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China, coal, and the U.S. economy

More evidence that we're exporting massive carbon emissions

Posted by Tom Philpott at 2:38 PM on 02 Jan 2008

Read more about: energy | coal | China | business | economy

Last month, President Bush signed into law an energy bill most remarkable for its timidity with regard to climate change. According to sometime Gristmill contributor Peter Montague of Rachel's Democracy & Health News, the 2007 Energy Act will reduce U.S. carbon emissions by just 4.7 percent by 2030 -- clearly not nearly enough to avoid risking dire climate change. (Montague leans on this study (PDF) for his calculation.)

Given that we're quietly moving our most carbon-intensive industries to China, even that mind-numbingly modest reduction will surely prove a fraud.

Consider the chemicals industry. As The Wall Street Journal put it on New Year's Eve, "For years China has been a magnet for the chemicals industry, attracting European and American companies with its cheap production costs and growing market."

Of course, by "cheap production costs" the Journal isn't just referring to the labor of China's vast population. It also means its lax environmental code -- and ready stash of coal. Here we go:

Now China has another attraction for the energy-intense chemical industry: vast supplies of coal that can replace oil and natural gas as raw materials for chemical production.

Let's get this straight. U.S. (and European) companies are reducing their domestic consumption of oil and natural gas, saving money and lowering domestic carbon emissions -- by switching to an even more carbon-intensive fuel, coal, in China.

The Journal article is immensely depressing -- and absolutely essential reading. Here's an honor roll of U.S. companies getting into the act:

Celanese Corp. opened a plant this year that uses coal-based feedstock to make a chemical used in paints and food sweeteners. Dow Chemical Co. has partnered with Chinese energy company Shenhua Group Corp. to study a project to convert coal into plastics. Mining company Anglo American PLC is also looking at a coal-to-chemicals project. Suppliers to the chemical industry, such as Praxair Inc., are vying to open accounts with the new coal-to-chemical plants.

And here's the de rigueur euphoric quote from a U.S. participant in the unhappy trend: "Coal to chemicals is an opportunity that's literally exploding [in China] right now," declared the CEO of a U.S. company "that builds coal-gasification plants." Hooray!

I like the methodical way the Journal writers unpack the climate implications of the trend. "North America has its own huge reserves of coal, sparking interest in gasification plants in that continent as well," they write. "But development has been slowed by concerns that the projects would contribute to growing emissions of the gases that cause global warming."

Clearly, the solution to this dilemma is simply to move those plants to China.

So, in the face of mounting evidence of human-caused climate change, we get a weak energy bill and a strong move to offshore the dirtiest industries. How to explain this seemingly insane response?

Peter Montague offers a sinister explanation:

The U.S. seems to be painting itself into a corner, creating a global warming emergency, which may then be used to convince us to accept the only "solution" favored by the coal, oil, mining, railroad, and automobile industries: burying carbon dioxide a mile below ground, hoping it will stay there forever.

When I read something that sounds like a conspiracy theory, I reach for my Occam's Razor, and usually slice it to shreds. Yet Montague's explanation seems sturdy. Can anyone think of a better one?

Importing GHG

Good points but the concept of exporting heavy industry ... and then re-importing the finished goods seems like a tighter argument.

That is a function of many things, such as globalization and how the heck we're going to measure the life-cycle emissions of GHG such as CO2.  

For example, I would predict that given the tightness in the US refinery industry, more refined hydrocarbons such as gasoline and distillates would be imported to to the US.  This is a fairly new development, and use of coal-to-chemical technology in China is no exception.  

On its face, this strategy would appear to allow for growth in the US and be able to claim emission inventory reductions at the same time, with the exception of shipping (most of which are internationally registered so we can't regulate them).  That is no Great Conspiracy, other than the policy is to only include emissions within the physical boundaries of the US - thus taking out the upstream emissions from offshoring and importing.

Put that in your Occam's slicer and see what you get!  -sammie

Onward through the fog

Eventually...

...as China becomes more prosperous, and it's population less concerned  with personal poverty, they'll begin to shift their focus towards issues like safety, humanitarianism, and the environment.

