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Growth Over Green Goals
China Builds Coal Plants it Doesn’t Need

In a perfect world, policymakers would be able to pursue energy strategies that would be beneficial both to the environment and the economy, but—of course—that’s frequently not the case. That stress between those two desirable goals is especially acute in China, whose extraordinary recent growth, enormous population, and rapid urbanization have placed large demands on planners to keep the lights on without utterly degrading the country’s natural resources.

Beijing’s central planners have responded to an increasingly outspoken public’s concerns over air and water pollution by shuttering a number of its coal plants in the winter in an attempt to clear the smoggy skies of its megacities, and have also beefed up investments in cleaner alternatives like nuclear power, natural gas, and renewables. But at the local level, officials aren’t ready to say goodbye to Old King Coal and all the jobs he’s capable of providing. The WSJ reports:

For companies and local officials eager to prop up growth with new jobs, the availability of low-cost financing is combining with coal prices that are half the level of five years ago to make power projects attractive. Tens of billions of dollars will be spent over the next two years. Investment in thermal power projects jumped 20% last year even as China’s power demand fell. […]

While Chinese leaders are eager to recharge flagging economic growth, the pace of building and investment has started to worry them, frustrating key goals to restructure the economy and clean up the nation’s polluted skies. This raises the question as to whether state companies’ investments are “being used to drive short term GDP numbers with no regard for market demand or investment returns,” said Lauri Myllyvirta, a coal campaigner at the environmental group Greenpeace.

China’s smoggy skies can be lethal, and they cost the country enormous sums of money every year in material damages and healthcare costs. Social media platforms like Weibo give a restive Chinese public avenues to voice their discontentment over endemic air pollution and have helped put further pressure on the country’s leaders to enact changes. Clearly China has the motivation to move away from coal, to shed its title as the world’s largest consumer of the dirty energy source, but the ever-present imperative to grow is throwing a wrench in those plans.

It’s also highlighting the long-running tensions between the country’s central planners and its local governments. Provinces and cities have GDP targets to hit, and in the past they’ve proved more than willing to throw scruples out the window to meet those goals, whether that’s cooking the books or, as we’re seeing now, constructing coal plants for which the country has neither the desire nor the need.

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  • Jacksonian_Libertarian

    These types of things don’t happen in the free market, only where the Government Monopoly is in control do we see this. China is hitting the wall right now, and the capital flight is the major symptom of their crashing.

  • Josephbleau

    If China were not a dictatorship they may have passed laws to install basic air pollution controls on their plants and could have as clean air as we in the US (remember Acid Rain?). The Soviets allowed themselves to operate the same way out of expediency.

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