s future economic growth. Energy
Policy (2013), http://dx.doi.org/10.1016/j.enpol.2013.02.034i
5
would also be helpful because China cannot import enough coal
to meet its demand. Because of these issues, China would very
much like to find sufficient energy of other forms to replace
coal. It would also be desirable for China to change its energy
system into something less dependent on coal. However, several
researchers note that this energy transition is very difficult, has
many potential risks and is also relatively slow on the millennium-
long time horizon (Bardi, 2007; Bashmakov, 2007; Smil, 2010;
Fantazzini et al., 2011). Besides, the peak of finite fossil fuels tends
to throw countries into sociological trajectories not prone to easy
energy transitions, and the increasing of price due to the peak can
be expected to slow an energy source transition (Bardi, 2007;
Friedrich, 2010). Another factor which may hinder or slow the
energy transition is low EROI (energy return on investment) of
some alternative energy, for example, solar and wind energy
(Fantazzini et al., 2011). For these reasons, we believe it will be
very hard for China to achieve its substitution target. The follow-
ing is what we find for potential alternative energy sources
for coal:
4.1. Oil
Oil cannot realistically replace coal. One reason is that there
are big differences between oil and coal. Coal is a solid fuel with
low quality and high carbon content and is mainly used to
generate electricity in China. Oil is a high quality liquid fuel with
lower carbon content and is mainly used for transport. Because of
these differences, it is difficult for China to replace coal with oil.
The other important reason oil cannot realistically replace coal
is that China’s oil resources are quite limited. In 2010, 54.5% of
China’s oil consumption was imported (Li, 2011). Furthermore,
imports are likely to grow in future, because the fields which are
the backbone of Chinese oil production are maturing and reaching
a point of terminal decline (Tang et al., 2010; Höök et al., 2010b),
while China’s consumption continues to grow. Additional
evidence of limits on Chinese oil supply is increasing tension
surrounding petroleum resources in the South China Sea,
a source of possible growth in China’s oil supply which is
uncertain due to technological and political factors (Wang et al.,
2011b; Zhang, 2012).
One way China copes with the current shortage of oil supply is
by developing coal to liquids (CTL) projects (a process by which
liquids such as gasoline and diesel are made from coal), because
the government believes that China is rich in coal. China’s CTL
policy has made some reversal due to water constraint and other
factors after 2006 (Rong and Victor, 2011); however, CTL capacity
is still expanding and reached 1.6  106 MT/year in 2009 (Yang,
2010a). Capacity is forecast to reach 12  106 MT/year in 2015,
50  106 MT/year in 2020, and expand further after 2020 (Yang,
2010a). Unfortunately, replacing oil with coal is not a workable
solution because coal resources are also limited. Furthermore,
CTL projects exhaust a large quantity of coal resources. Conver-
sion ratios for CTL are generally estimated to be between 1 and 2
barrels/metric tons coal (Höök and Aleklett, 2010). This means
that producing 50  106 MT of oil would exhaust 183.3–366.5 
106 MT coal, which is 1.8–3.6 times the amount of coal imported
in 2009.
4.2. Natural gas
Replacing coal with natural gas is also impossible, because China
has even less natural gas resources than oil resources. According to
estimates by Chinese scholars, China’s conventional natural gas
ultimately recoverable reserves (URR) amount to 5.99–13.32 
1012 m3, with the average URR equal to 9.64  1012 m3 (Zhang,
2002), which is far less than the 22.03  1012 m3 estimated by the
6 J. Wang et al. / Energy Policy ] (]]]]) ]]]–]]]
government (Dai et al., 2008). Even if an adjustment is made for the
difference in the official URR compared to that of Chinese scholars,
production in 2020 will only be 164.6  109 m3, while gas demand
will be much higher, reaching 260  109 m3 in 2015 and 350–
400  109 m3 in 2020, according to the Chinese official 12th
Five-Year Plan (Qu, 2011; Hou, 2011; Liu et al., 2010a). Therefore,
the gap between demand and supply in 2020 will reach 185.4–
235.4  109 m3, while China can only import 114  109 m3 natural
gas based on current import plans (Qiu and Fang, 2009). As a result,
China will need to find 71.4–121.4  109 m3 natural gas to meet its
demand.
China has given more attention to developing unconventional
gas resources, such as coalbed methane (CBM) and shale gas, to
meet this expected gap in gas supply and demand. The resources
of unconventional gas are potentially substantial (Liu et al., 2009;
PES, 2011); however, only a small part of them are discovered
(Yang et al., 2011). Furthermore, according to the Energy
