China’s Coal Consumption Has Finally Decreased
Sierra Club.
By Justin Guay.
There may be a light at the end of the long dark tunnel: It appears China’s coal boom is over.
While positive signs have been emerging from China for well over a year, it appears the ‘war on pollution’ is not just talk. According to analysis produced by Lauri Myllyvirta and Greenpeace International in the first half of this year, China’s coal use dropped for the first time this century – while the country’s gross domestic product (GDP) actually grew.
You read that right: coal and GDP growth have decoupled in China.
At the same time, the growth of imports — the seemingly endless source of optimism for the moribund U.S. coal industry — ground almost to a halt, with only 0.9 percent growth so far this year, as opposed to more than 15 percent yearly figures we have seen since China first became a net importer. Topping off the trifecta of good news is that domestic production dropped by 1.8 percent [article is in Chinese]. While uncertainty over the changes in coal stockpiles still exists, we’re confident that the unbelievable may be at hand: peak coal consumption in China.
It’s hard to understate just how historic this shift is. Analysts have been arguing over if, and when, Chinese coal consumption would peak. Some were forecasting a peak before 2020 while others — including Wood Mackenzie — have been loudly claiming Chinese coal demand may not ever peak but would instead double by 2030. This new data exposes the wide gulf between reality and hype that those predictions rely on.
In a sign of just how dramatically the tables have turned on the previously skyrocketing projections for the coal industry in China, consider this: the China National Coal Association is now calling for a 10 percent reduction in second half domestic coal output in many of the main coal-producing provinces. That about face comes as quite a shock considering as recently as December, the Association was busy advocating for a billion tonnes of coal to be added to the Chinese coal market by 2020. My what a difference a year makes.
But, it’s important to understand how the many who still believe in the myth that Chinese coal demand can grow endlessly will respond to the news. Two easy to believe short-term explanations have already been offered for the slowing coal demand.
The first is that China’s economic growth is slowing and skyrocketing coal consumption will resume when the economy rebounds. The problem with this explanation is that while the first five years of the century saw coal use and GDP grow almost hand in hand, the second half saw them decouple. More importantly, the Chinese economy registered a year-on-year growth rate of 7.4 percent, which indicates that the fundamental growth pattern of the Chinese economy has changed.
The second explanation was offered by Bloomberg: a surge in hydropower generation offset coal use. China did indeed add a lot of hydropower capacity in the first half of 2014; however, the 9.7 percent year-on-year increase in hydropower generation was business-as-usual. In fact, the average for the past five years was 9.3 percent. This increase in hydropower was only capable of changing the coal consumption growth rate by less than one percentage point, which hardly changes the big picture.
So, what’s really going on? The times, they are a changing, and the Chinese economy is changing with them. We’re finally starting to see movement away from the energy-intensive fossil fuel industries and investments that fueled China’s rise.
It has been long acknowledged that, in China, investments and a heavy reliance on industry cannot sustain growth while the services sector and household consumption remain suppressed. This adjustment seems to be slowly progressing, with growth in services (excluding real estate) and private consumption only recently outpacing the manufacturing industry. While still nascent, if this restructuring gains pace, along with the promising growth in clean energy, there is much reason for optimism.
But there is still a long way to go from a peak in coal consumption to the necessary reductions needed to move toward a clean energy future. Fortunately, this change does not have to be linear, and interestingly, it seems Chinese investors were ahead of the curve as many have been busy shifting their money from coal to clean energy over the past few years.
It looks like the smart money in China has long realized what the data is now showing: bullish predictions on future coal growth are unfounded, and clean energy is the future.
— Justin Guay, Associate Director, International Climate Program, and Lauri Myllyvirta, Greenpeace International
Source: Sierra Club. Reproduced with permission.
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Oh please let use see coal go negative next year. Then a push to close all the old coal boilers and we might see air improvements in short order.
Imagine that. You stop paying others for energy, and make it yourself you create your own jobs, and save money. Sort of like growing a garden, make your own.
Seeing this is interesting, because just a few days ago I saw this, which predicts that Chinese coal use will continue to rise until 2040: http://www.climatecentral.org/blogs/chinas-growing-coal-use-is-worlds-growing-problem-16999
Got to love how the graph in the article you linked to shows a decline in coal use in the US but then suddenly to goes straight even showing an increase towards 2040 because we all know that we’re going to suddenly stop installing new wind and solar capacity.
