China's Farewell to Coal: A Forecast of Coal Consumption through 2020

In recent decades, China has encountered serious environmental problem, especially severe air pollution that has affected eastern and northern China frequently. Because most air pollutants in China are closely related to coal combustion, the restriction of coal consumption is critical to the improvement of the environment in China. In this study, a panel of 29 Chinese provinces from 1995 to 2012 is utilized to predict China's coal consumption through 2020. After controlling for the spatial correlation of coal consumption among neighboring provinces, an inverted U-shaped Environmental Kuznets Curve (EKC) between coal consumption per capita and GDP per capita in China is detected. Furthermore, based on the estimation results and reasonable predictions of key control variables, China's provincial and national coal consumption through 2020 is forecasted. Specifically, under the benchmark scenario, consumption is expected to continue growing at a decreasing rate until 2020, when China's coal consumption would be approximately 4.43 billion tons. However, if China can maintain relatively high growth rate (an annual growth rate of 7.8 percent), the turning point in total coal consumption would occur in 2019, with projected consumption peaking at 4.16 billion tons.