Information Administration (EIA), (2011d)’s forecast, production
of unconventional gas will reach about 39.2  109 m3 ) in 2020,
which is still less than the gap of 71.4–121.4  109 m3. In addition,
China has also established some coal-to-gas projects, such as
underground coal gasification (UCG), and is planning to expand
their scale by breakthroughs in key technologies in 2011–2017
(Liu et al., 2010b; Yang, 2010b; Feng, 2011; NEA, 2011). For the
same reasons as with CTL projects, many Chinese scholars believe
that China is rich in coal but lacks gas (Liu et al., 2010b; Yang,
2010b). Trying to use natural gas to substitute for coal, therefore,
would seem to be impossible.
4.3. Non-fossil fuels
Non-fossil fuels are alternative sources of energy that do not rely
on exhausting limited supplies of coal, oil or natural gas. China
would use less fossil fuel, if more non-fossil fuels are available.
To increase its energy supply and to lower its carbon emissions,
China has set very ambitious short-term targets for increasing the
proportion of non-fossil fuels in its total energy consumption.
China’s non-fossil strategy includes both nuclear and renewable
energy. In 2010, the capacity of nuclear power was 10.82 gigawatts
(GW) (China Electricity Council (CEC), 2011a), and this capacity will
increase to 40 GW by 2015 (compared with 890 GW coal-fired
power in 2015), according to the 12th Five-Year Plan, with an
average annual growth rate of 29.9% (Seligsohn, 2011; Liu, 2012).
China Electricity Council (CEC) (2011b) forecasts that this number
will still keep rising and reach 90 GW in 2020. Therefore, China’s
nuclear power industry will experience its golden development
period, even though a serious radioactive leakage accident just took
place in Fukushima nuclear power plants in Japan in 2011.
In addition to the rapid development of nuclear power, China
is also installing renewable energy at an unprecedented rate. The
capacity of hydropower, wind power, solar power (including solar
PV and solar thermal) and other non coal-based power in 2010
were 213.40 GW, 31.07 GW, 0.24 GW and 0.02 GW, respectively
(China Electricity Council (CEC), 2011a). According to the latest
official plans, China will have 330 GW of hydropower capacity
by 2020, which is nearly equivalent to building a ‘‘Three
Gorges Dam’’ every three years. Furthermore, the capacity of
wind power, solar power and other renewables in 2020 is planned
to be 180 GW, 20 GW and 5 GW, respectively, with annual growth
rates of 19.20%, 55.78% and 70.56%, respectively (China Electricity
Council (CEC), 2011b). These numbers are so amazingly large that
it is hard for us to imagine how these goals will be achieved. Even
if China can achieve its goals, coal will still account for 60% of total
primary energy consumption in 2020 (Chen et al., 2011).
In summary, there are few options for China to reduce its reliance
on coal.
Please cite this article as: Wang, J., et al., An analysis of China’s coal supply and its impact on China’s future economic growth. Energy
Policy (2013), http://dx.doi.org/10.1016/j.enpol.2013.02.034i
5. Discussion and summary
Based on the above analyses, we reach several important
conclusions. First, a detailed analysis of China’s coal resources/
reserves classification system is performed, and then the URR
numbers over time are analyzed based on the resources/reserves
classification. It is found that the URR of China’s coal is basically
constant after 2001 except for a slight decline in 2010, with an
average value of 223.6  109 MT.
Second, China’s coal production is forecasted based on the
estimated URR and a logistic production model. The result indi-
cates that coal production will peak in 2027, with a peak
production of 3.97  109 MT. Then, considering and combining
other similar analyses, it is estimated that China’s coal production
will peak between 2025 and 2030, with peak production of
approximately 3.9  109 MT. Furthermore, it is noted that actual
production may peak earlier and the maximum production may
be lower if some other factors are considered, such as water
availability, land availability, transportation capacity and climate
change. However, extensive treatment of such factors where
outside this study.
Third, it is concluded that estimates of China’s future coal
consumption tend to be underestimated by most scholars. Accord-
ing to Shealy and Dorian (2010), even using a relatively conservative
annual GDP growth target of 6.5% for the next fifteen years, China’s
coal demand will still reach 6.12  109 MT in 2025, which is higher
than some major institutions such as International Energy Agency
(IEA) (2010), Energy Information Administration (EIA) (2010),
National Development and Reform Commission of China (NDRC)
(2009) have forecast. However, China’s domestic production
is forecast to be limited to 3.9  109 MT, which means the gap
between demand and supply will reach 2.22  109 MT in 2025. We
