Geopolitics

The Dark Truths Inside China's Dying Coal Industry

Coal miners have lived off the industry for generations. Though China is still the world's top coal producer, plans for clean energy spell the end of the mining life for many.

In a coal mine in Anhui province, China
In a coal mine in Anhui province, China
Frédéric Schaeffer

DATONG — "It's the end of a story," sighs Chen Yixian.

The slender 56-year-old wears a permanent smile, but it can hardly conceal his despair as he watches bulldozers and trucks laboriously pushing their loads in the distance. In this huge open-pit mine at Sandu, 400 kilometers southwest of Beijing, all color seems to have disappeared. Coal is everywhere, the mountain excavated a little more each day. The intermittent palisades cannot prevent the thick black dust from invading the surrounding roads and villages. Mining activity in the province of Shanxi is visible for miles around: not only the pervasive dark dust, but also the smell of sulfur that permeates the atmosphere.

On this spring day, the sky is blue and the sun is visible, a luxury in a region that is among the most polluted in China. It is also the result of a fall from grace of a once glorious industry.

A few years ago, Chen Yixian was rubbing his hands together. He came to Shanxi as a miner before deciding to buy a mine with other investors in 2006. "At the time, you could buy a big mine for a few million yuan," he recalls. He witnessed the surge in the price of coking coal, boosted by the extraordinary demand of a Chinese economy with double-digit growth rates. "The inhabitants were even digging behind their houses!" he recalls. The wealthy owners of private mines made millions.

"In 2008 it was the belle époque," he says, sinking into an old sofa at a construction site cabin overlooking his mine. "The golden age is over. Now, all I want is to finish this operation and turn the page. There is no future for small private mines." He's ready to start thinking about his reinvention "in logistics." Or why not even to realize a childhood dream: a television series for which he has already written the script: "A story of heroism, fighting the Japanese invaders in my village," he said.

The story of Chinese coal started growing darker in 2014. After doubling in a decade and surpassing four billion tons annually, domestic consumption — more than half of the world's demand — began to decline. This resulted in a fall in prices and the profitability of mining companies. Several factors led to the upset. Growth fell gradually to its lowest level in a quarter of a century. The structure of the economy changed: Beijing began its difficult rebalancing toward service sectors (now more than half of the GDP), which are far less energy-intensive than heavy industry. The slowing down of infrastructure work through last year diminished the demand for steel and cement, two sectors that consume a lot of coal.

Environmental constraints

And that is not all. In a country where cities are suffocating under a fog of pollution and the population's exasperation is growing, Beijing is driven by environmental constraints. The world's leading emitter of CO2, China is gradually reducing the share of coal in its energy mix, down to 62% in 2016. Tim Buckley, director of studies at the Institute of Energy Economics and Financial Analysis in Australia, said China was continuing its energy diversification much faster than expected.

Lauri Myllyvirta, who follows the coal industry at Greenpeace, said there has been a rapid growth in renewable energy production in China and that since 2013, all additional energy requirements have been covered by non-fossil sources.

China is the world's biggest coal producer and is seeking to reduce its overcapacity, estimated at 1.5 billion tons, which is more than all the United States mines combined. Beijing has taken a series of measures since the end of 2015: a moratorium on the development of new mines or coal-fired power plants; closure of small mines; and the grouping of around 15 large coalfields, among others. The country has almost 10,000 mines, nearly 4,000 of which will be closed by 2020. The number of coal companies is expected to be reduced by half, to about 3,000, according to the latest mining plan. In February 2016, China also announced its intention to eliminate 500 million tons of overcapacity within three to five years.

"Also, though it's a taboo subject in China, the government is announcing job cuts in the coal and steel sectors," says Sylvie Cornot-Gandolphe, an energy consultant at the French Institute of International Relations. Approximately 1.3 million jobs are being phased out in coal, or about 20% of jobs in the sector.

"But the most radical reform was the one implemented as of April 2016," continues Cornot-Gandolphe. Beijing banned national mining companies from producing more than 276 days a year, instead of the usual 330. As a result, production plummeted and prices rose so sharply that China had to ease the ban ahead of the cold winter.

In charge of 40% of the country's coal production, Shanxi, a province of 35 million, has been strongly affected by the decline in demand and is at the front line of Beijing's capacity-reduction program. Over the past three years, the province has had one of the lowest economic growth rates in the country. "We closed three mines and reduced our production capacity by 3.75 million tons last year," said Zhang Youxi, head of the Datong Coal Mine Group, the country's third-largest public mining group, with over 175,000 employees. "Our secretary general President Xi Jinping asked us to do the addition and substraction: eliminate the underdeveloped and old production sites and and grow the more modern and less polluting ones," he said.

Datong, known as the "coal capital," where the public company is located, bears the signs of these changes. Time seems to have stopped on the windswept square in front of the entrance to the Tong Jia Liang mine at the gates of the city. Wooden panels cover shops in the vicinity and the few fruits and vegetable hawkers have plenty of free time to play with their cellphones. "There are only old people here," one of them laments. And for good reason: The mine closed its doors last fall.