Unfortunately, the change would be slow even under optimal conditions, and with China's high levels of corruption, lack of available legal alternatives to encourage change and enforcement (i.e. lawsuits), lack of public education on environmental and social issues, and the government bein' ruled by primarily one party, the change is further delayed.

So the question becomes, will the change take place quickly enough so that they don't cause anymore serious damage, or not?

Frightening trend

Will China turn into a toxic waste dump?   They shoot environmental protesters there, don't they?

But do they kidnap, torture, and murder them, like bushco does to terror suspects?  More than likely.

The only way to change this trend is to show that there is better money to be made in green, renewable industry.  the US can lead the way, China will follow to grab market share.  They already are in the wind power business.  How long until solar PV is mass produced there at lower cost?

If they build it, they will use it, replacing coal.

http://amazngdrx.blogharbor.com/blog John Schneider, Northern Wisconsin

Reality Check


   Dear Tasermons Partner,

       The news here is full of talk about the environment, the schools teach it constantly.  You must have China and the US confused (there is no major anti-science movement here ruling the government).  As to corruption, look to the US and the energy and farm bills, to say nothing of the murderous slaughter in your province of Iraq.

        Anyone can criticize anyplace, but it is useful if you actually know something about the places you are criticizing.

   Dr. AmazingX,

        Do US corporations shoot environmental protesters in Nigeria (oops, that was the humanitarian Dutch), or in the Amazon?

        Does the US murder people randomly in Iraq for disliking being invaded??

   You can play tit-for-tat with human rights issues all you want, but outside of telling everyone you're cool and you care (though at this point, no Americans have much credibility on this score, it is hard to explain, but check out what people living abroad are experiencing), what is your goal?

   I know both of you don't like China.  Got it.  I like it here (I was just talking to some folks involved in water resource issues, there are difficult problems to work on, and some interesting work being done).  

   Anyway, have a nice day!!!  

patrick in Beijing

Events unrelated...

...um, patrick, you're tying unrelated events together.  Iraq is mostly a seperate issue.  It doesn't really have much to do with coal or diverted industries.

Also, if there is no major anti-science movement there, then wouldn't it stand to reason that they'd invest much more in clean energy that'd be better for the health of the overall populous?  They won't do so because the coal industry has deep pockets that bribe most officials.  That's the anti-science movement.  It's corruption.

True, they may do the same here, but here it's not as severe, and unlike China, in the United States, environmental groups and even individuals can sue to stop a project if they don't think it's good.  It doesn't always work (though sometimes it does), but usually they'll at least get some compromise outta it that'll make the plants cleaner.

If China had stricter environmental standards, or cared more for the environment, then our companies would be less likely to move there in the first place.  China's lack of regulations and enforcement (in addition to low labor costs) makes it more profitable for 'em to operate there.  It's deplorable on our part to take advantage of the situation, but likewise it's deplorable that the corruption there is bad enough to allow it take place.

Change is coming and China is getting better in respects to environmentalism.  We're just worried that the timeframe may be too slow to have a signifigant impact very soon.  Likewise, there are similar concerns 'bout our own timeline.

Misunderstandings


   Dear Tasermons Partner,

        The anti-science movement is in the US.  Students every year in China find that their classes are full of articles about the environment.  The TV news shows information all the time, many people have a better understanding than most folks in the US seem to.  I am trying to get you to notice that you are operating on "assumptions" about China that may not be true.

        The reasons they don't just "invest more" are complicated, but the simplest one is that they don't always have more.  The Chinese GNP is 1/33rd that of the US.  That means a whole lot less money not only for individuals, but for government as well.

        (Americans are so rich, that many of us think that everyone can just "buy anything", but the poor can't buy their way out of problems.)

         And China is spending a lot of money on renewables.  But the peak population (which seems close from a demographers viewpoint) needs to be planned for.  And with roughly 900 million people living in the countryside, it will take a lot of money to end poverty.

         Where renewables cost more and/or require technology they don't have, people will use what the do have.  And in China (and other developing countries) that is often coal.

