I think it’s safe to say that most people assume China is the world’s largest burner of coal.
And it was… until quite recently.
Suddenly, China has started burning less coal.
That makes sense considering China has made a pledge to cut its greenhouse gas emissions.
Yet, China built as much coal-fired electricity generation capacity in one year as Germany has all together.
The main reason China had to put the brakes on was because of slowing growth projections in its eonomy and industry.
Who knows how much worse their fossil fuel dependence could have gotten if their economy was still booming?
In order to clean up, however, China will have to find a massive amount of alternative energy sources, which analysts belive will lead to more job loss.
And let’s be clear: China was growing at an astounding rate until recently, with electricity demand growing 17 times from 1980 to 2012.
But after a decade of increasing coal consumption, demand actually fell 2.9% in 2014.
There are plants currently under construction, of course, and that will likely trigger an up-tick in consumption in the short-term, but it’s unlikely to jump over the long term as the push for cleaner power grows stronger in the public spotlight.
China has also announced the world’s largest cap-and-trade program that will cover emissions from power generation and the chemical, steel, paper-making, and building industries.
Xi Jinping even pledged to establish a $3.1 billion fund for aid to developing countries for potential tenuous climate change negotiations. This is a similar commitment to the one the US made about the same subject, which shows us that China has the potential to act as a bridge between the developing and already developed world.
There are a few problems with this…
Coal workers are already struggling to feed their families, and have to deal with incredible debt loads. If the coal industry dies, it will inevitably cause rampant unemployment.
The Chinese government is well aware that pollution has made them a target for mass amounts of criticism, so naturally, the “war on pollution” was declared.
In fact, 1,100 coal mines were closed in 2014, along with tens of millions of tons of steel, iron, and cement production capacity.
The plan is to build a “services-led, consumers-led” economy that will pollute less and be less energy intensive.
And Chinese officials seem confident that this new promise for a clean China is legitimate, so this ambitious attempt to curb emissions may actually come to fruition. As it stands now, China’s coal use is expected to peak between 2017 and 2020, with greenhouse gases peaking in about 2025.
Still, the daunting reality here is that China gets two thirds of its energy from coal at the moment.
Why wouldn’t they want to use more? Coal is both cheap and reliable.
And with so many areas of China in visible economic decline, it’s understandable that the government is concerned thatexacerbating unemployment from closing coal plants may cause an enormous amount of social unrest.
To continue reading…
Until next time,
A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.
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