The Chinese government recently revealed plans to slash national coal consumption by 160 million tonnes in five years in an effort to reduce air pollution.

It has also pressured state-owned coal companies to scale back output with leading producer China Shenhua Energy committing to a nearly 11% production cut (34Mt per annum) for 2015 to 273Mt.

These moves follow various coal quality restrictions and coal taxation measures introduced since October – with these estimated to cut 10Mt of annual global seaborne exports alone according to Macquarie Wealth Management earlier this year.

Despite these measures, the Qinhuangdao port spot thermal coal index fell to a range of 470-480 yuan per tonne ($US75-76.8/t) according to the China Coal Transport and Distribution Association.

This represented not only the third weekly decline in a row but also the lowest price since September last year.

In analysis revealed on Monday, Macquarie flagged that the rapid increase in Chinese commodities consumption in the 2000s translated into rising energy intensity with power consumption growing faster than GDP growth in that decade.

“The rising energy intensity seen in this period may now feel like a normal condition for those following China’s development (particularly those whose career started after 2000),” Macquarie wrote.

“But in the period before this, 1980-2000, GDP typically grew faster than power consumption, suggesting that a reversal of rising commodity and energy intensity is nothing unimaginable.”

On the policy front, the broker referenced a recently revealed document on energy policy from 2014-2020 to say that the government aimed to cut coal-fired power’s share of total energy consumption to 62% by 2020, compared to 71% in the mid-2000s.

“To facilitate the shift away from coal, Beijing has been pushing hard on renewable and clean energy,” the broker said.

“The installed capacity of nuclear power is expected to reach 58GW by 2020, almost tripling the current 20GW, and wind power capacity will more than double in the same period.

“For wind and solar power stations located in northern China, power transmission has been a major issue, but the rapid development of ultra-high voltage lines are set to swiftly reduce the burden in coming years.”

The broker also said a large number of new thermal coal power plants were being built in China at the moment, with this based on anecdotal evidence.

“If the pipeline for future energy projects indeed remains very big, then either they are likely to suffer from low utilisation rates once launched, or wide closures of existing projects should be expected.”