China still in thrall to King Coal

THE PM is gilding the alternative energy lily.

China coal power plant

CHINESE leaders have shown great success in rebranding the rapidly growing communist state as a lead player in meeting the challenges of a carbon constrained world.

But there remains little danger that China will lose its crown as the world's largest energy user and biggest carbon emitter.

The low-hanging fruit of closing older, heavily polluting coal-fired power stations, highlighted by Julia Gillard on ABC1's Q&A on Monday night, has all but been picked.

According to the Prime Minister, "China is closing down a dirty, coal-fired power generation facility at the rate of one every one to two weeks, putting up a wind turbine at the rate of one every hour, and has set a target by 2020 of reducing carbon pollution by 40 to 45 per cent per unit of gross domestic product."

The reality is every kilowatt hour of electricity saved from old coal-fired power stations now closed has been more than replaced by electricity from a coal-fired power station using newer technology.

It may be true that a vast program to build hydro, nuclear, wind and solar power stations will probably reduce the proportion of electricity China generates using coal, but not the amount.

And if the unfolding nuclear disaster in Japan slows China's push to become the biggest user of nuclear energy it will prove impossible for the Middle Kingdom to deliver on its low-carbon future promise.

This promise was outlined by the Chinese People's Congress, which has met this week to develop the communist state's 12th five-year plan, covering 2011-15.

It has pledged to continue its "clean revolution" during the next five years with significant targets for low-carbon energy, energy efficiency and clean technology.

The plan builds on an enthusiastic outlook about China's preparedness to join global efforts to combat climate change.

A report prepared by the Britain-based Climate Group on the five-year plan concludes "China's low-carbon ambitions are accelerating and will bend the nation's carbon emissions growth curve in the next five years".

It says China's energy supply was incorporating more non-fossil fuel sources and low-carbon technologies would continue to develop rapidly.

But China's ambitions must be viewed in context.

According to an analysis by the Hong Kong and Shanghai Bank, government backing means progress on low-carbon technologies will increase.

A four-fold growth in nuclear power to 40 gigawatts is expected with 63GW of new hydroelectric capacity, a growth of 22GW in gas-fired generation and 48GW of new wind power to more than double capacity.

Solar capacity is expected to reach 5GW of electricity by 2015.

But these figures must be measured against an estimated additional 260GW of coal-fired power generation.

China overtook the US as the largest energy consumer in 2009 and it is set to continue growing as the economy expands.

This will create enormous demand for electricity, most of which will come from coal, for many reasons.

For a start China has the third largest reserves of coal, 114 billion tonnes, well ahead of Australia's proved reserves of 76 billion tonnes. It also imports millions of tonnes, notably from Australia.

Coal fuels the economy and if China is to continue to generate the jobs and the higher incomes peasants coming to work in the cities expect there is no way it can turn its back on the source of its wealth, no matter how dangerous the mines or dirty the electricity generators.

Coal powers half the nation's railways and supplies more than half its chemical feedstock. And for all the talk of alternative energy right through the past decade China was annually expanding its coal-fired electricity system by the equivalent of the British grid.

The power companies are also politically powerful and as long as they don't defy government price powers on electricity they are largely left alone to run the system as they wish.

In the main they want to stick with what they know and that means more coal.

This especially applies in regions where the economy is expanding fast. Certainly rich coastal regions such as Shanghai can consider natural gas, but most provincial administrators have no stomach for anything that will slow the generating companies' capacity to keep up with demand.

Change in mining and generating is under way, but it has more to do with increasing output than reducing carbon emissions. The central government wants to close or improve operations in smaller, older mines and power plants.

The national energy administration says it decommissioned generators producing 70GW hours between 2006 and 2010 and plans to close plants producing another 8GW hours this year.

These plants are being replaced with more efficient ones, which still emit far more carbon than gas or alternative energies. And 80GW is not a lot of power in a nation that produces just short of 1000 GW hours a year.

In China, as in the developing world in general, coal is king. According to the International Energy Agency, a drop in coal-generated power in the West will be more than offset by growth in Asia. Overall coal-fired power generation is expected to increase from 8000 terrawatt hours in 2008 to 11,000 in 25 years (a terrawatt hour is the equivalent of 1000GW hours).

But while the IEA foresees China adding more coal-fuelled capacity than exists in the US, the European Union and Japan, this does not mean China has rejected renewals.

