Safety And Environmental Issues In Chinese Coal Industry:Responses,Investment And Policy

This study aimed at investigating safety and environmental issues in Chinese coal industry: responses, investment and policy in relation to development of the industry. This was done through identifying safety and environmental issues associated with coal mining industry in China: impacts, responses and solutions; identifying coal industry’s safety and/ or environmental investment and technologies uptake in China comparing to other world largest coal producers; measuring efficiency levels or productivity of selected coal mining firms after inputting safety and environmental investment and examining whether policy/regulation has an influence on safety and environmental investment and technologies uptake. Extensive literature review was carried out as well as the analysis of 2007 to 2012 panel data of 51 selected coal Firms in China was analyzed to achieve these objectives. This study unveils safety and environmental issues in Chinese coal industry and advocates for safety and environmental investment as one of the inputs to be fully embraced in coal industry despite its associated costs because it may perfect the industrial development and enhance sustainable development solutions of the industry. Through Government regulation/policy, the penetration of safety and environmental investment and responses into the competitive market is possible.The structure of this thesis is in such away that it comprises of 7 chapters. Chapter 1 is Research Introduction; Chapter 2; Theoretical Background and Hypothesis Development:Why Safety and Environmental Investment, responses and policy are Essential; Chapter 3; Coal mine Safety and Environmental issues in China compared to USA:Drivers, Impacts, Responses and Solutions; Chapter 4; Status of Environmental Technologies investment and Uptake:Clean Coal Technologies in China compared to other largest coal producers (India, USA and Australia); Chapter 5; Safety and Environmental Investment Effect Analysis:Empirical Study of Selected Coal mining Firms in China; Chapter 6; Analysis of Safety and Environmental Investment Policies for China as compared to USA:It’s Effect on Development of Coal Industry and Chapter 7; Conclusions and Policy Implications.On identification of safety and environmental issues associated with coal mining industry in China:impacts, responses and solutions; Results indicated that China’s coal mine safety and environmental situation is driven by nature of coal geology, methods of mining, levels of technological progress, safety and environmental investment levels, administrative system and intensity of exploitation; and by using case study analysis, these factors were validated. Solutions for addressing coal industry’s safety and environmental concerns (with emphasis on China) were then proposed as; involvement of the public, shifting from public production of public goods to public finance, emphasis on technological progress and innovations, uncompromising enforcement of regulations and laws, more investment in supervision, education and awareness as well as the general institutional changes.On environmental investment and technologies uptake in China comparing to other largest coal producers (Clean coal technologies); Observations indicated that China recognizes the importance of utilization of improved quality coals such that tremendous progress has been made in both pre-combustion and power generation based clean coal technologies over the years despite there being challenges e.g. water scarcity in wet beneficiation. Results furthermore indicated that progress on commercial development and deployment of power generation based cleaner technologies is very possible in both developing and developed countries and more specifically China; and fiscal policies are likely to increase uptake and prospects for uptake by private industry. However, integration of non-fiscal policies with participation of private coal energy industry may also help to achieve remarkable development and uptake.On Estimation and prediction of efficiency levels of selected coal mining firms after inputting safety and environmental investment, it was indicated that (1) during the study period, coal mine safety and environmental/R&D investment was low among China coal firms and thus treated as some of the operational costs which have to be minimized as much as possible as a way of maximizing profitable output. (2). lower investments on safety and environmental/ R&D with increases in capital, correspondingly resulted into increases in output (sales revenue) and enabled most firms to achieve some technical efficiency increases with time despite the increase being lower. (3). Overall Firm scale efficiencies were higher among large firms as compared to medium firms and small firms had the lowest; however, with some improvements within each scale as evidenced by as 2012 levels being higher as compared to 2007 levels. (4). Nevertheless, among medium scale category some firms assumed higher technical efficiency levels as compared to those in large scale category; implying that largest coal firms are not always the best in terms of productivity and efficiencies. (5). Firm level future efficiency levels based on empirical MLE results indicated that capital, R&D and Safety input parameters generated negative coefficients; indicating a decreasing effect on technical inefficiency implying that 1 unit increase of these parameters could result in future technical efficiency improvements.Examination of whether policy/regulation has an influence on safety and environmental investment and technologies uptake; indications pointed to the fact that China has in place numerous coal industry safety and environmental investment related policies/ regulations and a working enforcement institutional arrangement and approach (which is mainly command and control). However, their effect is hampered by not being backed by strong legislation. Hence, they are only working in reducing fatalities but rarely are they significantly fostering increased safety and environmental investment. That is, coal mine safety and environmental components were not sufficiently being treated as inputs to yield profitable outputs by many firms, but rather as one of operational costs in production which then led to them being minimized as much as possible in coal mining industry.Overall recommendations and policy implications were made that; (1) To address China’s coal industry’s safety and environmental concerns, there will be need for public involvement in policy formulation as well as technology development and deployment (Private-Public partnerships are most preferable), There is need for shifting public production of public goods to public finance, emphasis on technological progress and innovations, strong and uncompromising enforcement of regulations and laws, more investment in supervision, education and awareness as well as the general institutional changes. (2) Addressing future water scarcity problems in derailing widely used physical pre-combustion clean coal technology (wet beneficiation), development and embracing efficient dry beneficiation technologies as well as other wet technical systems that are efficient and conserves water is essential (e.g. Green coal preparation). (3).There is need for integrated approach in formulating and application of policies related to pre-combustion and power generation related CCTs as well as creating room and strengthening participation of private industries in this process. (4). There is need for properly designed and strengthening safety and environmental policy/regulation that fosters investment and technological improvements through addressing the weaknesses such as lack of supporting legislation, bribery in enforcement, inadequacy in addressing interests of all stakeholders and inadequacies in State initiated trainings. (5) Current Chinese coal mines policy of consolidating, merging and closure of small coal mines with the aim of achieving medium and large scales is well placed in economic terms as it may help address small scale firms challenges of investing in safety, environment and R&D and still operating productively and efficiently. (6). Safety and R&D /environmental inputs investment increases may not always be associated with reductions in productivity and technical efficiencies in production process; may also have a positive effect on future technical efficiencies.The Novelty of this study is that it establishes the existence of the positive relationship between safety and environmental investment, responses and policy on development of coal industry.