It was announced yesterday that the Environmental Protection Agency was considering rules that would ban new coal plants unless they implemented costly carbon controls. That move is likely to be controversial, and those involved in the coal industry will fight hard to prevent the law from passing.
However, China doesn’t have the same sorts of problems with lobbying and due process that exist in the United States. Today the country announced that it was banning the construction of new coal-fired power plants outright in three of its key industrial regions. The move is designed to reduce the level of air pollution in the country’s capital city, Beijing.
Dan Loeb's Third Point returned 11% in its flagship Offshore Fund and 13.2% in its Ultra Fund for the first quarter. For April, the Offshore Fund was up 1.7%, while the Ultra Fund gained 2.3%. The S&P 500 was up 6.2% for the first quarter, while the MSCI World Index gained 5%. Q1 2021 hedge Read More
Air pollution and smog in Beijing is a notorious problem—at least as represented by Western Media. Stories about air quality and pollution dogged the 2008 Olympic games in China as much as security threats followed the 2012 games across the news. China took care of the problem back then, and it’s taking care of the problem in the long term now.
The moratorium on new coal plants is part of a scheme that will see coal’s share of energy production drop below 65 percent by 2017. According to the Associated Press, who originally reported on this story, coal accounted for 68.4 percent of energy produced in 2011. The use of proportion rather than absolute numbers may hide the truth of China’s coal use, however.
According to Martin Adams, an analyst quoted by the Associated Press, the absolute amount of coal burned for energy in China will increase on the back of this plan, and the government had already been reducing the number of permits awarded before the ban on new coal plants was announced.
Coal problems in China
Since the dawn of the Millennium, it’s been clear that Earth needed some new ways to generate electricity. Those new ways have not arrived yet, but governments around the world have made efforts to clean up the electricity generation they already have on the books.
China is following suit, and its Communist bureaucracy may be a good deal more efficient than it has been given credit for in the past. China is a surprise addition to the countries looking to reduce emissions, but the country’s burgeoning middle class is demanding cleaner air. China’s state institutions are going to give it to them.