Coal from here to eternity

Is China truly going to use as much coal as is suggested in most major economic models, such as the chart below? If it does, then we get the nightmare climate change scenarios, and gas masks will become a routine Chinese accouterment. This blog, however, has written numerous times (such as here) that the answer is no — that one cannot simply look at a trajectory (such as illustrated in this good piece by David Biello at Scientific American), and carry it forward blindly. Among impediments to that trajectory are mainly local politics, but also others’ appetites, and geological and technical constraints to supply. China itself has announced plans to accelerate development of shale gas in order to reduce reliance on coal, Reuters reports.

Last week, I participated on a panel with Derek Scissors, a research fellow on Asian economic policy at the Heritage Foundation in Washington. Derek argues for the trajectory. In the interest of balance, I asked him to write a post laying out his case. Here it is:

Last week Steve did a big favor for me, so naturally this week I’m here to tell you he’s completely wrong.

What, that can’t be the end of the post?

OK, he’s wrong about something in particular: China moving off coal. And he’s not completely wrong, just mostly. The People’s Republic of China will move. Barring a technological breakthrough, though, reduction of current coal use will be minor, especially when considering the major move toward coal that has occurred in the past decade.

Steve’s main point is that increasing coal use will provoke a popular backlash and that the Communist Party, ever concerned with “social stability,” will effectively cut back on coal in response. This is true as far as it goes; it just doesn’t go very far. Three responses, from weakest to strongest:

1) Yes, China will invest to improve its energy mix in various ways, from cleaner coal to solar. But let’s not get carried away.

At about $65 billion last year in coal mining and coal dressing, China is investing far more heavily in conventional coal than any alternative; but since it is doing so at home, it is not winning attention for it. According to official data, Chinese investment in coal was about the same as its investment in oil, gas, and scientific research combined. The investment in coal at home was larger than the PRC’s outward investment in all non-bond assets — all energy, all metals, and so on — in 2010. Some of this investment, of course, is for cleaner coal.

2) Yes, China has worked and will work to clean up coal. That, however, can also cut against Steve’s argument.

The PRC would benefit more from cleaner coal than any other country and is indeed working to that end. There’s been considerable progress in cutting sulfur dioxide levels in the past five years and in the past 15 years. Air pollution in some Chinese cities is less devastatingly bad than it was near the end of the 20^th century. In others, coal dust is again less of problem; it’s just that sand particulates are more.

To Steve’s main point, air pollution was a terrible problem in the PRC in the 1990s, yet there was little or no popular protest. Or perhaps there was, but it did not become widely known. In either case, China had a very bad air pollution problem by 2003, yet had just started the massive expansion of coal use that continues to this day. Either there was no threat from environmental protests or, more likely, the threat was utterly outmatched by economic considerations.

3) The extent of China’s addiction to coal is so great that a relatively small movement away is all that can be hoped for.

This is a topic for a book, so I’ll just throw out a few facts: First, don’t pay attention to installed capacity as a measure. The PRC builds lots of things that just sit there — wind turbines, water treatment facilities, entire towns. In energy, coal is what gets used.

In 2000, according to official data, coal production was 880 million tons, and the PRC was a net coal exporter. In 2009, it was over 2.96 billion tons, and another 125 million tons were imported. I can’t give you the 2010 production figures because the State Statistical Bureau stopped publishing them.

From 1980-1996, coal consumption growth was about 5 percent annually. From 2003-2009, under leaders Hu Jintao and Wen Jiabao, it was over 13 percent annually.

Coal previously accounted for less than 70 percent of Chinese electricity use; now it is over 80 percent. The Energy Information Administration projects that coal will generate “only” 74 percent of the PRC’s electricity in 2035. From one perspective, that is a sizable drop. Yet it is still higher than the coal share in 1999.

China’s drive for energy diversification and cleaner coal isn’t a drive forward; it’s more a drive back. It’s an attempt over the course of two decades to move away from the astonishing coal use now to the merely world-beating coal use of, say, 2005. I suppose that qualifies as progress, but only because the bar has been set so low.