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China calls a halt to dirty coal imports

  • 24 September 2014

From 1 January next year, China will ban the import of coal with high ash or sulphur content and slap a three per cent tariff onto all coal imports.  The move is a one-stone-two-bird approach; less dirty coal will reduce air pollution, particularly around its coastal mega cities where restrictions are tighter and the struggling domestic mining industry will be given a boost.   

The draft regulation by China’s National Development and Reform Commission is big news in a country where coal is our second largest export and China accounts for 25 per cent of the market. Industry responses have varied. Some fear the restrictions might trip up Australia’s coal miners already struggling with reduced demand. The Minerals Council of Australia on the other hand gave an insouciant shrug and suggested business would go on as usual. 

China is in a bind. While the draft regulation emphasised environmental concerns, economic imperatives are central. After years of more than eight per cent growth, China’s GDP has started to slow. Last month GDP growth was 6.3 per cent. This slowdown has coincided with an oversupply in the market. The net result is a squeeze on China’s (very large) coal industry. China is the world’s largest producer of coal but still takes imports as a cheaper alternative for meeting the energy demands of its coastal regions. This gives it sizeable wriggle room to depress demand for exports.

The environment meanwhile is offering no such wriggle room. China’s meteoric growth has led to an ecological catastrophe. The Atlantic’s James Fallows published two graphs that isolate one aspect of China’s environmental challenge, air quality. The first graph shows that China’s air quality is so bad that the government scales it differently. Readings of 'good' or 'light' in China would be considered in the danger zone for US and European countries.  A particularly bad day in Shanghai is comparable to walking through a bush fire or volcanic eruption. The second graph shows that the ten worst cities in America for air pollution would be ranked in the highest bracket of 'Excellent' using China’s skewed scale. 

China’s environmental problems are not limited to air quality but it remains the most visible. Nearly half a million die each year because of it. Many more get sick. If that’s not bad enough, a Deutsche Bank report released earlier this year projected a 70 per cent increase in air pollution by 2025 if current
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