China stuck with coal for now

In the final part of her series on China's coal habit, The World's Mary Kay Magistad reports on why China is likely to remain dependent on dirty coal for decades to come, despite the billions it's pouring into alternatives.

China took a lot of flak at last year's Copenhagen Summit on Climate Change. Some critics accused it of blocking a more comprehensive agreement that would lead to faster reductions of emissions. Chinese officials say they were standing up for the rights of developing countries " to keep developing, and have developed countries that did most of the historical polluting pay a chunk of the costs of cleaning up, or moving to more expensive but cleaner energies. At home, the Chinese government straddles two goals " to keep up economic growth, while at least minimizing emissions and being better stewards of the environment.

Ask a middle-class person in China what it means to be middle class " and you might get a very familiar answer: "Well, in Beijing you certainly need to have property, and own a car," says Zhong Ling, a college professor. And then there's all the other stuff " computers, flat screen TVs, air conditioning all summer " pretty much what a middle-class American might say.

That American lifestyle has great appeal. Chinese have seen it on TV and in movies, and an ever-growing number of the country's 1.4 billion people want it too. The problem is, it has a huge energy footprint. The average American consumes more than twice as much energy as the average person in China.

But it's China, with four times as many people and a much dirtier energy infrastructure, that's now the world's biggest emitter of greenhouse gases. Most of those emissions come from burning coal. That's left many in the United States saying that China urgently needs to cut its emissions to fight climate change.

But Xu Yinlong, a professor of climate change at the Chinese Academy of Agricultural Sciences in Beijing, invokes fundamental American values to turn the argument around. "Your Declaration of Independence, and your Constitution, say everyone should be equal," he says. "So why do Americans think they deserve more emissions per capita than Chinese?"

Xu points out that most of the carbon pollution already in the atmosphere was put there over the past 150 years by the United States and other Western countries. They say China's already doing better than those countries did at the same stage of development " and when China has reached the same level of prosperity, it will cut emissions more.

Jonathan Watts, an environmental correspondent in China for the British newspaper The Guardian, and author of the book When a Billion Chinese Jump, says they've got a point. "In terms of fairness, China should have the space to emit more and more and more and more," Watts says. "That would be completely equitable, but totally calamitous. So you have to balance, what's fair, and what will preserve you and us. And that's the key question."

Fairness aside, Watts says the Chinese leadership faces a dilemma. They know that climate change is real, and already affecting China, and that carbon emissions from coal are a big part of the problem. They also recognize the severity of local environmental and public health problems from burning so much coal. But at the same time, the government is committed to spurring rapid economic growth and improving the material lives of Chinese people and coal, for now, is the cheapest available fuel with which to do it. With Communism all but dead as an ideology in China, the Communist Party's legitimacy is seen to rest on that pledge.

Watts says he sometimes hears a defense of coal from Chinese scientists and policy-makers that straddles these two concerns. "What they say is, "look, we know coal is bad. Nobody likes coal. But we don't think we have any choice,'" Watts says. "If we want to keep growing at the speed we've been growing, if we want to remain competitive then we need to keep using coal."

Under current projections, China's use of coal will continue to grow well into the middle of the century. And increasingly, that includes importing coal " the transportation of which uses even more energy, which creates even more emissions. China has plenty of coal at home, but its mining industry can't keep up with demand, as cities expand and infrastructure projects demand ever more cement and steel, the making of which is fueled by coal.

But all this begs a few questions. Is China's current speed of development necessary? And does the model of growth have to keep favoring heavy industry " which favors state enterprises, which the government tries to protect, but is bad for the environment? Or, with the right political will, could China move more quickly to a less coal-dependent, more environmentally sustainable model of growth? The government has talked about restructuring the economy, to make it more reliant on domestic consumption and less reliant on export. But Michael Pettis, a Peking University finance professor, says even that transformation isn't going to happen until there's a shift from over-investment in heavy industry and infrastructure.

"Some of the infrastructure investment is certainly necessary, and will create more value than it costs, so it will cause future consumption to grow more quickly than it otherwise would have," Pettis says. "But certain types of infrastructure investments, if they're not economically viable, reduce economic wealth, and therefore they have to be paid for. And they're always paid for by households " in the United States, in the form of taxes, in China, in the form of indirect taxes, like very, very low interest rates on their savings deposits. And if you force households to pay for non-economic investment, you are going to reduce future consumption, and that will slow GDP growth down considerably."

