China's Coal Methane: Actors, Structures, Strategies and their Global Impacts by Agence Française de Développement

Agence Française de Développement

working paper December 2012

China’s Coal Methane: Actors, Structures, Strategies and their Global Impacts

Ke Chen, Research consultant Olivier Charnoz, Agence Française de Développement

Research Department Agence Française de Développement 5 rue Roland Barthes 75012 Paris - France Direction de la Stratégie www.afd.fr Département de la Recherche

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Authors Dr. Ke Chen is a Research Consultant. Email: heroquixote@gmail.com ; mobile: +8610-13522210435 Dr. Olivier Charnoz is a researcher at Agence Française de Développement (AFD), in charge of the programme entitled “Local Politics, Global Impacts”. Contact: o.charnoz@gmail.com

This research has been designed and funded by the Agence Française de Développement, as part of a research programme entitled “Local Politics, Global Impacts” and led by Dr. Olivier Charnoz. Its guiding mission is to look at the international impact of local power dynamics in various policy areas, notably the protection of biodiversity, the fight against emerging diseases and the reduction of carbon emissions. This work has involved case studies in Brazil, Saint Lucia, Indonesia, India and China. More information and related publications can be found on the website of the AFD Research Department.

Copyright Copyright © Ke Chen & Olivier Charnoz, 2012 All rights reserved. Except for the quotation of short passages for the purpose of criticism and review, no part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of Ke Chen & Olivier Charnoz.

Disclaimer The views and opinions expressed in this publication are those of the authors and not necessarily those of the Agence Française de Développement.

Publications Director: Dov ZERAH Editorial Director: Alain HENRY ISSN: 1958-539X Copyright: 4rd quarter, 2012

Layout: Eric THAUVIN

Acknowledgements The authors feel indebted to many participants who generously gave their time and expertise in a series of personal interviews, and those who commented on preliminary drafts of this paper. Since anonymity was promised, the authors must acknowledge their contributions accordingly, with an emphatic note that this challenging study could not have been accomplished without their participation, cooperation and input.

Abstract The need for China to alleviate its energy shortage, reduce its dependence on foreign sources and mitigate its climate impact is driving a dire quest for alternative fuels. Coal Mine Methane (CMM), in this context, holds significant potential. While the 11th Five-Year Plan aimed to capture and use 10 billion m3 per year of CMM by 2010, the country achieved less than a quarter of this. This paper enquires into this puzzling outcome, which bears consequences for the world at large. China is indeed responsible for more than 40% of the world's total un-captured CMM emissions – which act as a greenhouse gas 21 times more potent than CO2, and whose role in global warming is often underestimated, especially in short- and medium-term climate strategies. While the Chinese central government may have incentive to work towards promoting CMM, the benefits of such policies at the sub-national level are far from self-evident. National CMM policies can have significant economic and social costs at the local level, and thus their implementation can be jeopardized. Implementation of such policies is inherently ambiguous, conflicting, and as such, political. Current research on the Chinese CMM industry has largely focused on its techno-economic aspects, with little if any politico-institutional analyses. As for policy research on the larger Chinese energy sector, this seems sturdily to embody a top-down view: it mostly ends up blaming the country’s decentralized governance structure and lack of a stringent implementation chain. Such top-down approaches do not help uncover “the sinews of war”: the range of less formal mechanisms, negotiations and agreements among the local actors, without which implementation does not in fact occur at the sub-national level. Nor do topdown research approaches facilitate inquiry into the way local stakeholders reframe the meaning, content and impact of CMM policies. More generally, the top-down approaches fail to consider the significance of actions taken locally, outside the “governmental box”, and the logic behind these actions. This paper takes a "micro” and “bottom-up" approach in order to shed light on the political tactics needed for policy change to take place. Three provinces were selected as case studies – so as to capture the rich variation in the local implementation environment, but also to uncover the key industrial processes involved in CMM development and utilization: 1) CMM exploration in Shanxi; 2) CMM transmission and delivery across Shanxi and Henan; 3) and CMM utilization in Guizhou, respectively. In particular, the conclusions highlight the role of “policy entrepreneurs” who often play a critical role in bridging the institutional, infrastructural, technological and financial divides. They resort to an arsenal of strategies, ranging from coalition building, to the manipulation of decision-making forums, to the strategic framing of issues and opportunities. Such actors are crucial to policy change and may act as useful allies and entry points for international donors attempting to help China move forward.

Table of contents Introduction

Enquiring into the CMM puzzle: beyond the techno-economic view

1.1.

The lack of bottom-up analysis in the current research on CMM

1.2.

Research design: a qualitative case study approach

1.3.

Research questions and paper outline

CMM: A potential game changer for the Chinese energy landscape

2.1.

The “Janus face” of CMM as a regulatory concern

2.2.

CMM as a “killer”

2.3.

CMM as an energy boon of strategic significance

2.4.

CMM as a global warmer

Structuring of the CMM/CBM playing field: Balkanized institutional frameworks and shifting actor alignment

3.1.

Contending mining entitlements: a knotty, “Merchant of Venice” problem

3.2.

Regulatory transition toward increased compartmentalization and local autonomy

3.3.

A fledging policy framework to be strengthened: problems with ambiguities and conflicts

3.4.

Shifting actor alignment: redrawing the State vs. societal boundary

CBM exploration in Shanxi: pre-empting strikes to stake out the CMM terrain

4.1.

Contending mining rights : structural tensions between mining and CBM companies

4.2.

A déjà vu of the “Partition of Fiefdom of Jin”: national SOEs pre-empting the CBM market

4.3.

Shanxi fights back: building coalitions to lobby Beijing

CMM power-to-grid in Guizhou: community engagement as bridge

5.1.

The provincial CBM/CMM scene in Guizhou: large potential in a poor province

5.2.

Gas-to-power as the main option for CMM recovery and use in Guizhou

5.3.

Hurdles for grid-connected CMM power generation: who will pay the subsidy?

5.4.

Local strategies for overcoming the hurdles

CMM transport from Shanxi to Henan: successful entrepreneurship breaks a deadlock

6.1.

Background

6.2.

The Duanshi-Jincheng-Bo’ai CBM pipeline

6.3.

Tan Yuanrong: a maverick entrepreneur

6.4.

Seizing the opportunity

6.5.

Seeking the least common denominator to secure an alliance

6.6.

The Shanxi Tongyu CBM Transmission & Distribution Company

6.7.

A “mission impossible”

Conclusion

Acronyms and Abbreviations

Units of Measure

Bibliography

Introduction

The future of international issues, such as climate change,

selected here as a promising telltale case, not only for its

global health, and environmental protection, increasingly

saliency to the energy-climate nexus but also to issues

depends on States’ ability – not just their willingness –

regarding implementation. To provide some context, a brief

to adequately implement domestic policies in line with

introduction to CMM is in order.

national and international goals. There is thus a need for global governance scholars to better factor in the interplay

CMM and CBM – short for Coal Mine Methane and Coal

of actors, interests and power structures that are active

Bed Methane, respectively – refer to methane-rich gases

at the sub-national level, and how these impact the

that occur naturally in coal seams (UNECE, 2010). The gas

implementation of national policies with global significance.

is released as CMM when coal seams are disturbed by

Such a “micro” or “bottom-up” understanding of global

mining activities, and becomes explosive when methane

issues should help in re-thinking international cooperation

(CH4) concentration in the air reaches the range of 5% to

and endeavours required to support countries that are

15%. Two safety methods are commonly used by

pursuing policies of global interest.

coalmines to reduce the risk of explosion: one is to rapidly dilute CMM concentration to below 5% CH4 through

China is particularly fit for this type of enquiry for a couple

ventilation systems; CMM thus diluted and vented becomes

of reasons. First, the sheer size of its resource base,

Ventilation Air Methane (VAM). When CMM flows are

growing economic weight and consumption power render

so high that they overwhelm the capacity of the mine-

its domestic policies increasingly consequential for the

ventilation system to dilute its methane level, CMM can be

global commons. Second, China’s complex governance

collected through the mine’s drainage system. Combined

structure makes homogeneous implementation within its

use of these two systems, if designed properly, will ensure

boundaries a colossal challenge in and by itself. The latter

that CMM can be safely captured and transported in

is made even more complex, given China’s rapid economic

satisfactory quantity and quality, which is only the first step

and social changes, which are multiplying the number of

toward CMM utilization.

conflicting

priorities

all

governance

levels.

Decentralization during the reform era extended extraordi-

If neither used nor destroyed, captured CMM (and VAM as

nary discretion to local officials, who, through their control

its diluted form) would be discharged into the atmosphere,

over local branches of state enterprises and regulatory

becoming a major greenhouse gas (GHG) with a global

agencies, have gained increased power in shaping policy

warming potential (GWP) of more than 20 times that of CO2

implementation in ways that make it difficult to ensure the

(IPCC, 2007). Globally speaking, methane totals 14% of

uniform, let alone effective, implementation of China’s ener-

anthropogenic GHG emissions, of which 6% can be

gy and environmental promises.

attributed to coalmine operations, or about 400 million tonnes of CO2 (MtCO2e) per year (UNECE, 2010). With the

On the one hand, policies set at the national level often

continued dependence of the global economy on coal

encounter “resistance or outright disregard” at the local

production for the foreseeable future, CMM emissions from

level (Wendt, 2008); but on another hand, local actors

coalmines are projected to increase through 2020

sometimes use creative tactics to bridge national priorities

(Methane to Markets, 2008; IPCC, 2007), with estimates as

with local interests, or to better align one with the other. The

high as 793 MtCO2e by 2020 (ESMAP, 2007).

(emerging) policy of promoting the development and

This is because in many parts of the world, mining activities

utilisation of Coal Mine Methane (CMM) in China is

have progressed deeper into more gassy seams as shallow

reserves are exhausted, thus liberating more CMM.

prominent place in China's national energy strategy for

However, if the explosion risk can be effectively managed

years to come, firmly staying above 50% of China's energy

and other circumstances permit, coal methane can be a

mix in the foreseeable future even under the most

clean, alternative energy source. For economic use, coal

optimistic projection for energy diversification.1 This view

methane can be captured as CMM during or after the

is substantiated by the fact that even after decades of

mining processes, or otherwise extracted from surface

intensive development, alternative energy resources

boreholes as CBM, independently and/or in advance of

(mainly hydro) have never risen to be 10% of China's

mining (USEPA, 2005). Of course, the viability of any CMM

primary energy supply (Xing and Clark, 2010; Tu, 2007).

utilization scheme ultimately hinges on locally feasible

Limited in oil resources, China's dependence on overseas

technologies, a mature gas market, good pricing, a well-

oil had already reached an alarming level of 47% back in

developed pipeline infrastructure, and a constellation of

2006 (Xiao, 2008); its per capita natural gas reserve is only

other downstream factors in effect locally and across the

1/12 of the world average (ESMAP, 2007). Looking into a

region.

future where oil and natural gas supplies become constrained, China is prone to the old policy position of

With this background in mind, we are ready to explore the

favouring the cheap extraction of coal to ensure energy

implications of CMM in terms of our research concerns.

security (Xing and Clark, 2010; Rosen, 2007). This

CMM is not only a major cause of coalmine fatalities, and a

would be a risky path, given the pernicious social

potent GHG gas; it is also a clean energy resource with the

and environmental side effects of coal production

potential to supplement carbon-intensive fuel types, such

and consumption. It would also thwart efforts to seek

as coal and oil, in China. While CMM issues are attracting

undeveloped or less-accessible clean energy alternatives,

growing attention, mainly from the perspective of global-

coal methane (CMM) being one of them.

climate change, China also has compelling national and local reasons for addressing the issue - improving local

The total size of China's CMM reserve is ranked third in

coal-mine safety and air quality, as well as enhancing

the world (Luo et al., 2011), comparable with that of its

national energy security (Qian, 2008). In the Chinese

conventional natural gas. However, China lags far behind

context, therefore, CMM development and utilization offer

developed coal-producing countries in terms of CMM

an illustrative case of how global, national, and local

drainage efficiencies; its CMM utilization rates also remain

concerns could be interconnected in policy formulation and

low, with more than half of the total mine-gas extracted

how diverse policy goals might be reconciled across scale

being released directly into the atmosphere.2 As a result,

during policy implementation.

China is now responsible for more than 40% of the world's total CMM emissions.3 It is projected that by 2020, the total

Blessed with vast coal reserves, China has disproportionately

amount of CMM released from Chinese coalmines will

relied on coal to fuel its rapid economic growth. Since 2000,

increase by more than 65% above present levels, due to

the country’s coal consumption has grown by more than

the inevitable rise in coal production extracted from deeper,

10% per year (Tu, 2007). It now uses more coal than the

more gassy seams (ESMAP, 2007). Without firm and

US and the European Union combined (Wendt, 2008).

immediate actions to mitigate CMM emissions by improving

Coal’s abundance and its ready accessibility assures it a

the capture, utilization and destruction of gas at the coal-

1 Despite major growth in the Chinese oil industry since the discovery of the Daqing oilfield in 1959, coal has never been less than 70% of China’s energy supply over the past 50 years (Tu, 2007). 2 In 2004, only about 10% of total CH4 was captured, of which only 4.3% was utilized and the

mines, such a steep increase in CMM volumes vented into the atmosphere is bound to have significant global consequences.

emissions thus avoided. In comparison, CMM drainage efficiencies in the US increased from 32% in 1990 to 42% in 2003, on average (ESMAP, 2007). 3 It is estimated (ESMAP, 2007) that in 2004, China's coalmines contributed almost 38% of

CMM (together with other clean-coal technologies)

the country’s anthropogenic CH4 emissions (i.e. 18 Bm3 of CH4, or 271 MtCO2e). China’s

represents a new and improved use of coal-based energy

CMM emissions represented 43% of global CH4 released by coal mining in 2004, expected to rise to more than 50% by 2020.

