Coal to remain king in China, despite ambitious climate policies
Coal to remain king in China, despite ambitious climate policies
The success of the recent COP21 climate deal will depend on efforts by China to reduce its greenhouse gas emissions. The world’s largest consumer of coal and emitter of carbon dioxide (CO2) recently introduced a set of initiatives aimed at a “green energy” transformation. These measures, however, conflict with China’s more basic economic imperatives and the realities of the country’s energy sector. As Chinese leaders seek to protect their legitimacy, they will probably prioritize economic growth, even if that means shelving the most far-reaching energy reforms.
China is the single most influential player on global energy markets, and that will remain true for decades to come. The country is already the world’s largest consumer, producer and importer of coal. It uses nearly as much coal as the rest of the world combined and produces more energy than the entire oil output of the Middle East.
China has seen tremendous growth in energy production over the past 10 years, up to 80 percent of which was based on coal-fired power generation. Between 2000 and 2012, the country doubled its coal consumption. In 2005, Beijing set a limit of 2.6 billion tons on its planned coal output for 2010. The actual production figure for that year was more than 4 billion tons.
China is already the world’s largest consumer, producer and importer of coal. It uses nearly as much coal as the rest of the world combined and produces more energy than the entire oil output of the Middle East
Reliance on coal poses a direct challenge to climate protection. Coal burning produces 44 percent of all energy-related CO2 emissions – ahead of oil and natural gas with 35 and 20 percent, respectively. Environmental groups have increasingly criticized coal-based energy production as the major obstacle to keeping the average increase in global temperatures below 2 degrees Celsius. They are demanding an end to state support for coal projects. Several of China’s recent energy initiatives have fueled speculation that the country is already on the path toward phasing out coal. But a look at its economy and energy sector tells a different story.
‘War on pollution’
In 2006, China became the world’s largest air polluter, surpassing the United States. Its growing emissions have accelerated global warming and caused serious environmental problems domestically. According to British medical journal The Lancet, air pollution in China contributed to as many as 1.2 million premature deaths in 2010. Research from an institute under China’s Ministry of Environmental Protection found environmental degradation cost the country about 3.5 percent of its gross domestic product that same year. Coal alone is believed to account for at least 60 percent of airborne pollutant emissions.
Recent reforms, including huge new subsidies for domestic and foreign firms, have made China the world’s biggest investor in renewable energy. Nevertheless, it is doubtful that Beijing can meet its own targets for energy efficiency and reductions in greenhouse gas emissions by 2020. Despite the new energy efficiency and climate change mitigation policies, the country could still end up emitting 50 percent more greenhouse gases by 2030 than it does today.
Deteriorating air quality has jolted Chinese leaders into action. In the spring of 2014, China declared a “war on pollution” with plans to reduce CO2 emissions per capita by 40 to 45 percent from 2005 levels by 2020.
Ambitious targets
Still, China will remain the world’s largest greenhouse gas emitter through 2040. It already produced 60 percent more greenhouse gases than the United States in 2012 and may be producing at twice the U.S. rate by 2030. In 2014, China surpassed the European Union in CO2 emissions per capita – 7.2 tons versus 6.8 tons, respectively. Its total emissions that year outstripped those of the EU and U.S. combined. Greenhouse gases have increased by 40 percent over the past four years.
The air pollution crisis has stirred a national debate. Chinese leadership has become unnerved by expressions of public concern over the issue, especially after such high-profile events as the August 2015 warehouse explosion in the port of Tianjin (which spewed toxic chemicals into the air) and the release of the independent Chinese documentary “Under the Dome,” which highlights the health problems caused by air pollution.
In June 2015, China unveiled new pledges on climate change for the medium term (see fact box at right). Meeting the targets will require huge investments in new “green” infrastructure such as smart power grids, high-speed rail networks and charging systems for electric vehicles. The country has also announced that it will improve its methods for compiling environmental data. China lacks transparency in this area and still does not publish any official annual figures on greenhouse gas emissions.
Adopting new targets will be insufficient. China still has to cope with impotent regulators and ineffective national legislation. The central government must show the political will to ensure that the targets are implemented on the provincial and local levels. So far, Beijing has mostly failed at this task. Local administrations have not been held accountable for failure to obey the law. Financial sanctions have been limited.