All you need to do is throw a reference to IEA or EIA and zing,… it starts waving like a flagpole…
I know, it gave me a laugh.
Did you notice that Larson failed to talk about (or doesn’t know) that the Chinese government has stated that they wanted to hit peak coal by 2015 and intended to drop use after peaking?
They did say later, after setting the goal, that they might not be able to peak until 2017.
Justin, can we have a graph of coal consumption versus total energy (or maybe electricity) consumption? Could it be that producing less steel and cement and whatnot has reduced the overall energy demand?
Calamity Jean, thanks for the link, but I like this graph better!
One estimate is that China now has enough modern accomodation for everyone. However, they may still be producing 15 million new units a year. Now 15 million might not seem that much in the context of a 1.3 billion population, but if they’re not being used it’s a waste. (Inflation eats away at Chinese bank accounts so people like to invest in accomodation instead.) While construction won’t stop in China it will slow down. This means means less steel, less cement, and less coal burned to produce the steel and cement. In addition, China is switching from a country that relies on mostly new steel to a country that relies much more on recyled steel, which is something that happens to all countries as they develop.
Ronald, how the hell do you know so much? You consistently have a very thorough (and seemingly informed… but maybe it’s just Australian BS) response to difficult questions people throw in here. So much knowledge about so many markets.
Well, I made the majority of my money from the stock market you know, at least at the moment I do. I study markets, economies, trends, technologies, and identify weak points and imbalances and work out what effects they are likely to have on economies. And then at the end of the day I say, “Yep, still don’t understand what’s going on, I’ll leave all my money in the index fund.” Leaving all my money in the index fund has made me a fortune over the years and I highly recommend it.
Well said.
Non-managed index funds rule. I’ll take a guaranteed second place in every race as opposed to a win every decade or two.
Ronald Brakels – We are very lucky to have your insights, someone has to keep Bob_Wallace hopping
To remember a lot of stuff, it helps to have a good memory. I can’t deny that. I used to have a good memory, but nowadays I find it hard to even remember your name, Susan.
But this just makes the second thing one needs to do to have an extensive fund of knowledge in one’s head to draw upon even more important. And this thing is, whenever one learns something new, always find connections between the new information and what one already knows. This is so one can slot the new stuff into what I’ll call for want of a better term, the Pyramid of Knowledge. At the base of the pyramid you have your foundations, maths, basic chemistry, a bit of statistics, etc. And above that one has what one knows that is supported by the foundations. If some new idea isn’t supported by the foundations that’s how one knows it’s rubbish and can be safely mocked. But always try to mock using the basics. That way one can check that one’s fundamentals are in good shape. Sometimes they need work.
And then at the peak of the pyramid there is the more intuitive functions that makes connections between what you know and can let one do things such as come up with a new recipe on the fly when cooking because one knows about the ingredients and can intuit how they’ll interact. Of course, sometimes this goes wrong. But that’s okay. One learns from that, improves the knowledge pyramid, and moves on.
So if one has some knowledge of economics, renewable energy, engineering, regional variations, etc. and one’s fundamentals are good enough to ensure that what one knows isn’t rubbish, then one can intuit what might happen with energy in the future. Of course one will need to check new ideas against what one already knows and the fundamentals to make sure they’re not crazy. If it’s not crazy and it checks out, fine, slot it into what one knows and move on. If it is crazy that’s fine, you now know why it’s crazy and have learned something. Try again or move onto something new.
And that, Susan, is how one gets a repuation for having a head full of useful, or depending on who one is talking to, useless information.
Yeah, so do I.
Yeah, so do I. It’s probably closer to correct, also.
Yes. If confirmed, and repeated in the last two quarters, it’s epochal: possibly the turning of the tide in the war to save a livable climate.
The supporting material confirms that this is almost certainly for real and not a statistical blip. The Chinese coal association is calling for further cuts in production to protect margins – so the industry itself believes the trend is permanent. Second, the rapid decline in growth rates for energy-intensive industry – pig iron production has gone flat – indicates a major structural change towards services. China is following OECD countries into dematerialized growth.
The Chinese government no longer has any domestic policy reason to oppose binding emissions caps internationally. They may not want to accept them out of an almost American suspicion of international constraints, but that’s another matter.
