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China’s Energy:

An Interview with Dave Feickert

Compiled by David Shvartsman
December 17, 2005

David Feickert is a mine safety expert and consultant in industrial relations, ergonomics and energy. He was a panelist in the Congressional - Executive Commission on China roundtable discussion regarding Chinese mine safety and has been quoted in articles for his views on the matter.

Mr. Feickert believes that China’s aggressive push for coal may have greater consequences in the environmental and energy arenas worldwide. The link between Chinese coal mining activity and the resulting effects on world energy demand is being overlooked in recent stories on mining disasters. The media naturally focuses on the tragedies and how they affect the miners, their families and the manner in which Chinese officials are responding. Mr. Feickert feels there is another element to the story, one that reveals the possibility of increased Chinese demand for oil and gas. We’ll start with some background on the overall energy picture for China.

· China is the world’s second biggest energy consumer after the US. It will become first after 2025.

· China produces 36% of the world’s coal but has 80% of the world’s fatal accidents in coal mining.

· China is dependent on coal for 69% of its primary energy demand.

Give us an overview of China’s energy use and some details about the country’s energy supply picture going forward. Will coal constitute the bulk of China’s supply or will Nuclear and renewables come to play a greater role?

Some factual background: Coal demand is expected to rise still further in China, having risen by 57% between 1994 to 2004 [1]. The 11th five-year plan from 2006-2010 will take coal production from 2.1 bn tonnes to 2.4 bn tonnes [2].This represents 36% (BP) of world coal output in energy equivalent terms. Coal makes up 69% of China’s primary energy consumption. This is the way it will stay for some time, as China has plentiful reserves of good quality coal, while its less adequate reserves of oil have meant rising reliance on imports and its natural gas reserves are less developed, supply only 2.6% of its energy production. There is room for expansion here but it will not be quick, unless the Chinese can persuade Russia to send more of its natural gas south rather than east to Japan.

As for nuclear, even with the involvement of Westinghouse of the US and Areva of France (which will quadruple the number of nuclear power stations in 15 years) nuclear’s contribution to energy demand will be only 4% in 2020. Moreover, each station will cost $2 bn (Le Figaro Economie, 28 fevrier 2005). To go further, the problems of safe operation and waste disposal would magnify greatly. But the Australians are quite happy to supply the uranium while the US worries about reprocessing for weapons.

Renewable energy in the form of hydro power makes up nearly 8% of energy production, but, as the Three Gorges project showed it is a huge economic and social project to expand further. It is fraught with social and environmental consequences. The same is true of other forms of renewable energy. Given rapidly increasing energy demand and a lack of the kind of planning consultation regime developed countries worked out over decades, these developments lead to land confiscations and quite often revolts (as in Dongzhou in early December – economist.com 12/12/05 – Trouble in Chinatown) and sometimes deaths. As in other coal producing regions new power stations are more acceptable for obvious reasons. While there is scope for new renewables they are unlikely to expand fast enough even to meet growth in energy demand.

You point out that hydro dam projects bring environmental and social impacts and that you find this to be true of other forms of renewable energy. Can you briefly elaborate this point?

It's more difficult with renewable energy as new land is required, whether for new dams or wind turbines and this can lead to land and property confiscations, giving rise to questions of proper compensation and actual payment, whereas coal mining communities are more accepting of new coal power plant. These are often located next to existing, older plant anyway. This is no different in any other country, except that it can be even more difficult where planning inquiries are the norm.

What else can be done to help the supply/demand picture?

The ‘virtuous fuel’ remains to be tried: improved energy efficiency and conservation. The 11th five year plan sets a target of a 20% improvement in energy efficiency/conservation. This is extremely ambitious and few developed countries have achieved it without external shock therapy such as an oil crisis. Japan is the most virtuous, along with some small EU member states and Germany. All are technology rich.

So for now, you see mainly a continuation of heavy coal use? You’ve made the point that any shortfalls in coal supply could result in China increasing their purchases of oil and gas from various sources around the globe. Please discuss this point.

China will have to rely on coal, or it will have to buy much more oil and gas off the world market. The effect on the global price is already apparent, with China making up around half of increased global oil demand, something few expected. Unpredicted, except by a few energy analysts was also the lack of supply, with has been critically restricted by the complacency that sets in during periods of low prices, the poor judgements made by the US and the UK in Iraq, the restrictions on foreign investment in the Middle East and the fact that the oil and gas reserve base has been steadily moving eastwards anyway, as Western (mainly US, UK) oil depletes and Mexican fields matures. Hurricanes do not help either; nor do refinery explosions, as at BP’s major US facility recently.

