Beijing just announced that it will close the last of its four major coal-fired power plants in 2016, avoiding an estimated 30 million tons of carbon. This welcome step, carried out as part of China's national Air Pollution Action Plan, is the latest evidence that China is putting teeth into its pledges to tackle air pollution and cap its carbon emissions. It is further proof that China is already starting to deliver on the commitments it made as part of the U.S.-China climate deal last November.
China's efforts to shift away from coal, the largest source of its air pollution and carbon emissions, are part of a broader national effort to transition to cleaner energy and a more sustainable economy. According to Greenpeace, twelve of China's 34 provinces, which burn a total of 44 percent of the country's coal, are required or committed to control their coal use. In January, China ordered four of these regions to come up with concrete plans to reduce coal consumption, including the city of Shanghai and the provinces of Zhejiang, Jiangsu and Guangdong.
[The End of China's Coal Boom/Greenpeace]
These efforts are already bearing fruit. As I explained here, China's coal use and carbon emissions dropped in 2014 for the first time since 1998, while the economy continued to grow. Moreover, Shenhua, the largest coal producer in the world's largest coal market, just announced that it expects its coal sales in 2015 to decline by 10 percent. Specifically, Shenhua's 2015 year-to-date production and sales figures show that:
- Its coal sales year-to-date fell 47.4 million tonnes, down 32.1 percent year over year;
- Its in-house production is down 11.8 percent year over year to 46.2 million tonnes;
- Its coal imports are down 100 percent; and;
- Its coal-fired power generation is down 3.2 percent year over year in the first two months of 2015.
Of great interest is the fact that Shenhua's annual report calls this decline the "new normal" for China's coal industry:
"The development mode purely relying on the expansion of output and capacity is gradually dying out along with the conventional market competition model. The accelerated structural adjustment of national energy consumption will further slacken the growth in the demand for coal... The government accelerates the adjustment of the power structure, and imposes a strict limit on the newly-installed capacity of coal-fired power... With regard to the tightening regulation on energy and the environment, the potential risks in terms of environmental and ecological protection will gradually increase. The entry requirements for coal exploitation and coal-fired power development and standards for energy saving, environmental protection and production safety, etc. are tightening, thus the approval of projects will become more difficult."
In light of this downturn, China's coal producers are scrambling for new markets, including coal-to-chemicals and coal-based synthetic natural gas (SNG), and the development of large coal power bases and coal-intensive industries in the western provinces. China's National Energy Administration (NEA) continues to be "strongly opposed to the blind development of coal-based oil and SNG projects." Recent guidelines from China's Ministry of Water Resources on limiting water use in the coal power bases, limitation of coal conversion projects by the NEA, and stricter approval processes by the State Council are important steps. But new approvals for large coal-consuming projects are still going forward. Without stronger policies there is a risk that increased coal demand created by these processes will shift China's coal pollution to its less developed western provinces and make achievement of China's carbon and air pollution pledges much more difficult.
Pollution leakage caused by increasing coal consumption in China's west is one reason why NRDC, along with over 20 leading Chinese stakeholders, including government think tanks, research institutes, and industry associations, jointly launched the China Coal Consumption Cap project in October 2013. The project aims to develop a comprehensive roadmap and policy package for establishing and implementing a binding national coal consumption cap that aims to help China peak its coal consumption by 2020. Accelerating the replacement of coal with energy efficiency and cleaner energy sources will fundamentally help China achieve its long-term economic, environmental, and climate goals.
A national coal cap can also create more and better clean energy jobs, according to a new study released today by the China Coal Cap Project. According to Dr. Pan Jiahua, Director of the Chinese Academy of Social Sciences' Institute for Urban and Environmental Studies:
"If a national coal cap policy is implemented, the renewables, clean energy and energy efficiency industries will create many more new jobs than those lost in the traditional coal mining and coal-intensive industries. And most of the newly created jobs are decent jobs with better working environment and higher technical skills, to replace low quality unstable ones."
As my colleague Dr. Yang Fuqiang further explains, "Our research shows that you can reduce pollution while creating new jobs and increasing economic security. Advancing energy efficiency, wind, solar and other clean energy will do far more for China's employment rates than the coal industry, which requires fewer workers by the day."
China is moving rapidly to create those clean energy jobs. In addition to investing a record $89.5 billion in renewable energy last year, more than any other country in the world, China's National Energy Administration just increased its 2015 solar PV target by about 20 percent, to 17.8 gigawatts (GW) of new capacity. This will enable China to overtake Germany as the world leader in solar PV installed capacity.
Earlier this week, China's top meteorologist warned that climate change could have a devastating impact on the country, threatening infrastructure, reducing crop yields, and increasing droughts and other extreme weather events. This underscores the fact that China's efforts to reduce its air pollution and carbon emissions are squarely in its own self-interest.