Michael R. Davidson at the School of Global Policy and Strategy
Mechanical and Aerospace Engineering Department of the University of California, San Diego takes the long look at China’s coal ‘problem’.
That coal in China is a problem, and one getting worse, is in no doubt.
China consumes half of the world’s coal used, five times more than India, the world’s second largest consumer. That consumption leads to 20% of global CO2 emissions and within China, unlike the developed West, only 60% of coal is used for heating or power.
The chart shows how, due to power shortages in recent years, plans for new coal-fired electricity generation have increased whilst at the same time (the violet bar at the bottom) plans to retire old kit have been pulled.
Mr. Davies breaks four areas where progress will need to be made:
- Supply Side Interventions. Well meaning efforts to consolidate production have gone out the window since the power crisis of 2021. This area looks a mess now and no long term progress can be achieved without rationalization.
- Demand Side Interventions. Attempts to introduce usage caps have largely failed. First, the heterogeneous nature of the market makes this akin to squeezing a bar of soap. Second, there’s no viable alternative for many coal uses. Even heating has resisted substitution.
- Employment and Social Impacts Mitigation. From its peak in 2013 coal mining employment has halved, but 2m or so more workers will need to go before 2050. Social costs vary by area and those most affected (30% of Shanxi’s GDP is coal related) must make adequate provision.
- Stranded Assets and Fiscal Management. A lot of new capacity is labelled ‘back up’ capacity. Which means it might not ever by fully utilized. Existing plant will need to be closed and an industry cost of up to U$1trn could be the result of greater efforts to get off coal in future.
In conclusion, whatever the speed of China’s efforts to de-emphasise coal there’ll be no easy or cheap solutions along the way. Which is why, IMHO, the process will continue for decades not years.
You can review the paper in full via this link Managing the Decline of Coal in a Decarbonizing China.
Happy Sunday.