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China Cuts Coal Use for Second Year in a Row – But can its numbers be trusted?

The announcement yesterday that China decreased its coal consumption for the second year in a row raises hope that the world’s largest carbon dioxide emitter might peak its emissions years earlier than it promised ahead of the Paris climate talks, experts said yesterday.

Year-on-year decreases in consumption in 2014 and 2015 show China on a trajectory to meet its pledge to cap emissions by 2030—a promise that helped make a global climate deal possible in the French capital last year.

“It remains to be seen whether this trend will continue, although it is very much in line with the government’s overall goals to peak its CO2 emissions, to transition from heavy industry to services and other low-carbon industries and to fight air pollution,” said Barbara Finamore, China program director at the Natural Resources Defense Council.

The nation’s coal use fell 3.7 percent last year compared with 2014, when it dropped 2.9 percent from its peak in 2013, according to China’s National Bureau of Statistics.

The drop stems from an economic slowdown and from a reordering of the Chinese economy away from the heavy industry that helped it industrialize. Last year, the service industry accounted for 50 percent of gross domestic product for the first time this century. And while a share of that energy- and carbon-intensive production will likely relocate abroad, much of it reflects a drop in domestic demand related to China’s infrastructure needs having been met, said Finamore.

She said the decrease is also a testament to China’s effort of phasing in clean energy policies in earnest three years ago.

“2013 is the year when China really declared war on pollution,” she said. The government established a pollution control plan in urban areas that year, introduced carbon-trading pilot projects and mandated reductions in coal use.

While yesterday’s announcement establishes a downward trend in coal consumption, it is set against the backdrop of last year’s revelation that China had been underestimating its own coal consumption since 2000. An energy census conducted in 2013 using more comprehensive methods than previous surveys showed that China consumed 17 percent more coal in 2012 than previously estimated.

“This is going to be one of the problems with China in particular,” said Sarah Ladislaw, energy and national security program director for the Center for Strategic and International Studies. “What baseline are we talking about?”

Accounting uncertainties

Improving the integrity and transparency of China’s data is necessary if the world is to have confidence in China’s future pledges toward international climate efforts, she said. The Paris Agreement requires a review of implementation in 2018 and invites countries to revise their post-2020 reduction pledges in 2020.

“If everybody is going to be trying to increase ambition based off of Paris—which is clearly the objective—what the underlying assumptions are of what your emissions were going to be or what your baseline number is, is really, really important,” said Ladislaw. “And in China, that is recognizably not reliable information.”

But Ladislaw and others say that last year’s discovery of the error is itself evidence that Chinese data is improving.

Ranping Song, developing country climate manager for the World Resources Institute, said he has greater confidence in China’s report that it has reduced coal use for two years because it disclosed the previous underreporting.

The two-year trend is significant, he said.

“I think it’s an indicator of China’s economic structure is transitioning, and a strong willingness to fight air pollution is much more likely to be a long-term trend rather than just a one year” decline, he said.

China’s drop in energy intensity is the result in part of energy efficiency improvements, he said. The National People’s Congress is due to consider its next five-year plan in March, he said, and if it continues those trends, China will be “well-positioned to implement its Paris commitments.”

Also yesterday, the Chinese government announced that it has moved 1.8 million workers away from the coal and steel sectors to reduce excess capacity. The move shows how quickly an authoritarian government can pivot its economy, especially when it retains control of core industries.

But some questions persist about yesterday’s report. A shift to higher-quality—and higher-emitting—coal may have counteracted the carbon-related benefits of the overall reduction in coal use.

And increases in China’s oil and gas use might have offset the dip in whole or in part.

“What is clear is their economy is slowing, they don’t need to use as much coal, the enormous upsurge in coal use was prompted by very high industrial growth, and the same industries—which were very energy-intensive—have either contracted or stopped growing entirely,” said Derek Scissors, who focuses on China at the American Enterprise Institute.

Chinese industry declining

China will peak its emissions long before 2030, he said. It’s even possible that it has already, though China has not said when its emissions will decline in absolute terms.

But the days of exploding Chinese emissions rates are now over, Scissors said.

“If they had made that Paris commitment back in Copenhagen—where they weren’t at all willing to make it—it would have been a huge deal,” he said, referring to the 2009 climate summit in the Danish capital. “This is all five years too late to be interesting.”

With coal use down and green spending still steady for the time being, China may claim to be an environmental champion, Scissors said.

That may be more than the world’s second-highest emitter can do. U.S. Special Envoy for Climate Change Todd Stern is in China through tomorrow to meet with counterparts on the Paris deal and to discuss “bilateral cooperation on climate change, international climate change goals for 2016, and U.S. and Chinese domestic policies to address climate change.”

But while China can point to its coal numbers and other developments, Stern is likely to field questions on the U.S. Supreme Court’s decision last month to delay implementation of U.S. EPA’s Clean Power Plan—a pillar of the United States’ Paris pledge.

And that’s not the only question Stern’s counterparts may have, said Robert Stavins, director of the Harvard Project on Climate Agreements.

“God knows, everybody is asking, ‘What if there’s a Republican administration? What happens to the U.S. [pledge]?’” he said. “So those questions are being asked on both sides.”

The Paris Agreement has provisions that are designed to boost the transparency of carbon reporting and accounting, though developed and developing countries start out with different levels of obligations that then converge over time.

Scissors said that China is unlikely to improve its transparency on any issue because of an international agreement.

“They consider information control a core element of the party’s grip on power,” he said.

What matters is whether the Communist Party decides that increasing disclosure on energy and environment issues is in its best interest, he said, adding, “I think there is some suggestion of that.”

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