Something very strange is transpiring in China right now. A new analysis by Greenpeace finds that the country's carbon-dioxide emissions have dropped fully 5 percent in the first four months of 2015:
This is unexpected. Over the last 20 years, China's CO2 emissions have grown at a relentless pace, as the country burned billion of tons of coal for electricity and industry. The country is now the world's biggest CO2 emitter, and officials had expected emissions to keep rising until 2030 or so. That's a big reason global warming forecasts look so dire.
But suddenly, China's emissions are dropping, spurred by a sharp decline in coal use. (Coal provides about two-thirds of the country's energy.) In 2014, according to official statistics, China's coal consumption fell for the first time this century. Then, in the first four months of 2015, coal use officially fell another 8 percent, year on year — which translates to a roughly 5 percent decline in CO2 emissions.
To put that drop in perspective, it's the equivalent of an entire year's worth of CO2 emissions from the United Kingdom. Because China is so incomprehensibly massive, even its little hiccups have outsized effects on international coal markets and global emissions.
So what's going on? 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 top. Glen Peters, a researcher at the University of Oslo, pointed out that China's coal statistics are notoriously unreliable, and often get revised significantly years later.
Prime example: in the late 1990s, China announced it was shuttering a bunch of smaller, illegal coal mines, and initial estimates suggested that nationwide coal use dropped 20 percent in 1998 as a result. 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 concluded that China's coal use hadn't dropped at all:
Another example: in its most recent five-year census, China revised upward its estimate for coal use in 2013 by about 8 percent. That's a huge edit.
So we should be cautious about the newest numbers showing a drop in coal use. Lately, China has once again been trying to close many of its smaller coal mines, but there's evidence that illegal mining is still ongoing. It's entirely plausible that current coal number 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 likely culprits 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 Greenpeace's Lauri Myllyvirta shows, this surge in hydropower allowed electric utilities to rely far less on coal. Given that electricity makes up half of China's coal consumption, this was a big deal. Unfortunately, we probably can't expect big surges in hydropower every single year.
The second factor: 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. Since industry accounts for (roughly) the other half of China's coal use, this recent slowdown had a big impact.
Now here's the question: Is this decline in industrial activity just temporary, due to the slackening Chinese economy? (Officials in Beijing say that GDP will expand 7 percent this year, but many outsiders think the true number is just half that.) If it is just a blip, then industrial coal use will presumably rebound in the years ahead, once growth picks up again.
The other possibility, however, is that the drop in industrial coal use represents the start of a structural shift in China's economy. That would be a little more interesting....
3) China is currently trying to shift away from heavy industry — though it's not yet clear what that means for coal
Over the longer term, the Chinese government does have broad plans to transition the country away from heavy industry and toward a more service-oriented economy as it tries to move up the development ladder, says Trevor Houser, an energy analyst at the Rhodium Group. This would have potentially large 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 expanding at 10 percent or more each year, as it has in the recent past, it might grow at just 1 to 2 percent each year.
To be clear, China would still need a lot of energy going forward. 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. "You have to assume that as the Chinese get richer, consume more, buy more gadgets, they'll use more electricity," Cohen says.
The key question, then, is what type of energy will satisfy this demand in the future. Coal? Or something cleaner? For the time being, coal remains China's energy source of choice. In 2014, Cohen calculates, the country added far more new electric generation capacity from coal than it did from hydro, nuclear, wind, and solar combined:
In the future, however, things might look different. 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.
Cohen points out, however, that even once China's coal use peaks, it won't necessarily decline sharply 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 drastically, 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 will have a big climate impact
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.
-- 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.