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Forget the Paris Agreement – it’s China’s ‘Peak Coal’ that truly matters

World leaders descended on Hangzhou over the weekend for the annual G20 summit. Commentators have generally been of the view that, this time around, the summit lacks a clear and precise agenda. Chinese and American officials managed to ignite interstate tensions during a tarmac tiff, distracting much of the press from the broader story of their historic cooperation in the process.

The real import of the summit, thus far, has been the ratification by both the United States and China of the Paris Agreement, the details of which were outlined in December last year. While the agreement doesn’t legally come into effect until nations representing 55% of global emissions sign on, its provisions would require the US to reduce emissions by 28% by 2030, and China, most crucially, to have emissions peak by 2030. It’s the first real comprehensive international commitment to seriously tackle climate change. After purportedly spiking the 2009 Copenhagen deal (provoking colourful excoriation from Kevin Rudd), the Chinese in particular have come a long way on this issue.

Yet here caution serves us well. We are sometimes prone to being caught up in the epiphenomenal or surface level; we allow ourselves to be dazzled by the political moments punctuated by handshakes between leaders, rather than structural trends and processes that unfold across longer timescales. The Paris Agreement is the deal we’ve anticipated for many, many years now. And yet, its significance will likely be overshadowed by another development: the peaking of China’s coal consumption. If we are to be spared from the catastrophic effects of more than 2°C warming from pre-industrial levels, it will likely be China’s post-coal status, rather than binding international targets, that will deliver such a reprieve.

The miraculous and continuous growth of China over the past 35 years is truly the most remarkable economic transformation in human history. Such ferocious growth has depended on the ferocious devouring of cheap coal. China became the world’s largest consumer of coal in 1983. In fact, since the 1980s the developed world’s coal intake has largely flat lined, while China has been responsible for 91% of the global growth in coal consumption from 1985-2012. It now appears that the link, once thought unbreakable, between economic growth and coal consumption has been compromised.

In July this year an article in Nature Geoscience pressed the case that China’s coal consumption had in fact peaked in 2014, emphatically declaring, ‘China has entered a phase of post-coal growth’. China had recorded dips in its coal consumption and production in 2013 (though the article argues that revised data only shows a flat lining this year), 2014, and 2015—the first ever drops in Chinese and global coal usage this century. For most though, these were regarded as anomalous or at least unlikely to reflect a sustained trend. The previously agreed upon window in which we were likely to witness ‘peak coal’ was somewhere between 2020-2040. This is what makes the claim of a peaking in 2014 so momentous; it would be in such defiance of widely held assumptions about the durability of coal growth in China.

Moreover, it would make the 2030 emissions peak target move from plausible to insufficient, as Lord Nicholas Stern, one of the paper’s authors, notes. Given this revelation, 2025 might be more realistic. Director of the Potsdam Institute for Climate Research Hans Joachim Schellnhuber is prepared to go further, contending that 2020 is within reach as a peak year for total emissions.

In arguing that the decline starting in 2014 is indicative of a broader shift in trajectory and not a mere blip, the authors point to structural shifts in the Chinese economy as well as proactive policies restricting pollutants. Firstly, Chinese GDP growth appears to be finally moderating, still elevated by global standards, but below the stratospheric levels of the 2000s. Part of this process has been a shift away from construction, manufacturing and heavy industry, and toward less energy-intensive industries, such as services. Increased labour costs domestically have resulted in a loss of comparative advantage and, as a result, manufacturing has gravitated elsewhere, especially Southeast Asia. There have also been massive gains in energy efficiency. Remarkably, in the sixth ‘five-year plan’ of 1981-85, China had to burn 1.7kg of coal to yield a dollar of GDP value. Fast-forward to today and that same dollar can be produced from 0.56kg of coal.

Concomitant with these structural alterations have been a series of conscious policies aimed at reducing pollutant levels and promoting renewable energy sources. Many of China’s urban centres are chronically afflicted by air pollution, and since coal combustion is a source of many of these pollutants, restrictions on these indirectly lower coal consumption. Then there is a dizzying amount of state money being poured into renewables—particularly solar and wind.

China’s relationship with coal may be more important than the Paris Agreement because China is simply uniquely important in the fight against climate change. The Paris Agreement doesn’t even offer targets that would allow us to avoid the 2°C warming. As mentioned earlier, China’s post-coal growth would allow it more ambitious targets than those outlined at Paris.

Furthermore, such is the rapacity with which the Chinese economy has devoured the fossil fuel that peak coal for China essentially means peak coal for the globe. For example, although India’s coal consumption is projected to continue growing well into the 2020s, it will not compensate for China’s falling demand, and the International Energy Agency is careful to emphasise it is unlikely to repeat China’s voracious coal-fed growth of the 2000s. This is essential given that, by Schellnhuber’s prediction, global coal use would virtually have to cease by 2035 for us to escape the 2°C threshold.

The authors conclude that ‘…a peak in China’s coal consumption is not only a necessary condition for a global peak, but may well be an important milestone in the Anthropocene, and a turning point in international efforts to mitigate the emissions of climate-altering greenhouse gases’.

It will, of course, require further data and observation to be definitive in this proclamation, and this trend could yet be reversed. If China has indeed entered a period of post-coal growth, however, it is a development the significance of which is difficult to overstate.

Jack Shield is the Climate Change and Energy Security Fellow for Young Australians in International Affairs.

Image credit: Axel Drainville (Flickr: Creative Commons)

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