China has set fire to the coal market at home and abroad. The National Development and Reform Commission (NDRC) recently commanded provinces to stop restricting shipments of coal to other regions to ensure stable supplies for the country, according to the Associated Press. The Ministry of Commerce, seeing a bubble in the making, has been attempting to stem speculation and outright scalping by ordering local authorities to press hard on companies and organizations hoarding coal, gas and other fuels. Profiteers attempt to manipulate auctions on the spot market to drive prices even higher than they are now for buyers, including steel mills and power generation plants. Of course, local governments that themselves have interests in local mining concerns may even sometimes thwart central government’s intent to keep the playing field somewhat level. Coal stockpiled at Qinhuangdao port during the first week of December 2010 slipped .6-percent from early September to between RMB795 (US$120) and RMB810 a metric ton, a sign that the NDRC’s words are being heeded somewhat.
However, something more than the onset of winter with incumbent requirements for keeping warm is at play in the energy markets. Rising costs for coal are part of China’s full-steam-ahead approach to economic development. The release of nearly US$1.5 trillion in loans into the domestic economy to keep China from following the West into economic stagnation stimulated a broad and deep portfolio of infrastructure projects throughout the country that require stunning amounts of steel and concrete, primarily powered by coal-burning furnaces. In 2007 China produced half the world’s concrete production and more than a third of its steel manufacture, economists Daniel Rosen and Trevor Houser write in their white paper, China Energy: A Guide for the Perplexed.
China is dependent on coal for 70% of its energy requirements, and burns half the coal in the world, according to the New York Times. Despairingly, that is only going to increase. Xiao Yunhan, a member of the Chinese Academy of Sciences, told Jonathan Watts he expects coal use to double over the next decade in China. Watts is Asia environment writer for the Guardian Newspaper, in the UK, and author of the new book about China’s environmental challenges When A Billion Chinese Jump: How China Will Save Mankind — Or Destroy It. The Chinese scientist saw China completely dependent on coal for at least another two decades.
Despite the green-stripes China has been able to sew on the uniform approach to its adoption of alternative energy sources, the fact of the matter is that China is marching in place when it comes to alternative energy making a difference in the society. With the country bringing online anywhere from one to three new coal powered generators every week for the last five years, it is loathe to abandon such an extensive investment. China’s unique position in modernity with a young and mobilized labor force, cash in the bank from the success of its export-led companies, and the mining and transport technologies that have been tried and true for decades have made it all too easy for China to get hooked on the black, sooty stuff. Now, with the proven ability to annually build and integrate capacity enough to power the entire United Kingdom, China’s demand for energy has become a trap that has major repercussions for it and for the world. Environmental scarring and increasing lung cancer rates – from miners and from communities based around coal burning facilities – are only half the concern. The other issue is the collapse of a post-modern China that one day just may not be able to get enough of the black stuff – even from other countries.
Citigroup announced at the end of November 2010 that it expected China’s net coal imports to jump more than 60-percent to 200 million tons in 2011, according to Reuters. China became a net importer of coal last year when China’s monetary stimulus jolted the economy back to life after the nadir of global economic downturn in the spring of 2009. Demand has been so great that the price of coal on international markets has doubled in the last five years. China in 2010 will have imported about 150 million tons of coal. Much of domestically mined coal in China is high in impurities, making it inefficient to burn the mineral for energy. So, China, to meet its exploding energy requirements, imports coal from America, Australia and South America – locations from which it is actually cheaper to ship the resource to the energy-hungry operations on China’s east coast than it is to transport from its interior, according to a recent New York Times article.
However, as China upgrades its rail transport system, and industry and consumer energy demands for coal continue to outstrip and circumvent central authority diktat, the world’s health and environmental challenges will continue to multiply. In ten years, alternative energy sources will have about the same impact on China’s ecology and society as spitting into the wind.