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China could cap coal consumption

14 March 2012

China is expected to announce in the first half of this year a national cap on coal consumption. If the reports are accurate, the cap will begin in 2015 at 4.1 gigatonnes (Gt), with budgets for each individual province. This would be the world’s first direct cap on a fossil fuel.

Policies China is already implementing include a 17% cut in emissions per GDP by 2015, an 11% target for non-fossil-fuel energy by 2015, an increase in forest area, feed-in tariffs for small-scale and large-scale solar energy, and trials of emissions trading schemes.

Of course, China, like everyone else, should be doing more. Even if China goes ahead with the cap, its coal consumption in 2015 will still be 18% higher than the 2011 figure of 3.5 Gt (however, under the current growth rate of 7.5%/year it would grow twice as much, to 4.7 Gt).

All of China’s actions should shame governments of the developed world into acting consistently with our greater wealth, per-capita emissions, and historical responsibility for the emissions that have already accumulated in the atmosphere. Rich countries like Australia should move towards phasing out coal and other fossil fuels as rapidly as possible, and provide financial and technological support for emerging and developing nations to follow in our footsteps.

A Chinese consumption cap would lower the global demand for coal. This should make Australia reconsider its plans to exponentially expand our coal exports.

Whatever China decides this year, the urgency of rapid emissions cuts required to meet even the target agreed by the world’s governments means the market contains a bubble of high-carbon investment, and it is inevitable this bubble will burst sooner or later. As the Executive Director of India’s largest energy company, Tata, said last week: “Why would anyone want to invest at this stage in a coal project?”

Why indeed?

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