China confronts the pain of kicking its coal addiction
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Version 0 of 1. POWER PLAY | Cheap electricity, a changing climate This is part of a series exploring how the world’s hunger for cheap electricity is complicating efforts to combat climate change. LULIANG, China — China, the world’s biggest user of coal, is suddenly burning less of it, a change with enormous implications for the state of the atmosphere and the potential course of global climate change. The shift has been both abrupt and unexpected, bringing fresh credibility to China’s pledge to rein in its greenhouse gas emissions, now also the highest level in the world. Blamed in the West for the failure of the last global climate change talks, in Copenhagen in 2009, China is setting itself up to play a constructive role at the next round of discussions, in Paris later this year. As recently as 2010, China added as much coal-fired electricity generation capacity in a single year as exists in all of Germany. It took China’s slowing economy, a slump in heavy industry and unprecedented moves by the Communist Party to curb choking levels of air pollution to produce the drop-off in coal consumption, which began in 2014 and has continued this year. [China wants cleaner air — without an environmental movement] Still, the idea that China might be transformed from the world’s smoke-belching factory into a cleaner, more high-tech place remains a distant prospect — even with the advent of a new cap-and-trade system that President Xi Jinping has promised to put in place by 2017. Getting to a greener economy will require China to find alternative energy sources on a monumental scale. The nation must transform its economy without greatly increasing the unemployment rate in places such as the coal fields of the north, something that could undermine the Communist Party’s hold on power. “I was traditionally, honestly extraordinarily pessimistic about all this, if you had asked me two or three years ago,” said Mikkal Herberg, director of the Energy Security Program at the Seattle-based National Bureau of Asian Research. “It is only in the last year or two that I have actually begun to believe they can do some of the things they are promising to do.” As China became the world’s industrial powerhouse, its demand for electricity soared, rising nearly 17-fold from 1980 to 2012. The nation burned coal as if there was no tomorrow, and its greenhouse gas emissions rose past those of the United States nearly a decade ago. But with heavy industry slumping and the economy becoming ever less energy-intensive, the growth in electricity demand has been flat this year and is expected to average a relatively modest 4 percent a year between now and 2020. For coal, the turnaround is more significant. Coal use, which had risen by more than 9 percent a year in the decade to 2011, fell by 2.9 percent last year, as the industrial economy faltered. The decline has continued this year. Experts point out that heavy rainfall boosted hydropower generation last year, and that a number of new coal-fired power stations will come online in the next two years. Nevertheless, there is a growing sense that a fundamental change is taking place, because of an aggressive shift into cleaner fuels, slower economic growth that has hit heavy industry hardest, and a conscious transition away from high-polluting industries that used a lot of coal and electricity. Coal consumption may flicker upward for another year or two as plants already under construction come online, but peak use is just around the corner. “Until recently, coal was king in China and the prospects of its decline were unthinkable,” said Michal Meidan, an associate fellow in the Asia program at Chatham House in London. “Now that China’s coal demand is slowing and imports are falling, markets must adjust to a new way of thinking.” Last November, China’s Xi and President Obama said their nations would join forces against “one of the greatest threats facing humanity,” climate change. Xi pledged then that China’s carbon-dioxide output would peak by 2030, and that it would increase the share of non-fossil fuels in its energy mix to about 20 percent by 2030 from 11.2 percent now. [ China’s climate change plan — in four graphs] On Sept. 25, Xi stood beside Obama again to reaffirm that commitment, announcing the world’s largest cap-and-trade program, to cover emissions from power generation and such key industries as iron and steel, chemicals, building materials, paper-making and nonferrous metals. Xi announced a new plan to ensure that China’s electricity grid prioritizes power drawn from renewable and lowest-polluting fossil fuel sources, and he pledged to establish a $3.1 billion fund to aid developing countries in the fight against climate change, matching a similar, earlier U.S. commitment. The gesture establishes China as more than simply a leader of developing nations in often-fractious