Smog worsens as China flags peak in coal usagePublished by MAC on 2013-02-11
Source: The Age, Xinhua, BBC News, Mining.com (2013-02-06)
Last month China been going through some of the worst air pollution episodes in modern history. In December Greenpeace coal team published an air pollution health report "Dangerous Breathing" together with University of Beijing, bringing the acute pollution deaths into the discussion. See: Greenpeace report: Coal projects' threat to the climate
As the debate on coal pollution comes to centre state, new figures show that Chinese coal demand has been rising at about 9% a year for the last 12 years. Coal use is growing, both in absolute terms and relative to the rest of the world (as China now burns just under half of all the world's coal use).
However, predictions show that coal consumption is soon likely to peak. For those suffering in a national industry still mired by a disastrous health and safety record, those suffering from air pollution and the future of the planet, any reduction may not come soon enough.
Time for change: China flags peak in coal usage
6 February 2013
Beijing - China's decade-long boom in coal-driven heavy industry is about to end as the leadership shifts priorities towards energy conservation, say officials and policy advisers.
The advisers predict China's coal consumption will peak at only a fraction above current levels after the State Council, or cabinet, last week set an ambitious new total energy use target for the five-year plan ending 2015.
"Coal consumption will peak below 4 billion tonnes," Jiang Kejun, who led the modelling team that advised the State Council on energy use scenarios, told Fairfax Media.
"It's time to make change," said Dr Jiang, who is director of the Energy Research Institute under the National Development and Reform Commission (NDRC). "There's no market for further development of energy-intensive industry."
The imminent stabilisation of coal usage, if broadly achieved, would mark a stunning turn-around for a nation that is estimated to have burned 3.9 billion tonnes last year, which is nearly as much as the rest of the world combined.
It would bring some relief in the fight against global warming.
It would also trigger a negative income shock to Australia, the world's biggest exporter or coal and iron ore, with significant implications for government budget forecasts.
Dr Jiang said the energy targets would bite hardest with energy-intensive heavy industries such as steel - dependent on iron ore and coking coal - which he said had saturated their potential markets and could no longer make money.
Thermal coal-powered electricity generation would continue to expand at a low pace, he said.
In the first 12 years of this millennium, China increased annual coal use by a staggering 2.4 billion tonnes, or 163 per cent, accounting for more than four-fifths of global coal consumption growth.
In five years China's net coal imports have surged from negligible levels to about 200 million tonnes, driving up the international price.
Last year China bought 19.5 per cent of Australia's thermal coal exports worth $2.8 billion; 17.5 per cent of coking coal ($3.5 billion) and 72.5 per cent of iron ore ($38.6 billion), according to estimates by Kieran Davies, an economist at Barclays Bank.
Foreign energy analysts are mostly sceptical that China can meet its "non-binding" energy goal, pointing out that it missed its 2010 target by a large margin.
They are broadly unconvinced that the energy targets can be achieved without an intolerable drop in the GDP growth rate.
Chinese officials and analysts acknowledge that state-owned enterprises, regional leaders and their political patrons have resisted or ignored previous edicts.
But they say the economic growth is now ready to be weaned from its addiction to coal and the State Council decision - including to apportion responsibilities to local governments and enterprises - shows a stronger political consensus has been reached to mobilise the bureaucracy.
Pan Jiahua, who heads a team of climate change economists at China's leading think tank, the Chinese Academy of Social Sciences, told Fairfax Media that the State Council's endorsement of the energy target had the effect of elevating it into a "political requirement".
He said officials in local governments and state-owned enterprises would now be judged partly on their ability to meet energy targets while a long list of green slogans, incentives and policies were translating into concrete measures.
Professor Pan said energy security remained the primary motivation behind the measures but last month's record pollution readings in North China had contributed to the hardening of political will.
"Chinese people have done enough tolerating such bad air," he said.
The State Council last week set a total primary energy consumption target (including renewable energy and transport fuel) of 4 billion tonnes of "standard coal equivalent" in the five years to 2015. Confusingly, 1 tonne of actual coal equates to about 0.68 tonnes of coal equivalent, according to Dr Jiang.
With two years of the plan period already used up, the target translates to annual growth in energy consumption of about 3.5 per cent over the next three years, down from 6.6 per cent per year in the five years to 2010.
A proportion of the increase will be absorbed by hydro, wind, solar and nuclear - which are all benefiting from strong government assistance - at the expense of coal.
Officials at NDRC have been telling visiting delegations in recent days that coal consumption will peak below 4 billion tonnes and the government would do "whatever it takes" to hit the overall energy use targets.
Professor Pan predicted coal consumption would peak at less than 4.2 billion tonnes by 2015 while other global commodities markets would be hit at least as hard.