         It's not because of corruption, it's because of poverty.

         The Chinese DO care about the environment, but they are poor and need the money.  If AMERICANS cared more about the environment, they would tell their companies to set good examples, instead of raping the world.  

         You say "It's deplorable on our part to take advantage of the situation".

         That is ultimately what I am trying to get you to see.  OUR government (remember I am American too) allows corporations to run rampant.  In a democracy, WE are responsible for what OUR government does.  That means ME and YOU.  America needs to change "OUR PART" in order for change to happen.

patrick in Beijing

         

More Comments


    There is no "Chinese Coal Industry" in the sense that it exists in the United States.  In other words, there is no large lobbying organization that goes out and works to promote its interests.

    What there is, are a number of large enterprises (state owned) and a huge number of small enterprises (privately owned).  Some of the smaller ones operate legally and some don't.  There are indeed cases of corruption, but they are not to allow for coal burning plants to be built, rather they are usually some local guy running an illegal mine who pays someone not to look too closely.

    The reasons that coal is popular is that it is available, and relatively cheap.  

    And that power plants can be built relatively quickly.  Also a lot of coal is still burned in the open air, or in little local furnaces (like the ones in the classrooms where I volunteer) or in poor people's homes for heat.

    Replacing that kind of coal usage is not easy or cheap.  (Though it is slowly happening).

    China is not a dictatorship.  It is a one-party state, but you need to understand the difference.  Decisions on power are often made at a local level where people are responding to local needs.  No one can wave their hands and order people to all act a certain way and have it happen.

    The coal industry never bribes local officials to chose coal over renewables (that I have ever heard any one even claim).  

     Heck, give them the technology and show them how to do it, and many of the coal bosses would be happy to get out of coal and become solar bosses or wind power bosses.  But they lack 1) information 2) expertise 3) capital.

     KYOTO was supposed to provide a lot of this, but the US refused to go along.

     Imagine if ten years ago, the US had committed 50 billion a year (or more!!) to helping developing countries reduce their reliance on coal...

     Finally, if people want to criticize the developing world, we need to learn more about it.  We could start by trying to get the American media to actually cover something besides tragedies.

patrick in Beijing

Part true...

It's not because of corruption, it's because of poverty.

That's only part true.  China, on average, opens more than one new coal-fired plant every WEEK.  And though China does have an abundance of coal (much of which is mined illegally), it also has abundant solar and wind potential.  Coal operations, much like oil in China, is highly subsidized by the government (when it's even a "legal" operation).

It would be no great deal for China to extend those subsidies to other sources like wind and solar, or for China to sponsor such projects on a larger scale.

Yet, renewable energy sources remain almost microscopic in scope for China as an overall part of their planned long-term energy solution.

Meanwhile, the increased pollution puts strain on an already overburdened haelth system, decreases tourism opportunities, and though many workers do get paid highly for working in mines (many of them illegal mines), Chinese mines also have extremely high incidents of death and dismemberment (thousands die in Chinese mines every year), leaving the workers' families without much income.

The increased pollution and runoff also destroys crops, causes deadly land and mudslides, contaminates drinking water, harms fish and wildlife that natives consume, and increases erosion and desertification.

The coal operations may increase the personal wealth of some of the workers (and definitely the operators), but collectively they end up causin' so much damage to the country as a whole that they end up prolonging and increasing poverty, not reducing it.


Also...

KYOTO was supposed to provide a lot of this, but the US refused to go along.

Believe me, I don't like the U.S. refusal anymore than ya do, but whether or not the U.S. signed it, it wouldn't have much effect on operations in China.  Though there are provisions in Kyoto for the sharing of energy technology, there's nothing in there that would've provided a catalyst to begin changing China's energy base from coal to renewables.


Microscopic


   Dear Tasermons Partner,

        Here is a link about Chinese renewables.

http://www.renewableenergyweekly.com/rea/news/story;jsess ...

and another

http://www.chinadaily.com.cn/english/doc/2005-11/08/conte ...

        Notice that there is not much solar in the mix, if you track through the information.  China actually produces a lot of solar cells, but for export, why?  Price.

