China’s coal consumption will peak in less than five years.
Read that again and pause for a moment to let it sink in.
China’s leaders have said its coal use will peak in the next five years, said Leaton [of Carbon Tracker], but this has not been priced in. “I don’t know why the market does not believe China,” he said. “When it says it is going to do something, it usually does.” He said the US and Australia were banking on selling coal to China but that this “doesn’t add up”.
I’ve since followed it up through the Carbon Tracker site, The Climate Institute, The Grantham Research Institute, and the Sydney Morning Herald, whose China correspondent John Garnaut appears to be particularly well connected.
China’s decade-long boom in coal-driven heavy industry is about to end [writes Garnaut] as the leadership shifts priorities towards energy conservation, say officials and policy advisers.
The advisers predict China’s coal consumption will peak at only a fraction above current levels after the State Council, or cabinet, last week set an ambitious new total energy use target for the five-year plan ending 2015.
“Coal consumption will peak below 4 billion tonnes,” Jiang Kejun, who led the modelling team that advised the State Council on energy use scenarios, told Fairfax Media.
“It’s time to make change,” said Dr Jiang, who is director of the Energy Research Institute under the National Development and Reform Commission (NDRC). “There’s no market for further development of energy-intensive industry.”
The imminent stabilisation of coal usage, if broadly achieved, would mark a stunning turn-around for a nation that is estimated to have burned 3.9 billion tonnes last year, which is nearly as much as the rest of the world combined.
A joint report by The Climate Institute and the Carbon Tracker Initiative, released on 29 April, finds that “Australian and overseas investments in Australian coal resources rest on a speculative bubble that ignore[s] their impact on global carbon budgets and their exposure to rapid devaluation.”
[The report] Unburnable carbon 2013: Wasted capital and stranded assets has revealed that fossil fuel reserves already far exceed the carbon budget to avoid global warming of 2°C, but in spite of this, [the industry] spent $674 billion last year to find and develop new potentially stranded assets.
This new research from Carbon Tracker and the Grantham Research Institute on Climate Change and the Environment at LSE calls for regulators, governments and investors to re-evaluate energy business models against carbon budgets, to prevent $6 trillion carbon bubble in the next decade.
And James Leaton:
“Investors need to challenge the assumption that coal demand will continue to rise in China and elsewhere, otherwise billions of dollars of taxpayer, superannuation and shareholder funds will be wasted in assets linked to unburnable carbon.”
If the above comments tend to focus on the Australian point of view, this is no more than a reflexion of Australia’s physical proximity to China. Australia has huge reserves of extractable coal, sells 20% of its production to China, and is counting on selling a whole lot more. China’s U-turn would be – and probably will be – the death of Australia’s coal industry. The US and Russia will also be impacted.
But the implications of China’s change of policy go beyond the financial considerations (if we may for the moment entertain the notion that there is life after money).
- If they say they’re going to do it, that means they can do it
- Counting on renewables to replace what would have been increased coal consumption.
- Implies that they have a clear vision of the energy future.
- “There’s no market for further development of energy-intensive industry.” What does that mean? That appears to look much further ahead.
- Why announce the bad news? Why not just let the rest of the world find out when it happens?
- Brownie points? They don’t give a shit – remember Copenhagen.
- To scare the rest of the world into taking climate change seriously? Possible. Not probable.
- To scare everyone shitless? Just for fun? Possible.
- To provoke financial meltdown? Possible? Probable? What would be the point?
With China, you have to look well beyond the next couple of moves.
It occurs to me that if the rest of the world were to go into financial meltdown and thence back to the Stone Age, China could survive. They can produce anything and everything they need and they have a big enough internal market to sell everything they make.
It further occurs to me that by bringing worldwide production to a standstill, China would effectively solve the problem of climate change.
Now there’s an interesting prospect…