climate change negotiations, experts said, but as a potential bridge between the developing and developed world. Now, many experts think China could beat its own emissions target and reach a carbon-dioxide peak even before 2030. But it won’t be a slam dunk. What is happening in the coal fields of Luliang in northern China shows what Beijing can expect, and in a sense what it most fears. A local motto puts it simply: When coal is happy, Luliang is happy. But here, in a small, one-room miners’ canteen deep in China’s coal belt, lunchtime diners are definitely not happy. They have just come from a grueling underground shift in the Guo Jiashan mine across the road but say they haven’t been paid for many months. Tens of thousands of miners across China are in the same situation. “I can’t even support my children, and I am going into debt,” said 34-year-old Zhai, who gave only one name to avoid trouble with his employers. “But we have nothing else to do and no other place to go. All we know here is coal.” In China, unemployment and social unrest are among the Communist Party’s greatest fears. Zhai’s woes, and those of his industry, trouble local officials — and they are not alone in resisting, even if passively, China’s attempts to modernize its economy. Yet the trends appear inexorable. Smog — and the public outcry it has generated — is a big part of the reason. Aware that pollution undermined their legitimacy, China’s leaders declared a “war on air pollution.” Last year, they closed 1,100 small coal mines and shut down tens of millions of tons of iron, steel and cement production capacity, targeting small, inefficient plants that were disproportionate polluters, both in their own emissions and in their inefficient use of electric power. Beijing is aggressively investing in natural gas supplies, nuclear power and renewable energy. China is the world leader in wind power and is about to claim the top spot from Germany in solar power; the pace of investment in renewables is accelerating, even if they still supply only a relatively small fraction of total power. China’s hopes to build a new services-led, consumer-led economy, which is less polluting and less energy intensive, embody a transition that the nation’s leaders have long wanted to make. Now they have been forced to embrace it, said Gao Feng, the special representative for climate-change negotiations in the Ministry of Foreign Affairs. “We need a new industry that is powerful enough to drive the economy, on a more sustainable and cleaner basis,” he said in an interview earlier this year. “We are fairly confident that climate change and environmental protection will become a powerful new driver of the economy.” And although domestic concerns may be the main motive, China’s leaders are aware that their densely populated nation, already facing a water shortage, is ill-equipped to withstand global warming. “China is beginning to bend down the curve of CO2 emissions through a very ambitious series of actions, plans, targets and programs,” said Barbara Finamore of the Natural Resources Defense Council. “We are starting to see the results through the reduction in coal use.” Optimists now predict that China’s coal use could peak between 2017 and 2020, before beginning a long, slow decline. Greenhouse gas emissions will lag behind but are likely to peak in 2025, according to a report by Nicholas Stern and Fergus Green at the London School of Economics. The list of challenges is daunting, and the pessimists have not entirely retreated. Nearly two-thirds of China’s electricity still comes from coal. Demand for electricity will continue to increase in the decades ahead as the economy grows, and power plants will continue to sprout nationwide to generate that energy. Renewable sources of energy have their own drawbacks: Wind and solar power are unreliable and intermittent, while nuclear power must overcome widespread safety fears. Nor does the pressure to cut air pollution on China’s crowded east coast necessarily imply lower emissions: Fourteen huge power plants are to be built beside coal fields in western China, connected to the east by long-distance transmission lines. [In China, a tug-of-war over coal gas: Cleaner air but worse for the climate] If the government succeeds in shifting pollution elsewhere, some of the public pressure for change may dissipate. But the greatest challenge probably lies in transforming China’s entire economic model while simultaneously keeping the engine of its economy running and maintaining social stability. Old-fashioned manufacturing is energy-intensive. China produces half the world’s steel; the province of Hebei, surrounding Beijing, alone produces twice as much as the United States and more than the entire European Union. Steel has been a major job creator but requires huge amounts of electricity (and burns huge amounts of coal on-site). Today, the city that embodies China’s steel industry, Tangshan, is — like Luliang — feeling the pain of overcapacity and stricter environmental standards. Plants such as Tangshan Fufeng Iron and Steel have shut their doors. Workers say none of the 1,600 people employed there have been paid since February but haven’t been formally laid off, either. “The company operated here for 12 years and still has money,” complained one factory worker, who declined to give his name because of pressure from local officials. But he said the government just looks the other way. An increasing unemployment rate is the stuff of nightmares for Hebei’s leaders. Heavy industry was a source not only of kickbacks for local officials but also was the key to political survival. China’s efforts to clean up its economy face resistance from within the Communist Party itself. But the pressure from the top is mounting, said the foreign ministry’s Gao. “This is a very good window of time for us to make this change,” he said. “Before the crisis, there was no way you could change. Businesses were getting orders from all over the world, and they didn’t listen to the government admonitions that they needed to change.” Teng Fei of the Institute of Energy, Environment and Economy at Beijing’s Tsinghua University is more cautious. “The fact is not much achievement has been made,” he said. “Some of the reasons are not energy issues, they are economic or even political issues.” The challenge of moving up “the global supply chain,” to shift from the world’s manufacturing hub into a higher-value place in the global economy, should not be underestimated, he said. “No one knows whether China can successfully change the structure of its economy from today’s pattern toward a services-led and consumption-led pattern.” Already there are signs that the transformation is proving enormously challenging — that the slowdown in construction and heavy industry is not part of a structured, controlled shift, but more likely the harbinger of a potential crisis the government will want to avert or, at least, postpone, said Björn Conrad of Berlin’s Mercator Institute for China Studies. A series of recent, and at times rather incoherent, government measures suggests growing insecurity and concerns from top leaders about the economic downturn, Conrad said, adding that a further fiscal stimulus and investment program to prop up growth is becoming increasingly likely. “If it focuses mainly on infrastructure investments to stabilize growth quickly, as during the global financial crisis, this would even further expand inefficient production in the most energy-hungry sectors of the Chinese economy,” he said. “And that in turn could be really bad from the climate-change point of view.” The consequences of the coal slump are not hard to miss in the mining villages around Luliang. For a decade, this was the fastest-growing district in coal-rich Shanxi province, but now Luliang has tumbled to last place. The “golden years” are over, said Quan Wei, director of the Luliang Development and Reform Commission, a government body in charge of economic policy. Shuttered shops tell of economic decline, while men play checkers to while away the hours. A few coal trucks trundle past, but it is not as it was when the mines operated at full capacity. [China adopts emissions policy that couldn’t get through U.S. Congress] Zhai, the miner, said he used to be paid $650 to $800 a month when times were good. But as the number of available shifts decreased, his salary did, too — by more than half. This year, he says, he hasn’t been paid at all. With his parents to support, as well as his wife, 10-year-old daughter and 8-year-old son, the strain is showing. “When I go home, my wife blames me,” he said. “When I go to work, my boss just scolds me.” Serving him food, Li Binze, 53, said he opened the modest canteen after working in the mines without pay for a year. In the past year, a few scattered protests and a short-lived strike broke out in nearby villages, locals say. But the most they achieved was the payment of a few weeks’ arrears. Miners know their bargaining power is limited and money is short. After growing 9.5 percent in 2013, Luliang’s economy shrank 2 percent last year and is continuing to contract this year, Quan said. Government revenue is expected to fall more than 20 percent this year. Although the local government wants to encourage other industries to invest, “a shortage of capital poses a very severe challenge to our transition,” he said. “There is growing urgency about air pollution,” said Herberg, the official with the National Bureau of Asian Research. “But what keeps the leadership awake at night is the risk of unemployment and social unrest. That’s why energy is such a visceral issue for them.” Gu Jinglu contributed to this report. Read more: U.S. exports its greenhouse-gas emissions — as coal. Profitable coal. China adopts emissions policy that couldn’t get through U.S. Congress In China, a tug-of-war over coal gas: Cleaner air but worse for the climate |