Xin Deng, an economist at the University of South Australia, says the Chinese government is intent on reducing its coal dependence. However, overall coal consumption will continue to increase to meet demand for electricity.

Changhua Wu, greater China director of the Climate Group in Beijing, tells The Australian the direction set for the energy sector under the new five-year plan will be available in coming weeks. But she says the percentage of coal-fired electricity generation is expected to fall by about nine percentage points in the next five years. That decrease will come from improvements in efficiency of coal plants and an increase in other sources of power generation such as hydro, nuclear, wind and solar, she says.

A huge development program is also under way to improve the efficiency of coal-fired power.

Wu says this hopefully will be followed by advances in carbon capture and storage.

There are about 20 demonstration carbon capture and storage plants in China.

And all new coal-fired stations that are being built include the possibility of the technology when it becomes available.

Wu says she does not think the unfolding nuclear emergency in Japan will cause China to reconsider its nuclear ambitions.

China's Vice-Minister of Environmental Protection, Zhang Lijun, was quoted on Sunday as saying: "We can learn lessons from Japan in the development of nuclear power in China."

He added: "The plan and determination for developing nuclear power in China will not change."

Wu says most people in China recognise that "all energy options have risk".

"When you have a large economy and a large population, and the economy continues to grow, it is hard to have all renewable energy today," she says.

"In China we have to try everything because of the scale of the economy and the speed of growth.

"Nuclear has to be part of the picture to move away from coal."

Wu says a large part of the recent moves to limit China's carbon emissions has come from shutting down smaller, outdated coal-fired power stations. "But as we move into the next five years the room for more plants to be shut down is getting less," Wu says.

This is expected to encourage a move towards more market-based mechanisms, away from command systems, to get greater efficiencies.

The federal government's climate change adviser Ross Garnaut says Chinese climate change policy is at the centre of the international effort to reach global agreement because it is the largest source of greenhouse gas emissions, because it is by far the largest prospective source of emissions growth and because economic and strategic competition between China and the US is important in the policy dynamics of both countries.

In the update to his climate change report released last month he says China's most important emissions reduction measures have been regulatory, including the closure of some emissions-intensive plants and industries.

There also has been substantial fiscal support to accelerate the deployment of a wide range of low-emissions technologies in energy and transport.

Stimulus spending after the global financial crisis included support for deployment of virtually all of the low-emissions technologies: solar, wind nuclear, biomass and hydro-electric.

There was large investment in the electricity transmission grid to reduce energy losses and to facilitate integration of new sources of electricity.

"Environmentally damaging, unsafe and economically inefficient small coal-fired generators have been closed at the rate of one every one or two weeks and replaced by larger, and economically and environmentally much more efficient plants," Garnaut says.

But he says not all has gone smoothly.

There are examples of wind power capacity growing well in excess of the grid's capacity to use the product.

There also has been criticism by economists of wasteful levels of subsidy for deployment of rooftop solar and electric cars.

However, Garnaut says, Chinese economic policy authorities have been surprised by the rate at which the costs of the low-emissions technologies have fallen.

"Costs of nuclear power have fallen so much that in coastal China, where the coal alternative involves the import of expensive coal from Australia and elsewhere or the expensive transportation of coal from the inland of China over hopelessly overextended rail and road systems, nuclear is close to being economically competitive with coal, with the relative costs continuing to move in favour of nuclear," he says.

"The main constraint on expansion of nuclear at the expense of coal will soon not be cost directly but anxiety about whether adequate supplies of high-grade uranium oxide would be available to meet China's demands."

According to Wu, one of the most striking aspects of this year's five-year plan process is that it is much more transparent and accessible by people. A key to future carbon emissions and fossil fuel use will be how well authorities are able to keep economic growth to a targeted 7 per cent.

"This 7 per cent target sends the message that the government will be attempting to slow growth down and pay more attention to the quality of growth," she says.

But the London-based Climate Group, an environmental and lobbying agency, argues the five-year plan will not deliver a cleaner, greener China.

"Significant barriers to success remain. Coal-fired generation and heavy manufacturing still make up the lion's share (81 per cent) of China's emissions," it says. "Despite ongoing efforts to modernise energy-intensive activities, growth in coal generating capacity will continue to outstrip aggressive alternative energy roll-out plans, and real capacity issues remain in government at the local level."

In China, coal still holds the mandate of heaven.