He said a continuing increase in coal-powered electricity generation would be offset by a production plateau in key heavy industries.
"I don't think there will be further scope for expanding iron and steel production, or cement," he said.
Professor Pan said there was no question the State Council would meet its target but he noted that measurement methods were not robust.
"In some cases statistics may not be able to provide accurate information and some numbers may have to be estimates, which gives a certain degree of flexibility."
China is getting serious about taming coal
By David Roberts
6 February 2013
The most worrisome energy trend in the world, by a wide margin, is rising coal consumption in China
The figures are pretty stunning: Chinese coal demand has been rising at about 9 percent a year for the last 12 years. By comparison, coal demand in the rest of the world has been rising at about 1 percent annually. China now burns almost half the world's coal.
Cheap coal power has been a boon to China, an engine pulling millions and millions of people out of poverty. But it has also brought nightmarish local pollution problems - which are not remaining local - and it of course threatens to tip the climate into chaos, which will do more damage to the Chinese people, over the long term, than the last decade of growth has done good. It is, as China expert James Fallows says, an "environmental emergency" that threatens to stop China fromever catching up to the developed world.
Most projections [PDF] have coal use in China continuing to increase for decades to come. But there are reasons to think those projections overstate demand - that China's appetite for coal may peak sooner than expected. For one thing, the Chinese government ishsignaling that the country's coal consumption will peak by 2015, at 4 billion tonnes.
This would be achieved through a cap on total energy consumption, as part of China's next five-year plan. It would be, to put it mildly, a remarkable feat, a matter of flatlining energy demand growth almost overnight. If China can pull it off it will be (comparatively speaking) a blessing for the climate and future generations.
There is, quite rightly, skepticism about the proclamation:
"Foreign energy analysts are mostly sceptical that China can meet its "non-binding" energy goal, pointing out that it missed its 2010 target by a large margin.
They are broadly unconvinced that the energy targets can be achieved without an intolerable drop in the GDP growth rate.
Chinese officials and analysts acknowledge that state-owned enterprises, regional leaders and their political patrons have resisted or ignored previous edicts."
(More skepticism, especially from the Australian coal industry, here. More on the inadequacy of China's efforts to date here.)
I don't buy the scare story about GDP. Many of China's most carbon-intensive industries (iron, steel, concrete) are reaching a plateau anyway. But that last bit, about the difficulty of making central-government edicts "stick" in the provinces, is a real concern. It's difficult to tell exactly what's going on from the story, but it seems that responsibility for reaching the goal will be apportioned to regions and state-owned companies, so perhaps they will be held more accountable this time. Making sustainability a route to advancement in the party is key to getting it done in China.
Regardless, Chinese government officials are saying they will do "whatever it takes" to hit this target. If nothing else, it signals an increasing political consensus in China that coal-driven growth must be tamed. It will be the drama to watch over the next decade. All our fates hinge on it.
China is going coal crazy: imports jump 56%
8 February 2013
Chinese customs data out on Friday show imports of coal amounted to 30.5 million tonnes in January, up 56.3% compared to 2012, already a record year.
Last year China imported 234.3 million tonnes of coal, which constituted a huge jump - 28.7% - over the year before.
China is also the number one producer of coal with domestic output pegged at 3.66 billion tonnes.
China now consumes almost as much coal as the rest of the world combined and coal consumption in the country shows no signs of slowing down.
The country's Coal Importers Association, recently said China's coal imports may reach 400 million - 500 million tonnes within three years.
China proposes coal industry reshuffle
5 February 2013
BEIJING - China proposes to further reshuffle its coal industry by setting higher thresholds for the scale of coal producers and encouraging mergers to form industrial conglomerates, the government said Monday.
The minimum standard for the scale of coal producers will be raised gradually, according to a revised draft of coal industrial policies released by the National Energy Administration, the country's top energy regulator, to solicit public opinions on the proposals.
The draft suggests that the annual output of coal companies in the country's three major coal-producing regions -- Shanxi, Inner Mongolia and northern Shaanxi -- should be no less than 3 million tonnes.
It also says large-sized coal enterprises will be encouraged to form alliances with each other or merge with smaller companies to develop big industrial groups.
The move came as China's coal sector is seeing softening growth and plunging prices due to overcapacity and sluggish demand amid the economic downshift.
The country's coal output rose 4 percent year on year to 3.66 billion tonnes in 2012, with the growth rate 4.7 percentage points weaker than that of the previous year, data from the China National Coal Association showed recently.
Boosted by expectations of faster mergers and acquisitions in future, shares of Chinese coal firms surged on Monday, with Datong Coal Industry Co., Ltd. soaring by the daily limit of 10 percent to 10.26 yuan.