That suggests that, even if environmental concerns are set aside, the Chinese government has ample motivation to accelerate a transformation of the economy, away from a heavy industry model that's quite so reliant on coal.

Some Chinese officials say, this is a phase a developing economy has to go through, and the best thing that could happen is not that China change the way it's developing its economy, but that the technology improves.

"Personally, I'm very concerned about climate change," says Kang Qing, who heads the Development and Reform Commission in the city of Baoding, about 90 miles south of Beijing. I'm especially worried for my children, and grandchildren. But " the thing is, climate change has been caused by improving living standards with the technology available. So it's the technology that needs to improve, so we can develop with less environmental impact."

Baoding has long been a smoggy industrial city. But pull in to town on the high speed train these days, and you might actually see blue sky . In the last few years, the local government has replaced almost 500 dirty coal-fired boilers with cleaner natural gas. It's also experimenting with energy-efficient buildings, putting up solar pilot projects, and shifting public transportation to natural gas.

Baoding is trying to become a low-carbon city. The transformation began through political will " and a shrewd business sense. Ma Xuelu was a local city official a dozen years ago, when he got sold on the potential for solar energy to give Baoding a new lease on life.

"Developing a low carbon economy is an opportunity for Baoding," Ma says. "We don't have the resources to support traditional industries. So we have to explore in a new way " a way that includes technological innovation and renewable energy."

Ma persuaded the Baoding government to open a hi-tech industrial development zone " and he became its director. He also became co-founder of Yingli Solar, one of the world's biggest photovoltaic companies, and China's first. Now, Ma says, with obvious satisfaction, the manufacturing of solar and wind energy equipment accounts for a quarter of Baoding's GDP, and Baoding's air quality has steadily improved.

The Worldwide Fund for Nature has been helping Baoding with its transformation. Lei Hongpeng, of the group's Beijing office, says since the project started, officials from more than a dozen other Chinese cities have also asked for assistance in becoming low-carbon cities themselves.

"Maybe five years ago more local governments paid attention to steel, auto industry, because these industries could create bigger GDP," Lei says. "But recently they see the future, is the renewable or low carbon clean energy industry."

It's a future the central government wants to encourage. It has named Baoding one of eight low-carbon city pilot projects. The central government has also started evaluating local officials around the country not just on how well their local economy performs, but also on how well they protect the environment. That includes minimizing the impacts of coal.

And already, in just a few short years, China has become the world's top producer and exporter of wind turbines and solar panels. In 2009, according to the World Resources Institute, China spent $34 billion on clean technology, compared to the United States $18 billion " outspending the United States almost two to one.

"I do think China is sincerely trying to change," says Watts, author of When a Billion Chinese Jump. "And it's not doing it because it wants to save the world. It's doing it because it wants to save itself, and because it wants more energy security, to be less reliant on fossil fuels, which are dirty or need to be imported. And because it's a power play. If you control the energy of the future, if you are the leader in solar and the leader in wind, and if the world 30 or 40 years from now is all supposed to be using that technology, that puts you in an incredibly strong position."

But the Chinese paradox, Watts says, is that China is going "green' and at the same time staying "black' " increasing coal use, while trying to increase efficiency and reduce emissions along the way. For now, China continues to chase its own version of the "American Dream" " big cities built for cars, an impressive new highway system, a growing middle class with a growing hunger for all the accouterments of the "good life' it has seen on TV, in movies, and on trips abroad.

But the "stuff' the middle class craves takes energy to produce, and much of that energy comes from coal. The idea of scaling back the middle class lifestyle to cut emissions and save the environment is something Americans have barely begun to embrace. And the Chinese government is only starting to structure new cities and set incentives to encourage a lower-carbon lifestyle, as ever more Chinese reach for a more-energy intensive middle class life.

"The American lifestyle is the American dream to us. And it's comfortable. We like it," says Chang Hong, a 45-year-old electronics entrepreneur, on his way out of an upscale Beijing department store. "But if everyone lives in such a way, I don't think the environment can take it.'

Chang's 17-year-old daughter, Chang Yi Fen, agrees. "China's history is very long, and throughout it, Chinese people have been making compromises due to this big population," she says. "And I think it's a trend that's going to continue. Each generation will have to make compromises for the population, and for the finite resources."

Chang Yi Fen thinks many people her age get that, and will be willing to make changes and conserve energy if it means helping the environment, and breathing cleaner air. And for those who don't get it yet? They will, she says. By the time her generation takes the helm, there won't be another choice.