Fired by coal

Nothing in China needs improvement more urgently than the aging and coal-dependent energy industry. Coal is the world8217;s cheapest and dirtiest energy source, and China has 1 trillion tons of proven reserves; only the US and Russia have more. Such an ample supply has been serendipitous in a country where the demand for electricity has risen by 60 per cent since 2000. China now accounts for one-third of global coal consumption, devouring 2.2 billion tons last year to generate 80 per cent of its electricity and 75 per cent of its home heating. China8217;s heavy industry would be lightweight without coal.

But like 19th-century England or the Soviet Union in its industrial heyday, China is seeing coal-driven growth turn ugly. As in India, another economic comer with power problems, China has been growing so fast, for so long, that the central government has lost control of the energy industry. Nearly half the coal plants built in China between 2001 and 2005 were small, old-fashioned models erected by local officials, often without Beijing8217;s full approval. President Hu Jintao and Prime Minister Wen Jiabao are trying to change that. They8217;ve made energy efficiency a national priority 8212; and the central government will spend hundreds of billions over the next 20 years building nuclear plants and developing renewable-energy platforms such as solar forests, wind farms, biomass fuels, not to mention 8220;qingjie meitan8221;, or clean-coal technology.

Both Hu and Wen tout 8220;sustainable8221; and 8220;scientific8221; development as the key to curtailing the social costs of unfettered growth. But Beijing8217;s effort to clean up and control the coal economy will take decades to produce results, and meanwhile China is courting a catastrophe that could impair the health of its people. The dilemma is ironic. If Hu and Wen succeed, China will become a cleaner country 8212; but the transition will also help slow down the growth of a manufacturing juggernaut that has helped bring millions of Chinese out of poverty and drive down the cost of everything from toys to TVs worldwide. If the leaders fail, China8217;s environmental problems will get worse.

China is already enveloped in a toxic cloud that8217;s visible from space. Virtually every day in December, Beijing looked like a film negative of itself 8212; spectral and acidic. And coal emissions do not respect borders. Sulfur dioxide discharges from China are being blown across the Pacific, causing acid rain in South Korea, Canada and Europe. Experts say that sulfur dioxide emissions from coal combustion 25 billion tons in 2005, tops worldwide kill about 400,000 Chinese prematurely annually.

In the cool, moist climes of southern Guizhou province, more than 10 million villagers have rotted teeth, arsenic poisoning or knock-knees, because they hang-dry corn and hot peppers indoors over coal-heated stoves then proceed to eat it.

The stoves are also to blame for the No. 1 killer of rural women: respiratory disease. The World Bank recently called Linfen8212;a coking city in northern Shanxi province 8212; the world8217;s most polluted city. Of the world8217;s 20 most polluted cities, 16 are in China. By 2009, the International Energy Agency predicted in November, China will overtake the US as the world8217;s biggest emitter of CO2 8212; a decade earlier than it originally thought.

Beijing aims to reduce the country8217;s energy consumption by 20 per cent by 2010 and has pledged to reduce key pollutants like sulfur dioxide by at least 10 per cent over the same period. Central policymakers also have begun to tinker with taxes, tariffs and commercial mechanisms to clean up the energy industry. China8217;s state energy conglomerates are investing heavily in mechanised mines, next-generation power plants and coal-based fuel alternatives to oil.

But grand plans are not easily implemented in China. Beijing is pushing coal-based power plants that are clean, efficient and big. But it8217;s had a tough time enforcing orders to dismantle or retrofit the smallest and dirtiest facilities. For a short time in 1999-2000, Beijing stopped approving new plants. But as soon as the freeze was ended, 8220;everybody and his mother went out and built a power plant,8221; says Joseph Jacobelli of Merrill Lynch in Hong Kong. Provincial and city officials are preoccupied with finding more energy, amid growing electricity shortages. There have been rolling blackouts in the south and southeast since 2002, because China8217;s coal-distribution system can8217;t keep up with demand.

Beijing first caught on to the concept of clean coal 8212; a catchall phrase for improvements ranging from modernizing mines to developing clean liquid or gasified coal for cars and power plants 8212; in the 1980s. Back then, China8217;s energy needs were relatively modest 8212; the country was a net exporter of oil. Today China imports 40 per cent of its crude oil. High oil prices, along with the country8217;s noxious coal plants, have motivated Beijing to embrace new clean-coal technologies once deemed uneconomical. In fact, the government and state firms are sinking a reported 128 billion into new pipelines and plants that can gasify or liquefy coal 8212; turning it into relatively clean diesel fuel for vehicles, methane for power generation and dimethyl ether for transport, home cooking and heating.

In the grasslands of Erdos, in Inner Mongolia, the Shenhua company is erecting the world8217;s first commercial plant that converts coal directly into refined oil that could go into making plastics or fuelling cars. Shenhua is also working with private foreign firms 8212; including Shell and Sasol, the South African coal-to-liquid pioneer 8212; to produce clean diesel fuel indirectly from gas, a more proven technology.

Worldwide, the best hope for eliminating coal-plant C02 emissions is a costly, unproven, yet much-trumpeted technology called IGCC 8212; Internal Gas Combined Cycle. It converts coal to gas and siphons off the carbon so that, theoretically, it can be stored underground, once 8220;sequestration8221; technology hits the market. But that day is perhaps a decade off. China hopes to fire up its first three IGCC plants by 2010.

8211;JONATHAN ANSFIELD