Among the sceptical reactions to China’s part of the joint announcement on climate policy made by the US and China, two were particularly prominent
* The statement didn’t require China to do anything until 2030
* The statement simply reflected “business as usual”
These arguments were almost immediately refuted when China announced, in its http://thediplomat.com/2014/11/in-new-plan-china-eyes-2020-energy-cap/ that it would cap coal consumption at 4.2 billion tonnes by 2020, with total primary energy consumption (including oil and gas) held below 4.8 billion tonnes of coal equivalent. By contrast, in 2013, the estimate was for 4.8 billion tonnes of coal alone. Back in 2010, the US Energy Information Administration was predicting continued growth in Chinese coal assumption to 2035 and beyond.
The idea that the statement didn’t require any action before 2030 was always silly. Did those making it, imagine, for example, that the number of cars, energy-using appliances and so on would grow fapidly until 2030, then stop at that point? That would entail a an overnight shutdown of most of the capital goods sector. But, the 2020 peak in coal use hammers the point home more than a logical refutation.
As for the “business as usual” idea, it’s true that this agreement is, for both the US and China, mostly a public commitment to goals that have been made feasible by recent changes in policy, rather than an announcement of a new policy shift. But the changes that made the announcement possible, notably including limits on coal-fired electricity in both countries represent a massive change relative to the policies and trends of the past.
Coming back specifically to coal, it’s obvious that in China, as in the developed world, the move against coal is motivated as much by concern about local pollution effects as about global climate change. Indeed, the work of Mendelsohn and Nordhaus has shown that local health effects would imply a very substantial carbon tax even if the global warming problem could be overcome. So far, these concerns haven’t had much salience in India (where indoor pollution from cooking fires is still a bigger problem in many places), but they are bound to emerge as the country gets richer.
As regards Australia’s coal industry, a peak in Chinese coal demand, combined with a push for self-sufficiency, suggests that Chinese import demand will peak before 2020. With India also aiming at self-sufficiency, it’s hard to see much scope for long-term growth in exports.