(cf. Wendt, 2008), for it offers a reliable source of energy

while minimizing adverse health and environmental effects.

The foregoing brings up two other interesting aspects of

The Chinese government has made a high-profile commit-

CMM policies in the context of our research. First of all,

ment to significantly increase CMM development and use,

CMM policies find themselves at the nexus of competing

yet the top-down implementation of this strategy faces

priorities in situ, most prominently about safety, coal

many challenges at the local level.

production, gas drainage, capture, and utilization at a given coalmine. In anticipation of this, statutes and regulations

First of all, implementation requires a paradigm shift in the

regarding CMM development and utilization often require

regulatory regime: re-framing the CMM problem as a

ambiguous language and contradictory goals to gain

resource recovery and development issue, and not as a

support and make it past the policy formation stage, as well

safety hazard. However, most small and medium-sized

as to leave sufficient leeway for “street-level bureaucrats” to

coalmines in China – the majority being locally owned

negotiate implementation in light of local conditions

and/or operated – still tend to see CMM more as a harm to

(cf. Matland, 1995). We therefore are likely to see wider

be mitigated than as an alternative energy resource to be

variation in how CMM policies are implemented at the local

utilized. Consequently, CMM drainage work is motivated

level than with some other national energy policies.

primarily by compliance (often minimal) with safety

Secondly, the pursuit of CMM development and utilization

ordinances, rather than for productive purposes, and CMM

would entail a fundamental shift of priorities within the

utilization is often deemed marginal to coal production.

existing resource-management regime, not outside of it;

Therefore, expenditures on improving CMM monitoring and

therefore, by nature, implementation of CMM policies is a

drainage infrastructure, as well as on personnel training,

matter of balancing policy change with policy continuity.

are often treated as a cost to be minimized, instead of a productive investment to be capitalized.

To sum up, the CMM policy arena provides a perfect example of “local politics, global impacts”, which happens

Ironically, while many Chinese mines have backed away

to be the research focus of this series. The CMM arena

from actively advancing CMM utilization, some others have

comprises a number of significant policy concerns, so that

jumped on the bandwagon recklessly to maximize the

policy making and implementation have to contend with

perceived economic gains, regardless of the inadequacies

competing priorities each step of the way, both across scale

in their drainage systems and staff training, and in defiance

and in situ; it raises questions about policy and institutional

of safety ordinances. Such a response is counterproductive

change

to the improvement of mine safety and to the development

descriptions and prescriptions but also allows for the

of a sustainable CMM utilization industry. Clearly, endorsing

possibility of convergence between the top-down and the

CMM utilization is one thing; promoting safe CMM

bottom-up perspective. As such, the focus of our study

utilization is another.

cannot be anything but a political one.

and

continuity;

defies

top-down

policy

1. Enquiring into the CMM puzzle: beyond the techno-economic view

At the dawn of China's 12th Five-year Plan (FYP),

it is also a clean energy resource with the potential to

overwhelming signs herald a sweeping upcoming change in

supplement carbon-intensive fuel types, such as coal and

the country's energy scene.

oil, in China.

Increasing demand for cleaner-burning fuels and mounting

China has set an ambitious target for its 12th FYP to more

pressure to reduce carbon emissions have compelled

than double its annual CMM production to 21 billion m3.

China, already the world's largest GHG emitter, and soon to

Accordingly, China plans to triple its use of gas (both

be its top energy consumer, to take a leap into the use of

“conventional” and alternative types) to about 10 percent

unconventional gas so as to cut its reliance on “dirtier” oil

of national energy consumption by 2020; it aims to add

and coal.4 In November 2009, China pledged to reduce car-

1 trillion m3 of recoverable CMM reserves by 2015, and

bon dioxide emissions per unit of Gross Domestic Product

another 2 trillion m3 by 2020, through investment and

by 40 to 45 percent by 2020, from 2005 levels.5 Achieving

prospecting.6

this goal will require rapid adoption of all energy efficiency, low-carbon or zero-carbon technologies. CMM recovery

Over the past 15 years or so, and especially during the 11th

and use stands out as a promising part of this portfolio.

FYP (2006-2010), China built up an impressive capacity for CMM recovery and utilization, and rapidly became one of

Inspired by successful experiences carried out mainly in the US, during its 11th Five-Year Plan (2006-2010), China

the world leaders (along with the US, Australia, Britain and

embarked on a massive campaign to explore its immense

of the world's largest CMM projects,7 and enactment of a

coal methane reserve as an alternative energy resource. As

number of supporting policies.8

South Africa), as evidenced by its implementation of some

outlined earlier, although coal-methane gas is a major cause of coal-mine fatalities and a potent GHG gas,

However, there are also worrisome signs. The 11th FYP target was to produce 10 billion m3 of coal methane

4 Coal and oil are both carbon-intensive fossil fuel sources. Coal mining and use can constitute a threat to health, safety, and the environment. “In China, thousands of miners die each year in coal mining accidents. Coal mining and inefficient methods of coal combustion in power plants and coke ovens have contributed to severe pollution and the depletion of surface and underground water supplies throughout China. Emissions of particulates, sulfur dioxide, and mercury resulting from the transportation, storage, and combustion of coal produce hundreds of thousands of deaths each year from lung and heart disease. Some of these effects, such as acid rain from sulfur dioxide emissions, carry to neighboring countries, and mercury pollution travels all the way across the Pacific to the United States” (Wendt, 2008, p.2). 5 Xinhua (6 January 2011). China meets 5-year energy-saving goal. Available at: http://news.xinhuanet.com/english2010/business/2011-01/06/c_13679329.htm 6 Official data contained in China's 12th FYP has not been made publicly available as of yet. See http://www.chinadaily.com.cn/usa/business/2011-07/16/content_12915817.htm 7 For example, the Sihe 120MW CMM-to-power project in Shanxi Province was commissioned in 2008, which is the largest CMM project in the world. Additionally, the Songzao CMM-to-LNG project in the Chongqing municipality, yet to be commissioned, is the largest CMM project of this type in China. 8 Most notable of these policies is to make it mandatory for coalmines to drain CMM prior to mining activities, which significantly changes the economical viability of CMM Recovery and Use.

annually by 2010. China reportedly achieved less than a quarter of this target, casting doubt on the 12th FYP targets. While many studies attribute the shortfall to technological, institutional, financial and other types of inadequacies, this study looks elsewhere for explanation. We suspect that the key to understanding underperformance in policy implementation lies in studying stakeholders' behaviour and the incentive structure. We are thus motivated to look at the interplay of structures, actors, and strategies often manifest in local power struggles, and their impact on policy implementation, as well as on policy definition. Such a “micro” or “bottom-up” approach could help explain the surprising shortfall in the CMM targets set by the 11th FYP.

1. Enquiring into the CMM puzzle: beyond the techno-economic view

1.1. The lack of bottom-up analysis in the current research on CMM

Over the past decade, due to growing awareness of

This type of research does offer penetrating insights, but it

the significance of CMM for GHG mitigation and China's

also ignores much of what is contained in policy literature

national security, numerous studies on the emerging

about how messy and political the implementation of

Chinese

commissioned

regulations is, particularly in China.9 To date, within the

international

research community and among policy observers, various

development agencies, foreign CBM developers, or have

views have developed about what could explain variations

been undertaken by individual industrial researchers (most

in local implementation. Kostka and Hobbs (2011b) have

notably, Luo et al., 2011; ESMAP, 2007; IEA, 2009).

aptly summarised four of them, to which we add a fifth

Although these studies have offered some very relevant

category based on their work. We suggest referring to the

policy insights, they also suffer from two inadequacies.

various dynamics using the following key phrases (in italics). 10

CMM

international

industry financial

have

been

institutions,

First, they typically present a limited, techno-economic focus on industrial processes, market potential/barriers,

Disjointed

while failing to consider the significance of actions taken

homogeneous implementation is hindered by lack of clear

locally in policy implementation and the logic behind such

institutional responsibility, which is largely disjointed in

actions. Second, they tend to take a top-down view,

China.

with a highly prescriptive bent. As such, their policy

authoritarian” bureaucratic system (e.g. Lampton, 1987;

recommendations usually focus on variables that can be

Lieberthal and Oksenberg, 1998; Lieberthal, 2003).

This

implementation.

turn

reflects

this

China’s

first

view,

“fragmented

manipulated at the centralised level. 2. Selective implementation. Here, local governments For example, a recent study by Luo et al. (2011) attempts

select which national policies are to be implemented based

to provide CMM policy recommendations based on an

evaluation of the overall economic viability of China's CBM

governance structure11 allows local officials to pick and

resources. After identifying the three most significant

chose which national policies to undertake and which not to

factors for determining economic viability (CBM price,

apply (e.g. Economy, 2004; O’Brien and Li, 1999).

local

conditions.

China’s

highly

decentralized

production rate, and operating costs), the authors analyse the validity of major policies by gauging the impact of

3. Self-contradictory implementation. In this approach, the

different policies on the profitability of CMB resources. They

centre still wields substantial power; it is the formal

argue that value-added tax (VAT) reimbursement, financial

constraints imposed by the central government itself that

subsidies, and a corporate income-tax exemption are

should be held responsible for the implementation gaps

the most effective policy instruments for improving the

(Ran, 2009).

economic viability of CBM resources. They then proceed to put forward a set of recommendations based on these

4. Conflictual implementation. In this alternative view, the

centrally formulated policies, calling for clear, explicit, and

quality of implementation at the local level is strongly

consistent goals.

diminished by conflicts of interest between national and

9 In reference to the old saying: “There are two things you never want to see being made...”10 This typology is drawn from Kostka and Hobbs (2011b) but the suggested “key words” are ours. 11 The Chinese constitution provides for three de jure levels of local government: province, county, and township. Currently, however, there are five practical (de facto) levels of local government: the province, prefecture, county, township, and village.

sub-national actors. Conflicts may arise when national policies fail to take into account their negative impact on local businesses, employment or taxation revenues. In such situations, national policies without sufficient local support and legitimacy are strictly implemented only when

1. Enquiring into the CMM puzzle: beyond the techno-economic view

there is direct and constant attention from the centre. Policy

There are at least three types of research questions,

outcomes, therefore, depend on the interplay between

derived from the above typology, which can be used to

national priorities and local incentives.

study the various modes of implementation:

5. Transformative implementation. In this last approach,

1. How is implementation unfolding in practice? The

local actors (and primarily local leaders) re-negotiate and

five implementation modes need not be mutually exclusive,

reframe the meaning and implications of national goals and

as they point out dynamics that can vary depending on

policies to increase their acceptability at the local level.

location or issues, or even be intermeshed within a given

Transformative implementation is of particular interest to

policy area. Combining the key modes may be necessary

our research as it refers to facts that have just started to be

to gain a finer understanding of what is going on.

explored in the literature – a case in point being Kostka and

Attention may also need to be paid to the role of policy

Hobbs’ work on energy efficiency in Shanxi (2011). These

entrepreneurship in driving policy change. A policy

authors suggest that local leaders reframe national goals,

entrepreneur can be an individual or an organization that

policies or programmes into discourses that cater to local

exploits an opportunity to influence policy outcomes in

interests (“interest bundling”). They may also “bundle” these

order to maximize its own or public interest, but the policy

national goals with local ones to create policies that have

entrepreneur may not necessarily have sufficient resources

greater local support and significance (“policy bundling”).

for achieving this goal (Cohen, 2011, p.2). The concept of

Windows of opportunity are also used to decrease the risk

policy entrepreneurship has entered into the scholarly dis-

of rejection due to external constraints, for instance, an

course that deals with policy change (see, e.g. Huitema,

economic downturn or the run up to the Olympic games.

2010; Perkmann, 2009; Steen, 2008; Sutton, 1999)

Through these “tactics” – that need to be further researched – municipal and county officials try to balance national and

2. Divergence or Convergence? Is the implementation

provincial demands with local interests.

mode identified on the ground enabling or distorting the realisation of national goals? Does transformative

Such bottom-up research on Chinese CMM policy develop-

governance, for instance, really enable national policies to

ment is literally non-existent. Kostka and Hobbs’ (2011a,b)

be better-pursued locally through the bridging of national

recent studies on Chinese sub-national governments'

priorities with local interests? Or does this rather distort the

implementation strategies for meeting national energy

expected outcomes? While many studies emphasise diver-

efficiency targets may serve as one of the few relevant

gence, one at least emphasises convergence (Kotska,

references. Their paper highlights specific implementation

2010b).

methods that officials use to strengthen formal incentives and to create effective informal incentives for complying

3. Flexibility or collusion? All five implementation modes

with energy efficiency mandates. The analysis is drawn

are also subject to this question. For instance, does

from extensive interviews conducted in Shanxi, a major

transformative implementation reflect constructive flexibility

coal-producing and energy-intensive province. Their

in the way the national interests are defined and pursued at

findings suggest that local government leaders conform to

the local level? Or does it rather foster dynamics of

the national directives by “bundling” the energy efficiency

collusion that benefit limited and powerful interests groups

policy with policies that are of more pressing local signifi-

to the detriment of other local or national stakeholders?

cance or by “bundling” their energy efficiency objectives with those of interests groups with significant political

While we will not use, nor rely upon, all of the

influence. Ultimately, sub-national government officials

implementation categories, our research is informed by the

frame policies in ways that give them legitimacy at the local

above framework of questions.

level.

