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April 7, 2015

Coal A Top Priority in China's War Against Air Pollution

By East Asia Forum

Energy efficiency should be China’s answer to both its energy supply and environmental problems. China should promote renewable and clean energy sources, upgrade its coal power production, and encourage a low carbon power system by capping coal’s absolute contribution to the energy mix. But any decision to cap coal consumption will face opposition from industry.

Air pollution is a long-standing environmental problem in China. In recent years, a series of record-breaking haze outbreaks brought unprecedented domestic and international attention to China’s worsening air quality. In January 2013, extreme haze covered around 1.3 million square kilometres in northern and eastern China, affecting around 800 million people. In Beijing, the highest daily average concentration of fine particulate matter (PM2.5, or particles less than 2.5 micrometres in diameter) reached around 600 micrograms per cubic metre. This was more than 20 times the World Health Organization’s (WHO) recommended value of 35 micrograms per cubic metre.

In response to the intensified public concern over the notorious air pollution, the Chinese government declared a ‘war against air pollution’. They announced a new Action Plan for Air Pollution Control in September 2013. The plan aims to reduce national urban suspended particulate matter (PM10) levels by at least 10 percent of 2012 levels by 2017. In particular, it aims to reduce PM2.5 concentrations in three major eastern metropolitan areas: Beijing–Tianjin–Hebei, the Yangtze River Delta and the Pearl River Delta by 25, 20 and 15 percent respectively.

Fossil fuel energy use is the prime culprit of air pollution in China. According to a recent study by China Coal Cap Research Team, coal alone contributes to at least 60 percent of airborne pollutant emissions. Unsurprisingly, the plan’s priority is to impose restrictions on the growth of coal use. Because power generation uses nearly 50 percent of coal, the electric power industry is the top priority for a coal cap.

Industry players think otherwise. They frequently argue that China’s pollutant control standards for coal-fired power plants are the strictest in the world. In the USA, Germany, the UK and other developed economies, coal was historically a main primary energy source exclusively used now for power generation. Electricity producers argue that because of the efficient employment of coal in the electricity industry than in others — including steel and cement production or industrial process heating —more coal used in power generation can improve air quality.

In 2012, 78 percent of China’s energy came from coal. If coal’s absolute contribution to power is capped at current levels and China’s energy supply increases in line with current trends, then coal power will supply 68 percent of total electricity demand in 2020, decreasing to 58 percent in 2030 and 45 percent in 2050.

n this scenario, clean and renewable energy could experience fantastic growth in China, supplying up to 48 percent of electricity demand by 2050. But even if the near-zero pollutant emissions standard are fully implemented in all of China’s coal-fired power plants by 2030, the reduction of the main pollutants (Sulphur-dioxide, nitric oxide, nitrogen dioxide and PM2.5) will not be sufficient to sustain the WHO’s recommended PM2.5 concentration level.

Bad air quality is just one demon of unchecked coal power. Another is water shortage. A serious water crisis could certainly damage the drought-affected western provinces containing most of China’s new coal-fired power plants. Unchecked coal power will also impact upon global climate change. If carbon dioxide emissions double in the power sector alone, this will spoil any efforts to stabilise greenhouse gas emissions in other sectors and other nations.

The government should consider improving energy efficiency through upgrading coal power while switching to low-carbon power. For decades, ensuring a sufficient energy supply was the top concern, while largely ignoring efficiency improvements. It would be easy to find 0.5–1 percent reductions in annual electricity demand. Upgrading China’s coal power and closing inefficient small plants is a good start. Switching to a low carbon system can lead to more benefits.

The fundamental solution is renewable and clean energy: wind, solar and — more controversially — nuclear power. The Chinese government should consider a policy scenario in which non-fossil sources account for 31, 46 and 64 percent of total power supply by 2020, 2030 and 2050 respectively. Gas expects to quickly develop into a primary power source and provide the vital flexibility for the power system.

Will the coal cap plan be cost-effective? Levying a pollution tax to remedy the coal consumption externality and subsidising renewable energy will certainly push up the cost of power. Total costs could rise by around US$80–100 billion in 2020–30. The payoff is great. In the long-run, slashing fuel costs and abating carbon emissions, while encouraging new industries and creating new jobs, will surely justify the costs incurred.

Courtesy East Asia Forum via Economy Watch

The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.

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