China’s Polluters Will Have To Pay A Price

CHINA IS NO climate denier, although the connections between climate change and the Henan flooding have been only lightly made in state media. However, reaching peak carbon before 2030 and going carbon neutral by 2060 have been policy since last year and are incorporated into the 14th Five Year Plan (2021-25). 

Specifics are sketchy beyond a 13.5% reduction in energy consumption per unit of GDP, an 18% reduction of carbon dioxide emissions per unit of GDP and an increase in the share of non-fossil-fuel energy in total energy consumption to around 20% from 15.8% over the life of the plan. The country’s new carbon trading market will have to play a significant role if those targets are to be achieved.

The long gestated national market finally launched on July 16 on the Shanghai Environment and Energy Exchange, becoming the world’s largest trading scheme for greenhouse gas emissions from the getgo.

Progress will likely be cautious. For now, only some 2,225 firms in the thermal power generation sector can participate. They emit more than 4 billion tonnes of greenhouse gases a year, contributing about 40% of China’s total carbon dioxide emissions and 15% of the world’s total. 

Other emissions-intensive sectors such, steel, cement and civil aviation are expected to join the market later. 

The initial round of carbon permits was allocated for free. The price per tonne of carbon dioxide equivalent was 48 yuan ($7.42) when the market opened. The first bulk deal — Sinopec’s agreement on July 21 to buy 100,000 tonnes of carbon quota from China Resources Group — was priced at 52.92 yuan per tonne.

By way of comparison, the price in the EU’s emissions trading scheme is around 60 euros ($70.80). 

However, China’s power generation industry is far from being a market-driven world and not well placed to shoulder the added cost of carbon. The lack of market-priced electricity — local and regional governments set prices — means there is no way for power generators to raise prices and induce lower and more efficient energy consumption by consumers. 

In the meantime, the price of coal is no longer regulated, leaving the power generators squeezed. The hope is that this will make them jettison their most outdated and inefficient power generation plants — and turn to renewable sources of energy.

The Shanghai price will inevitably rise as the government expands the number of participants, begins auctioning permits and reducing their supply. At present, there is effectively no cap on carbon credits. It will not be until then that market will significantly affect China’s capacity to meet its goal of net-zero carbon emissions by 2060.

China will probably reach peak carbon sometime this decade, come what may, as the industrial structure of the economy changes, although quite when will depend on a mix of the economic growth rate and the vigour with which authorities pursue policy enforcement of emissions reduction.

If anything, early recovery from the pandemic last year put the country on the back foot in pursuit of its goal. Energy consumption and emissions rose in China in 2020, whereas they declined almost everywhere else.

China Will Rebalance The World’s Energy

ACROSS THE MORE heavily industrialised provinces, factories and plants are being ordered to shut down or limit production during the winter months. This is both to curtail excess industrial production and also to curb seasonal smog, a byproduct of China being the world’s largest consumer of coal, which provides 65% of its energy.

The newly published annual outlook from the International Energy Agency (IEA) brings a glimmer of a silver lining to that particular dark cloud. China, it says, will remain a ‘towering presence’ in coal markets, but it believes coal use peaked in 2013 and is set to decline by almost 15% over the period to 2040.

China burnt 2.75 billion tonnes of coal in 2013, more than the rest of the world put together.

It is no secret that Beijing sees pollution as a potential political problem and that it is keen for China to go green. Lian Weiliang, deputy head of the National Development and Reform Commission, said earlier this week that the country was ahead of pace in its goal to cut coal capacity by 500 million tonnes within three to five years of 2016, while the Ministry of Industry and Information Technology forecast that environmental protection equipment manufacturing would be a 1 trillion-yuan ($150 billion) industry by 2020.

The new era will be about energy policy where the focus is on electricity, natural gas and cleaner, high-efficiency and digital technologies, not an energy system dominated by coal and a legacy of serious environmental problems, giving rise to almost 2 million premature deaths each year from poor air quality.

The switch will also flow from rebalancing the economy from a development model based on heavy industry, infrastructure development and the export of manufactured goods to one driven by higher-value-added manufacturing, services and domestic consumption.

Signs of the new era are there to be seen. Energy demand growth slowed markedly from an average of 8% per year from 2000 to 2012 to less than 2% per year since 2012. Official plans call for it to slow further to an average of 1% per year to 2040.

Energy efficiency regulation is a large part of the explanation. Without new efficiency measures, the IEA reckons, end-use consumption in 2040 would be 40% higher.

Nonetheless, such is the compounding effect of economic growth that by 2040, per-capita energy consumption in China will exceed that of the European Union and electricity demand for cooling alone in China will exceed the total electricity demand of Japan today.

The IEA reckons that China will need to add the equivalent of today’s United States power system to its electricity infrastructure to meet the demand expected by 2040. Such will be the scale of China’s clean energy deployment, technology exports and outward investment that it will play a huge role in determining global energy trends and in particular provide the momentum behind the low-carbon transition.

