The Chinese government released an official "white paper" today, saying that:

  • global warming is going to wreak havoc on China, reducing grain yields and making it difficult to feed 1.3 billion people;
  • coal is China’s primary contribution to global warming;
  • coal is also China’s cheapest and most abundant fuel;
  • the "coal-dominated energy mix cannot be substantially changed in the near future, thus making the control of greenhouse gas emissions rather difficult."

This is China’s conundrum. It is the world’s conundrum. Unless this problem can be solved, it’s a good bet humanity is in for unthinkable suffering in the coming century, and that’s no exaggeration.

What can China do? The answer is likely complex and iterative, but here’s a good start: price coal honestly.

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Just as in the U.S., the notion that coal is China’s "cheapest" fuel relies on what are effectively accounting gimmicks. The trust costs are not included in the price.

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What are the true costs? Glad you asked! As it happens, Greenpeace, the Energy Foundation, and WWF have just released a comprehensive study, commissioned from top Chinese economists: "The True Cost of Coal."

Top-line summary: coal’s social and environmental costs amount to a stunning 7.1 percent of China’s national GDP, about $248 billion a year. If those costs were incorporated into the commodity cost of coal in China, it would raise the price by about 23 percent.

That’s huge. Imagine what kind of changes would happen in the Chinese economy if coal was 23 percent more expensive.

The report concludes with some fairly detailed policy recommendations, all geared toward incorporating these costs into coal’s price. There’s a short summary here [PDF] if you want the details.

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Postscript: The report is getting great coverage: Associated Press, Reuters, AFP, BBC, Guardian, Aljazeera, and even Chinese media.