On its current economic growth trajectory, China is expected to overtake the US as the biggest world energy consumer sometime after 2025 and also the biggest emitter of carbon dioxide (CO2), the main Greenhouse gas. Accordingly, it has been hunting for diversified energy supplies around the world, with its well-trained diplomats engaging in discussions globally. This, of course, has been different from the US, Japan or Europe, where economic power, vested in large energy companies has helped out. However, as has been seen in the case of Shell, their energy reserve bases are dwindling or they are over-stated.

If China is to continue their push for coal extraction, safety and mining methods must be improved. How do they go about making a more rapid advance towards safety and efficiency? Will the technology improvements of developed countries be adapted to the Chinese mining industries through knowledge exchange and joint ventures between Western and Chinese companies?

The second question involves the leap-frogging or bypassing by China of the arduous route to development in its coal consuming and producing industries. If we do not help, the incipient oil price shock could become very real, even provoking a world recession. The planet’s atmosphere will have to cope with a much larger dose of CO2 unless an economic recession of sufficient scale drastically reduced world energy demand or the sky high oil price led to huge energy substitution, with high hydrocarbon prices making renewables and nuclear more economic. This is very tricky stuff, which deregulated and liberalised electricity companies cannot easily plan for.

On coal consumption China is adding to its electricity generating capacity every two years an amount equivalent to the total UK generating capacity. Most of this is coal but fortunately much is using the cleanest coal technology commercially available – the supercritical boiler, which can improve energy efficiency and reduce emissions by 20% or more. Even better clean coal plant is being proven and will be available in the near future (see IEA Coal Research - International Energy Agency). Both the EU (see EU-China Summit 2005 www.europa.eu.int) and the US (Dept of Energy) have major technology transfer projects in this area, including the technology for carbon capture and storage (also known as carbon sequestration – scrubbing CO2 during combustion or or out of coal in pre-generation and pumping the gas into disused oil/gas wells). These programmes need to be stepped up.

On coal production itself, this is more difficult, as the Chinese industry is so vast, so differentiated between small village private mines, township mines and large mechanised mines in the state sector. Different solutions are needed for each of these, with closure of the worst culprits regarding accidents being attempted now in the small mine sector. And yet the market is fuelling illegality, as demand pushes prices higher in a partially deregulated market. The longer term strategy must involve two things, crucially: the rebasing of the coal industry on large, efficient mines working good seams, probably going deeper. This could be done by the kind of reorganisation into large coal combines, envisaged in the 11th five year plan. It would require a large injection of capital. This could come from the West as well as China via joint ventures, or more likely on a basis similar to Western firms taking shares in large Chinese oil companies and banks. China would almost certainly not privatise its coal companies, any more than the US would allow China to buy its oil companies.

From a safety point of view, what is needed is the transfer of best practice and expertise as well as technology. China’s most advanced mines are not much less mechanised than Western ones, and its mining engineers no less skilled. However, the management of safety needs to be improved. Mining engineers, in particular, need to learn, as they had to in the West that technical improvements help but are insufficient by themselves. Without proper training and use they can be ineffective at best or harmful at worst, as mechanised mining was at first in the West. Incidence of ‘black lung’ climbed before dust suppression technology was developed.

The developed countries took decades – a century in the case of the European countries – to learn first, why socially, they should do and secondly, how to do it. The dreadful accident rate in Chinese coal mines is now in full public view both in China and throughout the world in a way that it never was in early industrial Britain, Germany, France or the US. Emile Zola and ‘Germinal’, apart.

So there is hope that some advancement is being made towards this effort. Can you give us some examples of the efforts being applied towards this goal and give us a view as to why we should be watching these developments?

The Chinese authorities have embarked on this colossal project with an increasing amount of international help from the US (US$2.5m Dept of Labour), Australia ( A$4m Federal Govt), Japan (in the form of technical assistance in mining technology) and, hopefully in the near future, the EU. The ILO is also, crucially, involved. I believe the authorities are genuinely beginning to grapple with the very difficult issues involved. As was the case in the UK, the various interests – Government (politicians, energy economists, mines inspectors), owners, mining engineer/managers and unions are being forced to find new ways of working together. What will help here more than anything else is the development of a concept of safety organization, one which includes joined-up thinking and co-operation between these groups. Miners’ safety representatives, 100,000 of whom are to be appointed in next months, need to be given clear powers and properly trained. It is in the miners’ most direct interest to help solve these problems and it is clearly in the interests of the country to do so, too, not to mention every Western auto driver.

Thank you, Mr. Feickert for your insights and your time.

[1] http://www.bp.com/genericsection.do?categoryId=92&contentId=7005893

[2] http://www.energybulletin.net/3566.html