The real China Syndrome

Welcome <cough> to <cough> Beijing

Dark clouds are gathering in the east.

We depend on China for all manner of manufactured goods. Consumer electronics, cookware, children’s toys, and virtually any other item you can name – or purchase – all come with the familiar “Made in China” label. In 2009 the country overtook Japan to claim the #2 spot on the World Bank rankings for Gross Domestic Product (GDP), second only to the United States. And with an annual growth rate that has hovered around 10% for the last four years, it won’t be long before China tops the charts.

The energy it takes to keep all that industry running is astounding. In 2009 China used 2,257 Mtoe (million tonnes of oil equivalent), making it the world’s top energy consumer. The International Energy Agency estimates that in 25 years, China will consume 70% more energy than the United States.

Where will all that energy come from?

The answer is enough to any environmentalist blanch. The country’s 12th Five-Year Plan, encouragingly, calls for lower carbon intensity and more diversification of energy sources. Despite this, two of the most significant sources of energy that will drive Chinese growth are nuclear and coal.

A burgeoning Chinese nuclear energy sector should be unsettling news both within the country and without. The Chinese people will have to bear the high cost of nuclear power and the near-eternal commitment to safeguard radioactive waste. Likewise, they will have to accept the risk of nuclear disasters. There are more stakeholders beyond the country’s borders; nearby countries like Korea, India, and Japan will also have to live with the danger of a Fukushima-style catastrophe.

The effects of coal will reach even further. A 2007 MIT report stated that China was building new coal-fired generation facilities at a rate equal to two 500MW plants per week. Olympians surveyed with dismay the dirty Beijing skyline, as much a result of the country’s addiction to coal as it is the massively polluting two-cycle engines of countess mopeds and motorcycles. While particulates and acid precipitation from burning coal take their toll on the Chinese, the carbon dioxide will be felt across the globe as temperatures rise and weather patterns increase in chaotic intensity.

Were China a democracy, there is at least a chance that the people might demand change. North American democracies are hardly a model for decisive action against climate change, but Europe has taken a firm stand. Germany has become a leader in renewable energy technologies and has made huge strides towards reducing its dependence on fossil fuels. Denmark has done likewise. All this because the voters have demanded it. There is no such pressure on Beijing – politburo members are accountable neither to the international community nor to the Chinese citizenry.

The term “China Syndrome” is used to describe an extreme-case nuclear disaster. In this scenario, the core of a nuclear reactor melts down, burning through the containment vessel and the secondary containment building, and continues right through the earth’s crust. In a stroke of childish hyperbole, the radioactive mass eventually emerges on the other side of the planet – China.

A more modern version of the China Syndrome would be this. The authoritarian regime ruling the world’s most populous country is bent on acquiring wealth for its elite members (and perhaps, through economic trickle-down, the rest of the citizenry). It pursues this agenda in spite of international pressure to clean up its environmental act. It rationalizes that the developed nations had their turn at the messy carbon trough, so why can’t the up-and-coming economies? Resources are consumed and greenhouse gases are emitted at an eye-watering rate. Global CO2 levels rise relentlessly. The world rides an express elevator to complete ecological meltdown.

The original China Syndrome has never happened (Fukushima may be the exception). However, the modern China Syndrome is taking place at this very moment.

Can anything stop it?

The avenue of formal, binding, global, multilateral agreement has failed. The Kyoto Protocol offered some hope, but that evaporated last year at the Durban Climate Change Conference. The so-called Durban Platform amounts to nothing more than hitting the snooze bar until 2015. Few are optimistic that anything meaningful will be accomplished then either.

As I pointed out at the beginning of this post, China did not get to where it is by catering to the needs of its own population. Its growth has been, and continues to be, fuelled by exports. China consumes coal, but we consume the products that the coal creates. If we want to know the real culprit, we have only to look in the mirror.

Consumers in developed countries have demanded more and more for less and less. To retain market share, manufacturer after manufacturer has been forced to relocate operations to locations with the lowest cost. All that we have demanded is that the products we buy be cheap – we don’t give a tinker’s cuss about the environmental impact. Heck, we don’t even care much about the quality. Who cares if it breaks, if it’s so cheap that you can just buy another one?

The only way the China Syndrome can be stopped is if we change our mindset, and our purchasing patterns. Manufacturers provide us with crappy merchandise produced in an utterly unsustainable way for one simple reason – we haven’t demanded anything different. If we demand products that are manufactured in an environmentally responsible way, producers have no choice but to supply them.

The most innovative players will identify environmental responsibility as a differentiator. Such products will, at first, be able to command a premium. With time, competitors will get in on the act. Hopefully, before too long, sustainability will be table stakes – producers simply won’t be able to sell goods that were created in a way that depleted the earth.

The clock is ticking. China’s trade balance took a sharp dip into deficit recently, meaning that the value of imports exceeded that of exports. The domestic Chinese market is growing as more and more citizens reap the benefits of economic advancement, and the middle class becomes larger and larger. Soon, Chinese firms will be able to profit without exporting. And any leverage the outside world has over Chinese environmental direction will vanish.

We’ve got the power to avert the modern China Syndrome. But we won’t have it for long.

