Greenpeace China has released a short briefing paper entitled “Polluting Power: Ranking of China’s Power Companies.” Its objective–to provide a balanced analysis of the ten biggest power companies of China across various metrics such as coal consumption, carbon dioxide emissions, and share of renewable power. It does a credible job, and provides an interesting picture of how some firms are doing better than others in different regards.
It is a big pity that Reuters has chosen to sensationalize the report, cherry-pick one relatively unremarkable finding, and brandishing it as a headline–”Emissions of 3 big China power firms exceed UK“–as if China represented an ecological apocolypse. Guardian brandishes a very similar headline. No doubt, China’s energy structure is heavily reliant on coal and is the world’s largest producer and consumer of that black stuff, but we’ve known this for a while. But to say that “greenhouse gas emissions from the three biggest Chinese power firms in 2008 were higher than those of the entire United Kingdom” is rather meaningless without context. We need to ask–how big are these firms? We are not saying that China’s biggest three power plants are matching the entire UK in carbon emissions, but that China’s three biggest utility companies, with fleets of hundreds and hundreds of power plants accountable for 30% of the entire power supply for China and its 1.3 billion people (30% x 1.3 billion = 390 million), is matching the carbon emissions output of the entire economy of the UK and its 61 million citizens. Viewed in that context, Reuters headline is decidedly unremarkable, and in fact makes China look good! [The explanation is, of course, a large segment of China's population remains in energy poverty, and that we are comparing carbon missions for 3 chinese companies from the power sector against all the sectors of the UK economy]
This is not to say that we should let the Chinese power sector off the hook. The report underscores some alarming findings and trends:
- environmental and public health impacts of coal burning by the ten biggest power companies is estimated to be RMB 87 billion (US$12.7 billion) in 2008;
- on a per kilowatt-hour basis, the ten biggest power companies still emit more carbon dioxide than in developed countries (20% more than the U.S. average, and 80% more than the Japan average);
- five of the ten biggest power companies obtain less than 7% of their share of electricity production from renewable sources, making them potential laggards in the context of China’s national goal of achieving 10% of its energy from renewable sources by 2010)
- eight of the ten biggest power companies are not yet half way to meeting its mandatory renewable (non-hydro) energy obligation of 3% by 2010, casting doubt that these targets will be met by 2010.
Yet, there are positives to be taken away from the report:
- All of the ten power companeis have already met their 2010 target of reducing coal consmption to 355 grams per kWh of coal power generation, ahead of schedule.
- Since 2006, as part of its “Program of Large Subsituting for Small,” China has shut down 54 GW worth of small, inefficient coal plants and plans to shut a further 31 GW in the next three years (see my related post on The Work Room);
- three of the ten biggest power companies have already reached a 10% or more share of electricity from renewable sources, and one (Guodian) has met its mandatory non-hydro renewable energy obligation of 3%, in both cases ahead of the 2010 deadline.
The result of the program of large substituting for small and relentless pursuit of the goal of reducing coal combustion per Kwh has spurred China’s power sector to build some of the most efficient coal plants in the industry, so much so that
China’s improvements are starting to have an effect on climate models. In its latest annual report last November, the I.E.A. cut its forecast of the annual increase in Chinese emissions of global warming gases, to 3 percent from 3.2 percent, in response to technological gains, particularly in the coal sector, even as the agency raised slightly its forecast for Chinese economic growth.
The overarching trend points to a clear policy direction–China is using more coal, yes, but it is using it in an increasingly efficient way. Greenpeace seeks to accelearate a decarbonization of China’s power sector with a half a dozen recommendations. I take slight issue with the first recommendation, which calls on China to introduce a price signal through an energy tax and environmental tax on coal. This is not a bad idea in and of itself, but would spells a lose-lose strategy right now beacause utilities are unable to fully pass down the prices increase of coal to their end-users. For any sort of tax mechanism to be effective, energy price reform in the electricity sector is hugely wanting (see also pevious post “China’s Coal Industry-MIT Report Challenges the Myths“).