China has a problem: the country’s getting
hotter, and it’s getting wealthier. While in isolation one is a global challenge
and the other a domestic triumph, in concert they present an issue because of this: the
air conditioner. Fix China on its latitudes and move it along
the longitudes and one can see that its size, shape, and southerness is not all that different
from the US’, and that reflects in its climate. Beijing’s temperatures closely track with
those of DC year-round, while Shanghai’s reflect those of Atlanta. That’s to say China, like the US, is hot. Much of the US developed in an era of air
conditioning—Florida, Texas, and Arizona had their biggest population influxes at a
time when inside and outside no longer correlated—and this is a direct contributor to the fact that
the US today has the highest electricity consumption per capita of any major economy. China’s marching down the same path. Two out of every five air conditioning units
made today are being sold to a Chinese person. Simply put, as personal income grows, air
conditioning use grows, and so on the hottest of hottest days, some 50% of electricity consumption
in China is now directly devoted to cooling down buildings. And this is only a single instance of a broader
phenomena: across the board, the exponential increase in electricity consumption as nations
grow wealthier is a well accepted and well documented phenomenon. Other prosperous regions have found a tenuous
equilibrium between wealth gains and efficiency gains—Europe and the US’s year-over-year
electricity consumptions have more or less plateaued—but China’s looks like this:
it’s just growing and growing and growing. And, most crucially, no country the size of
China has ever, in history, developed at the speed of China. Its people are marching up the wealth pyramid
at an unprecedented pace, and so too, of course, is its electricity consumption. This has led to difficulties. China’s no stranger to the occasional power
crunch—in a rapidly growing economy, these effectively represent growing pains. But the power crunch across China in September
and October of 2021 was different. As in other periods of unseasonably high temperatures,
power-strapped grid operators accounted for an uptick in air conditioning and fans by
cutting streetlights and other municipal power uses they could live without. Then they placed cuts on industrial users,
notifying manufactures and suppliers for the likes of Tesla and Apple that factory operations
would have to slow for the coming week or two. While the move put a damper on a Chinese economy
rallying for the first time since pandemic shutdowns, a temporary slow down wouldn’t
be a major issue in the grand scheme of things. Then it got worse. Scorching droughts persisted across central
China, winds unexpectedly died in the north, and across the entire country, coal reserves
dwindled to a day or two’s worth—suddenly the power crunch became rolling blackouts. For hours, Chinese cities went dark. In Liaoyang, cars stacked up when traffic
lights shut off and metal workers ended up in the hospital when factory exhaust systems
shut down. Shops ran by candlelight, cities advised residents
to stock up on clean water, building managers asked tenants to take the stairs, while at
least one family got stuck in an elevator when power suddenly cut out. The international media called it unprecedented,
and some Chinese citizens compared the outages to living in North Korea. To understand the true source of this crisis—beyond
the short-term, simple supply and demand imbalance—one must understand China’s electric grid, and
to understand its grid, one must understand this: coal is everything. The two other areas with similar GDPs, Europe
and the US, produce about 18% and 21% of their electricity with coal, respectively. In China, it’s 62%. In fact, about half of the entire world’s
coal power generation capacity is within the People’s Republic. In context, this isn’t surprising. Two or three decades ago, coal was far more
significant in Europe and the US’ energy mix, but in the years since, there’s been
a notable shift towards cleaner, more flexible natural gas fired power plants. China couldn’t do that—at least not easily. One of the country’s critical weaknesses
in today’s world is that it lacks significant domestic oil and gas production. It imports about half of the natural gas it
uses, which means it’s expensive, which means it doesn’t use the fossil fuel for
generating electricity—at least in any significant way. Meanwhile, China is swimming in coal. Enormous deposits sit in Inner Mongolia and
the Shanxi and Shaanxi provinces—the country has more natural coal deposits than anyone
but Russia, Australia, and the US. Many forms of renewable electricity generation
are now cost-competitive with coal and gas generation, but remember: China has been growing
