Wednesday, October 20, 2021

Why China’s coal shutdown is very important, for the right reasons

This post originally appeared on Free Basics, the digital innovation platform of Google, which serves more than 100 million people in India and the rest of the world. In a surprise move on March 6, President Xi Jinping announced that China will cease the expansion of coal-fired power plants and will phase out the burning of coal for electricity entirely by the year 2030. The country already has more than 1,000 coal-

fired power plants generating electricity. Why is China’s announcement so important? The U.S. government estimates that global investment in coal in 2017 was $600 billion. Further, China accounts for more than 20 percent of global coal consumption. President Xi’s announcement would likely have serious implications for this market. Websites affiliated with mining and energy companies declined our requests for comment.

Many focused on the positive implications of China’s announcement for climate change—perhaps for as long as the policy actually holds. There’s a larger reason why China’s announcement matters, however. This is the first time that any country has made a direct commitment to not expand its use of coal-fired power plants. China as well as the United States have been criticized for scaling back coal production as demand

has declined, even though the countries have been busy expanding exports of coal as the world’s economic health has steadily improved. Yet, the impact of shutting down plants is relatively small compared to the potential economic impact of expanding those same power plants. Currently, the United States and China’s coal stockpiles of 380 million tons is at a historic low. If those two countries shut down the same

amount of power plants each, 1.6 billion tons of coal could be removed from the market. This is essentially equivalent to the amount of new coal consumed by the entire world in 2014. If China’s coal projections hold true, it could have an even bigger impact, as that country used 2.9 billion tons of coal last year—enough to power China for a full year. This, in turn, could affect electricity prices across the world,

as new plants could be more costly. Suppliers could struggle to meet their commitments. And those new costs could affect not only the 2.9 billion tons of coal used in China but also those used by 3.5 billion more people. Rather than just focusing on climate change, the good news here is that China and the U.S. have agreed to limit their use of coal—what could be the most serious impact we’ve seen yet. There’s

currently no other nation either planning to or has said it will shut down their coal-fired power plants. Therefore, the U.S. and China will likely work together on this effort. It’s important to note that while these policies sound good on paper, there’s still the question of how they’ll be implemented. And that could have significant implications for millions of people. And China has a history of implementing

policies—a model the U.S. hopes to follow. For instance, it has reduced sulfur emissions from steel plants, also reducing emissions of toxic pollutants like lead and benzene. It still has to install stringent compliance systems in its many power plants. While China’s announcement is a welcome sign of the government’s efforts, this is a very complicated time, and many details are still to be worked out. What remains,

however, is that for the first time, the world’s two largest economies have acknowledged that in the long term, less carbon is more. The world will need to invest even more in clean energy, alternative energy, and green development to grow at the rate necessary to ensure an adequate supply of food and housing. It also must ensure that trade, which is dependent on power, fuels, and water, does not leave poor countries

behind. Without strong regulation, India is looking at dropping more than 30 percent of its renewable energy capacity by 2025. This means rising imports of coal, pollution and instability in the country, and more employment in jobs tied to the extraction of coal. Without strong regulation, India is looking at dropping more than 30 percent of its renewable energy capacity by 2025. This means rising imports of coal,

pollution and instability in the country, and more employment in jobs tied to the extraction of coal. The last several years have witnessed a dramatic shift in our attention to the second problem, “consumers.” We have to end our addiction to cheap energy—clean or dirty—for consumers and for the planet. Now, we have to focus on decisions that our economies must make to stay afloat. It is these decisions that determine

demand, pricing, and economic growth. We may not be able to replicate China’s announcement, but a simultaneous

More articles

Latest article