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China's Energy Thirst A Global Pollution Threat
By Matt Pottinger, Steve Stecklow, John J. Fialka, with contributions from Cui Rong, Asian Wall Street Journal

On a recent hazy morning in eastern China, the Wuhu Shaoda power company revved up its production of electricity, burning a ton and a-half of coal per minute to satisfy more than half the demand of Wuhu, an industrial city of two million people. AES Corp., an American energy company, owns 25% of the 250-megawatt facility, which local officials laud as an "economically advanced enterprise."

The Chinese plant is outfitted with devices that prevent soot from billowing into the sky. But other pollutants, such as nitrogen oxides,
sulfur dioxide, and a gaseous form of mercury, swirl freely from the smokestacks. Rather than install more sophisticated and costly antipollution equipment, the plant, which is majority owned by state-controlled entities, has opted to pay an annual fee, which it estimates will be about $500,000 this year. That meets Chinese standards but wouldn't be allowed in the U.S.

The billowing output of Chinese power plants like Wuhu Shaoda was once considered the price of China's economic growth -- and a mostly local problem. But just as China's industrial might is integrating the country into the global economy, its pollution is also becoming a global concern. Among the biggest worries: the impact of China's vast and growing power industry, mostly fueled by coal, on the buildup of mercury in the world's water and food supply.

Scientists long assumed that mercury settled into the ground or water soon after it spewed forth as a gas from smokestacks. But using satellites, airplanes and supercomputers, scientists are now tracking air pollution with unprecedented precision, discovering plumes of soot, ozone, sulfates and mercury that drift eastward across oceans and continents.

Mercury and other pollutants from China's more than 2,000 existing coal-fired power plants soar high into the atmosphere and around the globe on what has become a transcontinental conveyor belt of bad air. North America and Europe add their own dirty loads to the belt. But Asia, pulsating with the economic rebirth of China and India, is the largest contributor.

"We're all breathing each other's air," says Daniel J. Jacob, a Harvard University professor of atmospheric chemistry and one of the chief researchers in a recent multinational study of transcontinental air pollution. He traced a plume of dirty air from Asia to a point over New England, where samples revealed chemicals in it had come from China.

In the U.S., the consequences are being detected not just in the air people breathe, but in the food they eat. The U.S. Environmental Protection Agency recently reported that a third of the country's lakes and nearly a quarter of its rivers are now so polluted with mercury that children and pregnant women are advised to limit or avoid eating fish caught there. Warnings about mercury -- a highly toxic metal used in everything from dental fillings to watch batteries -- have been issued by 45 states and cover four of the five Great Lakes. Some scientists now say 30% or more of the mercury settling into U.S. ground soil and waterways comes from other
countries -- in particular, China.

The increasingly global nature of the problem is rendering local solutions inadequate. Officials in some countries are using the presence of pollution from abroad "as an argument to do nothing from home," says Klaus Toepfer, executive director of the United Nations Environment Program in Nairobi, Kenya. Yet global remedies -- primarily treaties -- are even harder to achieve. The last such initiative, the Kyoto Protocol, aimed at limiting emissions related to global warming, was rejected by the U.S., the largest contributor of such emissions. The best shot at a treaty for transcontinental pollution, Mr. Toepfer believes, would be to regulate a single pollutant that everyone agrees is hazardous. He recommends starting with mercury.

China is already believed to be the world's largest source of nonnatural emissions of mercury. Jozef Pacyna, director of the Center for Ecological Economics at the Norwegian Institute for Air Research, calculates that China, largely because of its coal combustion, spews about 540 metric tons of mercury into the air each year, accounting for nearly a quarter of the world's nonnatural emissions of mercury. And the volume is rising at a time when North American and European mercury pollution is dropping. The U.S. emitted about 100 metric tons of mercury into the air in 1999 from man-made sources. New Chinese power plants currently under construction -- the
majority fueled by coal -- will alone have more than twice the entire electricity-generating capacity of the U.K.

The overwhelming majority of China's power plants are built, owned and operated by Chinese companies. But regulators in Beijing say even the country's small number of plants with foreign investors typically satisfy only minimum environmental standards and lag behind the country's cleanest domestically owned plants.

Speaking about the Wuhu Shaoda power plant, Robin Pence, a spokeswoman for AES, says the company "is a minority partner in Wuhu. As such, we neither operate nor control the plant." She adds that AES, based in Arlington, Virginia, didn't build the plant and that its world-wide policy for plants that it does design and build is to meet emission standards set either by the local country or the World Bank, whichever is more stringent. The Wuhu plant's manager declined to comment.

U.S. EPA scientists estimate that about a third of the mercury in the atmosphere gets there naturally. Traces of the silvery liquid in the earth's crust make their way into the sky through volcanic eruptions and evaporation from the earth's surface. But it took the industrial age to turn mercury into a public-health concern. Mining, waste incineration and coal combustion emit the metal in the form of an invisible gas. After it rains down and seeps into wetlands, rivers and lakes, microbes convert it into methylmercury, a compound that works its way up the food chain into fish and, eventually, people.

