U.S. EP.NSII Coalbed Methane Energy Markets in China and the Outlook for CMM Project Development in Anhui, Chongqing, Henan, Inner Mongolia, and Guizhou Provinces Energy Markets in China and the Outlook for CMM Project Development in Anhui, Chongqing, Henan, Inner Mongolia, and Guizhou Provinces Revised, April 2015 Acknowledgements This publication was developed at the request of the U.S. Environmental Protection Agency (USEPA), in support of the Global Methane Initiative (GMI). In collaboration with the Coalbed Methane Outreach Program (CMOP), Raven Ridge Resources, Incorporated team members Candice Tellio, Charlee A. Boger, Raymond C. Pilcher, Martin Weil and James S. Marshall authored this report based on feasibility studies performed by Raven Ridge Resources, Incorporated, Advanced Resources International, and Eastern Research Group. 2 Disclaimer This report was prepared for the U.S. Environmental Protection Agency (USEPA). This analysis uses publicly available information in combination with information obtained through direct contact with mine personnel, equipment vendors, and project developers. USEPA does not: (a) make any warranty or representation, expressed or implied, with respect to the accuracy, completeness, or usefulness of the information contained in this report, or that the use of any apparatus, method, or process disclosed in this report may not infringe upon privately owned rights; (b) assume any liability with respect to the use of, or damages resulting from the use of, any information, apparatus, method, or process disclosed in this report; or (c) imply endorsement of any technology supplier, product, or process mentioned in this report. 3 Contents Acronyms and Abbreviations ...................................................................................................................... 12 1. Executive Summary ............................................................................................................................. 15 1.1 Introduction ................................................................................................................................ 15 1.2 Coal Market ................................................................................................................................. 15 1.2.1 Provincial Coal Markets .......................................................................................................... 18 1.3 Electricity Market ........................................................................................................................ 19 1.3.1 Provincial Electricity Markets .................................................................................................. 20 1.4 Gas Market .................................................................................................................................. 22 1.4.1 National Policy for CBM and CMM Development .................................................................. 25 1.4.2 Provincial Markets for CMM ................................................................................................... 27 1.5 CMM Projects in China ................................................................................................................ 28 2. Introduction ........................................................................................................................................ 30 2.1 Background-source of data and analysis .................................................................................... 30 2.1.1 Background info on USEPA feasibility and pre-feasibility studies in China ............................ 30 2.2 China’s energy use ...................................................................................................................... 30 2.3 Summary of China’s CMM Activity ............................................................................................. 31 2.4 How to use this document if undertaking CMM projects in China ............................................. 31 3. Coal Market ......................................................................................................................................... 32 3.1 National Coal Market Overview .................................................................................................. 32 3.1.1 Growth in China’s Coal Production ......................................................................................... 32 3.1.2 Supply/Demand ...................................................................................................................... 32 3.1.3 Structure of Demand for Coal ................................................................................................. 34 3.1.4 Demand for Coal through 2015 .............................................................................................. 34 3.1.5 Coal Production ....................................................................................................................... 37 3.1.5.1 Coal type ......................................................................................................................... 37 3.1.5.2 Coal Production Company Ownership ............................................................................ 37 3.1.5.3 Geographic Distribution .................................................................................................. 39 3.1.6 Marketing and Pricing ............................................................................................................. 40 3.1.7 Recent Market Trends ............................................................................................................. 41 3.2 Provincial level ............................................................................................................................ 42 3.2.1 Anhui ....................................................................................................................................... 42 3.2.1.1 Demand in Anhui ............................................................................................................ 44 3.2.1.2 Demand Outside of Anhui ............................................................................................... 45 3.2.1.3 Production and Industry Structure ................................................................................. 46 3.2.2 Chongqing ............................................................................................................................... 47 3.2.2.1 Supply and Demand ........................................................................................................ 48 3.2.2.2 Production and Marketing of Coal by the Chongqing Energy Investment Group .......... 49 4 3.2.3 Hebi Area/Henan Province...................................................................................................... 50 3.2.3.1 Supply and Industry Structure ........................................................................................ 51 3.2.3.2 In-Province Demand ........................................................................................................ 52 3.2.3.3 Demand for Hebi Coal ..................................................................................................... 53 3.2.4 Guizhou ................................................................................................................................... 54 3.2.4.1 Supply and Demand ........................................................................................................ 54 3.2.4.2 Production ....................................................................................................................... 56 3.2.5 Inner Mongolia ........................................................................................................................ 57 3.2.5.1 Development and Structure of the Inner Mongolia Coal Industry ................................. 58 3.2.5.2 Demand for Inner Mongolia’s Coal ................................................................................. 59 4. Electricity Market ................................................................................................................................ 61 4.1 National Electricity Market ......................................................................................................... 61 4.1.1 Growth in Demand .................................................................................................................. 61 4.1.2 Status of the Electricity Industry, 2012 ................................................................................... 63 4.1.2.1 Generation ...................................................................................................................... 63 4.1.2.2 Organizational and Geographical Overview of the Power Sector .................................. 64 4.1.3 Transmission, Distribution, and Geographical Layout of the Power Sector ........................... 65 4.2 Electricity Macro Plans ................................................................................................................ 68 4.2.1 Generation Mix ....................................................................................................................... 68 4.2.2 Grid Integration ....................................................................................................................... 70 4.2.3 Electricity Price .......................................................................................................................