China Coal: Beating the Energy Trap
China recently signed a MOU of $60 billion, with an Australian Coal major Resource House for a 30 million tonne coal supply deal.
Thus, China is finalizing a 20-year contract to receive high quality Australian Coal from a newly developed mining base called First China, which is located in Western Australia state of Queensland.
Though the deal was slammed by environmentalists and the media alike, the tie-up with the Australian Coal major will help China clean the environment, rather than pollute it. For the better quality coal will help China stop a large part of its own domestic low cost mining operations that produces inferior coal that today powers China’s high emission power and cement plants.
Over 80 percent of the current energy requirement of China today comes from Coal power.
China, like India has its own internal reserves to last for 20 years to meet its own energy requirements. But the quality of coal domestically produced by the Asian giants is inferior to Australian coal with its high Calorific value and low ash content. In short China and India will burn less coal and produce much lower emissions if it operates with Australian Coal instead of the cheaper domestically produced variety.
Co2 emissions, as defined by Kyoto is the most visible but the least polluting in a thermal plant, as there are bigger demons like ash slurry and fly ash disposal besides mill rejects which are not released to the atmosphere but to the mother earth, contaminating the water bodies and the plant and animal habitat in a much larger way. The best option would be to encourage the cleaner sources amongst the existing like low ash content Australian Coal to do their job while planning for new renewable energy sources.
China is itself low key on the deal, as compared to its Australian counterpart. The prime reason for this careful approach by China is because the final pricing has not yet been settled, and it is wary of energy traders raising a commodity scare and jacking up futures prices in coal. The $60 billion price could be driven up by Commodiy cartels of Big Banks and big oil who have joined hands already choking Europe’s supply lines and driving skyhigh the prices of Brent oil though the demand of the OECD has gone down in the last decade.