CHINA ON DEFENSE ABOUT COAL

That the Chinese government is not happy about its widespread and growing reliance on coal was evident in its reaction to The True Cost of Coal, a new report from 3 prominent international environmental groups.

The report describes the costs of coal reliance in vivid detail.

That China builds 1-to-2 new coal plants every week is widely known. Not widely reported is that 2/3 of the new coal plants in China today are “bootleg” plants being built against the wishes of the national government, according to Amory Lovins of the Rocky Mountain Institute.

The point: Though China's reliance on coal must be curbed, it is not just an energy issue. It ties into the problem the national government has controlling the distant provinces and explains much about authoritarian measures exercised at times by the central party.

It is likely leaders like Hu and Wen understand the costs as well as the groups who produced The True Cost of Coal.

The question: (1) What does it take to get this vital message across to the coal builders and burners, be they in government or industry?

The true costs of coal impact every industrialized and emerging economy and the question could well be asked almost anywhere.

From The True Cost of Coal: “…this reliance on coal comes with heavy environmental and social costs. Every step in the process of using coal, from mining through to combustion, is wreaking severe damage to China’s environment. Of most concern is climate change, primarily caused by burning fossil fuels such as coal.”

Perhaps the most important aspect of the report is its designation of the “external costs.” These “externalities” are (1) air and water pollution, (2) ecosystem degradation, (3) infrastructure damage, (4) human harms including disease, injury and death, and (5) the distortion of government regulations.

The report offers constructive criticism, including a path: “To ensure its energy security, environmental protection and healthy economic and societal development, China must reduce its reliance on coal. To achieve this aim, China must introduce an appropriate coal pricing mechanism and instigate an energy revolution to radically improve energy efficiency and put heavy emphasis on expanding the renewable energy sector.

From the “your best defense is a good offense” file, a Chinese government spokeswoman responded to the report by stressing her nation’s increasing efforts to develop New Energy.

Jiang Yu, spokeswoman, China foreign ministry: "We have reissued a renewable energy law and encouraged development of all sorts of renewable energies, including green energy, solar energy, water and hydro energy, thermal energy…We also attach importance to the clean use of coal, and we have done a lot to control the emission of pollutants produced in burning coal."

Footnote: The report describes a pricing system by which China can recognize the “true” costs of using coal. Putting a price on externalities could be a way to push back against the "bootleggers." It is a method the U.S. could also apply.

From The True Cost of Coal: “…to ensure that the true costs of coal are reflected in its price, China has to reform its coal pricing system. The internalization measures include imposing energy and environmental taxes, improving coal resource compensation systems, deepening market-oriented reform of coal and improving liability rules.”

Report Summary: The True Cost of Coal in China

Continued in next chart. (click to enlarge)

China defends energy policy after scathing report
October 28, 2008 (AFP)

WHO
Mao Yushi Sheng and Hong Yang Fuqiang, report authors; Greenpeace, Energy Foundation and World Wildlife Fund (WWF), report sponsors; The Chinese government (Jiang Yu, spokeswoman, China foreign ministry)

WHAT
The True Cost of Coal describes great costs to China as a result of its reliance on coal.

Continued in next chart. (click to enlarge)

WHEN
- 2007-2008: China became the world’s leading generator of greenhouse gases (GhGs).
- Key finding: In 2007, each tonne of coal used in China caused RMB 150 in environmental damages.
- Total 2007 external costs: RMB 1.7 trillion, (7.1% of China’s GDP).

WHERE
- China and the U.S. are the world's biggest emitters of GhGs.
- Nowhere are the impacts of global climate change more readily observed than in China. Arable land and water resources are already noticeably compromised and may reduce China’s food production capacity as much as 23% by mid century.

WHY
- China gets 70% of its power from coal.
- China's dependency on coal has environmental and other costs equal to more than 7% of its annual gross domestic product (GDP).
- The costs would be even higher if global climate change impacts were included.
- Chronic respiratory disease from air pollution largely attributed to coal burning is one of China’s leading causes of death.
- Air pollution could cost China as much as $390 billion/year by 2020.
- 2.5 tonnes of water is polluted for every tonne of coal mined.
- China has implemented policies, including ambitious New Energy targets, to counteract the problem.

click to enlarge

QUOTES
- Jiang Yu, spokeswoman, China foreign ministry: "The Chinese government attaches great importance to the development and exploration of clean energy…It has been making great efforts to increase the share of clean energy in the energy mix."
- From the report: “…by 2050, an increase in energy efficiency would reduce China’s energy demand by 40 per cent and renewable energy, including wind and solar, could satisfy over 50 per cent of China’s electricity consumption…With an effective price signal for coal, a massive improvement in energy efficiency and large-scale implementation of renewable energy, China could meet its social and economic
needs as well as avoid many of the worse impacts of coal use and climate change. This is the challenge and opportunity for the Government of China. Greenpeace calls on the Government to seize this opportunity…”