(John Kemp is a Reuters market analyst. The views expressed are
By John Kemp
LONDON May 21 "If I work in your Beijing, I
would shorten my life at least five years," Premier Zhu Rongji,
a career politician from Shanghai, quipped in 1999, referring to
the notorious air pollution in China's northern capital.
Research has confirmed life expectancy in northern China is
5.5 years shorter than in the south owing to the worse air
pollution, and the shocking difference stems from a
well-intentioned government policy to keep the residents of
northern China warm in winter.
According to a group of U.S. and Chinese academics who have
studied the impact of China's air pollution, "during the
1950-1980 central planning period, the Chinese government
established free winter heating of homes and offices as a basic
right via the provision of free coal for boilers".
"Due to budgetary limitations, however, this right was
extended only to areas located in northern China," they
explained ("Winter heating or clean air?", 2009).
To determine which cities qualified for free heating,
planners employed the traditional division between northern and
southern China that runs along the line of the Qin Mountains and
The Huai-Qinling line is an arbitrary boundary dating to
imperial times, though it corresponds roughly to the 33rd
parallel of latitude and the zero degrees Celsius isotherm in
Under the Huai River policy, northern cities such as
Beijing, Tianjin and Shenyang were provided with free heat from
Nov. 15 to March 15 through district heating systems that pump
hot water or steam from a network of boilers along pipelines to
homes and offices.
By 2003, district heating systems had been installed in 321
northern cities, employing 58,000 km of hot water pipes and
12,000 km of steam pipes to heat almost 19 billion square metres
of home and office space ("District heating in China", 2009).
Unfortunately, most of these heating systems are based on
small and inefficient coal-fired boilers that belch soot into
Coupled with old and inefficient coal-fired power plants,
steel works and cement factories, many still located in the
heart of urban areas, the result is an appalling smog across the
country's north, northwest and northeast regions.
"In contrast (to the north), heating was (and largely
remains) nonexistent in the south because the government did not
supply a heating infrastructure, nor was there a private supply
until recently," according to the U.S./China research team.
As a result, cities just south of the Huai River - including
Nanjing, Shanghai and Chengdu - are hit especially hard during
cold winters, causing resentment.
"We have almost exactly the same weather as them, but they
have heating and we don't," a resident of one city just south of
the line complained in a newspaper interview. "We have to endure
the cold more than anyone" ("China's unlikely divide over home
heat", January 2013).
"Installing heating in the south is now a matter of social
fairness," according to one editorial published in January 2013
following the coldest winter in three decades. "The use of the
Qinling-Huai dividing line to create one-size-fits-all criteria
for heating is neither reasonable nor scientific."
In the south, there are few district heating systems. Almost
all the heating is from electric appliances such as
airconditioners. Most electricity is generated by burning coal,
but power plants are larger and generally produce less soot than
the small distributed boilers used in district heating systems.
Air quality is poor throughout China. The concentration of
total suspended particulates (TSPs) in the atmosphere was more
than double the national safety level between 1981 and 2001, and
five times higher than the level that prevailed in the United
States before the passage of the Clean Air Act in 1970.
But the situation is much worse in northern China. To the
north of the Huai River, the concentration of TSPs is 55 percent
higher than in the south, according to the U.S. and Chinese
researchers ("Evidence on the impact of sustained exposure to
air pollution", July 2013).
Life expectancy is also 5.5 years lower in the north "almost
entirely due to an increased incidence of cardio-respiratory
mortality", they explained. "Estimates suggest that the 500
million residents of northern China during the 1990s experienced
a loss of more than 2.5 billion life years owing to the Huai
River policy," they concluded.
So Premier Zhu was right: working in Beijing rather than
Shanghai or Chongqing really can take years off your life.
China is not alone in suffering lethal pollution from
coal-burning. In the 19th and 20th centuries, London suffered a
series of terrifying smogs blanketing the city in a foul mix of
fog and pollution, culminating in the Great Smog of 1952, which
is estimated to have killed as many as 8,000 people.
