China in the 21st Century: Stuck with Coal…. Means Facing the (Postponed) Cost of Plant Upgrade

As the crisis over air quality exploded into the public eye during 2012-13, it seemed that caps and quota cuts on coal usage were the answer. State (NDRC) planners huddled and in several tranches mandated seemingly astounding levels of reduction in the use of coal overall and (thus) also in power generation. The cynosure of the campaign was the announcement by Beijing municipality earlier this year of an immediate shutdown of one of the city’s 5(?) coal-fired power generation stations. The gap was to be filled with “by wire” supply, presumably from non-coal sources feeding the N. China grid.

It was and perhaps still is an engaging fantasy: not only would “brown coal” start a much overdue net expulsion from the country’s fleet of 1,500-odd smoke-belching generator stations, and thereby lower the rate of pollutants injected into the overhead sky, but even invisible carbon emissions (more a global than a parochial concern) would begin to trek downward on a per unit power generated basis, then on an absolute year against year basis. Even Greenpeace proved unable to resist the euphoria, and issued a special on the “End of China’s Coal Boom”. (cite).

But – read the fine print! – no one was predicting a dent-making reduction in the country’s reliance on coal for electricity. …. all reports end with a “but coal consumption is [still] predicted to increase by [fill in your own multiplier] …. over the next howsomever years”.

Truth is: there is no realistic possibility of any significant decline in China’s world-first level of dependence on coal for the production of electric power. Given the industry-intensive demand structure of power consumption, the longstanding (largely Soviet-inspired) concern to achieve/maintain “upstream” industry’s lead position and global independence, and the galloping pace of urbanization, electricity demand in and of itself has and will continue to match or often even outpace baseline economic growth. (See next page). And with the exception of the Three Gorges Dam project, which added around 18% to total power capacity over the last several years, no significant renewable alternative or even “clean” fossil fuels (gas, natural or otherwise) is waiting to be tapped. That means that there is now way that China’s economic growth can be decoupled from a more or less 100% matching coal consumption growth. (The matter of imported natgas and SNG has been dealt with above, but we shall return to it again below).

That coal as a physical (and thus also emissions) burden has become so-to-speak “fixed” into the Chinese economy is more than evident even from 21st century figures, as per below.

Only the US (as of data years 2011 and 2012) digs, hauls, trundles, and fires more pounds of the black stuff on a per capita (end-consumer) base than the People’s Republic – about twice as much at present (3 as against 1.5 Metric Tons). But that charge is against an economy 5 times larger (on a per capita basis)(??); and at any rate it is clearly trending DOWN in the aftermath of the natural gas boom that started (here) in the 90s, but has yet to start in China (and won’t).

Coals physical tax

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