The Haney Group Forum Transforming China’s Gri..

Source Link

Coal has been the primary fuel behind China’s economic growth over the last decade, growing 10 percent per year and providing three quarters of the nation’s primary energy supply. Like China’s economy, coal’s use, sale and broader impacts are also dynamic, changing with technology and spurring policy interventions. Currently, China’s coal sector from mine to boiler is undergoing a massive consolidation designed to increase efficiency. Coal’s supreme position in the energy mix appears to be unassailable.

However, scratch deeper and challenges begin to surface. Increasingly visible health and environmental damages are pushing localities to cap coal use. Large power plants with greater minimum outputs are shackling an evolving power grid trying to accommodate new energy sources. Further centralization of ownership is rekindling decade-old political discussions about power sector deregulation and reform.

This unique set of concerns begs the question: how long will coal remain king in China’s energy mix?  Managing conflicts between security of supply and the environment

China faces the typical conundrum of any large coal-rich nation: as an energy source, coal has an unrivaled security of supply while also being the dirtiest to extract and use. However, whereas other countries enjoy some amount of fuel diversity, China’s resource endowments in other fossil fuels are severely limited (see figure). China is home to perhaps the world’s largest deposits of shale gas, but these resources are still many years away from commercial exploitation.

To meet rising electricity demand, China is rapidly exploiting its renewable and hydropower resources: by 2020, China aims to have 200 gigawatts (GW) of wind, 50 GW of solar, 30 GW of biomass, and 300 GW of hydro. Nuclear is expected to increase six-fold, to 80 GW. Yet, even with these massive additions of non-fossil energy sources, China still plans to add 50 GW of coal-fired capacity every year in order to keep up with the projected growth in energy demand.

At the same time, environmental and health damages driven by China’s rampant coal use are increasingly apparent. Cancer is the leading cause of death in Beijing, with lung cancer the most common form. Monitoring PM2.5 is now like checking the weather report – a daily necessity for city-dwellers. A recent study pegged coal’s use in northern China to heat homes as contributing to an average loss of 5 years in life expectancy.

In the long term, the International Energy Agency’s 450ppm scenario for climate stabilization calls for an 80% reduction in CO2 emissions from coal-fired electricity in China by 2035, compared to business as usual, a goal which could only be met with a drastic reorganization of the power sector and significant technological advances in carbon capture. China is currently experimenting with local emission trading schemes to complement administrative energy efficiency measures. As I blogged about earlier, these face a host of challenges before they can really take off.