I've seen plenty of Christmas imagery in China during my visits there, like Yuletide carols emanating from trash trucks in midsummer and tinsel adorning cut-out reindeer in a Starbucks next to an ancient pagoda. But I'm not sure if "coal in the stocking" translates very well.
What's naughty and what's nice in China's energy industry? It's hard to tell sometimes, especially if you follow the Beijing government's initiatives as closely as I do.
The day after Christmas, shares of China's biggest wind energy company, Xinjiang Goldwind Science & Technology, surged by 264% on the group's first day of trading!
Some of that exuberance can be chalked up to a pattern of 100% or more jumps in initial public offering prices on the Shanghai and Shenzhen stock exchanges, but the reason this stock is on steroids is because the government has stimulated clean energy equity demand through its energy edicts and advances.
Out of a 2010 target of 5 gigawatts of electricity from clean energy, China is actually on track to beat its own goal, as it finished 2006 with 2.6 GW of capacity, mostly coming from Xinjian Goldwind's turbines and other mechanisms.
Nevertheless, coal is still a first-rate resource in China. Last Friday, the Ministry of Finance said on its website that previously tentative export taxes on coal, metal ore, and crude oil (all three of which are known as primary exports) will remain in place through 2008.
According to Reuters reports from the Ministry of Finance's website, which is only published in Chinese, the tax is to curb exports of "energy-consuming, polluting products."
Uh, yeah . . . Keep those polluting products at home where they belong!
Chinese Coal Gets a Boost
It may seem like the Chinese have established two parallel universes, with coal being the center of one and renewable energy ruling the other.
If we think about it, though, China really is playing it smart, and it's a perfect example of what I call the Transitional Energy Economy.
The Transitional Energy Economy encompasses not just companies like Brazil's Petrobras (NYSE:PBR), one of the world's budding fossil fuel giants that is also a major ethanol player, but also countries like China that are tapping what's in the ground while also looking to the sun, wind and waves for future power potential.
On December 26, the same day as the Xinjiang Goldwind debut, China's State Council (the cabinet) issued a white paper (a non-binding statement of position, not policy) stating that coal's 70% contribution to the country's energy mix is expected to stay high, and that outside investment in technologies such as clean coal and coalbed methane is being aggressively sought.
"Coal consumption has been the main cause of smoke pollution in China, as well as the main source of greenhouse gas . . . if this situation continues, the ecological environment will face even greater pressure."
Indeed, the "ecological environment" is already under strain, as anyone who's visited the Middle Kingdom in its current boom can tell you.
China's government is already one of the world's renewable energy investment leaders, with over $10 billion expected as the year-end total for 2007, putting it behind only Germany.
You may remember almost a year ago when Germany, one of the world's first coal-fired industrial giants, announced a plan to close the country's eight remaining coal mines by 2018.
China, with hundreds more coal-fired plants planned for construction in the next decade or so, is now the world's largest coal producer, and it's about to turn from a net exporter into a net importer of the black stuff.
How long will coal be the gift that keeps on giving China energy? One thing's for sure--the quest for continued energy security in that country will continue to present us with abounding investment opportunities into 2008 and beyond.
Regards,
Sam Hopkins
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to me it is a sin that Man still pursues such goals. Coal must be conserved and NOT used up. To the devil with those that advocate coal mining for energy. Profit is a selfish motif
There are only a few, and solar power from space via microwaves seems to be about the best. The problem which has kept this from being developed in the last 40 years is the cost to lift a few thousand tons per day into orbit.
It isn't the energy cost per se which is quite modest, it's the cost of rockets. Now it is starting to look like a space elevator might be possible based on nanotube cable. _If_ this can be done, a mechanical lift space elevator rated at 2000 tons per day takes about a GW of power to run. It takes 5 days to lift the 10,000 tons of material for a 5 GW power sat. The obvious metric is that a power sat pays back its lift energy in one day.
More if anyone is interested.
Keith Henson