The dangers of significant methylmercury exposure to the nervous system are well documented, particularly in fetuses and children. Permanent harm to children can range from subtle deficits in memory and attention span to mental retardation. In January, EPA scientists released research indicating that 630,000 U.S. babies born during a 12-month period in 1999-2000 had potentially unsafe levels of mercury in their blood -- about twice as many babies as previously estimated.

Adults aren't immune, either. Joel Bouchard, a National Hockey League defenseman who spent the past two seasons with the New York Rangers, says that last December he began suffering dizziness, headaches, insomnia and blurred vision -- forcing him to miss around 25 games. "It was, honestly, like I was in the Twilight Zone," he says. A team doctor discovered Mr. Bouchard had abnormally high levels of mercury in his bloodstream. The suspected cause: the tuna and salmon he had been eating almost daily as part
of what he thought was a healthy diet. He says his blood levels have since returned to normal and the symptoms have disappeared.

Few places more starkly illustrate the threat from mercury, and the obstacles to containing it, than China.

In Qingzhen, a town in the poor mountainous province of Guizhou, a 53-year-old female rice grower named Zhang and thousands of other farmers are surrounded by mercury pollution. Dark smoke surges from the local power plant, staining crops a drab gray. The power plant flushes eight million cubic meters of ash and water each year into an area adjacent to a major drinking-water reservoir. Some fish that live near the plant contain levels of mercury 18 times what the EPA and the Chinese government consider safe --
according to the Guizhou Provincial Environmental Science and Research Institute, which recently completed a seven-year study into the province's mercury pollution.

The plots of land that Ms. Zhang and her neighbors tend are especially ill situated. Nearby is the Guizhou Crystal Organic Chemical factory, which over the years released as much as 90 metric tons of mercury into a stream that runs through her village, according to the study. An official in the factory's environment and safety department calls the report's estimate "too high," and says the factory stopped dumping mercury by 1998. But the stream still runs black and reeks so strongly of chemicals that people unaccustomed
to the smell struggle not to gag when standing downwind.

Ms. Zhang and her neighbors are used to the smell. With no other choice, they pump water from the poisoned stream onto dozens of hectares of rice paddies each planting season. Rice from the fields tastes sour, she says. "When you wash it, the water in the pot turns the same color as the river." Grain from these fields contains nearly 40 times as much mercury as rice grown in Shanghai, according to the study. Laboratory mice that were fed the rice became hyperactive and their nervous systems began deteriorating within a month, the study says.

Farmers in the village complain of periodic fits of shaking. Ms. Zhang suspects the pollution is the reason that she and some of her neighbors have stomach cancer.

Once airborne, by drifting as an invisible gas or clinging to particles of dust, mercury begins to wander. Last April, an instrument-laden U.S. surveillance aircraft near the California-Oregon border hit a plume of dirty air inbound from China. Among the pollutants: black carbon, sulfur dioxide and mercury. "Storms didn't wash it away," marvels Veerabhadran Ramanathan of the Scripps Institution of Oceanography in La Jolla, California. Dr. Ramanathan, who helped pioneer the field of tracking international air pollution, says such plumes shed some of the noxious load over the ocean. But their bulk continues to drift across the U.S. at the leisurely speed of
a blimp, polluting lakes and rivers as they go.

The density of Chinese pollution has amazed researchers. Hans Friedli, a chemist at the National Center for Atmospheric Research in Boulder, Colorado, recalls flying through plumes off the Chinese coast near Shanghai two years ago that contained pollutants in the "highest concentration that I have ever seen from an aircraft, except when I've flown into forest fires."

And it is going to get worse. By 2020, China will have nearly 1,000 gigawatts of total electricity-generating capacity, more than twice the current amount, according to the State Power Economic Research Center. And the majority of new plants will burn coal. Coal-fired plants today produce three-quarters of the country's electricity, compared with around 50% in the U.S. The country will this year burn about 1.7 billion metric tons of coal, a 12% increase over last year, and consumption is expected to keep rising.

China is phasing in several measures to tackle air pollution. But soot, as well as sulfur dioxide and nitrogen oxides -- often referred to as "SOx and NOx" -- are understandably taking priority over mercury. Even with the existence of poisoned villages like the one in which Ms. Zhang lives, other pollutants affect even more Chinese people. Airborne particulates are a suspected leading cause of respiratory disease around the country. Acid rain from sulfur dioxide now pelts a third of China's territory, a ratio that is "expanding, not shrinking," says Pan Yue, the deputy director of China's State Environmental Protection Administration, or SEPA.

Mr. Pan, an outspoken champion of stricter environmental standards, says there currently aren't any rules being drafted to address mercury. Asked if he is aware of recent studies linking Chinese emissions to mercury in American lakes and rivers, he nods.

