China Environmental Law

Beijing’s efforts to manage its way out of a potential electric power crisis are becoming more bizarre.

That real trouble is brewing is becoming more obvious.  All Roads has been following this issue for a longtime and China Law Blog carried an on-the-ground report yesterday.  The needs of the Olympics are often cited as a reason for power shortages, but Olympic-related demand is a drop in the bucket. Dwindling coal supplies (as we discussed last week) are the real culprit and the central authorities have got everything all bollixed up in that area.

Beijing has for several years attempted to shut down small, illegal, and unconscionably dangerous private coal mines.  As reported Sunday by the International Herald Tribune these mines “provided 38 percent of its coal last year.”

Around nine-tenths of Chinese coal mines are classified as small, but they are eight times more deadly per ton of coal produced than the larger mines.

From 1995 to early 2008, the number of coal mines in China had fallen around 80 percent to about 16,000. Over the same period the death toll is down 40 percent to 3,786 in 2007, according to the State Administration of Coal Mine Safety.

Beijing’s goal is to reduce the number of small mines to under 10,000 by 2010 and to eliminate them by 2015.

Beijing has now pulled a 180 and is urging that these mines be reopened post haste.  Needless to say, local authorities are confused.

But in late May, when coal stocks in key power plants had fallen to critical levels and summer power shortages loomed, the Chinese prime minister, Wen Jiabao, called for an increase in coal output, while the cabinet asked local governments to speed up approvals for restarting small coal mines.

Some have returned to production in Shanxi, the top coal producing province, but many are still closed or performing maintenance, traders and analysts said.

And in late June, the Shanxi provincial government ordered local governments to shut down illegal coal mines, highlighting the conflicting signals that have kept officials cautious.

“How can local officials reopen small mines? They want to keep their jobs,” said a trader based in Shanxi, who declined to be identified because he was not authorized to speak to  media.

It appears that the heavy sanctions imposed against local officials when mine accidents occurred within their jurisdictions are still a little too fresh.

“Local government officials are more concerned about personal interest,” said Li Chaolin, a coal analyst at an industry body based in Beijing. “They are afraid of the punishment a mine accident could bring to them.”

They are right to be concerned. Six government officials in the Luliang region of Shanxi were fired after a blast at a small mine, approved to reopen just a month earlier, killed 34 in June, Xinhua, the official Chinese news agency, reported.

It of course doesn’t help things that China has capped coal prices through the end of the year.

“Miners understand if they don’t dig out all the coal now, they can sell later for a better price. Natural resources will only get more precious,” said Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University.

The impact of the coal shortage is already being felt. There have been record power shortfalls in Shanxi Province, where the government had to ration power supplies, hurting energy-intensive plants like aluminum smelters.

Other industrial provinces, like Shandong and Guangdong, have forecast deep power deficits.

Something has to give here. I just hope it’s not the lives of more coal miners.