unbelievably, unprecedentedly fast. While the overall cost per kilowatt-hour of
solar, for example, might be the same or lower than that of coal power, there’s the question
of when the money is spent. With solar, nearly all of the cost is upfront,
in the production and installation of panels. With coal, however, the cost is more distributed
through the lifetime of use: there’s a lower initial installation cost per unit of capacity,
but it raises through time, with use, as coal has to be purchased to keep the generation
ongoing. So, when a country is growing at such a pace,
it’s much easier to spend less upfront to add capacity, knowing that more money is coming,
rather than spend a larger amount upfront knowing the savings will come later—it’s
that simple reality that has undergirded the centrality of coal in China’s energy mix. Now, the companies actually producing power
in China are, almost universally, state-owned enterprises, but despite reporting up to the
central government, on a day-to-day basis, these businesses do act with a certain degree
of autonomy, responding to market conditions similar to how a privately-owned enterprise
would. But this is a unique market. Beijing regulates how much power producers
get paid for the electricity they make: typically it hovers around eight cents per kilowatt-hour—far
below the world average. The country considers this crucial because,
still today, it’s a largely industrial economy. Industry requires power, and just as China
is competitive with the rest of the world thanks to its low labor-costs, it’s also
competitive thanks to its low electricity costs. But low costs mean nothing if there's no electricity
to be consumed. Notably and crucially, Beijing does not regulate
the cost of coal: it fluctuates wildly up and down, just as it does in the rest of the
world. So, companies get paid a fixed amount for
what they make, but their input cost, the coal, changes. It doesn’t take an expert to spot the potential
issue with this. So why not renewables? Ignoring, for the moment, the difficulties
in upfront financing, if solar and wind are competitive in cost with coal-fired power
and aren’t vulnerable to the short-term up and down fluctuations in coal prices, wouldn’t
they be the clear winner? Wouldn’t a solar installation producing
for less than eight cents per kilowatt hour be a guaranteed profit machine? Yes… but: most Chinese people live where
favorable conditions for renewable energy simply aren’t. The country’s greatest solar energy potential
lies largely in the arid west and along the northern border. The same goes for wind—these regions in
the far west and borderland north are also where the nation’s most consistent wind
potentials lie. The difficulty is, more than 90% of China’s
population resides on the southeast side of this divide—far from the most productive
areas for renewables. Even when it comes to the nation’s most
heavily developed renewable—hydropower—many of the nation’s largest dams are located
in Southern and southwestern China—near moderately populated areas, but still far
from most densely populated provinces. Making the most of renewable resources—and
the already impressive amount of renewable infrastructure the central government has
built out—then, requires efficient means of transferring electricity over vast distances,
and a flexible, interconnected grid. Alongside the massive dams, solar installations,
and wind farms China’s taken on in the past decade, is an equally impressive assortment
of transmission lines increasingly connecting the sunny, windswept hinterlands to population
and industrial centers. This is an Ultra High Voltage power-line,
and of the 36 that exist globally, China’s home to 34 of them with plans to build more. While standard overhead transmission lines
run from 110 to 500 kilovolts, these run from 800 to 1,100, resulting in massive efficiency
gains and, in turn, allowing these long-distance lines to move up to five times the power of
a standard line.In China, they’ve been identified as the key to linking areas of high energy
consumption with areas of high renewable production. And yet, while these infrastructure investments
have built out wind and solar plants in remote areas as far east as the deserts of Xinjiang,
then connected them directly to industrial centers like the Anhui Province 2,000 miles
or 3,200 kilometers away, China has yet to make the most out of their green investments. At the end of 2020, a report surfaced that
China’s future-forward Ultra-High Voltage lines were only running at a paltry 60% of
capacity. For a country with a still climbing coal habit,
this dramatic under-utilization was disappointing but not necessarily an indictment of the physical
grid—rather an indictment on how China’s grid works on a policy and pricing level. China’s yet to properly incentivize their
renewables. They’ve addressed the supply side, but largely
