Professional Documents
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Coa l Wa r s
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Sh a ngh a i
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because they had few other options for making a living. Profits were as scarce
as safety: coal industry losses before the reforms of the 1990s stretched into the
hundreds of millions of dollars per year. The five-year plan for 199195 called for
the elimination of 400,000 coal mining jobs, nearly 6 percent of the 7 million
workers in the industry.17 Prime Minister Zhu Rongji, known as One-Chop
Zhu for his ruthless management style, was shown on state TV in 1992 angrily
lecturing coal managers at a large mine in Shanxi Province for their waste and
profligate hiring practices.18 Slowly, the industry was forced to modernize.
At the same time, the State Power Corporationthe state-controlled monopoly that generated and transmitted electricity in China up through the
reforms of the mid-1990slaunched an astonishing binge of power plant construction that continued through the first decade of the twentieth century.
After the revolution, in which the communists took control of the shattered country after World War II and the civil war that followed, the power
sector in China was small, fragmented, and outdated. Total national capacity
was only 1.85 gigawattsa small fraction of the capacity of, for example, the
state of California at the time.19 Over the next seven decades the country embarked on the greatest and fastest expansion of power generation the world has
ever seen. Energy use per capita was far below the world average, to say nothing
of developed countries like the United States; but it began to climb steadily
in the 1980s, finally matching the world average around 2008.20 All of Asia
Pacific accounted for only about 15 percent of total world energy consumption
in 1971; by 2010 that figure had ballooned to 38 percent, driven mostly by
growth in China.21 Total electricity use in China in 1980 was 250 terawatthours, only slightly more than the state of California. By 2010 that number
had ballooned to nearly 4,000 terawatt-hoursalmost as much as the entire
United States consumed.22
Most of that new power came from coal. During the eighth five-year plan,
which ran from 1991 to 1995, total coal production in China grew by 40
million tons a year. Between 1997 and 2005, China added 206 gigawatts of
power generation capacity, or 500 megawattsthe equivalent of a mediumsized coal-fired power plantevery week.23 These are official figures; the actual
total is probably more, as illicit mines proliferated and many companies set up
their own private coal boilers, off the national grid, to run factories and steel
mills and cement plants.
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By the turn of the twenty-first century, the central government had begun
to realize that the countrys dependence on coal was a devils bargain. With annual production growing at nearly 10 percent a year, officials in Beijing began
a program of closing small mines that managed to reduce production from just
under 1.4 billion tons in 1996 to less than 1 billion in 2000. That proved to
be a pause: the worldwide construction boom of the 2000s fueled a seemingly
limitless expansion of coal. Coal production doubled from 2001 to 2004, reaching 2 billion tons; by 2009 it was 3 billion, still not enough.24 Imports climbed
as well, and in 2007 China, for the first time, became a net importer of coal.25
That same year, China surpassed the United States to become the worlds
largest emitter of carbon dioxide.
China is still growing at 7 to 8 percent a year, a rate that all of the Western
industrial nations envy. But the model is faltering, and there are increasing
signals that a powerful and unpredictable transition is gathering force.
We have hit the limit of this type of growth, Zou Ji, deputy director of
Chinas National Centre for Climate Change Strategy, told the online news
outlet China Dialogue in 2013.26
In June 2014, the energy information provider Platts reported that Shenhua Group, the state-owned coal giant, was pleading with utilities and coal
traders to reduce oversupplies at Shenhua loading facilities.27 For the worlds
largest coal producer, this was an extraordinary development. Created in 1995
by the State Council of the Peoples Republic, Shenhua had grown into a vertically integrated behemoth with interests in not only coal mines, but also
railways, power plants, ports, shipping, and coal liquefaction. Its revenue had
grown in tandem with Chinas booming economy, reaching more than $46
billion in 2013, nearly twice as much as those of Exelon, the largest U.S. utility
in terms of revenue.28 Enjoying deep connections with the Communist Party
leadership and the Peoples Liberation Army, it epitomized the for-profit state
enterprises that dominated Chinese economic life. Even as the coal boom began to slow, Shenhuas low-cost mines and its sheer scale buffered it from market forces that battered other coal companies: its coal sales grew by more than
10 percent in 2013. In 2012, with its fleet of coal-fired plants growing across
the country and its thirst for coal growing faster than its domestic production
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