China´s declining coal industry - Sara Hsu

+Sara Hsu 

A declining economic growth and stiff anti-pollution measures hit especially the coal industry in China hard, as prices fall in an industry suffering from overcapacity, writes financial analyst Sara Hsu in the Diplomat. The trend will continue. although "the transition to a diminished reliance on coal is difficult."

Sara Hsu:

For one, improved environmental standards around the world have reduced orders for this heavily polluting resource, and China has forced smaller mines to close or be purchased by state-owned companies. About 1,000 small coal mining companies were shut down in 2014. In the past four years, 5,920 coal mines have been closed. Most Chinese mining companies, about 70 percent, incurred losses in the first 11 months of 2014, as national governments have adopted climate change policies that attempt to transfer the reliance on polluting fuels to renewable and cleaner energy. Second, China is also very slowly decreasing its demand for coal as part of its five-year energy strategy for the 2016-2020 period, from 64.2 percent of total energy consumption to below 62 percent by 2020. Use of some highly polluting types of coal have been banned. As the world’s largest coal consumer, China’s declining demand for this natural resource bodes well for the environment and for the health of its population, as coal plant emissions alone result in hundreds of thousands of premature deaths due to particulate and heavy metal pollution. Coal miners themselves frequently suffer from pneumonoconiosis, or black lung disease, due to inhalation of coal matter. 

The transition to a diminished reliance on coal is difficult, however. Chinese regulators have attempted to maintain coal contract prices in order to maintain economic stability, but even so, coal prices declined 20 percent in 2014. Stockpiles of the fuel at coal mining companies increased 2.6 percent year on year, to 87 million tons, while stockpiles of coal at power plants rose by 17 percent. Excess inventories and overcapacity will likely maintain the pinch in the coal sector over the next year. To combat this, Shanxi province in northern China, one of the biggest coal producing regions in the nation, stated that it would not approve new mining projects until 2020. This represents a dramatic move toward increasing efficiency in coal markets.

More in the Diplomat.

Sara Hsu is a speaker at the China Speakers Bureau. Do you need her at your meeting or conference? Do get in touch or fill in our speakers´ request form.

Are you interested in more stories by Sara Hsu? Do check this regularly updated list.  

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China's low energy efficiency - Bill Dodson

Bill Dodson

China is using most energy in the world, not only because of its booming economy, but also because of its low energy efficiency, writes energy specialist Bill Dodson in the China Economic Review. The good news: China's officials know they have a problem to fix, and look for ways to do so.

Bill Dodson:

The average energy efficiency in Chinese buildings is relatively low, at about 50%, Li Bingren, chief economist of the Ministry of Housing and Urban-Rural Development, said in late 2010. Even if that standard rose to 65% by 2020, Chinese buildings would still use 50% more energy for heating on average than developed countries with similar climates. 

Lighting, heating and ventilating buildings uses more than a quarter of the power China generates, Li said. An additional 15% of the country’s energy is used for manufacturing and transporting building materials, and for constructing homes and offices, according to the Worldwatch Institute. Energy efficient approaches to building materials and construction could greatly reduce this voracious appetite for energy. 

To a country that is one of the world’s largest importers of coal and oil, energy efficiency matters. China’s current energy plan, with its emphasis on the supply side of the energy equation, is akin to pouring an increasing amount of water into an expanding bucket full of holes. State media reports as early as 2006 claimed China would not be able to meet the energy demands of its buildings in 2020. 

Energy efficiency would provide a way for China to reduce its use of fossil fuels without expensive outlays in alternative energy sources. Saving a kilowatt of power costs just a quarter of the amount used to generate a new kilowatt, said Barbara Finamore, founder and director of Natural Resources Defense Council’s China program. The NRDC estimates increased energy efficiency could cut China’s growth in energy demand in half by 2030.

More in the China Economic Review.  


Bill Dodson is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

New controls on wind and solar power - Bill Dodson

Bill Dodson

Premier Wen Jiabao spelled out China's new energy initiatives during the meeting of the National Power Congress. Energy specialist Bill Dodson summarizes on his weblog strict control of wind and solar power, and the resumption of approvals of nuclear power projects.

Bill Dodson:

During the 2012 session of the National People’s Congress (NPC) Premiere Wen Jiaobao presented a government work report on China’ energy plan. The annual NPC session was held at the beginning of March. The report stresses the need for China to curb uncontrolled expansion in sectors such as solar energy and wind power. Qian Zhimin, NPC deputy and the deputy director of the National Energy Administration (NEA), cited that government policy would slow overheated development in PV glass and wind power equipment manufacturing, among others. 

China’s solar PV industry exploded to more than 500 enterprises in 2011 from less than 100 in 2008. PV makers relied on old and traditional methods of production. They paid little attention to R&D. As a result, the market became saturated with homogenized products. Overcapacity and oversupply block the industry’s healthy development. 