"Apart from coal, there is nothing"

A few years ago, most miners left the surrounding buildings and were relocated by the company to an immense public housing estate closer to the center of Datong. Here, 38-year-old Zhang Hui an assumed name lives with his wife and two children. He was one of 4,000 miners from Tong Jia Liang. Helmet in hand, he prepares to begin his night shift in another mine where he has been reassigned. "The front-line miners have all recovered but other employees have to stay home," he said. "There is no future in coal, new mines need fewer employees, wages are falling, the cost of living is rising. But what if you are not very educated and have no connections or money? Here, apart from coal, there is nothing."

Frightened by the slightest risk of social instability, the Chinese authorities insist that no miners will remain unemployed. The president of the Datong Coal Mine Group said more than 6,000 miners in his group were transferred to other mines and activities within the sector, such as services and coal-fired power plants, or that they got early retirement.

But miners' wages have fallen and payment is often late. "Before, I could earn 7,000 yuan a month about $1,030, now it does not exceed 5,000," said Zhang Hui. "I have to pay a portion of my salary to miners who have not found a job." Another miner said he did not earn more than 4,000 yuan a month.

"We've been abandoned," said a miner's widow who joined the conversation at the foot of a building.

A year ago, at the height of the crisis, thousands of miners went on strike in northern China, fearing for their jobs and demanding to be paid. In cities like Datong, the social impact has been considerable. Beijing set up a fund equivalent to nearly $15 billion to reclassify 1.8 million coal and steel workers who will lose their jobs. "This will probably not be enough," say analysts at Capital Economics.

Without any skills, "some of the employees are hardly reclassifiable," observes Zhang Bo, a professor of economics at Shanxi University. "Some will return to agriculture or try to work in tourism."

Even as China slows down and turns away from its heavy industries, investing massively in non-fossil energies, the page on coal remains unturned. The capacity of the power stations will increase by 20% by 2020; China does not need them, but will keep them running to support the local economy and preserve jobs. The restructuring of the Chinese coal industry has only just begun.

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Future

7 Ways The Pandemic May Change The Airline Industry For Good

Will flying be greener? More comfortable? Less frequent? As the world eyes a post-COVID reality, we look at ways the airline industry has been changing through a pandemic that has devastated air travel.

Ready for (a different kind of) takeoff?

Carl-Johan Karlsson

It's hard to overstate the damage the pandemic has had on the airline industry, with global revenues dropping by 40% in 2020 and dozens of airlines around the world filing for bankruptcy. One moment last year when the gravity became particularly apparent was when Asian carriers (in countries with low COVID-19 rates) began offering "flights to nowhere" — starting and ending at the same airport as a way to earn some cash from would-be travelers who missed the in-flight experience.

More than a year later today, experts believe that air traffic won't return to normal levels until 2024.


But beyond the financial woes, the unprecedented slowdown in air travel may bring some silver linings as key aspects of the industry are bound to change once back in full spin, with some longer-term effects on aviation already emerging. Here are some major transformations to expect in the coming years:

Cleaner aviation fuel

The U.S. administration of President Joe Biden and the airline industry recently agreed to the ambitious goal of replacing all jet fuel with sustainable alternatives by 2050. Already in a decade, the U.S. aims to produce three billion gallons of sustainable fuel — about one-tenth of current total use — from waste, plants and other organic matter.

While greening the world's road transport has long been at the top of the climate agenda, aviation is not even included under the Paris Agreement. But with air travel responsible for roughly 12% of all CO2 emissions from transport, and stricter international regulation on the horizon, the industry is increasingly seeking sustainable alternatives to petroleum-based fuel.

Fees imposed on the airline industry should be funneled into a climate fund.

In Germany, state broadcaster Deutsche Welle reports that the world's first factory producing CO2-neutral kerosene recently started operations in the town of Wertle, in Lower Saxony. The plant, for which Lufthansa is set to become the pilot customer, will produce CO2-neutral kerosene through a circular production cycle incorporating sustainable and green energy sources and raw materials. Energy is supplied through wind turbines from the surrounding area, while the fuel's main ingredients are water and waste-generated CO2 coming from a nearby biogas plant.

Farther north, Norwegian Air Shuttle has recently submitted a recommendation to the government that fees imposed on the airline industry should be funneled into a climate fund aimed at developing cleaner aviation fuel, according to Norwegian news site E24. The airline also suggested that the government significantly reduce the tax burden on the industry over a longer period to allow airlines to recover from the pandemic.

Black-and-white photo of an ariplane shot from below flying across the sky and leaving condensation trails

High-flying ambitions for the sector

Joel & Jasmin Førestbird

Hydrogen and electrification

Some airline manufacturers are betting on hydrogen, with research suggesting that the abundant resource has the potential to match the flight distances and payload of a current fossil-fuel aircraft. If derived from renewable resources like sun and wind power, hydrogen — with an energy-density almost three times that of gasoline or diesel — could work as a fully sustainable aviation fuel that emits only water.

