Sustainable Development and Energy Transition in Europe and Asia

2Is China’s Dependency on Coal a Threat to Its Economic Development?

Coal is one of the prime contributors to China’s economic success. Despite China’s drive toward economic modernization, coal still plays a major role in its economic sectoral performance in electric power generation, the chemical industry, and various other commercial activities. The country’s overreliance on coal and their excessive use of it has had a detrimental impact on the environment, and the sustainability of this resource as the major fuel for economic growth and development is being questioned. Being cognizant of the damaging environmental and health effects of coal, the Chinese government has been trying to reduce coal consumption, and significant efforts are currently underway to find alternative energy sources that contribute to the development of a sustainable and eco-friendly energy model. This chapter examines China’s coal dependency by looking at the short- to medium-run dynamics between coal price volatility and sectoral stock exchange performance.

2.1. Introduction

Today, coal remains at the heart of the global energy system; it is the core component of fuel supply worldwide and has a close relationship with the Chinese power sector that largely depends on this organic rock. Owing to its abundancy, relatively low price, accessibility, easy storage, and transportation, coal enjoys very attractive characteristics that make it a key resource to support economic development in industrializing ...