Intent and Growth Reductions Won’t Solve Smog.

Thursday, November 7, 2013 16:05

With Northern provinces already beginning to feel the bite of winter, the next few months are going to prove interesting for China as the air grows thick with pollution. There have already been reports that the air is growing thicker, with Harbin  being the worst to date, but as I have been discussing over the last few years, things are only set to get worse for the time being despite a number of announcements from the new administration

Announcements that include continuing the movement of boilers to gas, move industry out of cities, and force  ask the large power producers to invest in cleaning equipment.  All of which will sound familiar as Beijing has been retrofitting boilers for 10 years, heavy industry has been moving (at a snail’s pace) out of the city, and the economy is transforming, but given the severity of the issue and the fact that the “government” is having to shut down schools to protect children, there is a different feel to the announcements.

The intent is certainly there, or at least there at a higher level, to do something. The only question is what can “they” do besides take cars off the road and shut down factories?

For many, this would be an opportunity to raise their hand and offer up “renewable energies” as a replacement to coal, but for me it has to go farther.  That, what needs to be done is to move away from the emotionally charged “better” energy, consumers, and government policies and get into the nitty gritty of where the system is failing. Which requires a very different approach.

Why I say this is simple.  China is NEVER getting away from coal. Growth rates may come down, but even at best estimates, coal is expected to move from 70% to 65% of China’s total energy package in 2030.  An energy package that will be 400% LARGER than today.   Which is a “reduction” only in name as emissions from coal based energy production will continue to climb…. (Note: that this is also true for many of China’s raw material inputs into the core of its economy)

Which is where this gets far more complicated because in reality the smog that China is seeing is actually a byproduct of urbanization. The very thing that they feel will provide long term stability for the country, its economy, and its people.  A process  that will (intentionally) move an estimated 20 million rural residents into the city every year for the next 20 years.  300 million people, who are largely off the grid today, will move from being largely off the grid into the urban lifestyle. A lifestyle that is 4-5 times more economically productive, but 8-10 times more energy intensive.

This is a system  whose byproducts, are not going to be materially impacted by “more” solar panels, caps on coal fired production in a few areas, or fracking at this point.  Yes, doubling solar from less than 1% to 1.5% by 2030 is noble, and a great way to keep an industry afloat, and yes, cutting coal from 71% to 65% is an “achievement”, but at the end of day China will need to radically change the calculus for energy demand.

Right now, China is in a state of transition, and with transition is going to come pain.  Pain that is only going to get worse if the way that we look at these problems doesn’t change.

Beijing, at present, is trying to remove the “causes” of the air pollution by  focusing on tailpipes and smokestacks, the mediums by which emissions are created and delivered to the air, which will only deliver negligible gains as economic growth will outpace their capacity to insert plugs. The pollution that we are seeing is a BYPRODUCT that needs to be addressed at the source, system, and behavioral level, and to avoid taking DRASTIC actions, investments need to be focused at the  source, systems, and behavioral levels.

Which is why I say that it is ultiamtely not about intent.  It is not about words, hope, or announcements.  It is about action.   Material action, that reduces the demand side of China’s energy equation

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