Government authorities, including the National Energy Administration, are working on an energy plan for the 12th Five-Year Plan period (2011-2015). According to primary research, demand for China's coal will continue to grow rapidly during the period, making guaranteeing a stable coal supply a significant issue.

In 2009, China's primary energy consumption exceeded 3 billion tonnes of standard coal, and fossil energy consumption accounted for 91 percent of this, including 68.7 percent coal, 18 percent oil and 3.4 percent natural gas. But non-fossil energy consumption only accounted for 9.9 percent.

Assuming an 8 percent of annual growth in GDP, China's primary energy demand would hit 4.2 billion tonnes of standard coal by 2015, with 260 million tonnes to be provided by hydropower, 57 million tonnes by wind power, 68 million tonnes by nuclear power, 20 million tonnes by biomass energy, and 200 million tonnes by oil. Therefore, about 3.8 billion tonnes will have to be fed by coal.

However, the growth of domestic coal output would find it hard to match the growth of demand.

China's coal output has been targeted at 2.6 billion tonnes for 2010 in the 11th Five-Year Plan, but actual coal output is likely to reach 3.2 billion tonnes this year. However, China is facing great challenges in restructuring the energy industry.

So far, 315 coalmining companies capable of producing 1.2 million tonnes or more a year have been formed, with a combined annual output capacity of 670 million tonnes. Meanwhile, China also plans to raise the output capacity of large coalmines to make up more than 50 percent of national total during 2011-2015 and shut down all small coalmines each with an annual production capacity of under 300,000 tonnes.

Nevertheless, small coalmines with production capacity less than 450,000 tonnes still account for the majority of the national coal output and play a significant role in feeding domestic coal demand. The closure of these small coalmines would definitely lead to a tight coal supply.

Therefore, apart from domestic output, China will have to increase coal imports in order to cater for domestic coal demand. Guo Yuntao forecast that pushed by the increasing coal demand China is likely to become the largest coal importer in the world in 2010, with net imports expected to hit 170 million tonnes, up from 103 million tonnes in 2009.