Peak coal
China has officially declared that its coal consumption and CO2 emissions will peak in 2030. However, in a November 2014 joint announcement with the U.S. on climate change, Beijing said it would “make best efforts to peak early.” That statement, along with the new climate and renewable energy initiatives, have led some observers to speculate about whether the high point may come before the target date. Slowing economic growth, manufacturers beginning to relocate to other countries in the region, and low oil and gas prices have all been used as arguments that Chinese coal consumption and emissions may begin to decline after 2020.
But while growth in coal-fired power generation is set to slow from more than 11 percent in the decade prior to 2012 to just 0.6 percent between 2030 and 2040, China will still remain the world’s largest producer of coal-derived energy by volume, even as coal’s share in its total energy budget drops.
The capacity of China’s coal-fired plants is projected to increase by a further 420-600 gigawatts (GW) by 2040 – the total combined coal-fired generation capacity of the U.S., the EU and Japan. The country is building 50 coal gasification plants, which could produce an estimated 1.1 billion tons of CO2 per year. The plan will reduce air pollution in China’s largest cities, but mostly by shifting the emissions to other regions.
China is also seeking to reduce emissions and air pollution by increasing the efficiency of its coal-fired plants and installing modern scrubbers. Domestic generators have already reached 37 percent efficiency, higher than the global average of 33 percent.
King coal
While coal’s contribution to Chinese power output could drop to about 50 percent by 2040, it cannot be replaced by gas or renewables. For the medium term, it will remain the country’s most reliable fuel and the main guarantor of stable supply to the domestic power grid. The earliest realistic date for phasing out coal-fired output is probably around 2050.
In the years ahead, both demand and production may grow due to programs for converting coal into synthetic natural gas, coal liquefaction and production of coal-bed methane. While these technologies promise substantial reductions of CO2 emissions and air pollution, they bring a different set of environmental problems, including intensive use of energy and water.
Peak coal consumption will not necessarily coincide with a peak in greenhouse gas emissions, so long as Chinese demand for oil and gas continues to grow rapidly. And while renewable energy sources, natural gas and hydropower have seen impressive expansion, the new coal production capacity added to the grid in 2014 exceeded that of hydropower by more than 300 percent, wind energy by more than 400 percent and solar energy by 1,700 percent.
Scenarios
Against this background, three potential scenarios materialize. In the best-case scenario, China will be able to implement all of its new climate and energy policy initiatives and will hasten its green energy transformation. Combined with structural changes in the economy and slower growth, these initiatives would allow greenhouse gas emissions to peak by 2020. Coal consumption would rapidly decline thanks to energy-sector innovations such as cost-effective battery storage.
In a second, worst-case scenario, China will face increasing economic difficulties after 2020. Despite Beijing’s official pledges at the COP21 summit, the party’s Politburo will be unwilling to sacrifice economic growth simply to meet international climate obligations. As a transformation of the energy sector becomes too expensive to implement, the government will fall back on “cheap” coal.
The third, most probable scenario assumes only a very gradual decrease in coal consumption. The latest figures show coal-fired generating capacity undergoing a boom in the first half of 2015, as construction jumped 55 percent from a year earlier. Approved new capacity (some 200 GW) exceeded the total from the previous three years. According to the five-year plan for 2011-2015, about 860 million tons of new coal production capacity and 300 GW of new coal-fired power capacity have been brought on line. In 2015, Beijing approved some 155 new coal projects – equivalent to 15 percent of China’s total coal-fired power capacity, or almost 40 percent of the capacity of all operational coal plants in the U.S.
Since most of China’s coal power plants were built after 2000, they are relatively new and may continue to operate commercially for another 40 to 60 years. Taking this into account, almost all forecasts for China project that consumption of fossil fuels will keep growing until about 2040, when they will still generate most of the country’s electric power. Significantly reducing the reliance on coal would require a much more radical shakeup of electricity markets and a major boost in renewable energy investments.
It should also be remembered that, for China and its leaders, fighting climate change and curbing air pollution are not the same thing. The collision between the two goals is shown by the widespread installation of energy-intensive scrubbers, which improve air quality even as they increase carbon emissions. While Beijing has important domestic reasons for pollution abatement, especially in urban areas, it will not be so keen to make sacrifices on climate change, which has not yet become a real concern for the Chinese public.
