Monday, 3 February 2014

China's coal dependency will persist as pollution levels thicken dangerously

China’s leaders are working hard on a number of reforms to turn the world’s third-largest economy into even more of a robust powerhouse. The government’s plans to tackle corruption, food safety, and banking rules will all be overdue upgrades for the economy. But there is one issue China will need to address before it gets even more out of control. That issue is pollution.

If China cannot control this swelling crisis, it may have more trouble on its hands than it needs, especially as the economy is expected to slow in the coming years. And the trouble it might cause will not be isolated in the lungs of Chinese citizens.  

China’s extraordinary industrialisation has employed an unsustainable economic growth formula over the past few decades in an effort to keep its 1.3 billion people happy and complacent.  Most people have been prepared to look past the environmental damage that comes with their new-found prosperity but that attitude appears to be changing.

About 700 million people now live in China’s cities, contributing to high levels of congestion and industrialisation, but efforts by the government to rein in pollution have been much more limited than they perhaps should be given the size of the problem.

If the statistics from Former Health Minister Chen Zhu are to be believed 500,000 people per year could die from the smog if it continues to belch from factories and cars at present rates. This is bound to lead to internal strife which could threaten regime legitimacy. With greater prosperity comes greater awareness of the world and many Chinese citizens are comparing other countries to their own and noticing the stark differences.

The negative impact on the health of Chinese people is rearing its head in other ways. So-called “cancer villages” – clusters of cancer and sickness around industrial facilities and polluted waterways – are now so common that the Chinese government finally had to admit they exist.

And quite aside from this being strictly a Chinese problem it is quickly becoming a global issue as well. A report by the US National Academy of Sciences found that on a daily basis “the export-related Chinese pollution contributed, at a maximum, 12–24% of sulfate concentrations over the western United States”.

Air pollution in China is not exactly an unknown entity. The country is the world’s largest emitter of anthropogenic air pollutants, and it has been this way for a long time. It is so bad in Beijing that smog levels due to coal-burning factories and automobile exhaust are not measurable on the American particulate scale which maxes out at 500 particles per unit. They consistently rise far higher.

The US State Department now considers its diplomatic appointments to Beijing to be a hardship post and ensures its diplomats and their families take periodic rest and relaxation leave out of the country for health reasons.

On January 16, the US Embassy in Beijing reported “hazardous” levels of smog particulates. To reach this tier, the smog must have tipped the scales at over 25 times the levels recommended by the World Health Organisation. On the same week, poor visibility closed four major highways in the capital city.

Pollution levels are bad elsewhere in China, and it’s not just the air that is suffering. The Chinese Vice Minister of Land and Resources Wang Shiyuan said recently that more than 8 million acres – which translates to about 2% of China’s arable land – is too toxic for crops. Many of these farms lie in the northeast of China, in the Hunan province and near the Pearl and Yangtze river deltas.

Beijing does have some moves it can make to cut back the rising tide of pollution. President Xi Jinping’s anti-corruption drive is likely to have a positive effect by legislating “harsh” fines on polluters and limiting carbon emissions. But China’s dependence on coal is the real sticking point and the most politically sensitive.

The US Energy Information Administration places China as the world’s largest producer and consumer of coal, this also means they will account for almost half of global carbon dioxide emissions growth over the next three decades. The Chinese government has pledged to curb coal burning to below 65% in 2014 (down from its current level of 65.7%) of the country’s energy matrix, but they are worried anything less could severely hamstring its enormous energy demand.

To further this pledge, according to Chinese authorities, Beijing will close its four remaining coal-fired power plants before the start of 2015. The alternative is a $NZ9.62 billion investment into gas-fired power plants which should burn cleaner and supply the requisite amount of energy for the hungry city.

This step would help reduce pollution in the city, but the capacity for cleaner fuel alternatives is too limited to expect the disappearance of coal-fired plants in the near future. Coal burning is a cheap form of energy generation, and natural gas isn’t available to supersede the fossil fuel, so reducing the environmental impact of coal burning could extend simply to sulphur filters on exhaust flus and other similar measures.

Widespread use of carbon capture technology is estimated by the World Bank to potentially reduce the cost of pollution in China by $NZ123 billion a year. So as long as the Beijing can enforce its implementation nation-wide, that would be a great place to start.

These can be expensive technologies however, which could lead to price hikes and job losses as profit margins become slimmer than they already are. At this point the Chinese government would need to balance its long-term goal of moving to a more efficient economic model and its need to maintain high levels of employment.

China’s dependence on coal to generate electricity and support its phenomenal economic growth is reaching a point of no return. While the fuel is still the cheapest option – which greatly assists the economic development - damage to the Chinese and global environment could be irreversible if more impactful actions are not taken by the government.

Ultimately, China is and probably will remain a coal economy. There are significant systemic limits on Mr Xi’s efforts to evolve China into new and cleaner fuel sources. Capture technologies will help to reduce carbon emissions, but the industrial energy requirements to create large amounts of low-priced manufacturing for export to the world can presently only be satisfied with coal-burning plants.

However, without significant change - which will include a tightening of President Xi Jinping’s anti-corruption screws – the government could face civil unrest as more than half the nation’s citizens living in cities struggle to breathe healthy air and drink clean water. None of this will help encourage foreign investment which will hurt their economy and exacerbate the problems of government stability and economic prosperity.

Unfortunately, it isn’t as easy as that either. Taking the necessary actions to curb emissions will probably introduce equally devastating problems for the government as their economy slows and suffers, further lowering the prosperity indices and angering the Chinese people. Beijing has found itself in a very dangerous predicament indeed.

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