1. Enquiring into the CMM puzzle: beyond the techno-economic view

1.2. Research design: a qualitative case study approach

Our study leans toward the bottom-up approach

warm them up and set the stage. Efforts were made to

exemplified in Kostka and Hobbs' paper. Empirical data and

secure prior approval for recording and note-taking, and to

information for this research have been collected mainly

ascertain whether the prospects were willing to be cited in

through interviews and a literature review that comprises

the final paper as anonymous information providers.

print and online sources, professional and lay literature.

Interviewees clearly indicated that they did not want to be

Care was exercised to select interviewees from a

identified in the final report, and their wish was obliged.

representative cross-section of stakeholders involved in

Three provinces – Shanxi, Guizhu and Henan – were

CMM policy implementation, ranging from regulatory

selected for this study’s fieldwork. They are all key coal-

agencies, research institutes, and coalmines, to consulting

production areas in China, but with diverse socio-economic

firms and NGOs. A total of 54 people from the three

profiles and CMM resource attributes. They were selected

case-study provinces, as well as Beijing, were interviewed

not only to capture the rich variation in local implementation

both directly and indirectly. Indirect interviews refer to

environments, but also to encompass the range of key

videos and transcripts of interviews conducted by media

industrial processes involved in CMM development and

professionals and made available on-line. Most of the

utilization: CMM exploration in Shanxi; CBM transmission

interviews were carried out in a casual setting. A research

and delivery across Shanxi and Henan; and CMM utilization

outline and a list of prompt questions was prepared and

in Guizhou, respectively. The research started at the end of

shared with the prospective interviewees in advance to

April 2011, and spanned a period of more than five months.

1.3. Research questions and paper outline

Through what processes and institutional arrangements are

Most of the studies that have been done so far on this

national CMM policies implemented on the ground? How do

dynamic resource domain deliver merely a factual (read as

provincial and local stakeholders interact? How does this

static) presentation of structures and rules for CMM

facilitate, hinder, or reshape policy implementation? Are

development and use. No study that we know of has

competing perceptions and interpretations of CMM issues,

attempted to address the above questions in any depth (if

policy discourses, and regulatory premises preventing

at all), or depict the implementation process in action.

positive change? A “structure-actor-strategies” perspective implicitly frames This paper attempts to identify variations in the local

this paper. We focus our attention on the constraints

implementation of regulatory policies, to document the

imposed on actors, the institutions of the CMM regulatory

shifting

and management regime.12

alignment

stakeholders,

their

strategic

interactions under evolving policy settings, and to also unravel certain policy paradoxes along the way. The

This paper is organized as follows. The second section

backdrop for the inquiry is set against the emerging, yet

offers an overview of the CMM issue as a potential game

significant CMM policy domain, around which various interests have in recent years coalesced to stage an evolving bid for power.

12 Tsebelis (1990, p.40) describes this rational choice perspective in the following terms: “Individual action is assumed to be adaptation to an institutional environment, and the interaction between individual actors is assumed to be a response to one another. Therefore, “the prevailing institutions (rules of the game) determine the behaviour of the actors, which in turn produces a political or social outcome“. For an excellent review of structure-agency framework in neo-institutionalist literature, see Hay and Wincott (1998).

1. Enquiring into the CMM puzzle: beyond the techno-economic view

changer for the Chinese energy landscape, by examining

parallel policy narratives. Written in a contextually rich style,

its complex nature, changing definitions, and policy and

they intend to capture the dynamics of the power struggle

regulatory dimensions. The third section turns to a politico-

among stakeholders and their strategic interactions (the

institutional analysis of the CMM issues, introduced by a

“strategies” part). Some differences across the cases are

broad sketch of the institutional arrangements and policy

presented and explored, but our central concern is to

environment (the “structure” part), within which the

identify common dynamics and key factors.

interactions between stakeholders help shape the evolution of China's CMM policies.

The concluding section attempts to relate the major findings

In the next three core sections (four, five and six), three

of this research to some strategic issues pertaining to CMM

case studies drawn from the fieldwork are presented as

development and use.

2. CMM: a potential game changer for the Chinese energy landscape

In this section, we provide information helpful in

China's coal methane reserves are distributed very

understanding the full significance of CMM in the Chinese

asymmetrically across the country. They are clustered in

context, as well as the regulatory challenges faced by the

seven geographic regions (see Map 1), with characteristic

coal industry. We conclude that CMM has the potential to

concentrations, richness, and the recoverability of the CMM

change profoundly the Chinese energy landscape.

endowment varying significantly across different regions.

To start with, let us recall that China ranks first in the world

The implications of the above features are manifold. First,

in the production of coal, which accounts for 69.91% of its

CMM drained and vented from underground mining

total national energy consumption (IEA, 2009). Overall,

(vs. CBM released from strip-mining) – if not used or

Chinese coalmines have the following notable features.

destroyed – would be the major source of anthropogenic

First, the majority are underground mines, which in 2007

GHG emissions in the Chinese coal industry.14 Second,

produced about 90% of Chinese coal. Second, they are

Chinese mines are more vulnerable to occupational

typically deeper, with an average depth of around 400

hazards and risks. Third, given all the above, and the

meters currently, which is increasing by about 10 meters

peculiar geological complexities in certain coalfields, it

per year, as excavation technology progresses.13 Third,

tends to be more expensive to invest in surface extracting

one-third of mines are gassy, one-third are prone to self-

and underground drainage systems, as well as more

ignition, and half of the total are susceptible to the risk of

challenging to design and operate such systems in order to

dust explosion. Fourth, workable coal seams are usually

balance CMM recovery and use with safety requirements.

thinner. Fifth, most coalmines are located in underdeveloped regions and impoverished localities (Chen, 2011a,b).

Map 1 - Distribution of CMM resources in China Northeast

Commensurate with its rich endowment of coal, China boasts a massive amount of coal methane, amounting to a

Northwest

total of roughly 31.5 trillion cubic m3 within a depth of 300-

2000m below ground (China University of Petroleum,

2008). Coal methane reserves in Shanxi Province alone

North

equal the national reserve of the US. More than 60% of China's coal methane reserves lie between 300 and 1500m underground, and currently, most Chinese CMM activities

South Southwest

to recover methane take place at this relatively easy-to-

Sichuan Yungui

reach depth.

Southeast

Source: IEA, 2009.

13 10 meters, on average, every year, given normal progress in mining operations, according to industrial insiders. Many old state mines are drilling at depths beyond 1,000 meters, at extremely high temperatures. 14 It is estimated that the large, State-owned mines, 46% of which are gassy (Huang, 2008), produced 42% of total national coal output in 2004 (Zhang et al., 2004) but accounted for more than 80% of CMM emissions in 2000.

In what follows, we explain what we mean by the “Janus face” of CMM – as a safety hazard and an energy opportunity – which renders its regulation extremely complex.

2. CMM: a potential game changer for the Chinese energy landscape

2.1 The “Janus face”15 of CMM as a regulatory concern

Coal Mine Methane (CMM) and Coal Bed Methane (CBM),

capture, recovery or destruction (through flaring), while the

alternatively called Coal Seam Gas (CSG) or “sweet gas”,

latter (CBM) usually refers to gas deposits to be extracted

refer to the methane that is adsorbed (adheres to the

as an alternative natural-gas resource often independent of

surface) by the solid matrix of the coal beds, and which

coal mining operations. In this text, CMM is used broadly to

loses its ability to be adsorbed by the coal when the

refer to all kinds of coal methane gases unless otherwise

coal-carrying strata is de-stressed, either before, during, or

specified.

after mining through various degasification methods. The liberated gas is then extracted or drained to the surface to

Unlike “conventional” natural gas, CMM has few heavy

be released, disposed of, or utilized -- either for safety

hydrocarbons like butane or propane. Besides, the

reasons and/or economic purposes.16

methane is stored in a near-liquid state on the surface of the coal by a natural process called adsorption. As such,

In industrial nomenclature, a subtle distinction is often

CMM is simply one of the “unconventional” natural gases,17

drawn between CMM and CBM in that the former refers to

among which CMM stands out in terms of certain energy

gas released (drained or vented) immediately prior to,

and environmental attributes; it is also the one gas that has

during, or subsequent to mining activities, hence with

seen the fastest development in China (Pilcher et al., 2007)

climate change impacts that can be mitigated by gas

2.2 CMM as a “killer”

The presence of CMM gas in underground coal mining

potential resource to be harnessed and utilized. Clearly, a

presents a serious safety risk under certain circumstances,

policy discourse based on such a prejudiced perception

even for the most modernized mines; therefore, gassy

and definition of CMM comes with biases which tend to be

mines are usually required by law to drain out CMM in order

perpetuated through policy and institutional choices, often

to improve mine safety. More than 95% of the coal mined in

to the detriment of good regulatory practices.

China comes from underground work (Vrolijk et al., 2005, p.2) where CMM gas has been a leading cause of mining

For example, responsibility for CMM regulation in China

fatalities, which happen regularly.

has in recent years been allocated to the State Administration of Coal Mine Safety (SACMS), with limited

For this reason, historically, CMM was cast in a negative

consultation with other agencies in charge of economic

light by Chinese coalmine operators and regulators, akin

development and resources management; mining safety

mainly to a hazard that is to be avoided, prevented, or

rules are enforced mainly by fines and sanctions, instead of

controlled; it was rarely perceived and defined as a

incentive-based policy instruments; expenditures on gas drainage, monitoring and training are often deemed by

15 In ancient Roman religion and mythology, Janus is a two-faced god. 16 In the next two paragraphs, we use information from various free encyclopedias, such as the Wikipedia article “coalbed methane”. 17 The “unconventional” natural gas family includes CMM, tight gas, shale gas, and gas hydrate. It should be noted that as a fossil fuel, CMM is cleaner than coal and oil, but not a renewable resource (akin to coal, oil and all types of natural gas). In Chinese regulatory practices, however, CMM is now treated as if it were a renewable resource; see below for examples.

mine operators as extra costs instead of an investment, and so forth.

2. CMM: a potential game changer for the Chinese energy landscape

2.3 CMM as an energy boon of strategic significance

Given that CMM gas and conventional natural gas have the

supplement to conventional natural gas, and with an

same main component – methane – the utilization of CMM

equivalent, even superior quality. China has a lot of coal,

energy content helps generate a relatively cleaner energy

but it is quite poor in oil and gas. Coal has underpinned

compared with coal.18

China's dramatic economic growth over the past 30 years and, in spite of China's great efforts to explore and develop

As a clean energy resource, CMM can be utilized in various

alternative energy sources, there has not been much

forms, and in different scales, to increase energy supply,

change in the country's energy production and consumption

improve energy security, reduce waste, and alleviate

structures (Wang, 2006). In this context, the development

environmental harms. At the local and regional levels, this

of CMM Recovery and Use is increasingly being seen by

energy resource can be used to generate electricity at the

top Chinese policy makers as strategically significant, for it

mine, supply gas to a nearby town, or for other uses

will help improve and optimize the national energy mix,

depending on specific needs such as fuel for industrial

reduce dependence on oil and natural gas imports, hence

furnaces, district heating, domestic cooking, automobiles,

enhancing national energy security and weaning the

and so on. In addition, the resource can also be used to

country off a carbon-intensive growth model.

reduce regional dependence on other energy sources, therefore minimizing environmental harms that would have

The emergence of CMM as a promising alternative energy

resulted from those resources. Guizhou, here, offers a good

opens up a virgin resource domain for industrial and local

example.19

interests to stake out, as well as novel avenues for stakeholders to lay claim to on the policy agenda, as

At the national level, coalmine gas is now touted in China

illustrated in the following case studies.

as the most realistic and reliable alternative energy

2.4 CMM as a global warmer

The double-sided character of CMM is exemplified in the

greenhouse gases, accounting for 14% of total such emis-

climate-change context, in the contrast between its global

sions. Coal mine methane contributes 6% of total global

warming properties and its mitigating potential.

methane emissions (USEPA, 2006; IPCC, 2007).

On the one hand, the main component of CMM is methane,

As the world's largest coal producer and consumer, China

a greenhouse gas (GHG) 21 times more potent than CO2 in

is the world's leading CMM emitter. Back in 2005, China's

terms of global-warming potential (GWP) over the time

CMM methane emissions were already over 40% of the

span of 100 years. Methane is second only to CO2 as a

world’s total (USEPA, 2006). Its CMM emission level is

GHG contributor to global anthropogenic emissions of

expected to increase in tandem with coal production (see

18 The environmental properties of methane in comparison to coal, are not only better in terms of carbon-related emissions, but also with respect to sulphur and particulate matter, which cause serious environmental and health concerns. 19 For example, Guizhou Province (included in our case study) lacks oil, natural gas and

Figure 1).

renewable energy resources, but has rich CMM resources. Therefore, CMM Recovery and Use is of long-term strategic significance.

2. CMM: a potential game changer for the Chinese energy landscape

Figure 1: Trends in global CMM emissions 1990-2010

16,000

1990

12,000

2010

2000

8,000 6,000 4,000

Republic

Czech

Kazakhstan

South Africa

India

Germany

Poland

Australia

Ukraine

Russia

USA

2,000 China

Methane (million M3)

14,000

Source: Pilcher et al., 2010.

