China’s coal industry fights for survival in a greener world

Smog in China

The future of coal looks like an ice-cream truck parked half a kilometer down a mine shaft in China’s Shanxi province. The yellow-and-white vehicle is equipped with a 5G router from Huawei Technologies Co. to gather data for the mine’s control center, where technicians monitor high-definition feeds on a screen the size of a two-story house. They’re tracking temperature and methane concentrations while keeping watch over the black lumps zipping along conveyor belts on the way up to waiting trucks.

The data collection would previously have been done by workers down in the pit, but Yangquan Coal Industry Group has managed to eliminate some of those workers and virtualize the least appealing aspect of mine labor. “It will take time, but in the future, miners will wear suits and white shirts,” says Han Weihai, manager of Huawei’s mine projects in Shanxi. “People no longer want to work in a mine, especially young people with college degrees.”

When President Xi Jinping announced in September that China would be carbon-neutral by 2060, he gave coal a four-decade transition period. Or even longer, perhaps, if China’s vast and politically powerful coal industry can find a way to capture the planet-warming pollution generated by burning the fuel, or find other ways around the national policy.

The long transition buys China time to use up its vast coal resources and figure out how to gradually shut down an industry that still employs, directly and indirectly, tens of millions of people. Nowhere shows this high-tech trajectory for China’s coal sector better than the Xinyuan mine.

Next-generation mining jobs there pay as much as 100,000 yuan ($15,000) a year. That’s more than miners of previous generations could have dreamed of making, and for some workers that’s for sitting behind a desk in a college campus-like facility with a basketball court, pingpong tables, and a library. The company organizes outdoor movie nights in the summer and running races in the spring and autumn.

The operation produces about 2.4 million tons of coal a year, less than a tenth of a percent of China’s current demand. That much coal could generate as much as 5 million metric tons of carbon dioxide when it’s burned, even as Xinyuan employs emissions-reducing techniques such as using methane instead of coal in its boilers.

Coal’s long exit is part of a two-speed approach proposed by climate scientists at Tsinghua University. Citing the inertia of energy and economic systems, they proposed allowing coal power plants to continue being built until around 2030, when China will be richer and replacement technologies will have advanced. Then the plan calls for the ongoing transition to solar and nuclear to accelerate sharply.

Easing off coal slowly would reduce abrupt shocks that risk bringing unrest, the Communist Party’s biggest nightmare, by dulling the inevitable pain to China’s army of coal workers. “The industry will cut jobs, but it should be slow and gradual,” says Wang Haigang, Xinyuan’s deputy general manager. His mine had 3,000 workers in 2012, and by 2025 plans to have fewer than 1,000. “It may take a long time, but we’re aiming for a future in which no workers need to work underground.”

Keeping coal alive while reducing the number of miners may also solve a further headache for China, where climate policies governing 1.4 billion people are planned in Beijing but have to be implemented by dozens of local governments. The central government has long struggled with the question of how to get local officials to embrace plans for restructuring industries that many of those officials rely on for income.

New mining technology will allow provincial governments to keep earning money that could be used to develop post-coal industries. That’s happening in Jinzhong, the city above the Xinyuan mine, which in 2018 invested 11.5 billion yuan ($1.8 billion) in a medical research centre, an industrial park for logistics companies, and other major projects.

Chinese state-owned utilities are betting on coal’s longevity by building new coal-fired power plants, with their fleets set to expand about 10 per cent by 2025. Just last year, China opened the $30 billion Haoji Railway line, a 2,000-kilometre conduit to haul 200 million tons of coal a year directly from central mining basins to energy-hungry regions in the southeast.

But the coal industry and local governments that support it may be too optimistic about the remaining timeline. China needs to stop building coal power plants immediately if it wants to meet the 2060 pledge, according to the Draworld Environment Research Center and the Centre for Research on Energy and Clean Air. That goal would require whittling China’s coal fleet down to 680 gigawatts by 2030, a reversal of the 1,300-gigawatt expansion currently planned.

Before long an uncomfortable truth could push to the forefront: China’s national target of reaching net-zero emissions might not be compatible with another generation of coal.

The climate researchers and the coal industry envision two parallel universes. In one, the use of fossil fuels is drastically reduced and China pivots quickly to renewable energy. In the other, coal is phased out slowly as new technologies are used to reduce their environmental impact.

