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Are China’s Climate Promises Feasible?

Sigma Investment Counselors

April 30, 2021

China’s economy is heavily dependent on coal powered electric energy.  We have previously discussed China’s dependence on coal. (See our blogs titled Climate, Coal and China and Coal).  In order to meaningfully reduce China’s dependence on coal, solutions to two primary roadblocks will have to be found.  Specifically, the availability of scalable and economically practical alternatives and the question of what to do about the millions of Chinese engaged in coal mining and related activities.

The world is well along in expanding generating capacity from wind and solar projects.  In addition, there is a significant increase in the potential for small nuclear generation operations.  While attempting to predict the pace of technological progress is difficult at best, directionally, the outlook is positive.

Second, and much more difficult, is the question of how to provide for the well-being of the millions of Chinese currently economically dependent on coal.  While the U.S. has the same problem, the numbers are far lower, probably fewer than 100,000 active miners compared to millions in China.  Interestingly, the United Mine Workers union understands that U.S. coal consumption is shrinking and is proposing targeted spending designed to help retrain former miners and support development in coal country communities.

It is difficult to be against retraining, but it is important to recognize that this is much harder than some politicians suggest.

All comments and suggestions are welcome.

Walter J. Kirchberger, CFA®

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