also show that it may be very difficult for China to meet its gap by
importing coal and developing alternative energy sources, which
means that China’s economic growth may be affected due to the
shortage of coal supply.
In addition, rising coal price can be expected to seriously
influence China’s economic growth (Ding et al., 2011). China’s
coal will become more expensive in years ahead for several
reasons.
First, increasing domestic coal demand, limited domestic coal
reserves and production will tend to lead to a rise in the price of
coal (Li, 2009).
Second, increasing gap between domestic coal demand and
production will lead China to import more coal from international
markets. Some studies have suggested a likely significant increase
of world coal prices in the coming decades (Kavalov and Peteves,
2007; Heinberg and Fridley, 2010), and rising international coal
price will surely promote the increase in domestic coal prices
because of the higher costs of imported coal.
Furthermore, the cost of imported coal is likely to be further
increased by high transportation costs arising from increasing world
oil prices (Kousnetzoff et al., 2008; Transportation Economics &
Management Systems, Inc. (TEMS), 2008). In fact, China’s coal prices
have already been rising since China’s coal pricing entered the
Market-oriented pricing period in 2002 (Tu, 2011), and are expected
by some to continue to rise in future (Wang and Zhang, 2011).
To sum up, Tverberg (2012) has shown that limited oil supply
and the concomitant rising oil prices can have an adverse impact
on economic growth. Other studies have also shown that high oil
prices can lead to recession (Kilian, 2008, 2009; Hamilton, 2009;
Fantazzini et al., 2011). China’s economic growth requires an
adequate supply of affordable and inexpensive coal, and cur-
rently, coal is more important than oil in China. It is believed that
limited coal supply and rising coal prices will present a significant
challenge to China’s economic growth.
 J. Wang et al. / Energy Policy ] (]]]]) ]]]–]]]
Acknowledgments
This study has been supported by the National Natural Science
Foundation of China (no. 71073173). We would like to thank
Dr. Mikael Hook, an associate Professor in Uppsala University, for
giving suggestions for our manuscript. Very helpful comments by
an anonymous reviewer are highly appreciated. The financial
support of the China Scholarship Council (CSC) (File No.
201206440034) is gratefully acknowledged.
Appendix A. Historical evolution of China’s classification
system for mineral resources/reserves
History of classification for Chinese mineral resources/reserves
China’s classification of mineral reserves is derived from the
system used by the former Soviet Union (FSU). In January 1954,
Solid Mineral Reserve Classification Standards of FSU was reprinted
by National Mineral Reserve Committee of China (NMRC) as a
main reference for Chinese classification systems. In April 1959,
the first formal Chinese standard of Provisional Specifications for
Mineral Reserve Classification (General Principles) was issued,
which divided reserves into five categories: A1, A2, B, C1 and
C2. In June 1977, new classification systems for metallic and non-
metallic minerals called General Requirements for Metallic Mineral
Exploration (Trial Implementation) and General Requirements for
Non-Metallic Mineral Exploration (Trial Implementation) were
introduced. Mineral reserves in the new classification systems
were divided into four categories: A, B, C and D. In December
1992, a new classification system for all minerals called General
Requirements for Solid Mineral Exploration (GB/T 13908-1992)
(‘‘GB’’ means ‘‘National Standards’’) was released to replace all
the previous systems. Mineral reserves were divided in priority
order of geological confidence into A–E categories.
All of the classification systems before 1999 are very similar to
the classification system used by the FSU as part of its system of
central economic control. Over the years, China revised these
systems several times in the light of its own conditions. The main
purpose of exploration activities under these old systems was to
know the quantities of mineral resources for the central govern-
ment, rather than to exploit them directly for enterprises. There-
fore, these systems are based primarily on geological conditions,
with little attention to economic conditions. This means that
some coal which cannot be extracted economically (for example,
coal that is too deep or in too thin seams) may not be extracted in
the future (Chen et al., 2002). Moreover, the old system made
comparison with other countries difficult. The Chinese Mineral
Resources/Reserves Classification System and its Application, which
was submitted by the Chinese government to the United Nation
(United Nations (UN) 2001) states:
The above edition (i.e. old classification system), which was
different from the international well known normal practices, had