        From the China Daily Article "Currently, investors enjoy a 50 per cent tax break when investing in solar, wind and renewable energy. The national value-added tax rate is 17 per cent.

"We are consulting with the ministry of finance to further reduce the tax burden when they invest in renewable business," he said.

China has made two commitments at last year's international conference on renewable energy held in Bonn, Germany. One is to make a law regulating renewable utilization and the other is to map out a national blueprint.

But he complained that developing countries sometimes fell into an unfavourable position when accepting assistance from developed countries.

"Sometimes, we have been forced to buy equipment from developed countries when accepting their loan, grant or technical aid," Zhang said. "The expensive equipment will add to our cost."

Take wind power, for example, in which one kilowatt/hour will cost 0.8 yuan (US$10 cents), while the equal amount of coal electricity just costs about one-third of that. "

        You say "It would be no great deal for China to extend those subsidies to other sources like wind and solar, or for China to sponsor such projects on a larger scale."

http://www.guardian.co.uk/china/story/0,7369,1636632,00.h ...

        From the guardian article. "The country aims to produce 20 gigawatts of electricity from wind power by 2020."

        Is this enough?  Probably not, but hardly "microscopic".  What can Americans do?  Sit one the sidelines and complain (current tactic) or put up some money to help the process go faster and farther.

         I can assure you that if the US wanted to invest $100 billion a year globally to help increase the renewable energy percentages in developing nations, no one would say "no"!!

        Developing.  You need to understand the difference between a developing and a developed country.  Not just in terms of China, but in terms of other developing countries (or is is just China  you don't like?  not clear....).

        What seems like insignificant sums of money to Americans can seem like huge sums of money in other countries.  Money, which seems like "no great deal" to you, IS in fact, a great deal.

         You might consider reading the discussions about the new post Kyoto treaty, and what the concerns of the developing world are.  It's not just China, it's also India  and the rest (China and India as the largest tend to be paid the most attention to, but notice that most of the other developing nations are standing together with them on the same page, there is a reason for this.)

         It is possible to criticize the source of the renewables (hydropower, for example), just as it is possible to criticize the source of American renewables (earth killing biofuels).

         There is lots of room for discussion, but it is helpful if it is factually based and lacks blanket statements of ill-will towards others.  (I do try to avoid the same, and have apologized when I fail....).

         And it is fair to note that currently China runs about 7% renewable energy as compared to 6% in the US.

         We have entered a difficult period for the globe, and in my opinion, need to work together to help each other reach and surpass our goals.

         I encourage people to learn more about the environmental problems in China and the rest of the developing world.  Such knowledge will be helpful in learning to work together towards a common sustainable future.

patrick in Beijing

         

Will the plan fail, though?...

From the guardian article. "The country aims to produce 20 gigawatts of electricity from wind power by 2020."

        Is this enough?  Probably not, but hardly "microscopic".  What can Americans do?  Sit one the sidelines and complain (current tactic) or put up some money to help the process go faster and farther.

That article was from 2005.  If they've gone more tahn 2 years without movin' much towards that goal, then they better get a move-on quick!  Have they proposed any sorta timeline or detailed plan as to how they will achieve this goal?  Somethin' concrete?

And Americans can't really invest much in the process regardless...the energy companies are state-owned in China, and are often hard-pressed to cooperate with foreign, private firms.

China may have a grand plan, but they've had many of those before, even aimed at environmental issues (the "Green Wall" and efforts to clean-up major rivers amongst 'em), which always seem to fail, be put on hold, or fall by the wayside.

Though I'd be extremely happy if this one actually fell through, what type of assurances are there that it will come through on time?

Assurances


   Dear Tasermons Partner,

        What assurances do you provide that America will actually do something about global warming?

        It's really a bit of a silly question, isn't it?  No one can provide "assurances", and certainly no government will provide them to you or me.

        Do they have a plan?  Are they making progress?  Do some research.  I get the fairly clear impression that you just don't like China.  

        Happy Spring Festival anyway!

patrick in Beijing

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