Guest Author: Edward Steinfield, Richard Lester and Edward Cunningham, Industrial Performance Center, MIT

To a significant degree, our planet’s energy and environmental future is now being written in China.  Consequential energy decisions are currently being made throughout this rapidly transforming nation.  In no domain, however, are these decisions more crucial and the linkages to the global environment more direct than in electric power.

Despite much current attention to alternative energy technologies such as wind and solar power, fuel cells, biomass, and nuclear power, the likelihood is that coal will remain the world’s largest source of electricity for decades to come. Thus the most important questions for the earth’s environmental future, at least over the coming decades, concern how coal will be utilized.  Will it be used cleanly or destructively?  Will it be used efficiently or inefficiently?  And will its pollutant byproducts be dealt with effectively or effectively ignored?  These questions matter wherever coal is being used, but they matter most where coal is being used most extensively; China.  And within China, coal is being used most extensively in the power sector.

The MIT China Energy Group’s first-of-its-kind, independent nationwide survey of Chinese coal-fired power plants provides a critical insight into how what’s going on in the China power sector will impact upon the world (Link).  It is well understood that developments in China’s energy sector now have global environmental implications.  It is also well understood that this sector has in recent years experienced rapidly rising fuel costs.  The MIT survey, by delving into technology choice, pricing, fuel sourcing, and environmental clean-up at the firm level, provides insights into how the Chinese power sector as a whole responds, and what the environmental implications are.

An important conclusion on the environmental front is that while Chinese coal-fired power plants are performing poorly today, they are investing in the sorts of physical infrastructure necessary for better performance in the future.  There is rapid uptake of advanced combustion technologies across the system, largely in response to rising fuel costs.  Similarly, environmental clean-up systems, particularly for sulfur dioxide, have also spread rapidly, in large part due to regulatory enforcement.  Yet, operationally, plants pollute substantially.  Coal price hikes encourage them to source low-grade fuel and idle cleanup systems.

In brief, China’s infrastructure has a proven capacity for rapid technological upgrading in the face of new market and regulatory pressures. The evidence is that governmental regulatory efforts are showing signs of real efficacy, at least with respect to the enforcement of technological standards.  Operationally, however, in part due to exposure to market forces, and in part due to limited state capacity for monitoring operations, even the most advanced power plants provided data that revealed such plants continue to be major polluters. The real question is whether social pressure and political determination – governance, in effect – can tilt the balance, transforming the potential for better environmental performance into reality.

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Steinfield, Lester and Cunningham are coauthors of Greener Plants, Grayer Skies? A report from the front lines of China’s energy sector MIT IPC Working Paper 08-003. The paper has recently been published in China Economic Quarterly. The authors have a second, related paper under review at Energy Policy.

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This entry was posted on Sunday, October 19th, 2008 at 9:00 pm and is filed under Environment and Climate Change. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.