It is estimated (Cheng et al., 2011) that methane emissions

of Global Warming Potential (GWP) for each type of gas.

from coal mining in China reached 20 billion cubic meters in

GWP reflects the ratio of the climate impact of a pulse

2008, with most of this coming from state-owned coalmines

emission of the greenhouse gas (CH4 for example) over a

with high-gas content.20 However, methane emission from

given period of time, versus a pulse emission of CO2 of the

Chinese coal production accounts for only a very small

same volume in the same year. The reference period is 100

portion of the overall environmental impact, compared with

years; this therefore means that, in terms of climate impact,

emissions of carbon dioxide from fossil fuel consumption

the emission of 1 tonne of CH4 is “equivalent to” the emis-

(Ibid.).

sion of 21 tonnes of CO2.

On the other hand, methane has an atmospheric lifetime of

As Dessus and Laponche further explain, the widespread

12 to 15 years, way shorter than that of CO2, which lasts for

use of this equivalence standard has led to the climate

100-200 years. Therefore, CMM emissions avoided today

impact of CH4 emissions being underestimated, because

will have a much more immediate impact on GHG

the GWP of CH4 varies considerably, depending on the

concentrations than a reduction in CO2 emissions.

period under consideration (from around 100 for the first few years, to 21-25 for a 100-year period, according to the

This fact has yet to be fully taken into account in the

most recent assessment). This underestimation is

development of climate-change policies. Dessus and

accentuated even more if the respective impact of avoided

Laponche (2008) provide a convincing analysis of this

emissions of CO2 and CH4 are compared, whether they

policy bias and deliver a useful warning to policy makers.

are avoided permanently or for a limited period of time.

As they point out, climate change policy targets are set in

Thus, comparing the climate impact of a 30% reduction in

terms of a reduction in greenhouse gas emissions, on the

global CH4 emissions between 2010 and 2030, to a 40%

basis of a single unit: tonnes of CO2 equivalent (t CO2 eq),

reduction in CO2 emissions over the same period, shows

which is determined for different gases using the concept

that the CH4 programme is 50% as effective as the CO2

20 China releases six times as much methane from coalmines compared to the United States. (Cheng et al., 2011)

programme by 2030, around 40% by 2050 and 20% by 2150.

2. CMM: a potential game changer for the Chinese energy landscape

In a nutshell, the effect of measures implemented for CH4

To wrap up, CMM has a set of inherently elusive and

emission-reduction is highly significant in short- and

complex properties that pose unique regulatory challenges.

medium-term climate strategies, a dynamic that is rarely

On the one hand, build-ups of CMM gas are a primary

appropriately reflected in national climate-change policies.

reason for China’s high rate of mining accidents; but on the

Dealing with CH4 is thus an urgent challenge, and CMM

other, the gas drained from coalmines “can transform a

recovery has to fully play its part. Given that methane

dirty, carbon-heavy by-product of a dangerous mining

recovery and use technologies are relatively cheap,

industry into a relatively clean and potentially competitive

exploiting CMM gas fully as an energy resource will give

fuel”.21 This Janus face of CMM renders its regulation quite

other technologies time to develop and help reduce their

complex.

costs (IEA, 2009).

21 Kenny W. Chan, quoted by Chen (2010).

3. Structuring of the CMM/CBM playing field: Balkanized institutional frameworks and shifting actor alignment

Since we adopt a “structure-actor-strategies” framework in

evolving framework, as not all of these interests are

this study, it is necessary to more fully define both “struc-

necessarily well-aligned with each other, let alone with

tures” and “actors” in order to show how structural factors

those of the coal sector. As widely noted, fragmentation of

impinge on stakeholders' strategic choices and interactions

the institutional framework threatens to jeopardize effective

presented in the upcoming case studies.

CBM/CMM development (e.g., ESMAP, 2007; IEA 2009, Yang, 2009; and to a lesser extent, Du, 2009; China

By “structure”, we refer to the legal, administrative, regula-

University of Petroleum, 2008; Tu, 2010; Caprotti, 2009;

tory

Luo et al., 2011).

and

policy

aspects

the

institutional

framework/regimes as they pertain to CMM recovery and use. Each of these aspects ultimately represents certain

For the sake of economy, below we highlight only a few of

interests that are articulated and defended by societal

the most debilitating features of the legal/regulatory/policy

actors. Previous studies have characterized the institutional

patchwork, which are highly pertinent to our case study

framework as a colossal patchwork that intersects a

presentations. This is followed by a summary of the shifting

diversity of industrial and societal interests ranging from

array of actors, which has driven the evolution of the

energy use, to resources management, to environment

institutional patchwork. The main purpose of this is to set

concerns and production safety (e.g., ESMAP, 2007; IEA,

the stage for the introduction of our case studies in the next

2009; Yang, 2009; Chen, 2011a,b). These and other studies

three sections.

capture the incoherent, and often perplexing aspects of the

3.1. Contending mining entitlements: a knotty, “Merchant of Venice” problem

As widely noted in recent Chinese literature,22 a prominent

1) Classify coal and coal methane as different resource types;

legal fault line in the evolving institutional framework lies in the incoherent jurisdictions over coal methane vs.

2) Assign mining leases for the two types of resources to

coal-resource management that:

different leaseholders;

22 E.g, 王志林. 2007. 煤、气矿权之争:法律困局的解析与反思-《经济问题》2007年第12

3) Divide licensing authority for the two resources among

期-吾喜杂志网. 《经济问题》2007年第12期. http://wuxizazhi.cnki.net/Search/JJWT200712010.html.; 宋亮. 2011. 煤层气争夺如何休战 _中国煤炭资源网. 中国经济和信息化. January 30.

different jurisdictions and regulatory agencies. Under such arrangements, coal methane (esp. CBM) is a

http://www.sxcoal.com/gas/1419711/articlenew.html.; 肖华. 2006a. 南方周末——山西：

matter of national concern, hence the licensing required for

煤与瓦斯之争.

its

南方周末. October 26. http://www.southcn.com/weekend/economic/200610260016.htm.; 何清. 2010. 补贴巨大，央企博弈煤层气开采权. 21世纪经济报道. January 21. http://news.qq.com/a/20100121/001237.htm.; to list a few.

development

(such

surveying,

mining

and

exploitation) is subject to approval by the national authorities,

represented

mainly

the

National

3. Structuring of the CMM/CBM playing field: Balkanized institutional frameworks and shifting actor alignment

Development and Reform Commission (NDRC) and the

CBM developers (which are primarily larger, national

Ministry of Land and Resources (MLR) under the State

energy enterprises under the aegis of the central govern-

Council (i.e., the Chinese Cabinet); in fact, the latter also acts

ment), entangling them in a protracted “territorial war,” as

as a gatekeeper that administers market entry into the

illustrated in our Shanxi case study (presented in Part 4).23

coal methane industry. Yet, licensing jurisdiction and

This is because coal methane is found in coal seams;

procedures for coal and CMM development are even further

hence coal and coal methane are spatially inseparable. To

dichotomized, due to a dual system that stratifies licensing

force separation between coal and coal methane in terms

regulations in accordance with the scale of the operation.

of mining rights is often likened by industrial insiders to the

A disjointed administrative framework naturally flows from

famous problem of “The Merchant of Venice” – removing an exact pound of flesh without losing a droplet of blood.24 In

such a split in jurisdiction. Take CMM projects, for example:

fact, for sake of mining safety, any working colliery (the

CMM for projects that supply surplus power to the

mine and its surrounding plant) needs to drain coal

electricity grid must be approved by the provincial

methane properly before going ahead with mining

investment authorities, while “captive” CMM power plants

operations. Under the dual administrative system,

(i.e. generation of power for on-site use) must register with

characterised by overlapping and contending claims, such

municipal or county investment authorities, below the pro-

a benign practice by a coalmine often infringes on the

vincial level. In both cases, “investment authorities”

mining rights of the CBM developer. Likewise, gas

normally refer to provincial or local NDRC branches at the

extraction by CBM developers is typically undertaken atop

pertinent governmental level; the junior level investment

a licensed coal-mining block, which often causes

authorities are required to report the approved CMM

disturbances to the strata surrounding the underground

projects to the senior level NDRC offices.

coal seams, thus heightening the risk of mining hazards.

For example, a gas pipeline project with the capacity to transport more than 500 million m3 annually, or that will

Under such circumstances, both the coal-mine operator

cross provincial borders, must be approved by the NDRC, while a pipeline project with capacity below 500 million m3

stumbling block for each other, or even have veto power

annually must be approved by the provincial investment

finds it necessary to secure official permission from a CBM

authorities. Likewise, as far as coal production is

developer licensed to operate in the same mining block,

concerned, a threshold of 1.2 million tons annual production

before it can begin operations, because there is no way to

is set: any coalmine with production capacity below this

mine the coal without draining the gas first.

and the CBM developer could potentially become a over the other's operations. For instance, a colliery often

threshold must file for an operating licence with provincial and municipal authorities, while licensing responsibility for

Mine operators often complain that extractive activities

coalmines at, or above, the threshold rests with the central

undertaken by CBM developers on the surface level have

government (i.e. NDRC).

caused unnecessary disturbances to geological conditions underneath, thus increasing the risk of a gas outburst or a

Such a dual system of lease and licensing administration

cave-in. CBM developers are criticized for being interested

creates a knotty problem for both coalmine and CMM

mainly in well-drilling, pipe-laying and gas pumping, without

operators (mostly provincial and local enterprises) and the

paying enough attention to the potential impacts of such

23 The central-provincial tension surrounding competing claims over coal vs. gas mining

activities on existing or future coal production. They are

has become the focus of many Chinese media reports. e.g., “煤层气开发远未达预期,破

seen as competent only in extracting CBM from the land

解需解央地矛盾”. 中国能源报. July 14, 2010; “地方与央企争夺煤层气：山西综改艰难前

surface, but negligent (if not ignorant) of the requirements

行”. 中国化工信息网. January 25, 2011; “煤层气激烈竞争, 地方和民营企遭三巨头清洗”.

of draining, monitoring and controlling CMM underground.

和瑞财经. June 3, 2011. 24 肖华. 2006. “煤与瓦斯之争,山西晋煤集团遭遇威尼斯商人难题”. 南方周末. October 27. http://news.cnfol.com/061027/101,1277,2368208,01.shtml.

On the other hand, counter-complaints are also filed against coalmines by CBM developers, who see many

3. Structuring of the CMM/CBM playing field: Balkanized institutional frameworks and shifting actor alignment

mining activities (especially by small local mines) as not well

reform adds to the confusion.

planned or even reckless, threatening to make the operating

Consequently, many market participants do not like to

environment for surface gas extraction less favourable.

operate in unknown minefields. They often choose to play it

When the national government granted China United Coal

safe and act proactively, either by taking a wait-and-see

Bed Methane Company Limited (CUCBM) exclusive CBM

attitude, halting business expansion, lowering their deve-

exploratory rights in 1996, it did not give CUCBM the same

lopment targets, or simply exiting from the market. For

right over coal mining activities that are supposed to fall

instance, not just a few foreign CBM developers have

within the jurisdictional turf of the provincial governments.

ultimately decided to withdraw from partnerships with

CUCBM finds it hard to proceed with exploration without

Chinese entities, simply because they could not put up with

first

the persistent uncertainty anymore.27

entering

into

agreements

with

the

coalmine

leaseholders, whenever CBM extraction and coal mining activities are in close geological proximity. Unfortunately, for

Given that a piece of mining land can be owned by a

a long time there has been no institutionalized mechanism

number of stakeholders, such as the coal, gas and

for the two sides to effectively plan out their interactions and

land-surface owners, such multiple ownerships have often

resolve potential conflicts. The situation is made even more

complicated or delayed CMM project development. The

perplexing by the fact that in the Chinese regulatory

majority of Chinese coal mining is for coal extraction, and

system, there is no clear distinction between surface CBM

operational licensing for such falls primarily within the

activities undertaken primarily for energy production (known

purview of the provincial and local governments. Therefore,

as VCBM and CBM in industry jargon) and CMM operations

within Chinese officialdom, the traditional coal industry and

undertaken mainly underground to facilitate and ensure

the relatively new projects in CMM recovery and use tend to

mining safety (ESMAP, 2007; IEA, 2009).

seek political patronage from different levels of government.