The result was the Clean Air Act of 1956, which introduced
smoke control areas in some cities in which only "smokeless
fuels" could be burned. Britain's pollution problem was
gradually reduced by the introduction of the first electric
heating in the 1960s and then natural gas from the 1970s.
To clean up its atmosphere and reduce the death toll, China
needs to replace some of its coal consumption with
cleaner-burning gas as well as install and actually operate
scrubbers to reduce particulate emissions from the rest
("China's war on pollution needs more than words", March 12,
China has already been using natural gas for almost 2,000
years, employing bamboo poles to extract gas from shallow wells
in Sichuan. There is still a natural gas industry centred on
Sichuan in the country's southwest. More recently, natural gas
has been produced along with crude oil from the country's giant
Daqing oilfield in the northeast.
However, "gas production areas were scattered and relatively
small", according to a study by General Electric. "Lack of
infrastructure to transport gas to large cities meant supply was
used near where it was produced" ("China's age of gas", 2013).
Since the 1960s, China has developed large quantities of
"towngas" manufactured by partially burning coal and fuel oil, a
process once common across North America and Western Europe
before it was replaced by natural gas in the last 50 years.
In the last decade, China has begun to build a transmission
and distribution network to bring natural gas from Sichuan,
Xinjiang and the oilfields of the northeast, as well as imported
LNG from the Middle East, and pipeline gas from Central Asia, to
the cities of eastern and northern China.
Natural gas remains underutilised, however. "Gas accounts
only for 4 percent of China's primary energy consumption, 19
percentage points below the world average," according to General
In the rest of Asia the average is 20 percent, and even in
coal-dominated India it is 8 percent. Gas accounts for just 2
percent of China's power generation, compared with 75 percent
To cut pollution and improve energy security, China will
need gas from all available sources: conventional deposits as
well as shale in Sichuan and the Tarim basin; LNG from the
Middle East and Australia; and pipeline gas from Central Asia
The enormous need for more gas helps explain why China has
finally reached an agreement to take gas from Russia and why the
deal is so important for both countries (not just Russia, as
some analysts suggest).
As well as more gas, China needs more pipelines to carry it
across the country to consumption centres and distribute it to
power plants, homes, offices and factories.
China National Petroleum Corp (CNPC) has built more than
40,000 km of gas transmission and distribution pipelines,
including the two massive West-East transmission lines bringing
gas from the Tarim basin and Central Asia to consumption centres
along the east coast.
CNPC's smaller rival Sinopec has more than 4,500 km of
pipelines, including a southern transmission line bringing gas
from Sichuan to Chongqing, Jiangxi, Hubei, Anhui, Jiangsu,
Zhejiang and Shanghai, and a northern line linking Shaanxi and
Shanxi to the consumption centres of Hebei around Beijing and
the industrial centres in Shandong.
But China's gas network remains relatively undeveloped. The
United States has around 500,000 km of gas transmission
pipelines, almost 10 times as much, and more than 3 million km
of distribution lines.
The challenge is to build out China's inter-regional
transmission network and city-level distribution system.
Customer equipment may also need to be retrofitted to burn
higher-calorific natural gas rather than lower-calorific
towngas. Power producers must also be incentivised to shift from
burning dirty coal to cleaner gas.
CNPC and Sinopec have been criticised as not developing the
domestic market and infrastructure fast enough. Earlier this
month, however, CNPC announced it would transfer the eastern
sections of the two West-East pipelines into a separate
subsidiary, and market a stake in the company to outside
Current and former CNPC officials are at the centre of the
current anti-corruption drive, which is a huge distraction for
the company, but may also compel it to fall into line with the
government's stated intention to develop the gas market more
Splitting pipeline assets into a separate subsidiary with
outside investors raises the intriguing prospect that China
could eventually have a transmission and distribution business
operated on a common carrier basis, similar to those in the
United States and Britain, with open access to the network for
different producers and consumers.
China is still a very immature gas market. But the agreement
on a new pipeline with Russia, coupled with the development of
domestic resources and the restructuring of the pipeline system,
mean that one day going to work in Beijing might not result in
dying five years earlier.
(Editing by Dale Hudson)