“When China changes, everything changes”, as the IEA says.

The agency lays out the future thus:

One-third of the world’s new wind power and solar PV is installed in China … and China also accounts for more than 40% of global investment in electric vehicles. China provides a quarter of the projected rise in global gas demand and its projected imports of 280 billion cubic metres in 2040 are second only to those of the European Union, making China a lynchpin of global gas trade. China overtakes the United States as the largest oil consumer around 2030, and its net imports reach 13 million barrels per day in 2040. But stringent fuel-efficiency measures for cars and trucks, and a shift which sees one-in-four cars being electric by 2040, means that China is no longer the main driving force behind global oil use – demand growth is larger in India post-2025.

China will also continue to lead a gradual rise in nuclear output, overtaking the United States by 2030 to become the largest producer of nuclear-based electricity.

The shift to a more services-oriented economy and a cleaner energy mix will take a decade to have its effects on the skies above. The IEA projects carbon dioxide emissions will plateau at only slightly above current level by 2030 before starting to fall back.

China’s 3m-plus Hectares Of Farmland Too Polluted To Grow Crops

CHINA HAS LONG been steadily losing farmland to urbanization, soil erosion and environmental degradation. Now authorities say 3.33 million hectares of the arable land the country still has are too polluted to grow crops. By way of comparison, that is an area almost equal to the size of Taiwan. Vice-minister for land and resource Wang Shiyuan says “tens of billions of yuan” is being thrown at pilot projects to rehabilitate contaminated land and water supplies tainted by the same source.

Officials are particularly concerned about toxic metals getting into the food chain. This Bystander has heard reports of rice being sold in Guangzhou that contains dangerous levels of cadmium. Once in the ground, such metals can persist for years, and government land surveys are still turning up traces of pesticides banned in the 1980s.

China is skirting the 120 million hectares of farmland considered to be the minimum needed to ensure the country’s food security. A newly released national land survey says the country’s arable land was down to 135.4 million hectares as of the end of 2012. The current five-year plan calls for more than 50 million hectares of new farmland to be created by 2020, so every little bit of reclaimed contaminated land helps.

If Pigs Could Float

If pigs could fly. Well, they do float. At least when dead. More than 2,000 bloated pig carcasses have been fished out of the Huangpu River at Songjiang on the outskirts of Shanghai. It is not unusual to see all sorts of pollutants in China’s rivers, including dead pigs, if not on this scale. It is not clear how the pigs got into the river, or who dumped them in it, but there are plenty of pig farms upstream. Authorities say there is no cause for concern over the quality of drinking water taken from the river, but this unusual case seems set to become a touchstone for popular concerns about environmental pollution.

Update: Authorities say the number is now up to 2,800 dead pigs, that the animals came from Jiaxing City in  Zhejiang, and that the pig virus, PVC (porcine circovirus, which is not known to infect or cause disease in humans), had been found in one water sample.

Dalian Oil Spill Bigger Than Said, But Big Enough For A Minamata Moment?

The pipeline explosion at a PetroChina oil terminal outside Dalian two weeks ago that sent crude oil gushing  in to the Yellow Sea is reckoned to be China’s worst known oil spill. The worst by quite how much is now the question.

Official figures put the size of the spill at 1,500 tons of oil, which would be 11,000 barrels or half a million gallons. Rick Steiner, an American marine conservation specialist consulting for Greenpeace and who has seen the spill, told the BBC that the spill was lager than that caused by the Exxon Valdez, the tanker that hit a reef off Alaska in 1989 spilling an estimated 260,000 to 750,000 barrels of crude into Prince William Sound. At the time it was the largest oil spill in U.S. waters and is still regarded as one of the worst man-made environmental disasters.

[picapp align=”left” wrap=”true” link=”term=dalian%2c+oil&iid=9419277″ src=”http://view3.picapp.com/pictures.photo/image/9419277/worker-cleans-the-oil-from/worker-cleans-the-oil-from.jpg?size=500&imageId=9419277″ width=”234″ height=”349″ /]Steiner guesstimates that at least 440,000 barrels of oil have spilled into the Yellow Sea from the Dalian explosion creating a slick covering some 1,000 square kilometers (400 square miles). Despite the massive clean-up now underway (left), the environmental damage is likely to persist for years and it is uncertain what lasting effect it will have on nearby fishing grounds.

China’s oil companies and officials were already reviewing their contingency plans in the light of the BP oil spill in the Gulf of Mexico, though reports of the clean-up operation in the Yellow Sea suggest it mainly involves throwing thousands of people at scooping up the oil from boats and off the beaches, some with their bare hands, and spraying chemical dispersants on the water.

