Energy

On China's Electricity Grid, East Needs West—for Coal


Trucks line up at the Buya Coal Mine in the Xinjiang region

Photograph by Liu Xin/Color China Photo/AP Photo

Trucks line up at the Buya Coal Mine in the Xinjiang region

Geography has presented obstacles to generations of Chinese planners. From the ancient Grand Canal to the ongoing South-to-North Water Transfer Project, vast waterways have been rerouted. The latest challenge: redirecting energy generated in some of China’s remotest provinces to power-hungry cities in the east.

Like the U.S., China has a dense network of large eastern cities, a less urbanized interior, and a western region rich in natural resources. With freight railroads and river barges badly overloaded (coal transport glitches have led to rolling brownouts around Shanghai), the central government has been building high-voltage transmission networks along three primary corridors, known as the West-East Electricity Transfer Project. It’s a vast undertaking: By 2020, the total electricity capacity of these corridors is projected to equal 60 Hoover Dams. It also poses potential threats to the environment and the livelihoods of local inhabitants.

In 2010 seven eastern provinces—out of the overall 31 mainland provinces, municipalities, and autonomous regions—consumed almost 40 percent of China’s electricity. Sixty-eight percent of the electricity consumed in Beijing is generated outside the capital. In Guangdong province, often called the world’s factory floor, 20 percent of electricity is imported from other provinces. Power demand is also picking up in central China.

Fifteen years ago, China’s government kicked off the “Go West” campaign to spur development in the interior provinces and build the necessary roads, dams, and other infrastructure to extract resources from them. More recently, the 12th Five-Year Plan on Energy Development, released in January by the State Council, calls for building and expanding 14 massive “energy bases”—mostly in western provinces—where coal mines will be combined with nearby power plants and petrochemical facilities. By 2015, the government aims for these hubs to supply more than half the coal mined in China. (Coal generates nearly 80 percent of the country’s electricity, and China now burns half the coal consumed in the world annually.) Rather than ship the coal, the Chinese will transmit the bulk of electricity generated over long-distance power lines. Some energy is lost this way, but it’s more efficient than loading coal onto barges, trucks, and trains. While the three main transmission routes are now operational, new extensions and branches are being added and upgraded.

Attaching new energy bases to the grid has its perils. Jennifer Turner, director of the China Environment Forum at the Woodrow Wilson Center in Washington, refers to some significant natural limitations as “choke points” for the West-East project. Producing electricity from coal requires large quantities of water to remove impurities as well as produce steam in coal-fired power plants.

Because many of China’s planned coal bases are in water-deprived northwestern regions, including Xinjiang and Inner Mongolia, she says, “they may not have enough water to do this,” adding that northern China has only one-fifth of the country’s fresh water resources. “China has to become a world leader on water-use efficiency, as well as energy efficiency,” Turner says, “but so far there’s been too little focus on water.” Recent studies on China’s energy-water conundrum by the seemingly odd bedfellows of Greenpeace East Asia (Thirsty Coal) and HSBC (HBC) (No Water, No Power) echo that warning.

One likely scenario is that Chinese authorities would divert water from agriculture to feed the western energy bases. In Inner Mongolia, coal mine operators and petrochemical plants are already tapping aquifers and wetlands. The parched grasslands have suffered—and with them, the livelihoods of local herders and farmers. In May 2011, protests erupted after a herder died under the wheels of an out-of-control coal truck. While the incident was initially ascribed to ethnic resentment (the herder was a minority Mongolian and the driver Han Chinese), subsequent reports indicate the real anger was directed at coal trucks as symbols of an industry literally sucking the life out of the grasslands.

“In China, economic development has been very much focused on the coastal regions, while the resources have been in the west,” says Ailun Yang, a senior associate of the World Resources Institute’s Climate and Energy Program. “But you can’t really understand China’s economic development unless you see the competition between the provinces.”

Yang refers to the pattern in which “the west must subsidize the east” with natural resources, while Beijing sends money west. Although this boosts revenue for the local government and mining companies, there’s no guarantee the money will trickle down to improve the lives of the local farmers or herders displaced by the mining operations. Moreover, China’s coal-rich western regions are home to some of the country’s least assimilated and often poorest ethnic minority groups, including Uighurs and Mongolians, who themselves have limited voice in their local governments—and lack control over access to coveted natural resources.

Meanwhile, the restive region of Xinjiang in the far west—the scene of deadly rioting in 2009—is on track to become China’s No. 1 coal-producing province by 2020, analysts at China SignPost predict. Given Xinjiang’s natural resources and the central government’s push, they expect its annual coal production to rise from 120 million tons in 2011 to 1 billion tons by 2020. Within the scheme of the West-East Electricity Transfer Project, much of that would be converted into electricity flowing to the eastern megacities of Beijing and Tianjin.

The bottom line: Fourteen “energy bases” could transform the economy of Western China, but water shortages and protests threaten their viability.

Larson is a Bloomberg Businessweek contributor.

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