Government restructuring during the reform era added a

Clearly, it is not only ideal but necessary to develop

temporal dimension to the already bewildering mosaic of

effective mechanisms that better coordinate coal production

overlapping rights and entitlements. Licenses and permits

with CBM/CMM development, particularly coal extraction

granted in the past need to be renewed, updated, or

with the underground draining activities for CBM/CMM.

removed; this would require that a simple, transparent and

Unfortunately, no such mechanism is known to have been

easily accessible system be in place for record tracking

officially implemented, although various solutions have

and updating. However, the dual system of licensing

been proposed. A key prerequisite for introducing and

administration makes record keeping and tracking overly

institutionalizing

cumbersome.25 It often happens that an enterprise has

disentangling, and clarifying the existing morass of

painstakingly obtained official permission to operate on a

competing and overlapping claims and entitlements for coal vs.

mining block, only to find that the same block has already

CBM/CMM resources, an effort that seems to be well under way.

such

mechanisms

streamlining,

been licensed to a competing venture by other agencies.26 In this regard, the not-infrequent reshuffling of the licensing

Recent legislative efforts have been undertaken at the

and administrative systems as a result of governmental

national level to revise both coal and mineral resources

25 Personal communications with MLR and NDRC officials.

laws (ESMAP, 2007), but it remains to be seen how these

26 Interviews with coalmine industry insiders from Shanxi Province. 27 Interviews with coalmine personnel from various provinces. 28 “Sanjiao”(三交) refers to a western Shanxi region where the coal vs. gas mining rights have been most intensively intertwined and contested. To end the deadlock, PetroChina has in recent years tried to engage provincial and local coalmines as partners in a more cooperative mode of coal methane exploration. This approach emphasizes the complimentary, mutually beneficial role the coal producer and CBM developer can respectively play in the operation, in terms of prospecting, gas drainage, project financing, etc. For details, see introduction in Chinese literature, esp. : 徐祖成, 李延祥 (2010). “中国采气采煤协调发展的三交模式”.天然气工业，2010, 30(6), pp: 106-108. 冯立杰等.采煤采气一体化开发模式的价值分析．天然气工业, 2011,31(2), pp：110-113.

concurrent efforts will be coordinated to effectively resolve contradictions. It should be noted that in parallel, local initiatives have been carried out in an experimental, bottomup mode in an attempt to resolve the “Merchant of Venice” issue described earlier, and which are demonstrated by the “Sanjiao Model” of joint coal and gas exploration.28

3. Structuring of the CMM/CBM playing field: Balkanized institutional frameworks and shifting actor alignment

3.2. Regulatory transition toward increased compartmentalization and local autonomy

The division of responsibility among different governmental

eventual abolishment of the Ministry of Coal Industry (MCI)

levels for managing energy development has changed

is widely seen as a defining event (e.g., Ma et al., 2009;

dramatically since the reform era in China (introduced

Wang, 2006; Yang, 2009; Andrews-Speed et al., 2000). The

in 1978), roughly in line with the overall direction of the

event is deemed significant for at least the following reasons:

governance reforms over the past few decades, which have been variously characterized by researchers as

First of all, it represented an unequivocal policy signal from

“liberalization”, “marketization”, “denationalization”, and

the central government that from then on it would no longer

“decentralization” (e.g., Martin, 2010; Ma et al., 2009;

directly manage any coalmines, and as such, managerial

Wang, 2006; Yang, 2009; Du, 2009; Terway et al., 2008).

functions were gradually to be shifted to provincial and local governments (akin to the “devolution” mode of

As far as the energy industry is concerned, the governance

decentralization). In spite of the many benefits of doing so,

reforms involve various types of decentralization, mainly

however, this has often left local governments in mining

“delegation,” “devolution” and “de-concentration,” with

areas in an ambiguous situation (cf. Wang, 2006). The

profound implications for local-level accountability and the

geographic proximity of Chinese coalfields to impoverished

top-down vs. bottom-up approaches to policy implementa-

localities tends to make the local government prone to

tion, which is the focus of this study.29 A good example of

being co-opted by the local mining interests (Wang, 2006).

the “delegation” mode of decentralization would be

Second, revocation of the MCI went along with the

the NDRC assigning jurisdictional power over certain types

introduction

of projects to its provincial and local level offices

Administration of Coal Mine Safety (SACMS), the powerful

(i.e. “investment authorities”), as mentioned in sub-section

State coalmine safety watchdog, whose field branches

3.1 above. An example of “deconcentration” would be the

operate independently from the local government. The

State Administration of Coal Mine Safety (SACMS) being

provincial SACMS can shut down mines that seriously

redesigned to operate, as described below. On the other

violate coalmine safety codes. Compared with other

hand, the operation of Key State-owned Mines (KSOMs)

provincial-government departments, SACMS has fostered

seems to typify the “devolution” mode of decentralization.

stronger ties with coal mining stakeholders, including the

and

institutionalization

the

State

smaller mines (such as Town and Village Coal Mines, Regulatory restructuring in the reform era features

known as TVCMs), which lack the knowledge and

discernable measures of institutional continuity and

expertise to implement CMM projects (ESMAP, 2007).30

change: many new regulatory agencies were created, while

The emergence of SACMS represents the institutional

some old ones were either dismantled, or evolved into new

separation of regulatory responsibility for coal-mine safety

entities under different names. During the long journey

from that for coal-mine production; previously, those res-

toward regulatory liberalization, the demotion (in 1998) and

ponsibilities were often both delegated to the entity that

29 In governance literature, distinctions are often made among the various modes of decentralization, with their implications for public accountability at different levels of government having become a key interest (see esp. Hague [1997] for a good summary). In this finer treatment of the decentralization theme, “delegation” refers to the transfer of functions to the local level, but the ultimate responsibility lies with the central government; “deconcentration” is used to denote the transfer of functions from the central ministries to their field agencies; “devolution” indicates the transfer of functions as well as decision-making authority to legally incorporated local government (e.g., Smith, 1985; Uphoff, 1985; Rondinelli, 1983). 30 In this context, cynical views exist that there might be “agency capture” of the SACMS field offices by local coalmines, but our fieldwork does not yield evidence in support of such suspicions.

operated the coalmine (cf. Wang, 2006; Yang, 2009). Third, with the concurrent rise of SACMS and fall of MCI, the regulatory sphere has gradually expanded to include Town and Village Coal Mines (TVCMs). Before 1998, China’s coalmine industry was characterised by public ownership and State planning, which was the main mode of

3. Structuring of the CMM/CBM playing field: Balkanized institutional frameworks and shifting actor alignment

State control in China, while the private sector played a

mining – readily succumb to SACMS’ authority and

limited and largely unregulated role (Wang, 2006; also see

regulations.33

Yang, 2009; IEA, 2011; Andrews-Speed et al., 2000; Ma et

In sum, the overall trend in regulatory reform for the coal

al., 2009).

and energy industry since 1993 has been a move toward

Fourth, the year 1998 ushered in a new regulatory era

achieving the following policy goals (Ma et al., 2009; Wang,

during which we started to see, in Wang’s words (2006),

2006; also cf Du, 2009; Tu, 2010; Andrews-Speed et al.,

“the state [get] intensively involved in economic and social

2000).

affairs via standard-setting, supervision, monitoring, and

• Separation of governmental functions from the managerial

enforcement, shortly summarized as ‘regulation’.”31

affairs of enterprises; • Decoupling of ownership from the operation of

Since 1998, a compartmentalized regulatory regime seems

enterprises;

to have emerged from the reforms: one for CMM recovery

• Promotion of marketization of the coal and energy

and use, which is centred on the key regulatory role of

industry;34

SACMS; the other for CBM development, which hinges on

• Improvement of the efficiency of the coal and energy

the dual role of the China Unified CBM Incorporation

sector;

(CUCBM), as both a regulator and a developer. Neither

• Separation of the role of regulator from that of operator

SACMs nor CUCBM coordinate well (if at all) with NDRC

and producer.

provincial offices and other departments of the provincial and local governments in charge of economic development.

Although regulatory reform has undoubtedly gone a long

On top of this dichotomized system is an inter-ministerial

way toward accomplishing these goals, it is fair to say that

coordination mechanism created in 2005 within the State

the overall administrative and regulatory framework for

Council, in part to address problems that may arise from

CMM/CBM development in China has yet to be well-

compartmentalization and conflicts of interest among

developed,

agency stakeholders (ESMAP, 2007).

CMM/CBM value chain has been expanded as new options

let

alone

sufficiently

streamlined. The

for coalmine methane recovery and utilization are being It should be noted that SACMS is primarily concerned with

explored thanks to various preferential policies; as a result,

coalmine safety as a regulatory concern; hence the agency

the interests involved in CMM/CBM development have

is not necessarily friendly and supportive to CMM recovery

become increasingly diversified (cf. next section), and the

and use, which runs a calculated risk of compromising

responsibilities for regulating coalmine methane as both a

coalmine safety.32 Besides, it is not always clear to what

safety hazard and a energy resource have been dispersed

extent CBM developers – many of them newcomers to coal

among many regulatory agencies and are not clearly

31 Further, Wang (2006) succinctly and insightfully summaries this trend as follows: “Regulation in this sense is a distinct form of external market control exercised by public agencies that use more or less formal procedures to develop and implement rules prescribed in the name of ‘public interest’. Thus, China’s transition from state socialism has resulted not in a Hayekian night watchman state but in a new regulatory state”. 32 Field interview notes from Guizhou.

defined (ESMAP, 2007).35 For example, regulatory segmentation can be found not only in coal vs. CMM/CBM resource management and in coalmine safety enforcement vs. CMM/CBM development (as noted above), but also

33 Interview notes from Beijing.

when it comes to gas derived from coal vs. oil,36 as in

34 In this regard, “marketization” in some cases involves other forms of decentralization, such

gas-to-power utilization and transportation (gas-to-

as the privatization of coalmine operations (e.g., transfer of mining functions or contracting managerial responsibilities to the private sector, as examined by Wang [2006]) and “intermediation” (i.e. transfer of certain aspects of the mining operations to mutual-aid organizations, such as those that help with disaster relief and training). For general discussion of these typologies and their policy implications, see Hague (1997). 35 For example, besides safety regulations, all CMM projects must conform to relevant environmental regulations before being permitted to operate. Energy use during project implementation should be in "accordance with the ‘Energy Conservation Law of the People's Republic of China’ and the energy-saving regulations and measures of the state and local government” (cf. ESMAP, 2007). 36 Given that CBM is regulated as an alternative natural gas, there is regulatory overlap with the petroleum regulations that apply to natural gas (ESMAP, 2007).

LNG/CNG utilization), respectively. Clearly, the wide dispersion of responsibilities as a result of regulatory segmentation, if left unchanneled, is bound to increase the probability of agency conflicts and the shirking of responsibility, thus diminishing incentives to promote CMM/CBM development and dampening enforcement efforts.

3. Structuring of the CMM/CBM playing field: Balkanized institutional frameworks and shifting actor alignment

3.3. A fledgling policy framework to be strengthened: problems with ambiguities and conflicts

As previously noted, the Chinese government has unveiled

• such projects may be eligible to deduct 50 percent of the

many developmental programs and stimulus packages to

cost of research (before income taxes) on new technologies

promote CMM/CBM development over the years. Previous

or processes.

studies have offered a fairly thorough overview of the

• surface extraction and CMM recovery-and-use projects

favourable policies and financial incentives contained in

involving prospecting and mining rights are entitled to a

those national programs (ESMAP, 2007; IEA, 2009; CCMC,

total or partial exemption of utilization fees.

2006; USEPA, 2009; CEGD, n.a.; Chen, 2011a,b; Cheng et

• a price structure that favours the use of CMM over natural

al., 2011; PCEPG, 2001; Vrolijk et al., 2005; Terway et al.,

gas, with CMM pricing for civil and industrial consumption

2009; Huang, 2010, 2008; Qiu, 2009; Zhang et al., 2004;

set lower than for natural gas.

Zhang & Liu, n.a; etc). A few studies have even gone to great lengths to classify those and other associated policies

It should not come as a surprise that the policy output from

and incentives (not necessarily designed specifically to

a fragmented regulatory system (as outlined above) may

support CMM recovery and use) into various categories

tend not to be fully consistent and coherent. In fact, as

allowing for in-depth analysis (e.g. Luo et al., 2011; Yang,

many previous studies have pointed out (such as some of

2009; and also Du, 2009; Qian, 2008). What is clear from

those cited above), those policies tend to be developed

these policy reviews is that the Chinese CMM/CBM policy

in a piecemeal fashion that often results in different

framework encompasses a constellation of policies

prescriptions for the same concerns, and potential

and incentives/disincentives that govern coal and

contradictions; some of the policy documents are framed in

mineral-resource development, environmental protection,

sometimes vague language and some observers have

conservation, energy efficiency, GHG mitigation, and so on.

suggested that this may be done intentionally, so as to allow

To facilitate subsequent discussion, it suffices for us to

sufficient leeway for deal-making and local deliberation. For

highlight some of the policies and (dis-)incentives that

example, although the State Council issued a policy edict in

directly impinge on CMM recovery and utilization.37 They

2006 requiring a power-grid company to buy surplus power

include but are not limited to:

from a CMM power plant based on a subsidized tariff, the policy edict did not specify who would pay for the subsidy

• no resource taxes are assessed on gas consumed by

(IEA, 2009). This example will be examined in greater depth

CMM recovery and utilization projects developed by coalmi-

in Part 5.

ne enterprises with approved mining licenses. • collieries undertaking CMM recovery-and-use projects

Given that for a long time CMM recovery-and-use did not

with approved mining licenses could receive various other

surface as a significant regulatory issue in coal industry

taxation benefits, as on the value-added tax (VAT), income

policy reform (cf. ESMAP, 2007), regulations in this regard

tax, as well as the tariff tax.38

have essentially followed those developed for conventional

• coalmines can collect a certain amount per ton from coal

coal-mining operations, now to be enforced by a “third party

sales to be applied to CMM recovery-and-use projects.

regulator” (i.e. SACMS).

37 For a more comprehensive summary of relevant policies, please refer to Luo et al. (2011) and ESMAP (2007). 38 On October 25, 2006, the Ministry of Finance, the State Administration of Taxation, and China Customs exempted import tariffs and VATs for CMM equipment, instruments, spare parts, and tools. Since January 1, 2007, the same bodies have implemented a “levy-firstrefund-later”policy on CMM drainage and sales (Huang, 2008).