China Shenhua Energy Co., Ltd., the country's largest coal miner, saw its share price rise 1.34 percent to 24.93 yuan on Monday.
China's coal conundrum as smog worsens
By Martin Patience
31 January 2013
Datong - Locals in Datong call it the coal capital of China - and it is not hard to see why. Outside the city you can see enormous mining towers and buildings scarring the landscape.
At one coal pit the bulldozers are hard at work. They push huge mounds of coal close to the waiting trucks. The air is filthy, blackened by the coal dust.
This is a dirty, grimy business but in China it is crucial work. Coal has fuelled the country's economic boom, with consumption tripling in little over a decade.
Currently, China burns almost as much coal as the rest of the world combined. But that is leaving many cities, including Beijing, choking on hazardous smog.
Many people in the capital say the pollution this month has been the worst they can remember.
Hospitals have been over-run by both the young and old suffering from respiratory problems as pollution levels soared passed levels considered hazardous by the World Health Organisation.
One recent study, carried out by Greenpeace East Asia and Peking University's School of Public Health, estimated that air pollution had caused more than 8,000 premature deaths in four major Chinese cities last year.
Coal accounts for two-thirds of China's energy supply and is the country's main source of pollution, as well as the millions of cars on the road.
But the smog it produces has led many to question the country's economic model.
A sustained effort to reduce China's dependence on heavy industry is now required, says Yang Fuqiang, a former government energy policy researcher and now a senior adviser at the Natural Resources Defence Council.
"We have to change our ways. The pollution caused by coal is simply too severe," he said. "If nothing happens then the public outcry in the cities will keep growing.
"The government needs to restrict the use of coal and develop cleaner and more efficient technology."
In Beijing the authorities have shut down some factories and taken cars off the roads to try to reduce the pollution. People are being warned to close their windows. Sales of air purifiers and facemasks have rocketed and in some shops have simply run out.
In the long-term China is also investing heavily in hydro-electrical power and another renewable energies. It is considered a world leader in green technologies.
But with demand for energy growing year on year, consumption of coal continues to increase.
On Thursday, state-run news agency Xinhua reported that the authorities have now set a target designed to curb the growing consumption of energy, and coal in particular.
But any efforts to cap consumption will run into stiff resistance from local governments, which fear restrictions on economic growth.
Many people in the cities, however, want the authorities to take tough measures in order to improve their quality of life. But in the shadow of the coal mines in Datong there are different expectations.
Xu Youwang has been a farmer all his life. The 56-year-old says he can remember a day when all he owned were sheep. He and his neighbours all live in mud-brick houses.
But now he has a washing machine, a TV - and big dreams. "If I had the money I'd buy a car, an apartment, a fridge and a computer," he said.
Farmer Xu expects his life to only get better. And that is the challenge for China's leaders - balancing the aspirations of people like him with more sustainable economic growth
For now, at least, the country's reliance on coal and the pollution that comes with it shows little sign of ending.
China is burning coal at an insane rate
29 January 2013
Chinese financial website Finet quotes Phil Ren, chief of the China Coal Importers Association, as saying at an industry conference in Singapore, China's coal imports may reach 400 million - 500 million tonnes within three years.
That would constitute massive growth from current levels. China imported 234.3 million tonnes of coal in 2012, which constituted a huge jump - 28.7% - over the year before.
Ren said that the Chinese market is highly sensitive to price movements and would import coal even when it is able to satisfy coal demand from domestic sources.
The China National Coal Association announced yesterday that production in the country reached 3.66 billion tonnes in 2012, up by 4% compared to the year before.
Growth in coal consumption in China has been even more spectacular than its output growth - growing for 12 years in a row - according to newly released international data from the US Energy Information Administration (EIA):
China's coal use grew by 325 million tons in 2011, accounting for 87% of the 374 million ton global increase in coal use. Of the 2.9 billion tons of global coal demand growth since 2000, China accounted for 2.3 billion tons (82%). China now accounts for 47% of global coal consumption-almost as much as the entire rest of the world combined.
Robust coal demand growth in China is the result of a more than 200% increase in Chinese electric generation since 2000, fueled primarily by coal. China's coal demand growth averaged 9% per year from 2000 to 2010, more than double the global growth rate of 4% and significantly higher than global growth excluding China, which averaged only 1%.
While Australian and Indonesian coal miners have been the main beneficiaries of Chinese growth, the US coal industry - struggling to compete with cheap natural gas at home - has been thrown a lifeline by upping exports.
US exports are on track for a record year in 2012 of more than 125 million tonnes. That is up from just 40 million tonnes a decade ago and in line with the all-time record set in 1981.
While metallurgical coal used in steel-making still constitutes the bulk of US exports, all the growth has come from increased steam coal exports.