ignored demand. Critical to the full implementation of China’s
solar and wind farms and the power lines connecting them to population centers, is the willingness
of Chinese provinces to buy energy from one another. Because energy rates are set by the government
rather than a market, provinces—which are largely in charge of their own grids—have
prioritized purchasing electricity within their borders—regardless of its origin—to
keep the money local. Why give another province the work that could
exist within? And because the provinces that need more power
are more densely populated or more industrialized, they’re probably Eastern or coastal and
likely buying power from nearby coal plants rather than out-of-province renewables. Available renewables then take a backseat,
they get used… mostly, as provinces buy this electricity as capacity insurance during
peak surges. While flexible, interconnected, and national
in theory, China’s grid’s still just more regional, rudimentary, and coal-oriented in
practice. Up until today, China’s grid has largely
done enough to facilitate the nation’s monumental rise, but as Chinese coal consumption, consumer
standards, average temperatures, and weather variability rise too, the challenge will be
keeping up. And in 2021, it didn’t. Given the continued centrality of coal in
China’s energy mix, the move they took in the middle of 2020 was bold: they banned Australian
coal. This move occurred in response to the western
nation’s calls for an investigation into the origins of COVID-19, but up until that
point, Australia supplied around half of China’s imported coal. Still, as the world’s largest coal producer
by orders of magnitude, the ban on Australian coal, even when entering winter, could be
managed—as long as it was the only challenge to manage. Next came 2021, and with it, the recovery:
as China’s strict quarantine and control measures virtually eliminated the COVID virus
from its territory, construction and heavy industry roared back. While the sectors signaled signs of life from
the previously dormant Chinese economy, they also put pressure on the grid, as the first
half of 2021 saw an 11% increase in coal demand from the year prior, and an 8% increase from
2019. But as business boomed, under the surface,
cracks were beginning to show. While China was burning more coal than in
years prior, it was hardly producing any. Here, in the Inner Mongolia Autonomous region,
China closed over thirty mines over land-use violations, halting production for months. Here, in Shanxi, coal mines closed for a month
for safety inspections after a worker died in an accident. And at the same time domestic supply hit snags,
so too did international. Indonesia—China’s newest number one coal
supplier—was hit by a heavy storm season that derailed its export goals. Heavy storms led to record flooding in Zhengzhou,
China, too, requiring emergency reroutes of coal into Henan province. But the rain didn’t last, and as 2021 progressed,
much of China entered an intense drought which severely hampered hydroelectric production. All the while, global coal prices skyrocketed
to over $200 per metric tonne—four times its average from a year prior. Chinese mines struggled to produce, while
Chinese power providers drained reserves to at least minimize their losses while producing
for a higher cost than they could sell, then claimed they were going offline for maintenance
to further mitigate their financial damage. Twenty separate provinces experienced some
of the most significant rolling black outs in decades. The global supply chain was thrown into further
turmoil as producers were forced to cut back or shut down production. While the crisis passed, the bedrock of the
nation’s economy had been exposed as a brittle embarrassment of a system. China’s stuck between a rock and a hard
place. The rock is the expectation, both domestic
and international, of continued, tremendous economic growth, and the hard place is the
unmitigated, escalating global climate crisis. China knows it needs to cut back. It knows this both because of the ironclad
science of climate change, and because of its own practical experience. Less than a decade ago, China, and specifically
Beijing, had some of the worst air quality in the world. And this wasn’t merely unpleasant: while
it’s tough to accurately measure, researchers have attributed one, two, or three thousand
excess deaths, not per year, but per day to air pollution in China. The issue escalated to such a degree that
international employers started awarding hazard pay to staff sent to the country to compensate
for the very real health effects of simply existing in China. The largest single factor behind this tremendous
air pollution was coal—both for power generation and household heating purposes. While in the decade since the country has
made tremendous, unprecedentedly fast progress in improving its air quality, it’s still