China’s coal bosses know their regions may struggle to recover if the first scenario comes to pass.In the northeastern city of Fuxin, locals have been extracting coal since the 1700s. When the Communist Party took over in 1949, leader Mao Zedong made Fuxin central to his efforts to modernize the nation. Working the mines was an economic necessity but also a source of patriotic pride.

Coal owned the city. At its peak, more than 500,000 of the city’s 700,000 residents either worked for the mining bureau or were family members. The bureau ran hospitals, schools, and sports facilities. Everything revolved around the Haizhou mine, the largest open-pit coal resource in Asia. 

By 2005, easy-to-reach fuel was tapped out and the mine declared bankruptcy. Thousands of workers were dismissed with little money. For three days, they protested in the streets, lining the road that led to the city’s administration, says Zhu Yu, who had been working at the mine for eight years at the time.

He eventually received severance equal to about three month’s wages. After the mine went through a restructuring he managed to get a job there, with a severe pay cut. Older workers and those who couldn’t pass a health check weren’t so lucky.

“They had no other skills, no education, and no preparation. If the mine that they worked for all their life won’t hire them, how could they expect other companies to?’’ he says, gazing at the defunct mine, which has been turned into a museum. “We sacrificed our health and our youth for a job that’s supposed to last our whole lives, but suddenly we’re told the promise is no longer valid?”

Fuxin is still struggling to adapt. From the rim of the Haizhou pit, you can see wind turbines on a distant hill, sounding both a note of hope for the future and a death knell for the resource that built the city. Manufacturing and technological advances, driven largely by Chinese factories, have lowered the cost of wind and solar power to a point where they’re competitive or even cheaper than coal without subsidies.

But assembling solar panels and wind turbine parts isn’t generating as many jobs as mining did.

From Shanxi, where the high-tech mine is located, to such other heavyweight coal regions as Inner Mongolia, Shaanxi, and Xinjiang, local officials are trying to figure out how to avoid Fuxin’s fate for as long as possible. In China, it isn’t corporate dynasties like Koch Industries that are lobbying for fossil fuels, it’s provincial party leaders and heads of state-owned enterprises. These local figures rely on the industry to generate jobs and economic growth, and to maintain their power and personal wealth.

They are people such as Chen Jinxing, the former chairman of China Datang Group, one of the country’s biggest coal power generators. He started out as a worker at a coal plant in Shandong province and spent 40 years rising through the ranks at various state-owned power companies before becoming a top government adviser. In May, he told China Electric Power News, a trade publication, that coal should play a “foundational role” in stabilizing China’s power supply to help “make sure China is self-sufficient and will never be controlled by others.”

That’s an argument the industry has used for years to lobby for more government support, and one that’s gained credence as China becomes increasingly isolated on the global stage. At the party’s annual legislative meeting in May, delegates from China’s coal industry submitted proposals that centered on the fuel’s role in providing “energy security,” a term gaining popularity amid growing nationalism.  

There’s good reason for the coal industry to think it can find a way to coexist with the 2060 pledge. It’s done it before. When Xi began pursuing more progressive climate policies five years ago, companies began upgrading their plants to trap more of the small particulates that generate smog, and to produce more electricity from every ton of coal they burn. Chinese power companies now brag that their best coal power plants are on the same environmental level as some gas-fired units.

They are also banking on technology breakthroughs in areas such as carbon capture and sequestration, which traps and stores the greenhouse gases emitted when coal is burned, to help achieve carbon neutrality. China is running demonstration projects using the expensive technology, and top researchers say they want scale up to offer an alternative to clean-energy storage as a reliable around-the-clock power source.

Climate experts are wary of both those approaches, which seek to mitigate carbon emissions instead of actually eliminating them. But it might be the best China can do in the foreseeable future. At least that’s what Wang, the mine supervisor at Xinyuan, is hoping. Coal “cannot be replaced in a short period of time,” he says, “even if it will one day disappear from our society.”

© 2020 Bloomberg L.P.

Dear user, please be aware that we use cookies to help users navigate our website content and to help us understand how we can improve the user experience. If you have ideas for how we can improve our services, we’d love to hear from you. Click here to email us. By continuing to browse you agree to our use of cookies. Please see our Privacy & Cookie Usage Policy to learn more.