2015 marked the fifth year of the 12th Five-Year Plan. At present, the coal industry nationwide is closely watching and pondering the development issues for the 13th Five-Year Plan. In the current era of comprehensive transformation both domestically and internationally, after experiencing a “decade of golden growth,” the coal industry has entered a new phase characterized by overcapacity, a sluggish market, and the need for transformative development. What kind of development trends will the coal industry face during the 13th Five-Year Plan? This is a critical question that everyone urgently needs to understand.

　　The Fifth Plenary Session of the 18th Central Committee was held in Beijing from October 26 to 29, 2015. Among the key topics discussed at this session was the formulation of the 13th Five-Year Plan, whose thematic focus will undoubtedly serve as the guiding principle for the development of various industries in the years ahead. As a pillar industry characterized by strong policy orientation and dependency, China’s “13th Five-Year Plan” will undoubtedly have a profound impact on the specifics of its energy sector.

　　It is understood that from January 2015 to February 2016, the country was in the drafting phase of the “13th Five-Year Plan” for energy development. The submission of the national “13th Five-Year Plan” for energy development and related work will take place from March 2016 to May 2016. Although the official plan has not yet been released, several key highlights of the 13th Five-Year Plan can already be discerned from recent high-level speeches by central authorities, earlier research studies, and the country’s recently issued relevant policies.

　　It is reported that the country is currently formulating the 13th Five-Year Plan for Energy (covering the overall plan, special plans, and regional plans), the Action Plan for Energy Development Strategy (2014–2020), the Energy Security Development Strategy, and the Energy Production and Consumption Revolution Strategy (2015–2020). The strategic direction for future energy development and reform is now largely clear: total energy consumption control, clean and efficient coal utilization, vigorous development of clean energy, and energy system reform are the key priorities.

　　Overall, the “13th Five-Year Plan” energy strategy roadmap has largely taken shape. China’s energy development priorities have shifted from expanding scale and ensuring supply to optimizing the overall system. The main approach is to curb coal consumption, stabilize oil and gas production, and boost wind and solar energy.

　　Implement total energy consumption control.

　　Controlling the total energy consumption primarily means controlling coal consumption. The state will set medium- and long-term targets for the overall coal consumption. As far as we understand, coal—being the key focus of total-consumption control—will see its share of total consumption drop from the current 66% to below 60%. The focus of coal consumption control will be on economically developed provinces (and municipalities directly under the central government), with the primary approach being the prevention and control of air pollution.

　　On November 4, at the international seminar on “Thirteenth Five-Year Plan” – China Coal Control Planning Study, the China Coal Control Project Team released the “Research Report on China’s Total Coal Consumption Control Plan.” The report points out that by 2020, China’s total coal consumption should be capped at 2.72 billion tons of standard coal, or no more than 3.8 billion tons in physical terms, with total energy consumption controlled at 4.74 billion tons of standard coal. To achieve these coal control targets, coal’s share in total energy consumption will drop to 57.4%, a decrease of 8.6% from last year.

　　Emphasize the clean, efficient, and comprehensive development and utilization of coal.

　　In the future, coal will remain China’s primary energy source. Cleaner and more efficient coal utilization will receive even greater attention, with power generation emerging as the key focus for such utilization. Consequently, the development direction of coal use will be steered toward centralized, high-efficiency combustion, and reducing the burning of loose coal will become a major goal.

　　In addition, modern coal chemical industry represents one of the approaches to the clean utilization of coal, enabling a transition of coal from being primarily a fuel to becoming a feedstock. Constrained by environmental protection and water resource limitations, the state has consistently adopted a cautious stance toward the development of the coal chemical industry. As a strategic supplement and technological reserve, the industry continues to focus mainly on steady, demonstration-level projects.

　　The layout of energy production continues to shift westward.

　　The overall guiding principle for coal development—“control the east, stabilize the central region, and develop the west”—continues to focus primarily on the 14 large-scale coal bases. Priority should be given to developing the eastern Mongolia, Huanglong, and northern Shaanxi bases; consolidate and further develop the Shendong, Ningdong, and Shanxi bases; restrict development in the eastern Hebei-Central, western Shandong, Henan, and Lianghuai bases; and optimize development of the Xinjiang base. In the central region (including Northeast China), maintain a reasonably intensive development pace and, following the “retire one, build one” model, moderately advance projects to ensure a smooth transition in production from depleted coal mines.

　　Under the target of achieving a 20% share for non-fossil energy sources, the process of "greening" energy production and consumption is expected to accelerate. As the economy enters a new normal—with slow growth in energy consumption and a generally relaxed supply-demand balance—the current situation also presents an opportunity to adjust and optimize the energy structure. The future development of new energy sources will become the major trend, while transformation and upgrading have become the inevitable choice for the coal industry’s development.

　　Before 2015, the coal industry had already fallen into a deep pit of overcapacity from which it found it extremely difficult to escape. Not only had coal prices plummeted by half, but the number of loss-making coal enterprises continued to expand. For quite some time to come, driven by slower economic growth and the country’s ongoing shift in its energy mix, coal demand is likely to remain sluggish. Consequently, any recovery in coal prices from their bottom will be a slow and volatile process.

　　So, given the current coal market situation, how can China’s coal economy break out of its predicament and promote the steady development of the coal industry?

　　From the government’s perspective, its efforts to help the coal industry overcome its difficulties should primarily focus on resolving excess capacity. Currently, the government’s main approaches to addressing coal overcapacity involve phasing out some outdated production capacities and closing mines that have exhausted their resources.

　　From the perspective of coal enterprises themselves, although production is the very foundation upon which coal companies rely for their survival and maintaining output levels is crucial, they should not pursue excessive growth. Finally, given the current market conditions, the previous development model for the coal industry indeed can no longer be sustained. At this stage, we should vigorously develop high-tech industries based on coal.