Cheap and Dirty: Asian Growth Continues to be Fueled by Old King Coal

With all the focus on green tech and the brightest minds applying themselves to solving the energy crisis, one would think that coal, that dirtiest and deadliest of fuel sources, would be losing its sway. And one would be wrong.

Asia's growth is primarily fueled by it. When you are determined to catch up economically, cheap and plentiful works. That the environmental costs may eventually outweigh the financial benefits is lost on no one. But that will be evidently be someone else's problem. JL

The Economist reports:

“Our civilisation”, wrote George Orwell over 70 years ago, “is founded on coal.” Unlike Europe’s, Asia’s still is. In 2010, according to the International Energy Agency (IEA), a think-tank, coal accounted for just one-fifth of primary energy supply in the OECD countries. But, in the world as a whole, coal accounted for almost half of the increase in energy use from 2000-10. Coal, says Edward Cunningham of Boston University, is experiencing an “historically incredible” resurgence, and may even overtake oil as a fuel by 2025. There is plenty of it and, compared with rival fuels, it is cheap. And often dirty.
Asia has been responsible for over two-thirds of the growth in global energy demand over the past two decades. As, above all, China and India race towards prosperity, they will burn coal in huge volumes. The resulting emissions of carbon dioxide will be among the biggest hurdles in the way of a global agreement on limiting climate change.

China leads the world in coal production and consumption. It mines over 3 billion tonnes of coal a year, three times more than the next-biggest producer (America), and yet last year overtook Japan to become the world’s biggest coal importer. Over four-fifths of China’s electricity comes from coal-fired power plants. Burning coal is a big cause of the severe air pollution afflicting parts of China, and, through waste from coal-washing and underground leakage, of contaminated water and degraded soil.

China is working hard to develop other sources of energy and to lessen the “energy intensity” of its growth (the energy needed per extra unit of GDP). It is already much the world’s biggest user of hydroelectric power, has almost as many new nuclear-power plants planned as the rest of the world put together, and is expanding solar and wind energy. But, according to projections by McKinsey, a consultancy, even taking all this into account, China is still likely to consume 4.4 billion tonnes of coal in 2030, when its carbon emissions are expected to have increased from 6.8 billion tonnes of carbon-dioxide equivalent in 2005 to 15 billion tonnes. Of these nearly 40% will come from power generation.

McKinsey outlines a strategy for making deep cuts in both coal consumption and carbon emissions. It seems optimistic. Mr Cunningham argues that the fragmented structure of Chinese mining, with myriad small producers, “makes it much harder for the central government to formulate and implement a sweeping reform.” Coal output has been increasing fast at home; imports are readily available from the world’s two biggest exporters, Australia and Indonesia, and Mongolia is developing the world’s largest untapped coal deposit just over the border. It is hard to argue with a report produced this week by GK Dragonomics, a Beijing-based research outfit, which concluded that “China will remain a highly coal-dependent economy for decades.”

Where China leads, India lumbers behind, also burning an awful lot of coal, and hungry for more electric power. Some 70% of its electricity comes from coal. The national grid has expanded hugely in recent years. But it still leaves about 300m people without a connection. In projections of increased energy demand over the next 25 years, India is second only to China.

Like China, it is ploughing resources into nuclear power, oil-and-gas exploration and imports, and renewable energy. Like China, too, however, India finds coal the obvious option. It is something it has plenty of—already the world’s third-largest producer, it has the world’s fifth-biggest coal reserves. But it cannot exploit them fast enough to meet demand. In fact, output has not increased for two years. Coal India, the state monopoly, blames the difficulty of securing mining permits. So India may soon become the world’s biggest coal importer.

On current trends, as estimated by McKinsey, India’s carbon emissions will increase by about two-and-a-half times by 2030, by which time its power industry alone will account for about one-tenth of the total rise in global emissions. Like China’s government, India’s points out that, per head, its people will still be producing far less carbon dioxide than Americans or Australians (though China is rapidly catching up with some European countries in pollution per person). And, in India’s case, total emissions (at 5 billion–6.5 billion tonnes) will remain well below China’s.

Coal-demand projections for both India and China were not much affected by the disaster last March at the Fukushima nuclear-power plant in Japan. The two giant countries announced reviews of their own nuclear programmes but are unlikely to scale them back. Elsewhere, however, heightened awareness of the risks of nuclear power has given coal another boost. In Japan itself, plans to increase nuclear generation from 30% of the total pre-Fukushima to 50% by 2030 are being re-examined. Coal already accounts for about 27%.

Two degrees of panic

Across Asia, from Bangladesh to the Philippines, the drive for more coal-fired power seems unstoppable. Renewable energy sources such as wind and solar generation do not offer affordable electricity on a big enough scale. Production of natural gas, which emits less carbon, will boom but not supplant coal.

So attention is focused on mitigating the harm coal power will do. Efforts to curb emissions from fossil-fuel power stations by “carbon capture and storage” are still no more than a good idea yet to be realised. Technologies to make generation cleaner and more efficient are available, however. But, as the IEA noted understatedly in a report last year, they “are not as widely deployed as they should be.” And, as the same agency has also argued, time is running out to limit emissions to levels that might keep the global temperature rise to 2°C this century. On today’s plans, it estimates, that rise will already be locked in by existing buildings and facilities, such as power plants, by 2017. The rise of Asia has costs, as well as benefits.