The Dilemma of Chinese Coal Industry

From ToxicLeaks

Winter has finally come for Chinese coal industry. The industry that has a history of heavy pollution and consumes an immense amount of energy lies at the centre of the Chinese government’s industrial curtailment policy. Recently, the Chinese State Council released its policy guidelines that forbid the construction of new coal production projects. In parallel, other important Chinese industries that are greatly reliant on coal industry, such as steel, aluminium and cement, are also at the core of curtailment policies, which will likely impede the demand of dirty coal. Facing the double pressure from the government and the market, the Chinese coal industry may finally crumble to its knees.

Chinese Water Resources and the Coal Industry[edit | edit source]

What makes the winter of coal industry that much colder is the largely overlooked intensive water consumption prevalent in the industy. The production of coal is a highly water-intensive process, and the surge in coal production has been threatening Chinese water provisions for decades. In China, water consumed by coal electricity production plants is as high as 740 million litres, which is nearly one third of total the water consumption per year in China.

In addition to this water intensive aspect, China has began to impose stricter rules for water resource use, which will even further squeeze the space for China’s coal industry development. According to People’s Daily, China’s largest governmental news outlet, Wubei province has introduced the most severe water protection rules yet, which oblige industrial production plants to obtain government’s permission when they consume more than 50 000 L of water from the River Yangtzi per day. In Shanxi Province, the government has also introduced stricter rules on water wasting industries and industrial water pollution. Now that China’s water resources are facing a greater threat that ever before and China’s government has released corresponding stricter rules, the conditions for the Chinese coal industry will be much harsher, and appropriately so considering the damage they are causing for the environment and local population.

Cement, steel and Aluminium[edit | edit source]

Following the COP 21, environmental protection has become the center of China’s government’s policy. However, Chinese industries that are reliant on the coal industry, for example steel, cement and aluminium, form a pollution chain that goes against this new policy orientation. For example, Conch Cement has annual CO2 emissions of 200 000 kt, Jiangsu Sha-Steel has more than 60 000 kt of CO2 emissions per annum, and Hongqiao Group emits more than 100 000 kt CO2 per year. Especially with regards to the aluminium industry, the majority of companies adopt the dubbed “Weiqiao Model”, where aluminium companies build their own small electricity plants that are more energy intensive, dirtier and more polluting, hence making the switch to cleaner energy models for these companies is much more difficult.

However, the Chinese coal industry is the important of all of China’s industries and responsible for the most environmental damage; thus its production curtailment and contraction have to be carried out with careful strategic considerations. In terms of traditional energy resources, China has always been a country with an abundance of coal and poor in gas and oil; therefore, developing coal has retrospectively been the only choice in the history of China’s industrial development. The curtailment of Chinese coal has to be carried out with great care to ensure the healthy development of Chinese industry in general. With this dilemma facing the Chinese coal industry, how should China find a solution for the smooth transformation of the coal industry and other energy intensive industries towards a greener future?

Development of Renewable Energy[edit | edit source]

Firstly, China must promote the development of renewable energy if it is to save its environment and population from the devastating effects of current pollution levels. Given the new restrictions on coal production and the shortage of other traditional energy sources to support Chinese industrial growth, the development of renewable energy is one of the most efficient ways to achieve the threefold goals of safeguarding Chinese energy security, reducing coal consumption and meeting heightened environmental goals. The Chinese government has already issued policies that support renewable energy, which will guarantee that the reduction of coal energy production will not risk China’s overall energy provision to its population and industry.

Restructuring of Human Resources[edit | edit source]

In parallel to coal production curtailment, policies should ensure that the workforce in the coal industry is able to undertake a smooth transition into other professions. Especially in China, the workforce in the coal industry is composed of aged workers without a higher education, who don’t have skills for other industries. The Chinese government, in response to this problem, has established a fund for coal workers to find new jobs in other sectors.

In addition, coal workers should be provided with professional education. With this support they will ideally be able to make a smooth switch to non-polluting, clean energy industries. This will be the start of China’s human resource restructuring towards green industries.

Innovation in the Coal Industry[edit | edit source]

The coal industry needs further technological breakthroughs in clean, efficient, water-saving and cheap production methods. For this to be achieved, substantial investment in R&D will be crucial for Chinese coal industry, especially to make clean coal viable in China both in terms of economy, water consumption and the environment.

Facing these great challenges, the Chinese coal industry should proactively transform itself from a resource-intensive, high-pollution industry into a clean and technology-intensive industry.