The news spells doom for Australian, American and Indonesian coal exporters. China will give priority to domestic producers, and stop imports except for specialized metallurgical coal. India to the rescue? Modi’s decision not to impose anti-dumping tariffs on imported solar modules confirms his priorities, and they aren’t more coal imports.
Tony Abbott, what’s your take on this?
Another wonderful, informed response. Love these, as coal is not my expertise in the least. And love this line: “Tony Abbott, what’s your take on this?” I think he is a CleanTechnica reader.
If Abbott doesn’t read CleanTechnica, he should.
At least in the short term, China will give priority to higher quality coal for air quality reasons, there won’t be a preference for local coal, much of which is lower quality.
Raw steel production is a pretty good metric for fossil fuel use. Not just metallurgical coal for carbon steel, but what’s done with the steel impact fossil fuel use. Roads, bridges, buildings, cars, buses, etc.
Here’s a nice rundown on steel production from World Steel: http://www.worldsteel.org/
All the data in the above link is under statistics. China produces about half the world’s steel. There is no slowing down of steel production through 2013. China’s production went screaming from 2000 to 2013: 129,000 to 779,000 thousand tons. The world’s steel production in that time frame went from 850,000 to 1,582,000 thousand tons. China may be slowing in rate, but the overall production continues to go up. If raw steel isn’t produced in China, it probably gets produced elsewhere.
China also produces half the world’s coal. Coal doesn’t just get mined to pile up on the surface. It get’s burned somewhere. Consumption is one thing, and an important thing. Production is probably more important. Hard data on production is only good to 2012.
I’m not going to celebrate anytime soon. Greenpeace has also moved from pure advocacy to environmental and energy consulting. Is PRC a client of Greenpeace’s?
Production of a base material like steel can be used as a proxy marker of GDP and in the past if GDP rose in China coal use rose, however the whole point of these graphs is that coal consumption and GDP have decoupled in recent years and that assumption of a directly correlated relationship is no longer reliable.
I respectfully disagree. The analysis is more hopeful than reality. Hard data for steel is good up to first quarter 2014. Coal is an estimate for 2013. Raw steel requires three inputs: iron ore (taconite), metallurgical coal and a fossil fuel for heating. Steel from scrap takes electricity. And lots of it. China is moving from coal to hydro, nuclear, renewables and natural gas to make that electricity. I’ll give you that. But the data says, China is not slowing down in steel production. China also produces half the world’s steel. That’s a lot. China’s steel production is increasing. World steel production is increasing. I don’t see that untethering of heavy industry.
The US has moved much of its heavy industry over to China. By doing that our overall carbon emissions have stabilized, maybe even dropped. The entire developed world has moved much of its heavy industry over to China. China has also a huge internal market. China is also moving some of its heavy industry out to other countries as it grows its economy. Coal production continues to rise globally. Oil production continues to rise globally. Natural gas is as well. The atmosphere experiences almost perfect mixing. Carbon dioxide, a greenhouse gas, is rising in concentration. China’s air quality concerns over its cities is one thing. Overall CO2 emissions is another.
I am a Chinese working as a China analyst at a think tank. It is becoming more and more apparent to many people, that the ruling Chinese Communist Party (CCP) knows it is on its last straw of survival.
The party is facing severe and endlessly increasing systematic stress on all fronts:
1. Increasing external oppositions from all other countries in the world including all of China’s neighbours. They are forming more and more alliances and becoming more outspoken with rising strengths against China, in addition to increasing anti-China sentiment from people in all other countries. Many countries including Canada and Australia have tightened their immigration policy to prevent Chinese from entering their countries. Even on these casual internet message boards, when you look past the paid Chinese propaganda professional commenters, you notice rising general anti-China feelings from all over the world.
2. Increasing internal severe and massive violent social unrest and anti-CCP mutiny from people of all Chinese living places. To beat down internal dissent in mainland China, the CCP every year is forced to spend even more money than on its massive military budget. All the semi-external places (Hong Kong, Xinjiang, Tibet, Macau) are fighting harder and harder to break free from China. Taiwan is for all practical purposes already a separate democratic country, and anti-China sentiment there (especially among younger Taiwanese generation) is at all-time high after seeing how China violently suppress Hong Kong as an example of “reunification”. This whole situation is continuously worsened by the free flow of information, with Chinese people knowing more and more from travelling abroad and learning about truths from jumping beyond the “Great Fire Wall” on the internet.