Premier Wen said in his government work report that China will develop nuclear power safely and effectively. Zhu Zhiyuan, NPC deputy and vice president of the Chinese Academy of Sciences Shanghai Branch, said the report implies the Chinese government will resume the normal development of nuclear electricity, according to .  

NPC deputy and general manager of China Nuclear Engineering Group Corp (CNEC), Mu Zhanying, added that China is very likely to resume approvals of new nuclear power projects in the first half of 2012, once the government releases the country’s nuclear safety plan. Mu also said that a new development target for nuclear power set by the National Energy Administration would come out in 2012. The goal will adhere to the nuclear safety plan. Mu expected new nuclear power projects to start construction in 2012. 

The original nuclear power plan targets that more than 70 nuclear power reactors in operation in 2020. The National Development and Reform Commission (NDRC) sees nuclear power accounting for 5 per cent of the country’s total capacity by that time.

Original from EnergySector.com

Bill Dodson is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

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Shanghai's focus on clean energy - Bill Dodson

Bill Dodson

Shanghai municipality has published plans to reduce non-fossil energy sources dramatically over the next five years, writes energy specialist Bill Dodson on his weblog. Reducing the usage of coal is high on Shanghai's energy Plan.

Bill Dodson:

The Plan cited that by 2015, three offshore wind farms (East Sea Bridge, Lin Port and Old Port) will be established or extended. Shanghai plans to achieve one-gigawatt of wind power capacity by 2015. 

Solar energy development will prioritize establishing “Golden Sun” demonstration projects and roof solar energy demonstration applications in industrial zones, including: Waibaoqiao, Old Port, or Chenjia Town, newly built districts, and large public buildings. The plan projects a total capacity of 150 megawatts met by 2015. 

Biomass energy development will be combined with waste treatment. The construction of biomass demonstration power plants in the Chongming, Songjiang, Fenxian and Old Port districts are on the drawing board. 

The plan includes the development of several incineration plants. The newly-added capacity will contribute 200-megawatts to Shanghai’s energy portfolio. Shanghai’s energy plan offers the development of Chongming into a national green-energy demonstration town and adding a new-energy plant with an installed capacity of 300 to 400-megawatts.

More on Bill Dodson's weblog on energy in China.

Bill Dodson is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch or fill in our speakers' request form.

More on Bill Dodson's work on China's economy at Storify.

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An energy shortage is more than a shortage - Bill Dodson

Bill Dodson

Author and energy expert Bill Dodson explains for NPR why China's energy shortage mean much more than just a shortage. Why is the government selling power so cheap? NPR:

Bill Dodson is the chief editor of ChinaEnergySector.com and author of the book: "China Inside Out." Dodson says there's more to this energy shortage than, well, a shortage. China's power companies buy coal at market rates. But China's government forces them to sell power to consumers at artificially low prices -- prices that don't cover their costs. So they just turn the power off. Why does China's government insist these companies sell power at bargain basement prices? Dodson says there are three reasons. DODSON: Social stability, social stability, and social stability. So if energy becomes more expensive than consumers are comfortable with paying, they will actually protest. They will come out onto the streets. And that really is one of the last things the central government wants.

More at NPR's marketplace. Bill Dodson is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch.

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The knock-on effect for wind and solar energy - Bill Dodson

A shortage of water is curtailing hydro power, the coal industry and China's nuclear ambitions, offering wind and solar energy great opportunities, told energy expert Bill Dodson yesterday at the Shanghai Foreign Correspondents Club. In theory.

From his weblog:

Again this year, hydropower dams in the southwest are generating power below capacity. Coal mines in the north are unable to operate due to a lack of water. And – to my estimation – aggressive plans to build nuclear plants along the Yangtze and Yellow rivers will have to change due to the lack of water flowing the concourses (and what to do with waste river water in the event of a Fukushima-style event).

The knock-on effects for the energy sector include greater opportunities for growth in the wind and solar power industries, and increased emphasis on energy efficiency, especially in its dreadfully wasteful property sector. However, by 2020 – when China’s energy requirements are set to double from the 2010 level of 1,000-gigawatts -  these alternatives will account for less than five percent of the total portfolio for energy generation. China’s big bet to take hydropower from generating its current level of about 20% of the nation’s energy to 25% by 2020 just may not be realized. The abundant sources of water the country has banked on for thousands of years may simply no longer be available in the quantities it has planned for its new and enlarged cities.

More at his weblog.

Bill Dodson is a speaker at the China Speakers Bureau. When you need him at your meeting or conference, do get in touch.

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China's green energy gains from Fukushima - Bill Dodson

Bill Dodson

The chain of disasters at the nuclear plan in Fukushima have cause a shock in China's energy policies, but solar and wind power industries in particular are beneficiaries of Japan’s nuclear tragedy, writes energy expert Bill Dodson.