"As for China's impact on surrounding countries, I'm first to admit the problem. But let's talk about this in the context of international
fairness," he says before firing a salvo of rhetorical questions aimed at Washington. "Whose development model are we emulating? Who has been shifting all of its pollution-heavy factories to China? . . . And who bears an even greater international responsibility than China -- but has yet to shoulder it -- on matters like greenhouse-gas emissions?"

Environmentalists say that U.S. action to control its own mercury emissions from power plants has been sluggish. James Connaughton, head of the White House Council on Environmental Quality, counters that the Bush administration has promised by next March to announce regulations aimed specifically at restricting mercury emissions from coal plants, which he says is a "world first." The plan, which follows years of delays and lawsuits, is expected to include market-based trading of pollution credits among utilities and won't be implemented fully until 2018. Meanwhile, the implementation of other technologies, such as flue gas desulfurization, that remove some mercury while scrubbing other pollutants from coal, has helped cut mercury emissions in Europe and North America.

On the face of it, China's new rules on sulfur dioxide should help combat emissions of mercury, too. Beijing is requiring many power plants approved after 1995 to install equipment that reduces sulfur dioxide, and such equipment often has a bonus effect of filtering out some mercury. China this summer also increased the fees that power plants must pay for each ton of sulfur dioxide they emit, hoping it will give all coal-fired power plants an incentive to buy such equipment.

But the reality is that sheer increases in Chinese coal consumption, together with difficulty policing polluters, will more than offset whatever reductions in sulfur dioxide and mercury are achieved by the rules, experts say. For China, the economics of coal remain irresistible.

It is less expensive, and "with current global reserves, it probably wouldn't be a stretch to keep using coal another 200 years," says Fan
Weitang, president of the China National Coal Association. Sitting in his Beijing headquarters at Coal Tower, a sleek new 22-story building, Mr. Fan is caught off guard by questions about mercury pollution. "It is hard for me to discuss that in depth," he says. Other pollutants like airborne particulates, and SOx and NOx, receive more attention, and "won't be much of a problem" in the near future, he promises.

That view isn't shared by Chinese scientists. " `No problem?' Big problem," says Tang Dagang, head of atmospheric research at the Academy of Environmental Sciences, which is funded in part by SEPA. By the end of last year, only 5% of the installed capacity of coal-fired plants in China had technology to reduce sulfur dioxide, according to official statistics. While new rules will require the retrofitting of many plants with such technology, Mr. Tang says older plants that account for half of existing power-making capacity are exempt.

What is more, there is little economic incentive for power plants like Wuhu Shaoda, the Anhui province company partly owned by AES, to further clean up its act.

For the several thousand tons of sulfur dioxide Wuhu Shaoda will emit next year, the company will pay an estimated fee of the equivalent of $400,000, according to an official with knowledge of the plant's emissions. That is much less than the $14.5 million engineers at the plant say it would cost to buy sulfur-dioxide-removal systems.

Foreign investors in the Chinese power sector, rather than leading the way toward cleaner technology, are viewed by some Chinese officials as environmental slackers. "They say, `So long as we meet the requirements, that's good enough,' " says Hao Weiping, a senior industry regulator at the National Development and Reform Commission, which formulates the country's energy policy. Most foreign plants "haven't achieved the levels of advanced domestic plants."

Troublesome aspects of doing business in China, from shoddy construction to unenforceable contracts, can make it hard to uphold high standards, say some foreigners in the industry.

When a joint venture majority-owned by AES commissioned the construction of a coal-fired plant called Aixi near the Western Chinese city of Chongqing in 1996, local contractors failed to meet all sorts of benchmarks in quality and timing, recalls Bill Ruccius, who was China president for AES when the plant was being built. Chinese arbitrators nonetheless ordered the AES joint venture to pay the contractors in full. "The performance of that plant was horrible," says Mr. Ruccius. "The combustion efficiency was horrible, sulfur removal never worked. After one year, it looked 50 years old."

Haresh Jaisinghani, AES Asia vice president, says the plant's problems have been fixed. Yet some substandard Chinese plants operate with impunity, in part because SEPA lacks the teeth to stop them. Inspectors work for local governments rather than Beijing and are loath to penalize a plant that their government employers depend on to create jobs and may own a stake in. SEPA in Beijing lacks the authority to shut down even egregious polluters; officials don't even know exactly how many coal plants there are in China.

"Enforcement is very lax," says Mr. Ruccius, who now runs a boutique investment bank in Hong Kong. "The way it really works is the environmental-protection guy comes by once a year and you negotiate your environmental fee based on what your theoretical emissions are going to be."

Asked whether this sounded like a fair representation of his department's wider enforcement record, Mr. Pan, the deputy director of SEPA, says: "He's correct. I agree. And I hope you'll report it that way. Our monitoring capacity is completely inadequate."

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