3. Its own economy and social condition never able to advance to higher level beyond mass skill-less manufacturing, due to complete absence of law and common morals. High technology and innovations and scientific development all require many citizens working together voluntarily contributing long term in a system they trust, with things like rule of law, no censorship on knowledge, no restrictions on speech and expression, copyrights, patents, common morals when collaborating and trading with each other etc. These qualities are all destroyed in modern China by the CCP. When was the last time you heard an announcement of technology development or innovations or scientific breakthrough coming from a Chinese organization / company / university? You haven’t because there ain’t any. Unlike mass manufacturing factory work, these high level human developments cannot be forced on or bought with a dictator’s central planning. The only way modern China gets these things is from stealing and spying from all other countries, but that has become much more difficult since the whole world has caught on to their act.
This systematic fatal weakness is why you do not see even one Chinese brand or company that can compete in the international market in any industry of the human race. For example Lenovo, who is already one of the few Chinese brands some people may have heard of, cannot make either the chips that power their computers or the operating system that run them, so it is just one of many plain vanilla boxmakers without any competitive advantage. Another example Huawei is blacklisted by many countries and international customers because everyone knows Huawei’s products send all communication data back to the CCP. No rule of law in China also means no people or businesses, both Chinese and foreign, ever invest in China long-term or on a large scale because everything frequently change on a whim along with the political climate. No one trusts any contract or agreement in China because they are always broken by the Chinese and there is no legal protection whatsoever, meaning China can never advance to a knowledge economy or service economy. No rule of law also ensures Shanghai fail to become a financial city despite the CCP dumping huge resources into it for 30 years.
4. China’s mass skill-less manufacturing itself is going away to other countries due to sharply increasing costs and openly hostile and unfair business environment full of frauds and sanctioned protectionism and government robberies. The labor force is endlessly more demanding both in wages and benefits expectations and working conditions, especially since all of today’s Chinese workers are single child used to coddling and indulgement by their own family. It is further worsened by the rise of robotic automatic manufacturing and 3D printing. This situation is a death knock to the “growth-based legitimacy” of the CCP, which is the only thing CCP can rely on for continuing ruling power. For sure Chinese people tolerate the CCP when the economy seemingly explodes, but when one day it crashes and the country’s hopeless bad shape hit them in the face the people’s “support” for the CCP will turn on a dime.
Since six months ago, all the major economic indicators for China have gone on a continuing nosedive – including manufacturing orders, export volume, commercial investments, graduate employment rate, corporate credits, foreign capital inflow, domestic consumptions, real estate prices, consumer spendings, luxury goods demand, HSBC Service PMI, survey of business sentiments etc. Suddenly all the rich Chinese tourists gobbling up luxury goods at different world cities seem to have disappeared altogether. The CCP is on its last resort of printing literally trillions of worthless renminbi to dump into the economy, causing way more long-term harm than short-term help, and when that is over there is nothing else the CCP can do to prop up the failing economy. China currently ranks 82nd on GDP per capita and that is the highest it can go before falling sharply in the coming near future.
5. Fierce unstoppable purges and mutually-destructive infighting among different factions within the party, who are imprisoning and killing each other every day. This power grab goes on under the laughable thin guise of “anti-corruption drive” when everyone knows all officials in china are corrupted. No work to manage the country or guide the ship is being done while this is going on.
