Reducing China's Coal Consumption Rate

Slowly, China is trying to wean itself off coal. Over the first six months of this year, China reduced its coal consumption rate, as measured by kilowatt-hour, by less than two percent compared to the first half of 2005.

While China has stated it plans to expand its hydro, nuclear and renewable energy programs to increase their share of electrical power production, the country ambitiously hopes to more than double the amount of natural gas in its energy mix.

Currently providing a little more than three percent of the energy mix, the Chinese have often announced they want natural gas to provide eight percent or more, by the time the Eleventh Five Year Plan ends in 2010.

"It's doable," Phil Flynn of Alaron Trading Corp told us. "It's going to be tough and very expensive, but I think they can reach that percentage." However in February of this year, the China Daily newspaper reported the bulk of China's gas-fired power plants could be closed down because of a natural gas shortage.

For example, four gigawatts of installed capacity were not used in Eastern China, in the latter part of 2005, because the country could not obtain sufficient gas supplies to power the plants. China's National Development and Reform Commission plans to increase the country's gas power capacity to 30 gigawatts, but the head of China's Electricity Council announced that gas shortfalls would probably make this target impossible to achieve.

James Finch contributes to StockInterview and other publications. Visit http://www.stockinterview.com to read all of his archived articles.