Bill Dodson:

The Chinese alternative energy business has found ways to turn danger into opportunity...

The tsunami and subsequent China State Council moratorium provided Chinese manufacturers of solar panels welcome relief. With an estimated doubling solar manufacturers in China from two hundred to four hundred in 2010, analysts and regulators braced the markets for a consolidation that would see the under-capitalized and the unsophisticated go out of business or be bought out by larger companies. Instead, the tsunami swept new life into the marketplace.

And:

In 2010 China surpassed its 2020 target of 30-gigawatts installed wind power capacity by as much as 15-gigawatts. However, nearly 30-percent of the wind turbines installed in China are not connected to grids to provide electricity. Central government planners, it seemed, had little control over local priorities as only 26 of the 187 wind farms established in 2010 were actually approved by central government. Nevertheless, the Fukushima incident if anything seemed to encourage the development of even more wind power energy.  BJX News cited estimates of wind power taking as much as half the 300-gigawatts slated for alternative energy production in 2020. Nothing, it seems, will dent China’s momentum in developing its alternative energy sources.

More at ChinaEnergySector.com (registration compulsory).

Bill Dodson is a speaker at the China Speakers Bureau. Do you need him at your meeting or conference? Do get in touch.

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Ministry uses TV-show to save energy

vice-premier Zeng Peiyan

The failure of China to reduce energy usage and reduce polutions was illustrated this weekend again when hapless authorities turned to a TV-show to urge the masses to reduce their energy consumption. The China Daily:

Chinese vice premier Zeng Peiyan on Saturday called on ordinary people to help save energy and reduce pollution.
"Energy conservation and pollution reduction are related to the sustainable development of the whole society and economy, as well as the interests of the broad masses," Zeng told the opening ceremony of a nationwide campaign in Beijing.

While the campaign involves at least 17 government departments, it looks mainly like a display of dispair and hollow propaganda, as real measures like the increase of energy prices is politically not achievable.

Green knights, on your horses

Earlier this year I listed the long row of urgent priorities by the central government. I found the list impressive and actually none of the subjects could be missed there. Without addressing each of them, China would develop a massive problem. Since then, with the product quality scandals and a few more, the list has only grown. At that time, I was also wondering which of those priorities would survive the year-end. Some things move faster than expected.
Politics in China is governed by negotiations between the central and many, many other governments. Much of the real power is in the hands of local power brokers and state-owned companies and only by getting their consent, the central government can realize some of its priorities. The question is therefore: what urgent priorities will drop off the list?
I have been discussing the subject with a range of fellow China-watchers and there is a consensus that the environment has dropped out. Some actually say, it has never been on it, but for a while at least investments in environmental projects went up. Local authorities do not mind those, since they benefit from every investment.
A few times over the past months, the government departments in charge of the environment had to take severe political hits. One report by the World Health Organization on the number of environmental reports in China and one developed with the World Bank on the Green GDP, a pet-project of Hu Jintao, where killed. They still had some effect because they of course leaked out, but it gave a clear signal that the environment as an issue should back-off.
Some of my friends dismissed those reports anyway as meaningless propaganda tools. That might be true, but when even meaningless propaganda kits gets killed, there is something rotten.
What those reports could and should have done is creating a climate for real measures, like a stiff increase of energy prices, so the usage of energy could slow down and that could force even the economy at large to cool down, something the central government has not yet been able to do. But when anything goes against the interest of the local power brokers, it is a slowdown of the economy. Those in charge are making money on the booming economy now and do not want to share that with a next generation of leaders.
Of course, China is never going to remove the environment as an issue from its political agenda. And of course, next year Beijing needs to have some breathable air for at least a few weeks in August as the Olympics take place. In the official propaganda, the environment will remain an issue, but not one with a high priority.
Knowing this, what can be done?

First, the environmental struggle has seen severe setbacks and the prospects do not look good. But not all is lost yet and the green knights should get on their horses and get their act together.
Second, companies involved in environmental projects should get their things implemented as soon as possible. Funding that is available should be used as much as possible, because a drop on the political agenda will be followed by a drop in funding
For the record, of course I hope this gloomy analysis is wrong.