6. Its many previously-suppressed fatal problems have all grown too big to be contained all catching up to the CCP e.g.
– severe carcinogenic poisonous pollution everywhere in air and water and soil and their own food etc, with the WHO issuing multiple warnings on Chinese population having the fastest cancer growth rate in the whole world
– skyrocketing unrepayable bad debts of all kinds everywhere, its true scope no one on Earth knows because all data from China are faked
– biggest housing bubble in human history, in addition to innumerous crumbling “ghost cities” and shoddily-built vanity project infrastructure that cannot and will not be used
– rapidly aging demographics with a 140:100 male:female ratio (from one child policy, culture of “leftover women”, and many Chinese families killing their own daughters so as to chase boys)
– world’s no.1 wealth inequality, with a Gini coefficient rivaling 18th century France just before the French revolution
– complete absence of soft power / cultural influence / social attraction, partly due to CCP censorship. One result of which is minimal and sharply dwindling number of foreign professionals and tourists and students going to China. It also means the CCP only has force as the only tool to use on the international stage
– all Chinese chasing foreign-brand goods and services while ditching low-quality Chinese-brands, who have a well known history of poisoning their own food and their own baby formula so as to make more money. This dashs CCP’s hope to build indigenous industries and a domestic consumption economy
– corruptions and fraud throughout the whole rotten core of a system
– desperate mass exodus at all levels of Chinese society to escape the country using emigration or buying houses / study abroad or marriage to foreigners or plain old human smuggling, resulting in all able Chinese leaving taking huge amounts of talents and money out of the country
– the law of large numbers, “middle-income trap” and “Minsky moment” all work against the growth-based legitimacy CCP desperately needs for its survival
Most importantly, the CCP knows that if 1.4 billion Chinese learn about basic human qualities such as morals, truth, justice, human rights, rule of law, fairness, freedom, universal values etc the CCP will be toppled very quickly. Therefore its state-controlled brainwashing education and propaganda machinations ensure a complete lack of morals and regard for laws in all Chinese growing up and beyond. This results in failure in all basic aspects of human interactions with every modern Chinese, whether it is business trading / personal dealings / technology development / creating innovations / human communications / scientific research / artistic expressions / teamwork collaborations / academic exchange etc. Another propaganda brainwashing technique used by the CCP is to make all Chinese people pathologically nationalistic and very emotional on this issue, so the CCP can always create and point to some “foreign enemies” so as to hide all the domestic crises and government robberies going on. This attention-diverting technique is the same trick magicians have used for more than a thousand years to fool their audience.
An interesting example would be the Chinese reaction to this report – they are expected to dismiss this report as total rubbish, accuse the author “unpatriotic” for saying the truth, shout China will only become richer and stronger than all other countries, yet they will give no counter-arguments and they will make no acknowledgement to the horrible factual conditions and complete lack of basic human qualities listed above in modern China. Ironically, the longer Chinese people deny or refuse to acknowledge the CCP problem, the longer they are only digging themselves into the hole and hurting themselves for any chance of recovery, causing the chinese economy to crash even further. Consider the example of Google, Facebook, Wikipedia, Youtube, Whatsapp, Twitter, Instagram etc – these services are all completely blocked in China while at the same time the rest of the planet are on these services every second communicating ideas with each other, making friends, exchanging knowledge, doing business, working together, improving science and technology and arts, and advancing humanity.
Some people say China economically developed a lot in past 30 years, but the truth is this “development” is actually debt borrowed against the future. After the 1989 Tiananmen Square massacre of their own students, in order to survive and hang on to power, the CCP was forced to pursue short-term explosive economic growth that sacrifice everything else, including a foundation or potential for long-term economic and social development. This “scorched earth” policy is like winning the lottery for corrupted CCP officials who can rob a lot of money from the country in the short-term before escaping to America. The only entity left to suffer is China’s future from this point on, a country that has been turned by the CCP into a place with no law, no morals, no system for future scientific or economic or social development, no spiritual support apart from money, no trust or cooperation among Chinese, no trust or goodwill from foreigners, no other country as friends, all resources sold away cheaply, entire environment and air and water and soil and food fatally polluted, only social recognition is to make a lot of money for “face”, no creativity or personal development for Chinese young people, a populus not allowed to know the truths and not allowed to say the truths.
The end result is that majority wealth of this “debt borrowed against the future” has gone to the 0.0000001% elite ruling class “princeling” CCP families (about 250 of them) who have already smuggled trillions of dollars abroad along with their U.S. passports and their own children (all Chinese elites and Politburo members hold foreign passports, with U.S. and U.K. being the most sought after choice). For the CCP in 1989, 1.4 billion people is great central-planning asset when the country start from nothing and you order them to do backbreaking mass manufacturing repetitive factory work 20 hours a day without workers protection of any kind. But in the 2014 borderless knowledge economy when that no longer works, 1.4 billion immoral and uncooperative and selfish and undeveloped and angry Chinese contained in a lawless system without any hopes of growth is very, very dangerous liability for the CCP.
