By Michael Lelyveld
China’s coal consumption appears to be rising at a rapid rate in 2018, erasing several years of low growth and environmental restraint.
In the first five months of the year, China used 870 million metric tons of “thermal” coal, a 12-percent increase from a year earlier, the government’s top planning agency said on June 21.
The growth rate was the highest since 2011, said the website of the official Economic Daily, citing a statement by the National Development and Reform Commission (NDRC).
The volume estimate is only for thermal coal, used for power and heat, other websites reported. The tonnage figure also covered only coal used to generate electricity, the official English-language China Daily said.
Still, the double-digit growth rate is cause for environmental concern.
If the country continues the 12-percent growth pace through the entire year for all coal use, consumption would tie the record mark of 4.24 billion tons set in 2013, based on calculations from National Bureau of Statistics (NBS) data.
While the NBS has yet to release final figures on total tonnage for either 2016 or 2017, it has estimated that coal consumption rose 0.4 percent last year, posting the first increase in four years.
The consequences for greenhouse gas emissions and climate change could be significant.
China produced 46.4 percent of the world’s coal and consumed 50.7 percent of the global total last year, based on energy equivalent estimates by BP Statistical Review of World Energy.
The country was by far the world’s largest source of energy-related carbon dioxide (CO2) emissions, accounting for 27.6 percent, the annual review estimated.
China’s CO2 emissions rose 1.6 percent in 2017 after declining in the previous two years, it said.
Elliot Diringer, executive vice president of the U.S.-based Center for Climate and Energy Solutions told National Public Radio on July 8 that “China’s emissions spiked in the first quarter of this year” after “more or less stabilizing” previously.
Worsening smog conditions are believed to be the reason for an extraordinary session of China’s top legislative body on July 9 to review implementation of the country’s Air Pollution Control Law.
A report to the Standing Committee of the National People’s Congress (NPC) highlighted double-digit reductions in smog-forming particles known as PM2.5 over a five-year period in major economic centers.
But a summary by the official Xinhua news agency made no mention of data comparisons from year to year.
Official reports in February cited a 6.5-percent drop in PM2.5 levels in 338 surveyed cities last year.
But concentrations in Beijing rose eight percent from a year earlier in May and 5.6 percent in the Yangtze River Delta, Reuters said, based on data from the Ministry of Ecology and the Environment.
In a lengthy Xinhua summary, NPC Standing Committee Chairman Li Zhanshu cited “unprecedented strength and pragmatic measures” in fighting air pollution, but also problems “caused by structural layout and slack law enforcement and supervision.”
The report singled out a high concentration of diesel-powered vehicles in coastal Shandong province and a full year of fabricated environmental readings from Linfen City in northern Shanxi province.
But there appeared to be no mention of the resurgent growth of coal.
While coal consumption data for China is only partial so far this year, the signs point toward acceleration.
In April, the National Energy Agency (NEA) estimated that consumption rose 4.2 percent in the first two months of the year from the comparable 2017 period.
In late May, the international environmental watchdog Greenpeace calculated that China’s carbon emissions rose 4 percent in the first quarter as coal demand increased 3.5 percent.
China’s coal output of 1.4 billion tons through May gained 4 percent despite continuing efforts to close outdated mines and cut production overcapacity, the NBS said.
In the first four months, production rose by 60 million tons in the main provincial-level coal centers of Shaanxi, Shanxi, and Inner Mongolia. The NDRC has given their mines a green light for increases of 250 million tons this year to keep already-high prices from climbing further.
The pressures on coal and the environment have been largely driven by pro-growth economic policies that have tightened China’s energy markets.
Electricity consumption jumped 9.4 percent in the first half of the year, rising eight percent in June from a year earlier, the NEA said.
“It’s clear the Chinese economy picked up pace early in the year which would be reflected in an acceleration in electricity demand, as the data show,” said Mikkal Herberg, energy security research director at the Seattle-based National Bureau of Asian Research.
Coal consumption rates have also been spurred, and perhaps distorted, by NDRC attempts to clear smog in Beijing and surrounding areas. The agency tried to ban coal-fired heating and cut steel production in 28 northern cities last winter.
Both of those efforts backfired, official data suggest.
