[Editors] MIT report debunks China energy myth

[Teresa Herbert]

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MIT report debunks China energy myth
--The problem isn’t in the technology, it’s the operations
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For Immediate Release
THURSDAY, OCT. 2, 2008

Contact: Teresa Herbert, MIT News Office
E: therbert at mit.edu, T: 617-258-5403


CAMBRIDGE, Mass. -- A detailed analysis of powerplants in China by MIT  
researchers debunks the widespread notion that outmoded energy  
technology or the utter absence of government regulation is to blame  
for that country’s notorious air-pollution problems. The real issue,  
the study found, involves complicated interactions between new market  
forces, new commercial pressures and new types of governmental  
regulation.

China’s power sector has been expanding at a rate roughly equivalent  
to three to four new coal-fired, 500 megawatt plants coming on line  
every week, said Edward S. Steinfeld, associate professor of political  
science at MIT.

After detailed survey and field research involving dozens of managers  
at 85 power plants across 14 Chinese provinces, Steinfeld and his co- 
authors, Richard Lester (professor, nuclear science and engineering  
and director of the MIT Industrial Performance Center) and Edward  
Cunningham (doctoral candidate, political science) found that in fact  
most of the new plants have been built to very high technical  
standards, using some of the most modern technologies available. The  
problem has to do with the way that energy infrastructure is being  
operated and the types of coals being burned.

New market pressures encourage plant managers to buy the cheapest,  
lowest quality and most-polluting coal available, while at the same  
time idle expensive-to-operate smokestack scrubbers or other cleanup  
technologies. The physical infrastructure is advanced, but the  
emissions performance ends up decidedly retrograde.

Understanding the realities of China’s energy infrastructure and  
management is crucial, Steinfeld said, for gaining leverage over the  
whole gamut of global energy-related challenges. China’s electric  
power sector is vast — second only to America’s in size — and globally  
unparalleled in terms of the speed of its growth. “To a significant  
degree, our planet’s energy and environmental future is now being  
written in China,” he and his two co-authors wrote in a recent MIT  
Industrial Performance Center working paper (available online at: http://web.mit.edu/ipc/publications/papers.html) 
. Findings from the research have also recently been published in The  
China Economic Quarterly and an additional paper is currently under  
review at Energy Policy.

Steinfeld, who has been working in China since the late 1980s and has  
been carrying out this research project there since 2005, said that at  
present the Chinese government lacks reliable data on how the nation’s  
powerplants are built and operated. Officially available data tend to  
be collected haphazardly and often by local authorities who have a  
vested interest in the outcomes. The survey work conducted by  
Steinfeld and his colleagues represents a first-of-its-kind effort by  
outsiders to collect unbiased, objective data of this sort at a  
national level.

One of the most surprising findings was that “the kinds of technology  
currently being adopted in China are not cheap. They’re not buying  
junk, and in some cases the plants are employing state-of-the-art  
technology.”

The findings suggest that emissions levels from Chinese powerplants,  
he said, “depend almost entirely on the quality of the coal they use.  
When they’re hit by price spikes, they buy low-grade coal.” Lower- 
grade coal, which produces high levels of sulfur emissions, can be  
obtained locally, whereas the highest-grade anthracite comes mostly  
from China’s northwest and must travel long distances to the plants,  
adding greatly to its cost. Contrary to what many outsiders believe,  
the Chinese state has substantially improved its ability to implement  
and enforce rules on technology standards. It has been slower,  
however, to develop such abilities for monitoring the day-to-day  
operations of energy producers.

In some respects, the situation is more amenable to change than many  
people had assumed, Steinfeld said. With expanding regulatory capacity  
and increasingly sophisticated efforts to regulate through market- 
friendly pricing mechanisms, reformers could achieve change relatively  
quickly, he said. “At least the technology — the physical  
infrastructure of China’s energy system — is not an impediment,” he  
said. Indeed, it can ultimately prove a key asset for achieving better  
environmental outcomes.

Since coal quality is one important leverage point, “some new  
regulatory efforts probably need to be focused on the mines and coal  
markets,” Steinfeld suggested. “That’s the kind of question that this  
research begins to allow you to address.”

The three co-authors of the study are members of the Industrial  
Performance Center’s China Energy Group. The research was supported by  
Shell, the MIT Energy Initiative, and the MIT Sloan School of  
Management China Program.

By David Chandler, MIT News Office

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