made it very difficult for the mining industry of China to
communicate in common language with that of other countries,
and hence, it has impeded the progress of China in developing a
market economy and opening its door to the world for invest-
ments in the mining industry.
Therefore, with the formation and development of the socialist
market economic system in China, it has been an urgent matter to
revise the old mineral reserve classification system in order to fit the
requirements of the new economic system, in order to be in a better
position to exploit Chinese mineral resources (United Nations (UN)
1999). Finally, in June 1999, the Chinese government issued a new
edition of classification system called Classification for Resources/
Please cite this article as: Wang, J., et al., An analysis of China’s coal supply and its impact on China’s future economic growth. Energy
Policy (2013), http://dx.doi.org/10.1016/j.enpol.2013.02.034i
7
Reserves of Solid Fuels and Mineral Commodities (GB/T 17766-1999) as
a national standard in June 1999 to solve this problem. The new
classification system was based on the United Nations International
Framework Classification for Reserves/Resources (ENERGY/WP.1/R.70)
(United Nations (UN), 1997) and Principles of a Resource/Reserve
Classification for Minerals (U.S. Geological Survey (USGS), 1980).
Using this approach represented a revolutionary reform for the
mining industry of China (United Nations (UN) 2001). Detailed rules
for implementing the new classification system were released in
August 2002, in a document called General Requirements for Solid
Mineral Exploration (GB/T 13908-2002) which replaced the imple-
mentation rules of 1992 (GB/T 13908-1992).
In 2007, China decided to make some modification of GB/T
17766-1999 because the new classification system was still not
regarded as being particularly suitable for reporting in a market
economy and because its use created operational difficulties for
both local companies and foreign companies operating in China
(Stoker, 2009). Therefore, in July 2009, Ministry of Land and
Resources of China (MLR) released a revised draft of GB/T
17766-1999 (named GB/T 17766-revision) to the public in order
to solicit opinions from all sides. However, even after the
solicitation of public opinion, the government did not formally
issue a revised edition.
Finally, in November 2010, the Chinese government issued a
further revised classification approach called Specification for
Comprehensive Exploration and Evaluation of Mineral Resources
(GB/T 25283-2010). The classification system of GB/T 17766-
1999 was still in use until the issuance of GB/T 25283-2010.
In summary, GB/T 17766-1999 has been brought into wide
use, although it is now being further improved. We therefore will
give a further introduction of it.
Classification for resources/reserves of solid fuels and mineral
commodities (GB/T 17766-1999)
GB/T 17766-1999 adopted a three-dimensional classification
model as recommended by UNFC to classify resources/reserves
(Fig. A1). The first axis in this three-dimensional classification
model is the degree of Geological Assurance (G axis), which is
based on the result of exploration. The stages of mineral explora-
tion work are divided into four parts: detail exploration, general
exploration, prospecting and reconnaissance; therefore, the
degrees of Geological Assurance are also divided into four parts:
measured (G1), indicated (G2), inferred (G3) and reconnaissance
(G4). The second axis in the model is the stages of the Feasibility
Assessment (F axis). Based on the different level of assessment
work, the stages of the Feasibility Assessment are divided into
three parts: feasibility study (F1), pre-feasibility study (F2) and
geological study (F3). The last axis in the model is the degrees of
the Economic Viability (E axis), which can be divided into four
parts: economic (E1), marginal economic (E2 M), sub-economic
(E2 S) and intrinsic economic (E3).
Based on this classification model, mineral occurrences are
sub-divided into sixteen categories within three major categories,
i.e. reserves (three sub-categories), basic reserves (six sub-cate-
gories) and resources (seven sub-categories) (General Adminis-
tration of Quality Supervision, Inspection and Quarantine of the
People’s Republic of China (AQSIQ) 1999) (Fig. A1and Table A1).
Reserves are that minable part of basic reserves on which the
factors such as economic, mining, metallurgical, environmental,
legal, marketing, social and governmental have been considered
and corresponding modification has been made during the
feasibility study, pre-feasibility study and preparation of the
annual mining plan. The results demonstrate that this part is
economically minable or has already been mined; it is expressed
by actual minable tonnage or volume, from which the losses of
8 J. Wang et al. / Energy Policy ] (]]]]) ]]]–]]]