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Best of a bad lot

Democracy is about majority rule. The candidate with the most votes wins the election. A newcomer to the whole idea of democracy – a school child, for example – might infer that the winner is best candidate: the most qualified, the most experienced, the most popular, the most effective, or some or all of the above.

It doesn’t always work out that way.

Oftentimes during election campaigns, you realize that you don’t particularly like any of the candidates. In fact, you actually detest one or two of them. When you head to the polling station, you aren’t actually voting for a particular person. Instead, you’re voting against all of the candidates except one. You’re voting for the least bad alternative.

It’s like that with solar energy.

Don’t get me wrong. Solar energy has many terrific selling points. With minimal capital investment and a rapid installation process, you can start producing power. Solar arrays are completely scalable, and can be sized precisely to the application – from a single panel powering a roadside sign, to a multi-megawatt solar farm covering several hectares.

Solar energy can be generated right where it is used, eliminating the construction cost, maintenance overhead, and losses inherent in long-distance electricity transmission infrastructure. Once installed, photovoltaic systems produce zero emissions. They have no moving parts, and so are extremely reliable and require minimal maintenance. Panel manufacture is energy-intensive, but the panels generate many times more energy than that during their usable life.

All is not sweetness and light, however. The manufacture and end-of-life disposal of solar panels suffer from the same environmental perils as the semiconductor industry. The production process uses toxic metals that must be handled carefully to keep them from leaking into rivers and other water bodies. And like consumer electronics, clapped out solar panels are nasty things if not disposed of properly. Fortunately more and more manufacturers are offering recycling services, and third parties are getting into the act – one man’s trash is another man’s treasure.

Then there’s the cost. At present, solar cannot compete with most other energy sources on an installed cost-per-watt basis. However, this is mainly because most traditional energy sources carry costs that aren’t included in the price. They appear cheap, but the price you pay is only the first installment; there are more costs hidden in the fine print, and they’re brutal. Economists call this an “externality”. More on this below.

So solar is not perfect. But let’s look at the alternatives.

In Ontario, Canada, the three main sources of energy are hydroelectric, nuclear, and thermal. So let’s focus on these three.

At first glance, hydroelectric power is pretty sweet. It’s always been expensive to construct a dam. But once it’s built, the water is free and maintaining the turbines is cheap.  However, the best locations for large-scale hydro projects are already tapped. Further, hydroelectric projects can wreak havoc on river ecosystems, and the flooding when a river becomes a reservoir has displaced entire communities. The cost of managing these social/environmental impacts is rising, and may even kill some projects outright.

Next up is nuclear. It’s reliable, and it doesn’t produce greenhouse gases. But it is incredibly costly. Nuclear plants are the most expensive of all, and the costs don’t end with the construction. Uranium mining is an unpleasant business. Operating the plants always costs more than the builders anticipate. Spent fuel rods remain incredibly dangerous for thousands of years, and that’s a horrible legacy to leave our descendants. Even the low-level waste from refurbishing or decommissioning reactors is a hazard, and a tempting target for terrorists seeking to build a dirty bomb.

Then there’s the risk of accident. Three Mile Island, Chernobyl, and now Fukushima Daiichi all loom large in the mind of the public, and currently China is the only country with plans to build new plants. Germany is getting out of the business entirely. Few private companies are willing to accept the risk associated with nuclear plants, so often state agencies or corporations have to assume the risk instead. That means that when things go wrong, it’s the general public that foots the bill. This is an externality, as mentioned above – the price you pay does not reflect the total cost.

Thermal power plants generate power by burning fuel – usually the non-renewable kind, like coal or natural gas.  Their main attraction is that they are one of the few methods of power generation that can be brought online in a pinch to deal with spikes in demand that happen when, for example, everyone cranks the air conditioning during a heat wave. They cost a fair chunk of change to build, but the fuel is cheap and that means the power is too.

However, the thermal power party may have the biggest hangover of all. Burning fossil fuels produces greenhouse gases, and this leads to global climate change. That is yet another externality. When a hurricane wipes out New Orleans, the companies that run coal-fired generating plants and gas station chains aren’t presented with the bill. Instead, the population at large gets nailed with higher taxes and insurance rates.

So solar’s competitors suffer from many disadvantages. They generally cost a bundle just to get into the game, and the investment earns no return during the long period of construction and startup. That’s a huge financial risk. Nuclear and thermal require fuel, and the price of that fuel varies, which presents another short-term financial risk. Since there’s only a limited amount of fuel in the earth’s crust, the long-term price trend will always be upward; that’s not even a risk, that’s a certainty.

Finally, the power is usually generated a long way from where it is used, so there’s a big infrastructure cost to get the power to market. If you want to compare apples to apples, the sunk cost of high-voltage transmission lines should be included when evaluating competing energy sources.

That’s why developing countries will likely leapfrog us – when they electrify outlying villages, they will likely skip over central power generation completely and jump straight to on-site generation with wind and solar. This is analogous to the way that they have largely skipped landline telecommunications, and jumped right to mobile phones.

Solar does have its downside, make no mistake. But when you make an honest, thorough comparison, it’s the best of a bad lot.