The Myth of Chinas Endless Coal Demand: A missing market for US exports

by Lifeng Fang

February 27, 2013

Its hard to imagine living in a place where the air is so dirty, going outside to breathe could be the most dangerous thing you do all day. Its even harder to imagine those conditions in a major metropolitan city. However, that is the reality in Beijing at the start of 2013. Earlier this year, the citys smog hit record levels, with dangerous fine particulate matter known as PM2.5 reaching 886 micrograms per cubic meter - more than double the US EPAs highest grading of hazardous. As the world's biggest coal producer and consumer, Chinas economy today is largely powered by coal, and burning coal is a leading cause of air pollution. On the other side of the Pacific Ocean, US west coast cities are suffering the impacts of downwind Chinese air pollution, including toxic mercury and sulfur and nitrogen oxides. Now, facing a rapidly shrinking market at home, US coal companies are seeking to export millions of tons of coal to Asian markets, including places like Beijing, fueling climate change and toxic air pollution along the way. In an effort to convince investors and politicians that coal export terminals are a sound investment, the coal industry has argued that Chinese coal demand is endless. However, a new report from Greenpeace,The Myth of Chinas Endless Coal Demand: A missing market for US exports, reveals the false optimism of a desperate industry. China does not need US coal. Chinas economic growth is slowing down, with GDP growth down to 7.8% last year from 9.2% in 2011. Meanwhile, the electricity consumption growth rate dropped as well. The Chinese government is expected to deliberately control the economic growth rate to prevent unsustainable booms, and in turn decrease the growth of energy demand. China has also issued a policy to cap coal production and consumption at 3.9 billion tons by the end of 2015, which indicates that the opening for new imports is small, and China will largely depend on its domestic coal. The Chinese public is growing more aware of coals problems, protesting against coal-fired power plants anddemanding cleaner air. And there are signs that these concerns are being heard. Recently, the government released new national air pollution standards for thermal power plants, and seventy-four cities began to disclose PM2.5 levels in 2013. All of these factors will limit coal imports, since major coal consuming regions are the major importers of coal. Meanwhile, renewable energy in China is experiencing explosive growth and decreasing coals share of the energy mix. China is the worlds biggest wind power consumer and aims to increase wind capacity to 100 GW by 2015. Investors and policymakers should examine the false optimism of the Chinese coal market being peddled by a desperate US coal industry.

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