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30 July 2013

The limit to China's coal growth

Coal extraction in China is the epitome of unsustainability. It tripled from 2000 to 2010, with double digits growth rates in some years, as in 2011. Consumption is growing even faster, and although China being the largest world producer, it has been a net importer since 2009. Round numbers, half of the coal extracted in the world is consumed in China.

Naturally, none of this can go on forever. Last week an outstanding piece of journalism published by Bloomberg points to what may be the definitive limit to China's coal growth: water. Although not my usual mondus operandi, I think it deserves its own log for a deeper reflection.
China Coal-Fired Economy Dying of Thirst as Mines Lack Water
Kevin Hamlin, 24-07-2013

Daliuta in Shaanxi province sits on top of the world’s biggest underground coal mine, which requires millions of liters of water a day for extracting, washing and processing the fuel. The town is the epicenter of a looming collision between China’s increasingly scarce supplies of water and its plan to power economic growth with coal.
Right at the opening the article leaves the impression that there is a serious problem with Chinese energy and resource policies. Although being in large measure subject to economic planning, resource exploration in the most populous country of the world seems to be driven by purely emergent forces.
“Water shortages will severely limit thermal power capacity additions,” said Charles Yonts, head of sustainable research at brokerage CLSA Asia-Pacific Markets in Hong Kong. “You can’t reconcile targets for coal production in, say, Shanxi province and Inner Mongolia with their water targets.”
One of the things I've learnt with this article is how dry China is. In a place like Portugal each inhabitant uses on average 7 000 m3/a and there are no serious problems in years with regular meteorology. Droughts may arrive during long periods without rain, but these tend to be short lived. In comparison, most Chinese folk go through their lives in drought conditions. According to the figures provided, the north of China seems not that different from the Middle East or North Africa.
Coal industries and power stations use as much as 17 percent of China’s water, and almost all of the collieries are in the vast energy basin in the north that is also one of the country’s driest regions. [...]

About half of China’s rivers have dried up since 1990 and those that remain are mostly contaminated.[...] At least 80 percent of the nation’s coal comes from regions where the United Nations says water supplies are either “stressed” or in “absolute scarcity.” [...]

China has about 1,730 cubic meters of fresh water per person, close to the 1,700 cubic meter-level the UN deems “stressed.” The situation is worse in the north, where half China’s people, most of its coal and only 20 percent of its water are located.
In spite of this visible scarcity, government plans are for a spectacular increase in coal usage in these regions. A canal is being built to divert part of the Yangtze to the north, but will it be enough to support the scale of growth envisioned?
A government plan to boost the coal industry and build more power plants near mines will lift industrial demand for water in Inner Mongolia 141 percent by 2015 from 2010, causing aquifers to dry up and deserts to expand, according to Greenpeace and the Chinese Academy of Sciences’ Institute of Geographical Sciences and Natural Resources.
One thing that is certain at this stage is that coal imports will have to continue expanding for the country to meet its growth targets. The race is on to source supplies overseas.
A shortage of coal because of the lack of water to mine and process the fuel may force China to increase imports, pushing up world prices, according to Debra Tan, director at research firm China Water Risk in Hong Kong. China, which mines 45 percent of the world’s coal, may adopt an aggressive “coal-mine grab” to secure supplies, said Tan.
Here's another figure that drops like a bomb: by 2015 China will be importing a quarter of the coal traded internationally. And the source of such figure is likely not taking into account the constraints on water availability. The end result for the world coal market can be quite spectacular. Europe must definitly stop taking this energy source for granted and start roiling out pre-emptive mechanisms like those in place for petroleum and gas.
Chinese demand will account for 25 percent of global coal imports by 2015, London-based shipbroker ACM Shipping Group Plc said in a report in April.
Water scarcity is setting limits not only on mining but also on agriculture. And of course is imposing a lot of pain on peasants.
Among the biggest losers are farmers, who have to dig deeper and deeper wells to find clean water, or are forced out by local governments who see bigger economic gains from mining.

In Zhanggaijie village, 90 minutes from Yulin city in Shaanxi, Li Qiaoling’s corn harvest slumped to 2 to 3 tons per mu (667 square meters) from 4 to 5 tons four years ago, she said. Li, 43, had to deepen her well to 60 meters from about 30 meters five years ago, she said.
In parallel the Chinese government seems also to be talking seriously on alternative energies: Nuclear, Wind and Solar. They better, otherwise the fantastic growth of the past decade may come to a sudden halt.

I strongly recommend the careful read of Bloomberg's article in full. Who said that growth can be sustainable?

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