Hidden Cost Of China's Coal Is $250 Bln – Survey

BEIJING - China's dirty and dangerous coal mining industry cost the country a hidden $250 billion last year in lost and damaged lives, wasted energy and environmental devastation, according to a survey launched on Monday.

Pollution affected water, land and air around mines, thousands died and many more were hurt in mining accidents, and acid rain-causing sulphur dioxide and mercury were among dangerous emissions when coal is burnt in factories and power plants.

None of this is reflected in low coal and power prices, according to "The True Cost of Coal", researched over three years by Chinese economists and environmentalists.

"Behind China's large production and consumption of coal ... lie expensive and worrying environmental and social costs," their report warns.

Tariffs would need to rise by around a quarter to reflect the real burden for Chinese society, which in 2007 was 1.7 trillion yuan (US$254.9 billion), they say.

"Currently these costs are paid by the people in China suffering from the damage," Mao Yushi, one of the report's authors and chairman of the Unirule Institute of Economics, told a news conference at the launch of the report.

Experts from the coal heartland of Shanxi province, Peking University, the government's top energy think-tank and the Chinese Centre for Disease control also contributed research.

Last year nearly 3,800 miners died in explosions, flooding and other underground accidents. Although that marked a 20 percent decrease from 2006, it is still the most dangerous mining industry in the world.

For a country short of water and struggling to keep its food and air safe, it is also an environmental liability, said Yang Ailun from Greenpeace, who helped coordinate the report.

Each tonne of coal produced means 2.5 tonnes of water are polluted, while coal mining waste makes up some 40 percent of the country's solid industrial waste, she said.

NO END TO COAL

The key problems identified by the report are government regulations that distort prices and weak oversight that allows miners to get land cheaply, dodge safety and environment laws and ship their coal in dirty, dangerously overloaded trucks.

Extra taxes, stricter enforcement, and an end to the price caps that have kept electricity temptingly cheap would make coal prices more realistic and curb waste, deaths and the worst pollution, the report said.

The good news for a country that relies on the dirty fuel for more than two thirds of its energy is that the big price increase it calls for in the long term would mean only a tiny hit to the economy as efficiency soars and green energy firms prosper.

But for those who dream of a future powered only by windmills and dams, they warn that coal will not lose its dominance in China for decades. The report says the 23 percent price rise it recommends would cause only a 7 percent fall in consumption.

China is already the world's biggest producer and consumer of coal, which provides a cheap, domestic energy source at a time when volatile global oil markets have exacerbated worries about tight supplies.

Demand is growing so fast that its miners have to produce an extra 200 million tonnes a year to keep up, or the equivalent of the entire coal mining industry of major producer Indonesia.

A slight decline in consumption, in place of this frantic expansion, might give the industry room to improve their standards without starving the country of energy.

(US$1=6.845 Yuan)

Story by Emma Graham-Harrison

REUTERS NEWS SERVICE