far above World Health Organization targets, and is still the source of myriad excess deaths
per year, but in this instance, China’s air quality crisis served a demonstration
to Beijing that its coal habit comes with a very real, very tangible cost. Simultaneously, the world recognizes it needs
to tackle the climate crisis to avoid the worst future of unlivable temperatures, destructive
sea level rise, and deadly superstorms. The world, and China itself, also recognize
that China is, by an enormous margin, the single-largest source of carbon emissions—responsible
for more than double the CO2 than the US, even if per-capita emissions are lower. And remember, its trend-line looks like this. All eyes are on China to play its part. So, as the world descended on Glasgow for
the 26th United Nations Climate Change Conference, China made a commitment: the nation would
reach peak carbon emissions by 2030, and carbon neutrality by 2060. This is aggressive. Japan said it will reach carbon neutrality
37 years after its carbon peak, the US is giving itself 43 years, and the EU a full
71. China is saying they’ll do it in thirty,
despite the fact that their peak will be far higher than any others’. But this is China—this is the country that
committed to 50 years of Hong Kong autonomy. This is the country that said a mere 300 died
in Tiananmen Square. This is the country that says all that’s
going on in Xinjiang is the lawful detention of Uyghur terrorists. Can any Chinese commitment be considered truthful? Well, when it comes to climate, it’s possible. At the 2009 iteration of the UN Conference
on Climate Change, China committed to reducing its carbon emissions per unit of GDP—a metric
known as carbon intensity—by 45% relative to 2005 levels by 2020. According to the United Nations itself, China
hit this three years early, in 2017. At COP21 in Paris, in 2015, the country committed
to go even further and reduce carbon intensity by 65% relative to 2005 levels by 2030, and
China still has every chance in the world to hit that. So that’s to say, based on the past promises,
maybe China actually will peak its emissions by 2030. But… back when originally setting its carbon intensity
targets, the primary criticism among experts was that China was supposedly already on the
path to hit 45% reduction by 2020—in fact, according to International Energy Agency data,
the pace of decline actually slowed in the five years after the 2009 commitment relative
to the five years before. Again, carbon intensity is a measure of emissions
per unit of GDP, not overall emissions, so a reduction in carbon intensity was to be
expected as the country’s economy started to shift from industrial to service-based. The new 2030 carbon peaking goal, however,
is different: China is not currently on that path, and with just seven years left on the
clock, it’s getting hard to believe that it can get on that path. China’s climate commitments came before
its power crisis, and 2021 and 2022 have demonstrated where the nation’s priorities lie. A majority of the world’s planned future
coal power plant construction is within China, and just last year, Beijing authorized another
370 million tonnes worth of coal production to go online, reversing their prior commitments
to reduce the fossil-fuel’s production. Analysts and observers have also noted a marked
tone-shift among Chinese officials, more often bringing up the need for energy security in
their transition towards renewables. And in December 2021, at China’s annual
Central Economic Work Conference, policymakers finally suggested what everyone else already
knew: that there could be a delay in hitting their emissions targets as they focus on their
economy. The economic story of China over the past
decade has been this: a slow slide out of the era of record-setting GDP growth, placing
pressure on the leaders whose power is undergirded by the continued march towards superpower
status. But it’s clearer than ever that China’s
GDP growth is tremendously linked to carbon output, and the carbon output has to stop—for
the health of its own citizens, for the pressure placed by the international community, and
for the pragmatic global realities of climate change. So what’s happening now is a tenuous dance—they
can take one step forward on decarbonizing, but that relies on taking one step back on
growth. They can take one step forward on growth,
but that requires taking one step back on diplomatic stature. China can manage and mitigate, but at the
end of the day, the past decade has borne out that renewables can’t come soon enough,
because soon enough, in China’s eyes, is the pace of growth enabled only by low-cost,
high-carbon energy. It’s economy versus climate, social order
versus public health, tomorrow versus the day after. Having met plenty of Wendover viewers, I know
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