Environmentally damaging industrial accidents are commonplace in China. Just earlier this week some 7,000 barrels of toxic chemicals were swept into the Songhua River in Jilin, a source of drinking water for several million people. But such accidents haven’t yet triggered the political backlash that seems inevitable. John Foley of Reuters Breakingviews suggested that was because China “has not yet reached its ‘Minamata moment'”, a reference to the death of nearly 3,000 residents of a Japanese town caused by the dumping in the early 1970s of mercury into Minamata Bay. The case became the poster child for  the unacceptable environmental costs of rapid industrialization, and made controlling pollution a national political priority in Japan.

In 2007, the World Bank estimated that pollution was responsible for the deaths of 460,000 Chinese a year. Authorities have been trying to curb the worst excess of industrial pollution, but it is a Sisyphean task at this stage of China’s economic development. The Party is well aware of the potential challenge to its power that could come from the emergence of single-issue pressure groups such as environmentalists campaigning for water fit to drink and air fit to breathe. Whether the Dalian oil spill turns out to be big enough to create China’s Minamata moment or not, at some point it will arrive.

Diesel Spill Halted On Yellow River

The diesel slick from a ruptured China National Petroleum Corp. pipeline near the Weihe River has been stopped downstream by floating dams on the Sanmenxia reservoir on the Yellow River. (Xinhua pictures here.) Reports from the Xiaolangdi Reservoir, 130 kilometers further downstream, say the waters are showing now signs of pollution from the spill.

More Anti-Pollution Measures Readied For Beijing And Beyond

Contingency plans have been announced in the event that Beijing stays as hazy and humid once the Olympics start as it has been the past week.

More cars will be taken off the roads (those whose license plate’s last digit matches the last number of the date) and the alternate day system of car bans will be extended to Tianjin and four urban areas of Hebei, Xinhua says. More than 100 factories in the capital will shut down polluting production or close altogether. Coal-fired power plants and small scale steel mills in Tianjin and Hebei will have to cut production significantly. As we noted earlier (Cleaning Up Beijing’s Dirty Air), up to a third of Beijing’s pollution comes from nearby industrial towns.

The new measures will be put in to effect if air quality is forecast 48 hours ahead to fall short of acceptable standards.

Beijing’s Air Worsens Again, New Restrictions Coming?

The first days after authorities took half the cars off the roads of Beijing to improve air quality for the Olympics that we noted in Cleaning Up Beijing’s Air may have been a false dawn.

Between 24th and 28th July pollution levels shot back up above World Health Organization standards having been well below since the 12th.

BBC is reporting that pollution levels have been sufficiently high in recent days that emergency measures are being considered. These could include taking nine out of 10 cars off the roads for the duration of the Games, stopping all construction and closing some factories completely.

Cleaning Up Beijing’s Dirty Air

Beijing’s pre-Olympic anti-pollution controls went into effect on Sunday and a couple of days on, this Bystander is told, they are having some beneficial effect in making the city less smoggy.

Car drivers may now use their vehicles only on alternate days, new building work has stopped, and, perhaps most importantly, smoke-belching factories around the capital have cut output.

The measures are based on work funded by the U.S.’s Environmental Protection Agency and conducted by the U.S. Energy Department’s Argonne Laboratory, the Chinese Academy of Sciences, Beijing and Tsinghua Universities and the University of Tennessee, which collectively modeled contributions to Beijing’s air quality. It was this research that lead to implementation of regional and not just local measures, after industrial cities several hundred kilometers away such as Shijiazhuang, Qingdao, Jinan and Taiyuan were fingered for helping make the capital’s air dirty.

More than a third of the air pollution comes from outside the city, the research found, so tightening the pollution controls in those surrounding cities will help the capital’s residents breathe a bit easier even once the cars are back on the roads in Beijing and construction restarts.

The research report also notes the importance of meteorology and topography to the city’s air quality. As Beijing is typically hot and clammy at this time of year, there isn’t much of a breeze and the hills to the north and west slow the dispersion of pollution, a few more windy or rainy days would really help.

Car Talk

This Bystander is amused by the news that Beijing is exhorting government officials to abstain from using four-wheel drive vehicles and other gas-guzzling cars, and to take more public transport in order to lower emissions and protect the environment.

Not because that is not a worthy aim; China has pledged to cut emissions and energy consumption, concerned that rapid industrialization is placing an unbearable strain on the environment, a strain that could become the focus of organized opposition to the government. Officials are being asked to do their part by cutting car use by 20% by the end of 2008.

But because of the unusual skirt-lifting on Chinese officialdom contained in the Xinhua report of the announcement. Official vehicles are not to be used in private business or leased for commercial purposes, the announcement says. It also reminds officials that using seniority to gain the use of government cars owned by lower-level departments, or accepting vehicle donations from private enterprises, are both strictly banned.

Using government cars for private purposes is rampant as is the increasing use of ever more luxurious cars in official circles. China’s low-emission vehicles tend to be bottom of the range. We’ll see how much trading down has been done by the end of next year. We suspect not much.