The majority of rural residents in China are dependent on traditional fuels, but the quality and quantity of existing data on the process of fuel switching in rural China are insufficient to have a clear picture of current conditions and a well-grounded outlook for the future.

Based on an analysis of a rural household survey data in Hubei province in 2004, we explore patterns of residential fuel use within the conceptual framework of
fuel switching using statistical approaches. Cross-sectional data show that the transition from biomass to modern commercial sources is still at an early stage, incomes may have to rise substantially in order for absolute biomass use to fall, and residential fuel use varies tremendously across geographic regions due to disparities in availability of different energy sources. Regression analysis using logit and tobit models suggest that income, fuel prices, demographic characteristics, and topography have significant effects on fuel switching.

Moreover, while switching is occurring, the commercial energy source which appears to be the principal substitute for biomass in rural households is coal. Given that burning coal in the household is a major contributor to general air pollution in China and to negative health outcomes due to indoor air pollution, further transition to modern and clean fuels such as biogas, LPG, natural gas and electricity is important. Further income growth induced by New Countryside Construction and improvement of modern and clean energy accessibility will play a critical role in the switching process.

This paper introduces a tool to analyze the future developments of the international steam coal market, the "COALMOD-World" model. Steam coal is a major fuel for electricity generation today and its use is expected to grow dramatically in the coming decades, despite the potential negative external effect on the climate through the CO₂ emissions.

In tandem with the growth of global coal usage, the volume of the international trade coal market has been increasing in recent years. This trend is expected to continue, and an increasing global trade means that many countries will rely on imports. Identifying how the trade flows will develop and where steam coal will come from in the future - a primary purpose of the model - can help us better assess possible energy security issues.

The combination of model theory and detailed market analysis provides the ground for the development and the implementation of the model.  The model setup follows the organization of the value-added chain of the steam coal sector. The value chain is complex and there are various types of players involved at each stage. Producers can be large national and sometimes state-owned companies. There are a few large multinational coal companies but also many smaller companies, usually operating in one country only. Transport infrastructure can be built by the mining company or by another entity. Often, it consists of rail infrastructure but in some countries trucks or river barges are used. Export ports can be dedicated to one company or be operated by another company. Traders as intermediaries also play a role as they can be vertically integrated or contractually connected to every stage of the industry. This modeling framework allows for detailed analysis of how the global coal trade may evolve in the coming decades.

In 2009 the global coal market witnessed one of the most dramatic realignments it has ever seen - China, long a net exporter of coal, suddenly imported a record-smashing 126 Mt tons (103 Mt net). This inversion of China's role in global coal markets meant that Chinese imports accounted for nearly 15% of all globally traded coal, and China became the focal point of global demand as traditional import markets like Europe and Japan stagnated in the wake of the financial crisis.  The middle kingdom's appetite for imported coal seems insatiable, and the "China Factor" appears to have ushered in a new paradigm for the global coal market.

But China doesn't "need" the coal.  The world's largest coal producer cranked out 2.96 Bt of production in 2009, backed up by 114.5 Bt of reserves.  While the world's other fastest growing importer, India, is plagued by a growing gap between coal supply and power demand that it is unable to fill domestically, this is not the case in China.  The spike in Chinese demand for imported coal is therefore a more complex (and less easily predictable) phenomenon that requires careful examination if the world is to understand what impact China might have on global energy markets in the coming decade.

In this paper Richard Morse and Gang He devise a model that explains Chinese coal import patterns and that can allow the coal market to understand, and to some degree predict, China's coal import behavior.  They argue that the unique structure of the Chinese coal market creates a series of key arbitrage relationships between Chinese domestic coal markets and international coal markets that determine Chinese import patterns.

The implications of this argument are significant for the development of the global coal trade in the coming decade.  The arbitrage relationships that Morse and He describe directly link the domestic price of coal in China to the global price of coal. Developments in China's domestic coal market will be a dominant factor determining global coal prices and trade flows (and by implication power prices in many regions).  This makes understanding the domestic Chinese coal market, which operates according to a unique economic and political logic, crucial for any participant in the global markets.