As noted above, such regulations have been shaped largely by the old regulatory paradigm anchored in the perception of CMM as a hazard; hence, they are not necessarily conducive to CMM recovery and use, for this is

3. Structuring of the CMM/CBM playing field: Balkanized institutional frameworks and shifting actor alignment

essentially an energy development and production activity.

below 30 percent concentration is generally considered not

For instance, the Ministry of Environmental Protection

safe for transport and use, according to international norm

(MEP) issued a policy directive prohibiting all newly

(UNECE, 2010; Piltcher, 2007).

established coalmines from releasing CMM with more than 30% methane concentration into the air (without prior

However,

many

Chinese

coalmines

recover

only

utilization). Although the policy was designed to promote

low-concentration gas (IEA, 2009; Qiu, 2009), while

CMM use and GHG mitigation, in some aspects it actually

Chinese turbine manufacturers (such as Shengdong

contradicted this goal, since this new regulatory require-

Group) have invented an effective way to utilize

ment threatened to disqualify many CMM projects for CDM

low-concentration CMM, which controls the risk of

consideration, which is often critical for the financial

explosion during transmission, and has been used by an

viability of the project.39

increasing number of coalmines, with satisfactory safety records against international norms (Chen, 2011a,b; for

Strict enforcement of such policies has led to unanticipated

international criticism, cf. UNECE, 2010; IEA, 2009;

twists. Anecdotes swirl that some coalmines not ready for

ESMAP, 2007; also see 5.2 below).

CMM utilization simply diluted the high-concentration CMM gas to below the 30% level to dodge the State ban on the

Therefore, rigid enforcement of such regulations without

venting

prior

allowance for local deliberation raises the question of whe-

utilization.40 Ironically, in 2005 SAMS promulgated a Coal

high-concentration

CMM

without

ther this serves the purpose of promoting CMM recovery

Mine Safety Regulation pertinent to the clean-development

and use.41 These examples illustrate the potential

mechanism (CDM). Section 148 requires that in order for a

ambiguities and conflicts in implementing CMM policies,

CMM project to be registered as a CDM project, methane

which have to walk a fine line between coalmine safety and

concentration must be at least 30 percent. This is meant to

energy development.

ensure the safe utilization of coal methane, for which a

3.4. Shifting actor alignment: redrawing the State vs. societal boundary

Looking over China's coal-mining landscape in the wake of

newcomers. With public ownership declining and market

sweeping liberalization and denationalization over the past

forces swelling, we have witnessed the shifting alignment of

three decades (Wang, 2006), we have seen the rise and fall

actors, which are interacting and coalescing to constantly

of many state institutions, accompanied by the retreat and

redraw the boundary between the State and the rest of

advent of non-state stakeholders. Since the reform era,

society, while also redefining the balance of power between

state agencies have moved from a planning to a regulatory

the national and local governments (cf. Lieberthal, 2003;

focus (Wang, 2006), while trying to shed off the ambiguous

Martin, 2010; Wang, 2006).

role of being both a regulator and an operator; at the same time, the coal mining industry has undergone a transforma-

The dazzling array of state and non-state actors in flux,

tion, with the wane and revitalization of SOEs, rise

operating under a fragmented institutional and policy

and consolidation of TVCMs, and the arrival of many

framework, will only add to the ambiguities and conflicts

39 See Chen (2008). This requirement makes those projects vulnerable to failure of passing the “additionality test”. Put simply, a CMM project would not be seen as “additional” if CMM use is mandatory in conformity with State regulations. 40 Interview notes from Guizhou; also reported in IEA (2009). 41 Field interviews by the authors.

of policy formation and the difficulties in policy implementation. Consequently, although there has been a huge set of policies from the central government that encourage/mandate CMM recovery and utilization, their implementation

3. Structuring of the CMM/CBM playing field: Balkanized institutional frameworks and shifting actor alignment

has often been distorted due to complex interactions at the

national initiatives or even causing utter policy failure.

provincial and local levels between, among, and within

Anecdotal stories collected from our field work show that

various stakeholder groups.

industrial, bureaucratic, and societal interest groups often coalesce around divergent CMM end-uses, and mobilize

These stakeholders include regulatory agencies at the

their resources to advance their own pet agendas, in an

central and provincial levels (in charge of environmental

attempt to stake out the CMM resource terrain so they can

protection, coalmine safety, energy supply, pricing, etc.).

fend off competitors.

research institutions and universities, coalmine owners (including KSOMs and TVCMs), SOE players (in the oil &

Examples of “selective implementation” abound, whereby

gas and electricity sectors), other private or corporate enti-

competing groups often try to interpret the policy goals in

ties (such as equipment suppliers, pipeline builders, foreign

their own favor, resulting in sub-optimal solutions for a given

ventures), the various end-users of coal and CMM-derived

CMM problem (such as CMM-induced casualties). We have

fuels, trade and professional organizations, and so on (cf.

also found examples of “disjointed implementation”

following table presentation).

whereby "the left hand does not know what the right hand is doing,” such as power struggles to resolve contending

As our cross-provincial gas transmission case study shows

mining rights, which unfold across several CMM-rich

(Part 6), these actors often engage in embedded role-

regions, resulting in protracted confrontation and a freeze

playing – across issue/jurisdictional boundaries – that

on mining operations (Part 4). Another illustrative example

tends to exacerbate the inherent contradictions in policy

of this would be the MEP’s ban on releasing CMM above

making, highlighting the muddle-through nature of policy

30% methane concentration into the air (without prior

implementation, and at times leading to the torpedoing of

utilization), as noted above.

Table 1 - Main stakeholder groups in China's coal methane development *Stakeholder Category

National and local authorities

Key Stakeholders State Council; National Development & Reform Commission (NDRC); Ministry of Finance (MoF); Ministry of Environmental Protection (MEP); Ministry of Land and Resources (MLR); the State Administration of Worker Safety (SAWS), etc. The provincial and local offices of the above national agencies.

CBM Project developers

Natural gas transmission and distribution companies, and power companies

China United Coal Bed Methane Corporation Ltd. (CUCBM); CBM Exploitation and Development Company of PetroChina; Sinopec; China National Offshore Oil Corporation (CNOOC). CUCBM; PetroChina; local and/or private gas distributors (such as Tongyu); subsidiaries of the “Big Five”: Huaneng Group; Datang

Roles Regulation of methane rights; project approval for leasing land; licensing and permitting processes; facilitating interaction between various stakeholders; macro-policy development and management; enforcement of safety, heath, environmental codes; other relevant regulations.

Project opportunity identification and planning, etc.

Pipeline sales for power generation, etc.

Group; Huadian Corporation; Guodian Corporation; and Power Investment Corporation. CUCBM; PetroChina; local and/or private gas distributors (such as Tongyu); subsidiaries of the “Big Five”: Huaneng Group; Datang Group; Huadian Corporation; Guodian Corporation; and Power Investment Corporation.

Pipeline sales for power generation, etc.

3. Structuring of the CMM/CBM playing field: Balkanized institutional frameworks and shifting actor alignment

*Stakeholder Category

Key Stakeholders

Roles

State Council; National Development & Reform Commission (NDRC); Ministry of Finance (MoF); Ministry of Environmental Protection (MEP); Ministry of Land and Resources (MLR); the State Administration of Worker Safety (SAWS), etc. The provincial and local offices of the above national agencies.

Regulation of methane rights; project approval for leasing land; licensing and permitting processes; facilitating interaction between various stakeholders; macro-policy development and management; enforcement of safety, heath, environmental codes; and other relevant regulations.

Equipment manufacturers

Shengdong Turbine Manufacturer, etc.

Methane treatment and utilization equipment; power generation equipment supply, etc.

Universities and research establishments

China Coal Information Institute (CCII); Energy Research Institute (ERI); China University of Mining & Technology; China University of Petroleum.

Mining companies (coalmines and their subsidiary CBM/CMM developers)

Manufacturer;

Weichai

Turbine

Technical assistance, i.e. testing, consulting and engineering, CHPs, power-plant engineering and construction companies, and drilling contractors, etc.

Engineering, consultancy, and construction companies

Professional Associations

Research and technical assistance, etc.

Establishing project networks, and advising members on technical, economic and legal issues, etc.

China National Coal Association

In conclusion, CMM/CBM policies in China seem to be

The evolving definition of coal methane from strictly a

highly ambiguous and conflicted, in part because of the

safety hazard to also an important energy resource tends to

multi-faceted character of coal mine methane as a regula-

reshape the bargaining relationship among the various

tory concern (outlined in Part 2), and in part owing to the

stakeholders. The regulatory and policy implications of

diversity of its potential uses and the multitude of societal

risk-control are different from CMM recovery and use in at

interests involved in CMM/CMB development. Clearly,

least one major sense: stakeholders tend to have more

within this patchwork, opportunities for implementation

potential sanctions and bargaining chips they can use as

deficits or failures arise. All of these structural factors are

leverage during the policy implementation phase.

inimical to the formation of an effective and sustainable

Now, the stage has been set for us to review the three case

national strategy for CMM/CBM development.

studies.

4. CBM exploration in Shanxi: pre-empting strikes to stake out the CMM terrain

4.1. Contending mining rights: structural tensions between mining and CBM companies

The overlapping and contending mining rights described in

mining operations, but such a benign practice will often

the previous section create a knotty problem for both

infringe on the mining rights of the CBM developer.

coal-mine

local

Likewise, gas extraction by CBM developers is typically

enterprises) and CBM/CMM developers (mostly national

undertaken atop a licensed coal-mining block, which often

and foreign enterprises), entangling them in a protracted

causes disturbances to the strata surrounding the under-

tug of war.42 As previously noted, coal methane is simply

ground coal seams, thus heightening the risk of mining

methane found in coal seams; hence, deposits of coal and

hazards.

operators

(mostly

provincial

and

coal methane are spatially inseparable. Forcing a separation of the two resources during the mining process

The impasse outlined above is most vividly encapsulated in

is akin to “The

what has transpired in Shanxi Province, home to approxi-

Merchant of Venice” conundrum (see

previous section).

mately 33 percent of China’s CBM/CMM reserves and 20

For the sake of mining safety, any working colliery needs to

percent of its coal reserves (Wu, 2010).

drain coal methane properly before going ahead with

42 Numerous Chinese media reports and articles have been used, in combination with interview notes, to inform the following discussion. See selective Chinese literature as follows: 戴民(2011). 煤层气：巨头的游戏. 中国企业家 2011年第15期. http://www.dooland.com/magazine/article_158265.html. 傅明, 郭纪亭(2011). 逐鹿煤层气. 证券市场周刊. July 4. http://stock.eastmoney.com/news/1406,20110704146264355.html. 郭芳 (2011a,b,c) 煤矿“两权分离”：地方和央企的瓦斯战争. 中国经济周刊. May 17. http://news.sohu.com/20110517/n307697966.shtml. 煤气之争已超越产业层面谁能协调利益格局？中国经济周刊. May 17. http://www.chinanews.com/ny/2011/05-17/3045119.shtml. 瓦斯战争：煤矿杀手的钱景. 《中国经济周刊》 > 封面文章. June 9.

4. CBM exploration in Shanxi: pre-empting strikes to stake out the CMM terrain

4.2 A déja vu of the “Partition of the Fiefdom of Jin”43: national SOEs pre-empting the CBM market

Shanxi Province, whose Chinese name means “the land

disputes; in a widely reported case, a few national CBM

west of the Taihang Mountain”, lies in the middle reaches of

enterprises filed joint lawsuits against a provincial colliery

the Yellow River, on the eastern edge of the Loess Plateau.

for violating their mining rights, even requesting the court to

The Yellow River flows along the eastern border of Shanxi,

issue an order of arrest for the senior executives of the

whose splendid landscape is graced by the celebrated

colliery.46

Taihang and Luliang ranges and Hengshan and Wutai mountains.44

It is estimated that, within the provincial boundary of Shanxi, a total of some 33,882 square kilometres of land

As China's powerhouse, Shanxi's coal-methane resources

mass have been licensed for CBM development, of which

are distributed in five provincial coalmine basins: Qinshui,

some 3,389 square kilometres (roughly 10%) have been

Hedong, Xishan, Huoxi, and Ningwu, with the first two being

previously designated as mining blocks for coal production.47

the most prominent (SJCM, 2004; Qiu, 2009; Zhang, 2004). In an anachronistic turn, fervour about the bright economic

National energy SOEs were ahead of the curve in the

prospects of CBM/CMM development, heated up during the

competition to claim the CBM/CMM frontier.48 They lobbied

11th Five Year Plan period, in a way that is reminiscent of

the national legislature to reform the mining laws so as to

the ancient era of the “Partition of the Duke of Jin.” Fierce

define CBM/CMM as a distinct, new type of resource,

turf fights between coalmines and CBM developers

hence clearing up the way for them to venture into virgin

sometimes escalated to the boiling point.45 For instance,

territory. They moved quickly to stake out the terrain, while

physical violence was purportedly involved in several turf

the provincial and local coalmines were restrained from catching up due to their old industrial-coal mentality, as well

43 Shanxi was a major cradle of Chinese civilization. During the Spring and

as the high technological threshold of market entry.

