GREEN GROWTH: FROM RELIGION TO REALITY - Sustainia

Chapter 77 Recent explorations show thatChina has 1,275 trillion cubicfeet of shale gas reserve, 12 timesthe size of its natural gas reserve(EIA 2011, 4). As of 2009, only3.9% of China’s primary energyconsumption comes from naturalgas (National Bureau of Statistics2011, 7-2). If exploitation of shalegas can prove to be economical,then share of gas in China’s energyportfolio may increase given theabundance of the resource. Whilenatural gas is still a fossil fuel andproduces greenhouse gases, its carboncontent is 45% less than thatof coal (EIA 2010, 7) and increaseduse of natural gas will help Chinalower its carbon intensity.8 For example, in the major coalproducing province of Shanxi,restructuring has slashed thenumber of operating mines from2600 to 1053; all mines with annualproduction less than 300,000tons were closed, and 70% of theremaining mines produced morethan 900,000 tons every year (Nie2010).9 China’s highway systems are alsooverburdened by the transportationof coal, as well known episodesof monster traffic congestions canattest. The 60 miles long monstertraffic jam on the Beijing-Tibethighway in the summer of 2010was due mostly to trucks carryingcoal from Inner Mongolia to thecapital, and the truckers say theyare used to such congestion (Niand Chua 2010; Watts 2010).sions or per-capita/per-unit GDP energy use more difficult.Price supports may also make China a less effective“nursery” market for new efficiency products thatChinese firms could eventually export to the rest of theworld. If such distortions cannot be removed, then effortsto reduce energy intensity may be limited. TheNDRC has expressed its intent to adjust electricity prices.For example, the NDRC is planning to introduce tieredrates for residential users in order to promote conservation(Liu and Huang 2010). But as a new round of inflationaryfears grip China, increasing energy prices maycontinue to be socially and politically unpalatable.4. China’s continued reliance on coalThough China's renewable energy sources are expanding,one cannot ignore the stark reality that China's energysystem will continue to rely on coal as its primaryenergy input for the foreseeable future. As discussed inSection II, the Chinese government’s top priorities areto maintain the economic growth engine and to improveliving standards, both of which require a cheapand secure supply of abundant energy. Coal is not onlyrelatively inexpensive compared to other energy sources,it is also plentiful in China. In countries that lack largedomestic sources of fossil fuels (especially coal), such asDenmark and Korea, the need for energy security naturallyoverlaps with the need to develop non-fossil fuel energysources. However, in countries where fossil fuels likecoal are abundant, such as the US and China, the needfor energy security often means exploiting available domesticsources first.As such, the government is not likely to reduce the useof coal, despite its contribution to atmospheric greenhousegases. Indeed, it may not be possible to do sowithout creating major economic disruption.According to several estimates, China has 114.5 billiontons of proven coal reserves, or 14% of the world'stotal reserve (EIA 2008; Morse and He 2010).7 China iscapable of satisfying most of its own coal demand, thoughsome provinces do import coal when international coalprices are more competitive than domestic prices. Notonly does China have domestic coal sources, it is alsosituated near a number of other large coal-rich countries,including Mongolia, Russia, and Australia. Fromthe Chinese government’s perspective, coal's abundanceand relatively low costs make it the best option to satisfyChina's rapidly expanding energy demand. As such, thegovernment is not likely to reduce the use of coal, despiteits contribution to atmospheric greenhouse gases.Indeed, it may not be possible to do so without creatingmajor economic disruption.The government is actively seeking ways to mineand burn coal more efficiently, safely, and cleanly. Thesemeasures address economic efficiency as well as energyefficiency and local pollution. As mentioned earlier, Chinais overhauling its fragmented coal mining industry viaclosure of small mines as well as merger and acquisition.8The 12th FYG emphasizes consolidation in coal miningindustry to create large, efficient mining conglomerates(NDRC 2011, chapter 11 section 1). More efficient minescan better enforce safety and environment standards forlocal pollution, but they also produce cheaper coal, whichmay lead to increased use of coalThe Chinese governmentis also actively closing down small coal-fired power plantsand installing larger, 600MW and higher power plantsthat produce less pollution, including CO-2 emission, perunit of energy produced (Yang, Guo and Wang 2010).Improving the efficiency of coal is also intimately tiedto the UHV transmission grid mentioned earlier. Theuse of coal has been somewhat constrained by the transportationcapacity between coal producing areas andeastern regions where energy demand is greatest. Currently,coal is transported from mines in northwesternChina to coal-fired power plants in the eastern seaboardvia railroads, or first via rail to a northern seaport, thenvia boats to southern cities. In 2008, 49% of the freightcargo by weight traveling on national railroads and 21%of China's total port throughput were coal, most of whichwas destined for power plants (NBS 2009, 15-20; StateGrid 2010).9 Thus the transportation of coal is one of thegreatest bottlenecks for meeting energy need in China.The new UHV grid will allow more coal-fired powerplants to be built where the coal is mined, and electricitycan be sent to load centers on a new long-distance transmissionnetwork. This can also reduce the energy usedand emissions resulting from the transport of coal. Producingelectricity where coal is mined will also allow theexploitation of lignite. Nearly 55% of China’s coal depositis lignite, but because lignite loses too much heat contentduring long transportation, these resources have notbeen used in every coal-fired power plant. With the newability to place power plants where the mines are, this lowgrade coal can be fully exploited (State Grid 2010, 34).Vertical integration of mining, transport, power generationand chemical industries is also being promoted toby the government to optimize China’s energy industryand other related industries. Such vertical integration willallow firms to operate more efficiently. Coal mines are encouragedto own and operate railroads and ports to facilitatethe transportation of their products, as well as haveon-site power plants. A policy document from the NDRCand approved by State Council calls for local governmentsto give priority approval to coal mines planning to buildon-site power plants (State Council 2010). According toa newspaper published by the NDRC, there are fourteencoal production bases planned for the next five years, allof which will have on-site power plants (Diao 2010).Alongside these measures to expand coal-fired powerplants in coal-producing regions, China is also expandingtransport capacity between coal producing regionsand southern and eastern China, where the demand isthe greatest. Rail transport in eastern China will be ex-Green Growth: From religion to reality 81