Myth of China's endless demand for imported coal
New study undermines business case for coal exports.
By Ross Macfarlane
One of the coal port boosters’ favorite lines is that the demand for coal is going to continue to grow dramatically in China and other Asian countries regardless of what we do here in the US.
The evidence is mounting, though, that this story is a myth founded more in the coal companies’ desperate need to find new markets as US demand shrinks, rather than any sober analysis of Asian markets.
Lifeng Fang, a Chinese energy expert working with Greenpeace has just produced a great new report that helps crush this myth. While China's coal demand has fueled global markets over the past decade, that appetite is rapidly cooling off. China's economy is slowing and is transitioning away from a focus on heavy industry to emphasizing investments in new economic sectors. It is also facing an existential crisis relating to unprecedented levels of pollution (heavily linked to coal) that is galvanizing the new middle class and urban populations.
China is leading the world in clean energy investments, and is starting to seize the tremendous low hanging fruit related its opportunities to increase energy efficiency and reduce waste while continuing to grow its economy in a less carbon-intensive way. The Chinese government has already imposed coal caps on many urban centers and has announced its intent to implement a country-wide coal cap and carbon tax, as well as other measures designed to accelerate its transition from 19th century industrial development to new strategies. Meanwhile, China has been modernizing its infrastructure and expects to satisfy most of its demand for coal from its own abundant sources.
Skeptical that this is all green propaganda because of the source? You shouldn't be -- Greenpeace produces excellent research from top global exports on energy and environmental issues (including this recent report from the consulting firm Ecofys identifying the top global “carbon bombs” – and naming coal export from the Northwest as the biggest climate threat from the US) . In any case, their conclusions are echoed by much more conservative and industry friendly sources. Take IHS CERA, the Cambridge think tank founded by Daniel Yergin, with deep ties to big oil and other fossil fuel industries. They produced a report earlier this month that concluded that Chinese coal demand would peak in the next 12 years, with coal imports starting to fall this decade.
This conclusion is being echoed with dire warnings from Australia, currently the largest exporter of thermal coal to China. Ross Garnaut, one of that country's top economists, recently warned that the rapid shifts in China's development created huge risks for Australia's economy if it continued to overinvest in coal infrastructure, "both in terms of creating multi-billion dollar white elephants and driving global warming.” Or take this statement from the top coal executive at the world’s largest mining company, BHP Billiton, who said that coal use is going to decline in a carbon constrained world, “and frankly it should.”
Sound familiar? The West Coast has already been down this rat hole before, with large coal export facilities failing in Portland and LA after volatile markets tanked. These are huge bets with massive implications for public investments and regional economies. It is critical that Northwest leaders closely look into, before letting the coal companies and terminal developers bet our economies and environmental futures.