Autumn Period (770-476 BC), Shanxi was ruled by the Duke of Jin. In the early Warring States Period (475-221 BC), three families – the Hans, the Zhaos and the Weis – partitioned the dukedom of Jin. Hence Shanxi's other name, Tripartite Jin. Cf. http://en.wikipedia.org/wiki/Shanxi. 44 Ibid. 45 肖华. 2006a. 南方周末——山西：煤与瓦斯之争. 南方周末. October 26. http://www.southcn.com/weekend/economic/200610260016.htm. 轶名.

At the same time, however, the decision of the central government to grant operating licences and permits mainly to national SOEs for CBM development met strong resistance from the provincial and local government, as well

2011. 采煤权采气权分离致山西煤层气大量浪费. 央视《经济半小时》. May 7.

as industrial interests in Shanxi. They figured out that given

http://news.sina.com.cn/c/sd/2011-05-07/223922423635.shtml. 46 Interview notes. Also see张沉. 2007. 瓦斯煤炭对峙国土部调解矿权重叠

the technical and market barriers, the profit margin of CBM

纷争. 经济观察报. April 29. http://www.cqcoal.com/news/N03/4005_1.html.

exploitation would remain thin for the foreseeable future.

http://www.cqcoal.com/news/N03/4005_1.html. 张宇芳. 2010. 对我国煤、气

Hence, they saw that the true purpose of the national

矿业权分置的思考——基于山西潘庄的煤气之争案例--《技术与市场》2010 年10期. 《技术与市场》 2010年10期. http://www.cnki.com.cn/Article/CJFDTotal-JSYS201010029.htm. 47 刘成昆. 2011. 山西众煤企与央企争夺煤层气采煤采气或一体化. 中国企业报. June 17. http://news.hexun.com/2011-06-17/130611458.html?from=rss. 48 Ibid. also see王康鹏. 2011a,b. 煤层气博弈：石化巨头山西圈气遭地方政府反击. 财经国家周刊. January 6. http://finance.eastmoney.com/news/1363,20110106114069982.html. 中石油中石化获煤层气“牌照”进入“战国时代”-煤层气,中石油中石化-化工行业-hc360

SOEs’ new claims on provincial mining blocks as being a pre-emptive strike to fend off competitors. As soon as entitlement to a mining block is secured, a CBM developer rarely moves to carry out gas extraction in earnest. Such behaviour angered the local coalmines in Shanxi, because they felt left out of the game, as well as belittled and victimized by industrial outsiders (i.e. the national SOEs).49

慧聪网. 财经国家周刊. January 6. http://info.chem.hc360.com/2011/01/060852212902-2.shtml. 49 Interviews with Shanxi coalmine managers and local officials.

Several new developments added to their problems. For one thing, in the face of mounting coalmine casualties

4. CBM exploration in Shanxi: pre-empting strikes to stake out the CMM terrain

resulting from gas accidents across the country, the State

Shanxi Province, in general, was not pleased for another

was tightening requirements that CMM gas must be

reason. Provincial officials complained that Shanxi has not

properly and sufficiently drained both prior to, and during,

been fairly treated in the national development plan. Given

mining activities (IEA, 2009). However, deprived of

the predominant role of coal in China's energy mix, Shanxi

entitlements to CMM gas, coalmines now would have to

has been asked to take on the preponderant burden of

consult with CBM developers in order to comply with the

coal-firing the country's growth engine and keeping it

more strict safety ordinances, not to mention all the extra

running for years; but in return, the Province has had to

investment required for upgrading the drainage system and

bear a disproportionate share of the environmental costs

training personnel. To make things worse, CBM developers

from the nation's rapid economic growth, without due

were not always cooperative; in fact, in a few reported

reparation. Such environmental costs range from air pollu-

cases, they had to be financially compensated in order to

tion and ecological degradation to resource depletion, as

become cooperative. Also, in light of the chronic shortages

evidenced by disturbing signs found ubiquitously across the

in coal and skyrocketing coal prices, provincial and local

Province. Now with a “new” energy resource up for grabs,

coalmines were eager to expand coal production in order to

they are concerned that the bad historical precedents would

boost their profit margins. Under such circumstances, they

repeat themselves.51 Indisputably, without Shanxi's coal,

certainly would not want to venture their business prospects

China's industries would literally grind to a halt, and China's

on the goodwill of competing CBM developers.50

economic miracle would evaporate overnight (cf. Wang, 2006).

4.3. Shanxi fights back: building coalitions to lobby Beijing

All in all, given the heavy dependence of the provincial

government imminently. For one thing, from 2009 to 2010,

economy on coal production, government officials and

the Chinese economy quickly recovered from the impact of

industrial interests in Shanxi increasingly saw the oligarchy

the global financial crisis, and the energy demand across

of the national SOEs in the emerging CBM/CMM industry,

the country was rapidly increasing; as a result, the

as well as the dual system of licensing, as an impediment

pertinacious energy shortage, that subsided during the

to further development of the provincial coal industry and

crisis, was again creeping back. In the meantime, an

economy overall. Therefore, they allied to lobby for change;

unprecedented national campaign to close micro-scale and

what they needed now was a convincing argument to pitch,

small coalmines in the name of “Consolidating Coal

as well as bargaining chips to help them win the case.

Resources” (煤炭资源整合) was well under way. The “storm

During the inception of the 12th Five Year Plan, the

of coal reform” (“煤改风暴”), as it has been popularly

Province saw what it needed to bargain with the central 50 Ibid. 51 Ibid.

called, originated in Shanxi, but it soon swept across other coal-producing provinces - Shandong, Henan, Shaanxi, Inner Mongolia, Guizhou, Anhui and so on. 52

52 For background info on the “storm of coal reform”, please see selective Chinese literature as.follows:曹海东(2010).南方周末 -【中国“治道”变革•地方】山西：煤改出，三晋动.March4. http://www.infzm.com/content/42177.溫淑萍(2011). 煤改_2011年山西煤改整合情況.中商情報網. June. http://big5.askci.com/freereports/2011/06/1713553825088.shtml.李红兵, 李荣东(2011). 山西煤改五年轮回. http://finance.sina.com.cn/g/20100222/11057434190.shtml.刘斌 (2011). 三个人眼中的山西煤改.http://www.sx.xinhuanet.com/nyjj/201001/06/content_18698429.htm.杨耕身.2010. 山西煤改，政府权力边界何在？. February 28. http://www.hebdx.com/tabid/63/InfoID/2871/Default.aspx.轶名 (n.d.) 山西煤炭资源整合若干问题的探讨 - docin.com . http://www.docin.com/p148298780.html.

Inevitably, this campaign caused a slow-down in coal production, and even a shortfall in some localities, raising concerns that the economic recovery would be disrupted. Playing on such fears of the national government, Shanxi found an opportunity to make its case. Provincial officials were frequently heard arguing that coal outshines coal mine methane by far in terms of their relative contribution to

economic growth. One metric ton of coal contains only 16

Anticipating that overhaul of the whole licensing regime

cubic meters of methane, but 100 times more thermal value

would not be easy, the Province was willing to back down,

than what is found in this amount of methane. Therefore, “is

and pursue an outflanking tactic instead. For instance,

it not silly to bend the needs of coal production to satisfy the

the Province was allegedly negotiating with the central

demands of the CBM industry?” To reinforce the provincial

government to delegate authorization to the provincial MLR

case, officials tactically attributed the transient slow-down

with regard to smaller mining blocks below a certain scale,

(and shortfall) of coal production primarily on the dual licen-

and allow certain newly commissioned coalmines to drain

sing system, which they said enabled CBM developers to

and exploit coal methane at their own discretion for at least

block coalmine operations (as noted above), while this

the first five years. Such a revisionist approach indicated

blockage more likely resulted from multiple factors.53

that the Province was realistic in its quest, willing to accept piecemeal modifications within the bounds of the existing

The shift in the policy winds also created an opportunity for Shanxi to reinforce its case. At the onset of the 12th

system to avoid a standstill.

Five-Year Plan, the Province was designated by the

To make the provincial case more acceptable to the

national government as the Pilot Zone for “Transforming

contending parties, Province officials did not forget to

Resource-Based Economy with Comprehensive Reforms”;

sweeten their proposal by emphasizing the benefits that

as such, the Province was authorized to propose and try

CBM developers could potentially reap from the proposed

out unprecedented policies and reform measures as

reform, and they did this on solid scientific grounds. Citing

the provincial government saw fit. Once on this rather loose

opinion from domestic and international experts, provincial

leash, the Province was quick to add into the “comprehen-

officials often argued the following: to improve coal-mine

sive reform package” a proposal for “submitting CBM

safety and the resource-capture rate, it would be better –

development to the requirements of coal production, toward

and fully in line with scientific principles – to give the coal-

integration of the two mining rights” (“气随煤走, 两权合一”),

mine operator a leading role in CBM exploration, at least in

clearly

dual

the early stages. This is because the data, information and

administrative system. To this end, the provincial govern-

knowledge acquired by coalmine enterprises through

ment orchestrated a propaganda campaign, and has shown

geological prospecting and drainage, prior to and during

great skill in mobilizing political resources and support to

mining activities, will help CBM developers make better

promote the provincial case through various avenues.54

forecasts regarding production potential and operations

aimed

eventually

abolishing

the

planning; such an approach would thus improve It was reported that over the past few years, increasing

coordination between surface extraction and underground

numbers of People's Representatives from Shanxi have

drainage.56

repeatedly submitted the above proposal, or a variant thereof, to the national legislature (the National People's

It is important to note that pitches alone rarely get results

Congress). Fully aware that the idea of integrating coal with

without potent bargaining chips. In this regard, it appears

coal-methane production would resonate well with other

that the Province did have something to trade. First of all,

coal provinces, Shanxi allegedly attempted to coordinate

coal is always a trump card in the provincial hand.

with them in its legislative campaign. To make an appeal to

By making the national dependence on Shanxi coal its

the provincial public and the media, provincial officials were

bargaining chip, the Province could never be seen in a

smart to draw analogies, stating metaphorically that “Shanxi

weak bargaining position. Besides, some mighty provincial

shall not act like an altruistic candle to light up the others

energy enterprises have emerged from the mergers and

but burn ourselves down”.55

acquisitions (M&A) campaign mentioned earlier as

53 54 55 56

Interviews with Shanxi coalmine managers and local officials. Ibid. Ibid. Ibid.

potentially capable of competing with the SOE CBM developers. Over the past decade, several provincial coal enterprises have accumulated sufficient knowledge and

4. CBM exploration in Shanxi: pre-empting strikes to stake out the CMM terrain

technical know-how about CBM/CMM development, even

CBM/CMM development. This is because even without a

though some have done this through “illicit” undertakings.57

profit motive, coalmines are strongly motivated to drain the CBM/CMM gas anyway, simply for the sake of safety. In

In fact, provincial officials have been heard to claim that

contrast, the national CBM/CMM developers do not have

some Shanxi coal enterprises are rising to become

such special funds.

industrial leaders in CBM/CMM exploration. An illustrative case they frequently cite is the Jincheng Coal Mine Group.

It appears that the provincial campaign has shifted the

In 2010, the Jincheng Coal Mine Group produced 1.573

ground, and the central government is ready to make the

billion cubic meters of coal-methane gas, which accounted

necessary concessions. Concerned about causing further

for 18.4% of the national total. Of Jingcheng's production

dissension in Shanxi, the national government gradually

total, 908 million cubic meters came from surface

yielded to the Province’s demands by loosening its grip on

extraction, accounting for 57.9% of the national total;

the provincial coal-methane resources in order to allow

utilized coal methane amounted to 1.013 billion cubic

provincial coalmining enterprises a slice of the pie.59

meters, accounting for 29.7% of the national total.

In 2010, the national government finally agreed to allow qualified provincial SOEs to apply for franchising licenses in

Jincheng's case drives to home the fact that a provincial

order to engage international CBM/CMM developers; this

enterprise may well beat national SOEs in CBM/CMM

move means that the era of CUCBM monopoly has come to

development, as long as such enterprises take the job

an end. In the same year, Shanxi's pilot reform testing

seriously. In fact, the Jincheng Coal Mine Group first

“Integrated Coal and CBM/CMM Development” was

launched its CBM program back in 2005, when it drilled

endorsed by the national government. Although the pilot

100 or so surface wells to drain gas, mainly for safety

reform falls short of the initial goal of Shanxi,60 the reform

considerations. By the end of 2010, the Group had some

certainly represents a step forward by emphasizing the

3,000 wells in operation, getting ready to engage in the

desirability of integrating two-resource development. Most

economic exploitation of coal methane.58

notably, last year the Jincheng Coal Mine Group was granted coal and CMM mining rights to a total area of

Most industrial insiders tend to agree that it would be

107.74 square kilometres, which has been widely seen as

advantageous to allow coalmine operators to get involved

a breakthrough toward the winding down of the rigid,

in CBM/CMM development. For one thing, new regulatory

bifurcated licensing system. In addition, certain national

ordinances now make it mandatory for coalmines to charge

energy SOEs also responded positively to the provincial

50 yuan per ton of coal mined to be set aside for CMM treat-

proposal by taking a more conciliatory approach to CBM

ment; part of the fund can be allocated for CMM capture

development, as manifest in “San Jiao Model” mentioned

and utilization, as well as mining-hazard management;

above.

hence, such a fund could reduce the overall cost of

57 Ibid. It is interesting to note that the Datong Coalmine Group – the largest KSCOM in Shanxi – was said to be the chief violator of CBM regulations by engaging in such “illicit practices”. 58 Ibid. 59尹俊峰,王晋鳌(2010).晋城市争取地方煤层气采矿权取得重大进展.太行报

.October15.http://china.toocle.com/cbna/item/2010-10-15/5438548.html. 佚名（2010）. 山西争取煤层气采矿权获突破. 中国化工报. October28. .http://www.coal.com.cn/Gratis/2010-10-28/ArticleDisplay_252442.shtml. 佚名(2011).晋煤集团首获煤层气采矿许可气权矿权之争或解决. 中国经济网. January 20. http://www.3158.cn/news/20110120/21/87-411289660_1.shtml. 60 That is, explicitly stating that the two mining entitlements shall be “integrated” and CBM/CMM development must submit to the coal production needs of the mining operation.

