CHINA'S CO2 EMISSIONS DIP 5% IN FIRST FOUR MONTHS OF 2015

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22 may 2015

China's CO2 emissions have been plummeting lately. What's going on?

Brad Plumer, Vox Energy & Environment May 22, 2015

Arguably the most important climate story in the world right now is the question of what's happening in China. A recent analysis by Greenpeace International found that China's carbon dioxide emissions have plunged nearly 5 percent, year over year, in the first four months of 2015,

That's ... unexpected. Ever since 2000, China's CO2 emissions have been rising at a relentless pace, as the country rocketed itself out of poverty by burning billions of tons of coal for electricity, heat, and industry. China is now the world's biggest CO2 emitter, getting two-thirds of its energy from coal, and officials have long assumed emissions would keep rising until 2030 or so. It's a big reason global warming forecasts look so dire.

But suddenly, China's emissions are falling, spurred by a sharp decline in coal use. As Greenpeace's Lauri Myllyvirta explains, China's coal consumption dropped in 2014 for the first time this century. Then, in the first four months of 2015, coal use fell another 8 percent, year on year — which translates to a roughly 5 percent decline in CO2 emissions.

To put that drop in perspective, that's the equivalent of a whole year's worth of CO2 emissions from the United Kingdom, gone. Because China is so incomprehensibly massive, even its hiccups have outsized effects on international coal markets and global-warming outlooks.

So why is this happening? Is this just a temporary blip? Or is it part of a real and lasting shift in China's energy use? I asked a number of experts, who pointed out a couple key things to keep in mind:

1) Be very, very wary of China's energy statistics

This caveat deserves to go up high. Glen Peters, a researcher at the University of Oslo, pointed out that China's coal consumption numbers are notoriously unreliable, and often get revised significantly years later.

Case in point: back in the late 1990s, China announced it was shuttering a bunch of smaller, illegal coal mines, and early estimates suggested that nationwide coal use dropped 20 percent in 1998. But it turned out that those coal mines didn't actually close, they just stopped reporting their numbers to the government. When BP reviewed the data years later, it turned out that China's coal use hadn't dropped at all in 1998:

Similarly, in its most recent five-year census, China revised upward its estimate for coal use in 2013 by about 8 percent. That's a massive edit.

So we should be cautious about these latest stats. As in the late '90s, China is currently attempting to close many of its smaller coal mines, but there's evidence that illegal mining is still ongoing. It's not impossible to think the latest coal numbers could be revised upward in the future.

2) The 2014 coal drop was likely due to a surge of hydropower and dip in industrial activity

Now, assuming it's not all just faulty data, there are two big plausible factors behind last year's drop in China's coal consumption.

First, China had a remarkably rainy year in 2014, which allowed its existing hydropower dams to produce more electricity than usual. As Myllyvirta shows, this surge in hydropower allowed utilities to rely far less on coal-fired power plants. Given that electricity makes up about half of China's coal consumption, this was a big deal.

Unfortunately, we probably can't expect big surges in hydropower every single year.

Second, heavy industry in China has been decelerating of late. Steel production appears to be at its lowest levels in three decades. Cement production is also growing more slowly than usual. Industry accounts for (roughly) the other half of China's coal use, so this recent slowdown also made a huge difference.

But that raises a follow-up question: Is this decline in industrial activity only temporary, a result of a slackening Chinese economy? Or is it the result of deliberate Chinese policies to shift away from heavy industry and to curtail coal use — in which case the drop could prove more lasting?

Peters notes that this could conceivably just be a temporary slump due to the Chinese economy hitting a wall. Officials in Beijing insist that GDP will grow 7 percent this year, but many outsiders are skeptical of that number. If China is in fact suffering a downturn right now, then coal use may rebound sharply once the economy does. On the other hand, if the recent drop is the result of structural shifts, that's a little more interesting...

3) China is trying to shift away from heavy industry — but it's not yet clear what that means for coal

Over the longer term, the Chinese government does have plans to shift the country away from heavy industry and toward a more service-oriented economy as it tries to move up the development ladder and become wealthier, says Trevor Houser, an energy analyst at the Rhodium Group. That has potentially big implications for China's energy use.