The value of a trade union in a coal mine

Historian Wu Si

Historian Wu Si looks at the backgrounds of the Shanxi brick kiln scandal in Southern Weekend (here in a translation of Danwei). At the tail of the story he illustrates how the arrival of a trade union in the Zaozhuang coal mines made a difference:

Wu: Last year I wrote an article that calculated the wage difference between Zaozhuang coal mines with and without a labor union. Before the labor union came, the workers were exploited terribly. Five years after the union arrived, workers' wages had risen 32%. Labor unions are one form of political power, and political power is worth money. It can be eaten - it was worth 32% of their former wages. The second question is whether the boss suffered after the wages were raised. Did profits drop? In those Zaozhuang mines, profits did not drop.
I've asked two bosses what would happen to their companies if, in the next five years, their employees' wages were to rise 30%. Would they forfeit market competitiveness? They said that the competitive edge that China has in the world market, particularly its cost advantage, is not just a point or two.
Today, Chinese products can be dumped on the world because of that labor cost advantage. This upsets workers in other countries, and has even caused problems to international order.
I've calculated that if China were to increase the salary of its 100 million migrant workers by 32%, this would bring to their families benefits worth 5 times what canceling the agriculture tax brought. This money would be transformed into spending power. One problem China has today is overproduction. Even if its competitiveness on the world market is weakened, the benefits of spurring domestic consumption are enough to make up for it.

The China Opportunity - the WTO-column

Shanghai - "Are you positive or negative about the effects of China on the world?" I tried to look no too cynical when the leader of a European delegation formulated last week the questions he wanted me to answer. Shanghai and China are flooded by delegations full of curious business people, government officials, NGO's, eager to find out how China is going to change the world. Most of them seem genuinly lost when it comes to the more fundamental questions.

All to often those relative newcomers try to fit China's development in some easy to catch cliches, since making a real assessment of what is going on is darned difficult. I try not to let them get away with all too easy ways of framing the China story. My task is to confuse you, I tell them, rattle their all to simple assumptions about the dangers and opportunities in China, try to liberate them from the all to simple ideas they might have had about China.

By the time I meet them, most visiting delegates have already made one simple but rather essential observation. "This is a huge country." While everybody might know the figures, only when you are traveling here, face the huge distances, the internal differences, people start to realize that even Shanghai - with mostly a bigger population than the region they come from - cannot be described in cliches only.

It is a delicate balance: trying not to deny the huge problems China is facing, while at the same time also avoiding all too easy doomsday scenario's that sell very well in the media. China's voracious hunger for energy and raw materials. The water crisis in Wuxi, the dead fish in China's lakes, the growing number of stories about social unrest: it's sizzling economic growth does seem to come at a price that might be too high.

China as a country has been used to an almost permanent state of crisis management and has become pretty good in managing crises of all kinds of nature. That is not meant as a compliment, but might help to understand why despite an endless row of serious incidents, there might be a way to continue economic progress without turning the environment or global economic relations into a real disaster mode.

What strikes me in China is the high level of inefficiency in using energy, labor, raw materials, almost anything that is needed for fuel its economic growth. Getting more coal and oil in has been the most important strategy to deal with the growing need for energy. But there could be another way. The level of inefficiency is so high that even a marginally successful program to save energy could make a huge difference and allow years of economic growth without the need for more coal or oil.

I'm not familiar with the current figures, but a few years ago China needed eight times as much energy to generate one US dollar worth of products compared to the United States, for sure also not a country that has a clean record when it comes to energy saving.

Efficiency is going to be a key word in the years to come. That might go against the slight anarchistic nature of China and its citizens, but when there is no other way out, China's crisis manager will find that way.

Fons Tuinstra

What is China's largest company?

I just got an invitation from Ogilvy to join a speech of the president of Azerbaijan later this month in Istanbul during a high-end meeting on energy. Hehe, I think I will not make it. The world is flat, but I would not even have a peek at it when they would offer access over the internet.
What struck me was this in the list of other speakers:

Liu Zhenya, President of State Grid Corporation of China (largest company in China).

The State Grid is a relatively new company was previously known as the (in more than one sense) powerful "State Power Corporation". Former prime minister Li Peng belonged to this conglomerate. The idea was to split off power production and distribution. But I'm not sure whether that really has worked out.
Not sure what kind of measurement is being used to call it the "largest company in China". Anybody can help me out?

A battle won for the environment in Yunnan

the three parallel rivers

Josie Liu points at a pledge the Yunnan provincial government has made to protect the environment. There will be no dams and no mines in the region of the three parallal rivers, one of the World Natural Heritages sites, listed by UNESCO.

Taiyuan refuses to compensate illegal miners

The decision by the municipal government of Taiyuan to no longer compensate miners of their families if they are involved in accidents in illegal mines has sparked off a fierce debate, also in the official media. The People's Daily summerizes (in a translation by CDT)

Should the government “pay the check” for workers who die at illegal mines? The admonition from Taiyuan Bureau of Land Resources brought on disputes from many quarters. Advocates said that to fight illegal mines the government should adopt multiple resolutions. It should not only heavily punish illegal mine owners, but should also punish peasant workers who participate in illegal mining. Opponents said that aside from the enticement of rich returns from illegal mines, the government’s misconduct should also be blamed for the existence of illegal mines, thus the government should take a certain responsibility for peasant workers whose interests are damaged while working at illegal mines.