Fig. A1. The three-dimensional classification model used in the classification system of Chinese mineral resources/reserves. Note: The Figure is made by authors on a basis
of GB/T 17766-1999. The explanation of code and other notation is shown in Table A1.

Table A1
Classification for resources/reserves of solid fuels and mineral commodities (GB/T 17766-1999).

Total identified mineral resources

Undiscovered resources

Measured Indicated Inferred Reconnaissance

Proved extractable reserve (111)

Basic reserve (111b)
Economic
Probable extractable reserve (121) Probable extractable reserve (122)
Basic reserve (121b) Basic reserve (122b)
Basic reserve (2M11)
Marginal economic
Basic reserve (2M21) Basic reserve (2M22)
Resources (2S11)
Sub-economic
Resources (2S21) Resources (2S22)
Intrinsic economic Resources (331) Resources (332) Resources (333) Resources (334?)

Note: Of the codes (111–334) used in the table above, the first digital number indicates the degree of economic viability: 1 ¼economic, 2 M ¼ marginal economic, 2 S¼sub-
marginal economic, 3¼ intrinsic economic, ?¼ economic interest undefined; the second digital number indicates stages of feasibility assessment: 1 ¼feasibility study,
2¼ pre-feasibility study, 3¼ geological study; the third digital number indicates geological assurance: 1 ¼measured, 2¼ indicated, 3 ¼inferred, 4 ¼reconnaissance,
b¼ before the deduction of extractable quantities lost in the process of designing and mining. Source: General Administration of Quality Supervision, Inspection and
Quarantine of the People’s Republic of China (AQSIQ) (1999).

designing and mining have been deducted; it is divided into three reconnaissance has been done. It is divided into seven sub-
sub-categories: their codes are 111, 121, and 122, respectively. categories: their codes are 2S11, 2S21, 2S22, 331, 332, 333 and
Basic Reserves is a part of total identified mineral resources, 334, respectively.
which can satisfy the index (includes grade, quality, thickness and
technical conditions for mining, etc.) requirements or current
mining, and is expressed in terms of tonnage or volume, in which Appendix B. Introduction of logistic model
the losses of designing and mining have not been deducted; it is
located in the measured and indicated reserve extending area, in Logistic model (or Hubbert model) is described by the following
which detail exploration or general exploration and feasibility equation (Patzek and Croft, 2010):
study or pre-feasibility study have been done, and the results
demonstrate economic or marginal economic. It also can be 2Q max
Q¼ ð1Þ
divided into six sub-categories: their codes are 111b, 121b, 1þ cos h½bðtt m Þ
122b, 2M11, 2M21 and 2M22, respectively.
NR
Resource consists of a part of total identified mineral resources Np ¼ ð2Þ
and undiscovered resources. The former includes resources for 1 þ ebðttm Þ
which mining is not economically viable or technologically
NR ¼ 4Q max =b ð3Þ
feasible at the time by feasibility study or pre-feasibility study;
the resources upon which some kinds of exploration or prospect- where Q is oil production at time t, Qmax peak production, Np
ing have been done, but for which feasibility or prefeasibility cumulative production, NR ultimate recoverable reserves (URR),
studies have not been carried out, are also included. The latter b a parameter which accounts for the slope of the curve, and tm
belongs to undiscovered mineral resources, upon which only the year corresponding to the peak.

Please cite this article as: Wang, J., et al., An analysis of China’s coal supply and its impact on China’s future economic growth. Energy
Policy (2013), http://dx.doi.org/10.1016/j.enpol.2013.02.034i
 J. Wang et al. / Energy Policy ] (]]]]) ]]]–]]]
Wang et al. (2011c) introduce the equation-solving process,
which is shown as follows.
By changing Eq. (2), we get:
NR Np
¼ ebðttm Þ ð4Þ
Np
By taking logarithms on both sides of Eq. (4), this gives:
 
NR Np
ln ¼ bt m bt ð5Þ
Np
Then, provided A ¼ btm , B ¼ b, Eq. (5) can be rewritten as:
 
NR Np
ln ¼ A þ Bt ð6Þ
Np
According to Eq. (6), we can obtain the value of intercept A and
slope B. Furthermore, parameter b and tm can be calculated. Then,
peak production Qmax can be calculated by Eq. (3) and forecast
production can be obtained by substituting Qmax, b and tm into
Eq. (1).
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