During the first half of this year, electricity consumption in China – which is two-thirds supplied by coal – rose by just 1.3 per cent, the lowest in 30 years. Last year, the average utilisation rates of coal-fired power plants across the country were the worst since 1978. And in the past few weeks, China's two biggest coal companies – Shenhua Group and China Coal – have engaged in a price war to protect their market share.

Meanwhile, trade data released this week showed China's coal imports slumped 30 per cent in the first nine months of the year compared to the same period in 2014. On paper, the rate of decline is actually moderating but that's because imports have now been falling for 15 straight months.

So how did the coal industry, environmental policymakers and most energy analysts get it so wrong?

Tim Buckley, former Citigroup analyst and now director of energy research at the Institute for Energy Economics and Financial Analysis says the mining sector underestimated Beijing's commitment to tackling air pollution and transitioning the economy away from a reliance on the manufacturing sector.

Huge investment has been made in hydropower schemes, wind turbines, solar farms and other renewable energy sources. China is now the largest investor in the renewable sector and according to the International Energy Agency, will account for 40 per cent of global capacity growth.

That's not to say China isn't still investing in coal. Since the end of 2011, China has invested 1.69 trillion yuan ($365 billion) into the coal industry, according to Deutsche Bank's Hong-Kong based analyst James Kan. However, he expects only half of the investments will turn out to be effective capacity and China will need to ramp up exports to relieve the industry from oversupply.

The real game changer for the global coal sector, according to Kan, will be the completion of China's Ultra High Voltage (UHV) transmission projects, which are being rolled out across the country. These are aimed at connecting hydro, wind, solar and mine-mouth thermal power plants in southwestern and northern China to the coastal areas, which are the biggest customers for imported coal.

Kan said in a report published in August that during visits with power companies he realised the completion of the UHV transmission plans would "unlock stranded power" and "reduce pollutant emissions in China's coastal areas." He forecasts coastal thermal coal demand to shrink by 160 million tonnes to 640 million tonnes, a similar amount to China's imports in 2015.

All of these developments are being bolstered by Beijing's continuing focus on the environment. President Xi announced late last month China would introduce a national emissions trading scheme in 2017, which despite likely implementation and enforcement issues is confirmation of the government's shift on environmental policy. It will allow the country to put a price on pollution and move to a more effective measurement system for emissions.

China is currently working on its next five year energy plan for 2016 to 2020 and there is speculation it will introduce a nation-wide absolute cap on coal consumption. While there are still some analysts who believe the "peak" is some way off, there is little doubt coal's share of the energy mix will continue to decline in line with new spending on transmission projects and renewable energy sources. And all of this is happening at the same time as China is moving away from a reliance on the power-hungry heavy manufacturing industry for economic growth.