One example comes out of California, where fuel-cell specialist HyPoint has entered a partnership with Pennsylvania-based Piasecki Aircraft Corporation to manufacture 650-kilowatt hydrogen fuel cell systems for aircrafts. According to HyPoint, the system — scheduled for commercial availability product by 2025 — will have four times the energy density of existing lithium-ion batteries and double the specific power of existing hydrogen fuel-cell systems.

Meanwhile, Rolls-Royce is looking to smash the speed record of electrical flights with a newly designed 23-foot-long model. Christened the Spirit of Innovation, the small plane took off for the first time earlier this month and successfully managed a 15-minute long test flight. However, the company has announced plans to fly the machine faster than 300 mph (480 km/h) before the year is out, and also to sell similar propulsion systems to companies developing electrical air taxis or small commuter planes.

New aircraft designs

Airlines are also upgrading aircraft design to become more eco-friendly. Air France just received its first upgrade of a single-aisle, medium-haul aircraft in 33 years. Fleet director Nicolas Bertrand told French daily Les Echos that the new A220 — that will replace the old A320 model — will reduce operating costs by 10%, fuel consumption and CO2 emissions by 20% and noise footprint by 34%.

International first class will be very nearly a thing of the past.

The pandemic has also ushered in a new era of consumer demand where privacy and personal space is put above luxury. The retirement of older aircraft caused by COVID-19 means that international first class — already in steady decline over the last decades — will be very nearly a thing of the past. Instead, airplane manufacturers around the world (including Delta, China Eastern, JetBlue, British Airways and Shanghai Airlines) are betting on a new generation of super-business minisuites where passengers have a privacy door. The idea, which was introduced by Qatar Airways in 2017, is to offer more personal space than in regular business class but without the lavishness of first class.

Aerial view of Rome's Fiumicino airport

Aerial view of Rome's Fiumicino airport

commons.wikimedia.org

Hygiene rankings  

Rome's Fiumicino Airport has become the first in the world to earn "the COVID-19 5-Star Airport Rating" from Skytrax, an international airline and airport review and ranking site, Italian daily La Repubblica reports. Skytrax, which publishes a yearly annual ranking of the world's best airports and issues the World Airport Awards, this year created a second list to specifically call out airports with the best health and hygiene standards.

Smoother check-in

​The pandemic has also accelerated the shift towards contactless traveling, with more airports harnessing the power of biometrics — such as facial recognition or fever screening — to reduce touchpoints and human contact. Similar technology can also be used to more efficiently scan physical objects, such as explosive detection. Ultimately, passengers will be able to "check-in" and go through a security screening anywhere at the airports, removing queues and bottlenecks.

Data privacy issues

​However, as pointed out in Canadian publication The Lawyer's Daily, increased use of AI and biometrics also means increased privacy concerns. For example, health and hygiene measures like digital vaccine passports also mean that airports can collect data on who has been vaccinated and the type of vaccine used.

Photo of planes at Auckland airport, New Zealand

Auckland Airport, New Zealand

Douglas Bagg

The billion-dollar question: Will we fly less?

At the end of the day, even with all these (mostly positive) changes that we've seen take shape over the past 18 months, the industry faces major uncertainty about whether air travel will ever return to the pre-COVID levels. Not only are people wary about being in crowded and closed airplanes, but the worth of long-distance business travel in particular is being questioned as many have seen that meetings can function remotely, via Zoom and other online apps.

Trying to forecast the future, experts point to the years following the 9/11 terrorist attacks as at least a partial blueprint for what a recovery might look like in the years ahead. Twenty years ago, as passenger enthusiasm for flying waned amid security fears following the attacks, airlines were forced to cancel flights and put planes into storage.

40% of Swedes intend to travel less

According to McKinsey, leisure trips and visits to family and friends rebounded faster than business flights, which took four years to return to pre-crisis levels in the UK. This time too, business travel is expected to lag, with the consulting firm estimating only 80% recovery of pre-pandemic levels by 2024.

But the COVID-19 crisis also came at a time when passengers were already rethinking their travel habits due to climate concerns, while worldwide lockdowns have ushered in a new era of remote working. In Sweden, a survey by the country's largest research company shows that 40% of the population intend to travel less even after the pandemic ends. Similarly in the UK, nearly 60% of adults said during the spring they intended to fly less after being vaccinated against COVID-19 — with climate change cited as a top reason for people wanting to reduce their number of flights, according to research by the University of Bristol.

At the same time, major companies are increasingly forced to face the music of the environmental movement, with several corporations rolling out climate targets over the last few years. Today, five of the 10 biggest buyers of corporate air travel in the US are technology companies: Amazon, IBM, Google, Apple and Microsoft, according to Taipei Times, all of which have set individual targets for environmental stewardship. As such, the era of flying across the Atlantic for a two-hour executive meeting is likely in its dying days.

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