All debts against the future have to be paid back – China is no exception. That moment may arrive a bit later than expected but it surely will come, as it has on 100% of occasions in human history. In normal countries bad conditions correct themselves with short periods of market ups and downs, but in China the CCP suppress all problems and criticisms until inevitable system meltdown. For China the moment has arrived to suffer the consequences for all its own chosen actions in past 30 years. All the festering fundamental systematic problems listed above and much more, are only getting worse and worse everyday until one day when the system can suddenly no longer bear.
Think USSR in 1989.
( Cliff notes summary for the smartphone generation with Attention-Deficit-Disorder:
– The Chinese Communist Party (CCP) signed a deal with the devil to pursue miraculous economic growth
– Miraculous economic growth has been achieved, now China has hit the wall
and many bad things have caught up
– CCP cannot go on externally, it cannot go on internally, economy has no way to go but greatly down, many fatal cancers and huge structural problems from the past now overwhelming the country
– Something has to break, what happens is anyone’s guess, guranteed to greatly impact China and the world )
BiberWallgoal – I’m happy to be your first follower and look forward to reading more of your comments.
It is true that China does have its problems but most Western Countries also have their share of domestic problems as well. That said, I believe that China has the capacity to work itself out of its problems if the newly Ultra Wealthy are not allowed to make themselves Kings and Queens of different parts of China, because that will only cause increased civil unrest. If history has shown us anything about the Chinese people, it is that when the price of rice becomes unaffordable, the people revolt against their rulers.
If I could offer a suggestion to the Leaders of China, I would suggest that they immediately start taxing the top 3% of the wealthiest Chinese and spend those funds on jobs and quality of life improvements for those Chinese that are the poorest. Unless China invests in its own people in order to make its poor feel proud to be Chinese, they will suffer ever increasing massive civil unrest that will make their on-going Tibet issue look trivial.
Another suggestion to the Leaders of China, is that they should reverse their hard line stance on Tibet and grant Tibetans a greater voice in directing their future because then all the minorities of China, along with the rest of the World, would see that peaceful protests can lead to change; which is an object lesson that is much less costly than civil strife and or open hostilities as we are seeing in the Middle East.
China is now one of the wealthiest World, so it is of major importance that they demonstrate what real Leadership means, instead of following the examples of the Western World where the Ultra Wealthy have created global gridlock, instead of making life better for all of mankind. The rest of the World needs China to step up and do more than just provide low cost labor for the rest of us.
I’d like to suggest that 2 other reasons for China to reduce the amount of Coal they are using is that it creates so much dirty air that it is reducing the efficiency of their solar panels and/or raising their health care costs due to poor air quality!
No “and/or”. It’s “and”.
And lost worker hours due to coal caused health problems.
Yes, Germany recently found that they were producing 5% more PV power than expected, because their air pollution had been reduced.
As an aside, I’ve had to run my backup generator a few times this summer due to persistent haze from California’s forest fires. Nothing (large) close to me has burned, but the big fires in NoCal and southern Oregon have put sunglasses over my panels.
In a normal summer I’d be fully charged before noon.
Maybe that is why the “Dirty” sources of Energy are so scared of “Clean” energy, as out air quality improves, our PV will even generate more! 🙂
They’re scared because they now realize that they are going the way of the buggy whip.
I saw something from the one of the oil companies about not getting into renwables because oil was going to be a profitable business for the next 20 to 30 years.
An admission that oil probably had no long term future.
Great comment! I’m Following Now.
Have a link, you can post?
Your wish is my command (up to a point). http://www.pv-magazine.com/news/details/beitrag/brighter-skies-leading-to-5-pv-yield-increases_100016449/#axzz3Fmd1C2Nq Fortunately a link is not beyond the point.
Shared with the world!
Salute!
More news on the same subject: http://reneweconomy.com.au/2014/china-coal-consumption-down-23-as-more-funds-dump-fossil-fuels-40314 This is comparing coal use in just the month of August 2014 against August 2013. Enjoy!
Just worked through the 2014 BP database on coal consumption. Based on their numbers China increased consumption 3.7% in 2013 over 2012. That’s down from a 10 year average of 9.9% annual increases.
The GP data comes from a 1.8% decrease in domestic production and flat imports. But they caution that consumption could be higher if China is burning stockpiled coal.
The cautious response might be “could be slowing”.
We will know for sure in two or three years, but it’s certainly a hopeful hint now.