The World's Biggest Pollution Factory | Author: Peter Navarro

The coal that has powered China's economic growth . . . is also choking its people. 

-- Elizabeth C. Economy 

At the root of many of China's air-quality problems is its heavy dependence on relatively high-sulfur, low-quality coal for everything from electricity generation and industrial production to cooking and space heating in the home. China relies on coal for almost 75% of its energy needs. In fact, each year, China consumes more coal than Japan, the United Kingdom, and the United States combined. 

The scale and scope of China's coal power plant construction program is almost beyond one's imagination. Consider that every single week, China adds one new large coal power plant to its energy base. Every single year, China builds enough new coal plants to light up the entire British Isles. In any given year, the amount of coal-fired capacity that China is building amounts to more than double that of the entire electricity-generating capacity of the state of California-more than 100 gigawatts. That China's coal appetites are voracious is aptly captured in this passage from the Wall Street Journal: 

"On a recent hazy morning in eastern China, the Wuhu Shaoda power company revved up its production of electricity, burning a ton and a half of coal per minute to satisfy more than half the demand of Wuhu, an industrial city of two million people. "

It's not just the quantity of coal used by China that matters. The large amount of coal in China's "energy mix" is quite different from virtually all the other major economies of the world, which depend much more on oil. China's heavy coal dependence, coupled with a woeful lack of pollution-control technologies, make China's air-quality problem a very different one from that of developed countries, such as the United States and Germany, in at least three ways: 

First, unlike in the United States, Germany, or Japan where sophisticated pollution-control technologies are deployed, much of what Chinese power plants and factories spew in the air is not just sulfur dioxide but also a high percentage of fine particulate matter. This is a critical observation because particulate matter is the most damaging form of airborne pollutants. 

Second, small cities in China are no better off than large cities in terms of ambient air quality. This is because small cities are as likely as large cities to depend on coal in both their residential and commercial sectors. That means that China's pollution woes are spread over the entire country in cities small and large rather than concentrated in a few large industrial hubs. 

Third, unlike the developed world where the automobile is the single largest source of air pollution, China's current problem is primarily a "stationary source" one. These stationary sources range from large coal-fired power plants in huge factory towns to small coal-fired stoves and heaters in peasant homes. 

The nightmare here is that even if China is able to get better pollution controls on its power plants, and even if it is able to convert some of its population to natural gas cooking, China's air basins are still likely to be overwhelmed in the next several decades by an explosion in the number of new vehicles on Chinese roads. Just consider this astonishing statistic reported by Elizabeth C. Economy: China is now adding 15,000 new cars a day to its roads, and it expects to have more cars than the United States -- as many as 130 million -- as early as 2040. In addition, Elizabeth C. Economy also reports the following:

First, China is expected to construct fully half of all the buildings in the world over the next 25 years. Beyond sheer quantity, the nightmare here is that these buildings will be electricity sinkholes because Chinese buildings are notoriously energy inefficient. This will only further exacerbate China's coal dependence and collaterally gargantuan pollution emissions. 

Second, China plans to move almost a half a billion peasants off the farm into factories and cities over the next several decades. As a rule, urbanites introduced to the magic of refrigerators, TVs, and toasters use more than three times the amount of energy as their rural counterparts. 

On top of all this, Chinese manufacturers are extremely energy inefficient. To produce an equivalent amount of goods, they use six times more resources than the United States, seven times more resources than Japan, and, most embarrassingly, three times more resources than India, to which China is most frequently compared. If ever there were a blueprint for a global pollution factory, China would be the model. 

The above is an excerpt from the book The Coming China Wars
by Peter Navarro
Published by FT Press;  May 2008;$15.99US/$17.99CAN; 978-0-13-235982-5
Copyright © 2008 Peter Navarro

About the Author

Peter Navarro a business professor at the University of California-Irvine, is the author of the best- selling investment book If It's Raining in Brazil, Buy Starbucks and the path-breaking management book, The Well-Timed Strategy. Professor Navarro is a widely sought after and gifted public speaker and a regular CNBC contributor. Prior to joining CNBC, he appeared frequently on Bloomberg TV, CNN, and NPR, as well as on all three major network news shows. He has testified before Congress and the U.S.-China Commission and his work has appeared in publications ranging from Business Week, the L.A. Times, and New York Times to the Wall Street Journal, Washington Post, and Harvard Business Review. His book, The Coming China Wars, is available from FT Press.

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