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ENVIRONMENT-CHINA: Coal Far Costlier Than Thought – Study

Antoaneta Bezlova

BEIJING, Oct 28 2008 (IPS) - Often criticised for its massive coal-based industries that jeopardise international efforts to combat global warming, China is undoubtedly the biggest victim of its voracious coal consumption.

Last year, the country’s overwhelming reliance on polluting coal carried a price tag of 250 billion US dollars, according to a green lobby of environmentalists and economists.

Even more significantly, they calculate the hidden cost of environmental and social damage caused by China’s coal mining industry to be seven percent of the country’s 2007 gross domestic product.

Perceived as an affordable fuel found in abundant quantities throughout the country, coal is responsible for a litany of ills such as polluted air, contaminated land and water, and thousands of deaths either by black lungs of in safety accidents, said a study released in Beijing this week.

If the so-called external, or hidden costs, were added to current coal tariffs, prices would rise by 23 percent, ‘The True Cost of Coal’ predicted.

Commissioned by Greenpeace, the U.S.-based Energy Foundation and WWF, the study was researched by Chinese economists for over two years. They sought help from experts in the country’s biggest coal producing region – Shanxi province – and from the national Centre for Disease Control.

“Currently the hidden price of coal is paid by the people in China suffering from the damage,” said Mao Yushi, lead author of the report and founder of the privately funded Unirule Institute of Economics. “China must count these external costs and make the coal price reflect its true costs”.

The study pointed a finger at “price distortions” caused by government regulations such as land-ownership polices and price caps on electricity that have made coal such an attractive fuel choice for China’s utilities.

According to the International Energy Association (IEA), in 2006 alone China added more than 105 Gw of new power-generation capacity, of which 90 percent was coal-fired. On top of this record, China added another 90 gigawatts of capacity in 2007. According to IEA projections, by 2030 it will have built 1,000 Gw more.

The sheer scale of China’s recent and planned power-plant construction has prompted environmentalists to question the viability of any future international framework to combat climate change if China is not part of it.

China relies on coal for 72 percent of its primary energy consumption, compared with a global average of around 30 percent. Coal is the biggest single source of air pollution across the country, responsible for 80 percent of its carbon dioxide emissions.

Scientists agree that CO2 is a major catalyst for global climate change. Its enormous emissions in China are blamed for making the country the world’s largest emitter of greenhouse gases. Experts estimated that if all of China’s planned coal-fired power capacity comes on line, the resulting increase in carbon dioxide emissions could exceed the Kyoto Protocol’s CO2 reduction targets by a factor of five.

But the latest coal study does not attempt to calculate the economic costs of climate change.

“It is far too complicated to calculate those costs accurately,” said Mao, adding that if the costs of the impact of climate change resulting from coal combustion were factored in, China’s coal bill would be significantly higher.

China maintains that richer, developed nations should take the lead in reducing greenhouse gas emissions while helping poor nations with money and technology to fight climate change.

This week, a senior Chinese climate official specifically suggested that richer countries should set aside one percent of their gross domestic product to help poorer nations fight global warming. The remarks by Gao Guangsheng, who heads the climate change office at the National Development and Reform Commission, China’s top economic planning body, were the first to propose specific demands on developed countries.

A key policy document released in Beijing, Wednesday, backed China’s long-standing stance on climate change. “Developed countries should be responsible for their accumulative emissions and current high per capita emissions, and take the lead in reducing emissions, in addition to providing financial support and transferring technologies to developing countries,” said the 44-page document.

But even if China wants the developed world to shoulder the historic burden of reducing carbon dioxide emissions responsible for climate change, the uncomfortable truth remains that its people are most exposed to the effects of what Mao termed an “excessive use of coal”.

Inhaling soot particles from coal-fired power plants is causing an epidemic of chronic respiratory diseases among Chinese. Without providing exact figures, the study estimated that the death rate per one million tonnes of coal produced and consumed in China was 70 times higher than in the U.S., and seven times higher than in Russia and India.

A World Bank study which found that some 750,000 Chinese people prematurely died annually from air and water pollution was reportedly suppressed by the government last year.

And the pollution caused by burning coal is hardly confined to China. Chemical by-products of coal combustion, in particular sulphur dioxide and various nitrogen oxides, can cause acid rain in countries as distant as South Korea, Japan, and even Canada and the U.S.

Nevertheless, coal is now priced at a discount against competing fuels in China, making it ever a more popular choice of power developers rushing to satisfy the country’s voracious appetite for energy. “Coal production is subsidised by the government which is one reason why the hidden costs are so high,” said Mao.

Energy expert Yang Fuqiang, chief China representative of the Energy Foundation and co-author of the report, called on policy makers to impose energy and environmental taxes.

“It makes economic sense for the government to adjust the coal pricing system to reflect its true costs,” he said at the launch of the study.

The report suggests the introduction of coal tax by 2009, which is expected to raise prices by nearly a quarter but reduce consumption only by seven percent. This means that coal would continue to dominate the country’s energy mix.

Yang Ailun, Greenpeace climate and energy campaign manager who helped coordinate the study, saw the bright side.

“Recognising the true cost of coal would create incentives to develop cleaner and more sustainable energy sources,” she said. “This would reduce China’s environmental pollution and show its leadership in fighting climate change.”