Assuming this "rebalancing" happens, we could reasonably expect China's economy to grow at a less frenetic pace in the years ahead. Rather than Chinese energy demand growing at 10 percent or more each year, it might grow at, say, 1 to 2 percent each year.

That said, China would still continue to need more energy, particularly in the electricity sector. Armond Cohen of the Clean Air Task Force notes that the average household in China uses just 1,500 kilowatt-hours of electricity per year, compared with, say, 5,830 kWh in Germany (or 12,000 kWh in the United States).

"You have to assume that as the Chinese get richer, consume more, buy more gadgets, they'll use more electricity," Cohen says. The big question, then, is what type of energy will satisfy this demand in the future. Coal? Or something cleaner?

For now, it appears coal is still the energy source of choice. In 2014, Cohen calculates, China added far more new electric generation capacity from coal than it did from hydro, nuclear, wind, and solar combined:

Image images//import_b029b0b348a00545724210537bafb39f_20140218-2.png
Source: CATF from China National Energy Administration website for GW. Assumed capacity factors: fossil (58% per IEA); hydro (34% per IEA WEO 2013); wind (33%); solar (15%). (

But that's slowly changing. China is setting aggressive targets for clean energy, and the government has been cracking down on smog and other more conventional air pollutants, which entails steps like closing all the coal plants around Beijing by 2017. That suggests cleaner energy could start to cut into coal's growth in the years ahead.

Depending on how these various factors shake out, Houser says, most analysts expect that China's overall coal use will peak somewhere between 2018 and 2025. So even if this year's drop does prove something of a blip, coal consumption isn't expected to keep rising forever.

Cohen points out, however, that even once China's coal use peaks, it won't necessarily decline dramatically thereafter. After all, many of the hundreds of coal-fired power plants that the country has already built are relatively new, with a life span of 50 years or more. And China is unlikely to retire these plants early. So Cohen expects more of a coal "plateau" than a sharp peak.

For China to cut its emissions sharply, Cohen adds, one of two things will need to happen. Either clean energy will have to grow so fast and get so cheap that it forces China to shutter many of those existing coal plants, which he thinks is rather unlikely; or the country develops technology to capture CO2 emissions from coal plants and bury them underground (a pricey and still-nascent technology known as CCS).

"Either you have to kill those plants early," Cohen says, "or you're going to have to retrofit them."

4) China's coal trajectory can have a big impact on climate change

Annex B vs Non Annex B

(Global Carbon Project)Image images//import_22149ba7d54f5e4342f15266398a869b_Annex_B_vs_non_Annex_B.0.png

The reason China's coal use gets so much attention is that the country remains the world's largest carbon-dioxide emitter by far. Over the last decade, roughly half the growth in global CO2 emissions came from China. So it's not an exaggeration to say that the future of climate change depends, to a large extent, on what China does.

Right now, as part of ongoing UN climate talks, China has pledged that its emissions will peak sometime around 2030. According to the analysts at Climate Action Tracker, that trajectory is consistent with overall global warming of around 3.1°C (or 5.6°F) above pre-industrial levels — significantly higher than the 2°C limit everyone's striving for.

If, however, China can figure out how to cut coal consumption more rapidly than planned, gets its CO2 emissions to peak earlier than 2030, and find a way to push emissions down thereafter rather than allowing them to plateau, we'd have a better shot at less global warming.

Granted, even that's not the end of the story. India has as many people as China, but still emits just one-fourth the CO2 because it's so much poorer. Right now, India is starting to build more coal plants in the quest for growth; a key question is whether it will follow in China's footsteps or find a greener development path. Likewise for Indonesia and Vietnam, which have been ramping up coal consumption lately. China dominates the climate picture, but it's hardly alone.


Further reading


-- This post by Arthur Yip offers an in-depth look at the scale of clean-energy China will need to meet its ambitious 2030 targets.

-- Another angle here: In recent years, the United States has been burning less coal (partly due to competition from cheaper natural gas, partly due to EPA regulations). As a result, many US mining companies have been increasingly focused on exports to China. But now that China's coal demand appears to be cooling off, some of these companies are laying off workers and watching their share prices nosedive.


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