The heating order sparked a run on gas that continued into the summer, despite the NDRC’s decision to ease the supply crunch by allowing coal burning to resume. The disruption has led to shortages of both gas and coal.
At the start of the year, the double-digit growth of gas use was expected to reduce coal consumption. Instead, it has only added to energy consumption as demand for both fuels remains high.
In the first five months of the year, gas consumption climbed 17.6 percent, the NDRC said.
“China is straining to meet rising gas demand, so there’s not really much ability to use more gas in the short term to meet rising growth,” said Herberg.
“So any substantial rise in electricity demand tends to default to more coal-fired power,” he said.
Several provinces have warned of summer electricity shortages, keeping coal demand high.
Steelmakers shift output
The influence of government regulatory measures on coal and emissions can also be seen in NBS steel data for the first five months, covering the period both before and after the winter curbs.
The statistics suggest that steelmakers simply shifted their output to other parts of the country to avoid smog controls in the northeast, setting a series of production records while cashing in on high prices from market reactions to the winter limits.
Despite international furor over tariffs and China’s production, the country’s output of crude steel rose from 74 million tons in March to nearly 77 million tons in April before hitting another all-time monthly high of more than 81 million tons in May.
The government has been studiously silent about the new production records while it is locked in a tariff standoff with the United States that started with complaints about steel.
In a rare admission, the NDRC conceded last month that it has had trouble reining in China’s steelmakers, particularly producers of substandard reinforcing bars.
Following regional inspections, an NDRC spokesperson threatened “zero tolerance and harsh punishments,” citing the “illegal use of production facilities and illegal addition of new capacity,” Xinhua reported on June 17.
The steel cases demonstrate a cyclical problem for coal consumption and emissions, created by ineffective regulation and spotty crackdowns.
In mid-June, steel prices heated up in anticipation of environmental inspections, S&P Global’s Platts energy news service reported. But higher prices have only served to lure manufacturers back into the market and drive up production.
The cycle has been a continual challenge for managing coal consumption and emissions since the current round of overcapacity cuts began in 2016.
Three-year action plan
The surge in coal growth coincides with the release of a new three-year environmental action plan on June 25, laying out new targets and steps to control air pollution through 2020.
The plan approved by the Communist Party of China (CPC) Central Committee and the cabinet-level State Council calls for an 18-percent improvement in PM2.5 concentrations in the most polluted cities, compared with 2015 levels.
Sulfur dioxide and nitrogen oxide emissions should drop by more than 15 percent, Xinhua said. Midsized and major cities should see the number of “good-air days” reach 80 percent, according to the summary.
The plan is focused on key power centers including the Beijing-Tianjin-Hebei region and the Yangtze River Delta, state media reported.
The group of cities subject to production cuts has been expanded from 28 to 82. No new production capacity for steel, coke or aluminum will be allowed in the enlarged area during the period, Reuters said.
The program also targets improvements in water quality with a goal of making 70 percent of surface water drinkable by 2020, the online news service GBTimes said.
But it is unclear how the new targets can be reconciled with the current increases in coal use. Genuine reductions in pollution seem unlikely unless the major source of pollution is curbed.
The three-year plan also seems to focus on smog, paying little attention to carbon emissions and climate change.
The experience with steel has shown that targets for visible pollution can be met by shifting production to other regions without achieving climate gains.
Last month, the NDRC said separately that it plans to create a national pricing “framework” by the end of 2020 “to curb environmental damage while keeping the economy afloat,” China Daily reported.
The system could strengthen incentives for the national carbon trading system, officially launched last December.
Planners have spent years considering how to put a price on pollutants that would reflect their true environmental and economic costs.
On April 1, some 260,000 companies and other entities started paying a modest environmental tax for pollution discharges, which could be raised over time.
But an official indicated to China Daily that the NDRC is still reluctant to set national rates for pollution under its new guideline and plans to leave the assessments up to individual provinces and cities instead.
Even that step toward a national pricing framework is expected only by the end of 2020. If coal consumption continues to increase, it is unclear whether China’s environment can afford to wait that long.
Please Donate Today
Did you enjoy this article? Then please consider donating today to ensure that Eurasia Review can continue to be able to provide similar content.