5. CMM power-to-grid in Guizhou: community engagement as bridge

5.1. The provincial CBM/CMM scene in Guizhou: large potential in a poor province

Guizhou is the most economically underdeveloped

accidents with 102 casualties, which accounted for 11.2%

province in China, as well as an important energy

of total coalmine accidents, and 23.5% of the resulting

production base in southern China, with coal, thermal and

deaths, in Guizhou for that year.61 Given that the operation

hydro-power as its most significant energy sources.

of coalmines, primitive and modernized ones alike, entails

Deprived of oil and such clean and renewable energy

exposure to gas-induced hazards from time to time, gas

resources as natural gas, wind power, and solar power, the

drainage and extraction has been motivated primarily by

Province finds itself in an awkward position in the ongoing

(and is indeed necessary for) coal mine safety.

economic restructuring and transition toward low-carbon economy (Chen, 2011a,b; Chen, 2009; PCEPG, 2001).

The operating environment for coalmines in Guizhou is distinctively challenging. Different from Shanxi, Guizhou

The massive national program of westward development ("

is characterised by thin coal-bearing strata, low gas

大西部开发”) aims to turn Guizhou into the primary coal and

permeability and diluted methane concentration in its coal

electricity supplier for neighbouring provinces and cities.

basins. Within a given coal basin, coalmines in Guizhou

chal-

tend to be more dispersed and smaller than mines

lenges to increase future energy production and exports; as

elsewhere. On top of these issues, mines in Guizhou are

such, the traditional high-carbon development model of

found mostly in rugged, mountainous karst terrains. These

Guizhou Province that relies heavily on coal resources is bound to continue during the 12th Five-Year Plan period,

factors, together with the underdeveloped local economy

with the consequential environmental impacts left to be rec-

nical and socio-economic challenges for CMM recovery

koned with (Ibid.).

and capture, especially for the surface extraction of

Consequently, Guizhou is facing mounting

and pipeline network, combine to pose a distinct set of tech-

coal-bed methane (CBM), which remains in the pilot phase In this context, coal methane has emerged as a strategic,

in Guizhou (Ibid.).

emerging energy asset for the Province. Guizhou has abundant coal methane resources, ranked second only to

On top of the obstacles mentioned above, a number of

Shanxi in terms of known reserves within China. According

compounding factors need to be overcome in order to pro-

to official assessments, Guizhou boasts 3.15 trillion cubic

mote CMM exploitation. These include the poor quality of

meters of CBM/CMM reserves within 2,000 meters

gas being drained and extracted in terms of methane

beneath the surface, which amount to 10% or so of the

concentration and stability, the rather limited end-use

national total. More than 80% of the provincial mines are

options, poor market cultivation for gas products, lack of

gassy or prone to either coal and gas outbursts, with the

fitting and/or advanced technologies, underdeveloped gas

latter type accounting for about 40% of the total (Ibid.). As

distribution networks, perverse economic incentives and an

such, coal methane is the main killer within Guizhou

unfavourable pricing structure, contradictory policies and

coalmines. In 2009 alone, there were 35 gas-induced

ineffective enforcement, and so on (cf. UNECE, 2010; IEA, 2009; Methane to Markets Partnership, 2008; ESMAP, 2007).

61 Interview notes from the fieldwork in Guizhou.

5. CMM power-to-grid in Guizhou: community engagement as bridge

5.2. Gas-to-power as the main option for CMM recovery and use in Guizhou

Since 2005, when the technology for utilizing low-methane-

As a result, the overall CMM utilization rate in Guizhou

concentration gas (less than 30%) for power generation

remains fairly low. Over the past decade, while coal

had a breakthrough in China, CMM-fired power generation

methane drained and extracted by all provincial coalmines

has become increasingly popular across China and is the

combined has reached a cumulative total of 674.4 million

main option for CMM utilization.62 Although there are still

cubic meters, only 83.92 million cubic meters have been

different views regarding the safety of using low-concentra-

used for power generation and other civic and industrial

tion CMM gas, the technology has gained endorsement

purposes; this translates into a meagre 12.4% utilization

from the Chinese government, as evidenced by supporting

rate. The lion’s share of CMM gas drained during mining

regulations and standards already in place or being

activities still remains unused, and is emitted into the air,

formulated (Chen, 2011a,b; IEA, 2009).

resulting in a tremendous waste of valuable energy resources and adding to GHG emissions.

According to the Guizhou Coal Mine Safety Administration, since

Guizhou's

first

gas-to-power

project

was

In 2006, the Chinese State Council unveiled the pivotal

commissioned in 2003, a total of 30,000 kilowatts of power

“Opinions on Accelerating the Use of CBM/CMM Being

generation capacity has been put into operation, which has

Extracted and Drained.”65 Accordingly, the Guizhou

produced cumulatively more than 10 billion kilowatts of

provincial government has also initiated a slew of

electricity output.63 However, CMM power plants were

favourable policy incentives and measures to encourage

owned and operated in the past mainly by three main state-

CMM utilization.66

owned (SOE) mining enterprises in western Guizhou: the Shuicheng Mining Corporation; the Guizhou Panjiang Coal

In response to these efforts, and also urged by the local

and Power Corporation; and the Guizhou Liuzhi Industrial

governments, an increasing number of small, private collie-

and Mining Corporation, while the legion of township collie-

ries in Guizhou have been more motivated to pursue the

ries that account for about 80% of the provincial coal output

option of using drained CMM to generate electricity, mainly

were not forthcoming in jumping on the CMM-to-power

to lower their electricity bills, not for economic gains. So far,

bandwagon.64

20 or so provincial coalmines have gas-powered plants in operation.67

62 轶名(2005). 煤层气发电技术及我国煤层气发电现状. 煤炭网. December 30. http://www.coal.com.cn/CoalNews/ArticleDisplay_115994.html.轶名(2011). 低浓度瓦斯利用期待政策突破. 中国能源报. August 24

There are good reasons for gas-to-power to become the

http://news.xinhuanet.com/energy/2011-08/24/c_121904602.htm. 轶名

prevailing option for CMM exploitation in Guizhou. First and

(2011). 瓦斯发电，“水”到为何“渠”难成？. 网经新闻. June 30. http://news.youboy.com/2011/06/30/newsb747118.html. 李良(2009). 煤层气

foremost, with chronic power shortages and the upward

发电与应用前景. “2009(首届)中国能源企业高层论坛”发言. November 5.

trend in electricity pricing being painfully felt by industrial

http://smt.114chn.com/Webpub/610800/071115000004/ConTP09110500005

enterprises, coalmine operators are strongly motivated

1.shtml 63 Interview with Guizhou grid company staff. 64 Ibid.

to ensure their power supply, save on electricity bills, and recover some of their gas-control costs. Besides,

65 徐万国. 2007. 中国发改委:煤矿瓦斯发电上网将获国家补贴. 财华网.

technologies for CMM power generation are more mature,

May 11. http://hk.jrj.com.cn/2007/05/111745129731.shtml 66 索小军张璇娴 (2009). 叩启煤矿“绿色发电”之门 ——记盘县首家地方煤矿

economical, straightforward, and robust than alternative

瓦斯发电. 《贵州政协报》June 12.

utilization options, which range from using CMM gas to

http://www.gzzxb.com/pages/news.aspx?id=%CD%B3%D5%BD%D5%FE

produce CNG/LNG and feeding CMM into the pipeline for

%D0%AD27039 67 Interview notes from Guizhou fieldwork.

domestic or industrial uses, to converting CMM to industrial

5. CMM power-to-grid in Guizhou: community engagement as bridge

fuels or by-products (Chen, 2011a,b). Those other options

economic attractiveness of CMM utilization; a gas power

are typically more capital intensive and restrictive in terms

plant requires that extra funds be spent on equipment

of operating requirements.

procurement, personal training, and gas monitoring and control. But the most prominent hurdle is the well-known

However, the gas-to-power option is not without its own

difficulty faced by CMM power plants in accessing, and sel-

problems. Skyrocketing coal prices tend to eclipse the

ling surplus power to, the grid.

5.3. Hurdles for grid-connected CMM power generation: who will pay the subsidy?

An explanation is in order to better understand why

grid company should shoulder the responsibility for building

gas-power generation needs to be grid-connected. First,

the power transmission line from the grid to the transformer

given the dispersed nature of gas power plants, which

of the CMM power plant, whereas the power plant should

are typically small in terms of installed capacity and

take care of the last-mile connection from the transformer to

geographically scattered across various coalmines, only by

the plant. The price of gas-produced power sold to

grid-connected power generation can voltage stability and

the grid is set by the NDRC based on the price for biomass-

efficient use be ensured; otherwise, the power capacity

generated power; the latter equals the benchmark tariff for

would not be able to fire up ultra-high-power devices.

electricity produced by desulfurized coal, plus a pre-set

Second, the electricity demand for captive use at a

subsidy per kilowatt.70 The difference between the grid’s

coalmine tends to be limited. As mining activities go down

preferential feed-in price for gas-powered electricity and the

deeper into more gassy coal seams, the volume of

benchmark tariff is to be absorbed by the grid itself, through

methane that is lost through drainage tends to increase.

increases in electricity prices within the grid’s service area;

Since for many collieries power generation remains the only

this suggests that the national government will not provide

viable option for exploiting the gas produced, this barrier will

funds to subsidize CMM gas-produced power directly.71

significantly limit the scale of the operation and CMM utilization rates.68

In practice, however, a CMM power plant will have to deal with a number of hindrances to getting connected with, and

In accordance with national polices,69 a CMM power plant

selling surplus power to, the grid company. First of all, the

is encouraged to apply for permits to make connections

complicated application and approval procedures can be

with the grid and to sell power in excess of captive use to

overwhelming for many coalmine operators already overs-

the grid company. The grid should then grant gas-power

tretched with keeping up with production targets.

plants preferential access, in the sense that they are not required to compete with thermal power plants in the elec-

The requisite procedures in Guizhou are outlined as

tricity market, and are also exempt from participating in the

follows, and go like this: normally, the project entity

peak-and-trough modulation of the grid. In principle, the

(typically the mine) files the application for initiating the project with the Guizhou Development and Reform

68 Ibid. 69 The “Opinions on Accelerating the Use of CBM/CMM Being Extracted and Drained”, and the “Pilot Scheme for Pricing and Cost-sharing Arrangements for Power Generation from Renewable Sources”, as noted above. 70 That is to say, on top of the feed-in price for thermal power from desulfurized coal to be used as a benchmark, CMM power sales are entitled to a subsidy of 0.25 RMB per kilowatt. 71 Interview notes from Guizhou fieldwork.

Commission (DRC); the application package typically contains

the

Feasibility

Study

Report

and

the

Environmental Impact Assessment (EIA) for the project, to have been completed by an accredited third-party entity. To help review the case, the provincial DRC would normally

5. CMM power-to-grid in Guizhou: community engagement as bridge

consult with the provincial and/or municipal Bureau of

On the other hand, the grid company lacks incentive to take

Planning (BP), the Environmental Protection Agency (EPA),

in the CMM-generated power. Effective operation of a CMM

and the Bureau of Land and Resources (BLR) about

power plant is contingent on the total volume of gas to be

whether the application should be approved or denied. If a

drained from the coalmine, the methane concentration, and

positive decision is made and the permit granted, the

the stability of the gas supply. These factors, in turn, are a

project entity can then begin working with the grid company

function of the coal-production levels of the mine (which

(an SOE) on a Letter of Intent (LoI) for grid-connection

drives its CMM drainage efforts) and the specific drainage

preparation. During this negotiation, the grid company will

technology being used (which affects the volume, stability

provide (read prescribe) guidelines for how the requested

and methane concentration of the gas drained). Due to

connection should be properly configured.72

inherent uncertainties surrounding each of these factors, a gas power plant is prone to start-and-stop issues and

If negotiation with the grid company goes smoothly (which

underperformance; such poor reliability creates potential

normally is not the case), the counterparties will sign the

hazards for grid operations. Therefore, it is understandable

grid-connection agreement to seal the deal. Completion of

that the grid tends to deem CMM electricity as “trash

this step will send the project entity back to the regulatory

power”, and hence not willing to meddle with it. In fact, in

agencies: to the Power Supervisory Bureau (PSB) for appro-

some localities, the grid company charges a fee for each

val to generate power, and to the Pricing Control Bureau

unit of electricity to be fed into the grid, or sets a technical

(PB) for the permit to set the tariff. After this, the project

threshold too high for a CMM power plant to meet.74

entity will have yet another step: signing the electricity sale agreement with the Power Supply (and Distribution) Bureau.

The grid company is reluctant to cooperate for another

Only when all the above regulatory requirements are fulfilled

reason. As noted above, the national policy dictates that, in

will a gas power plant be able to sell surplus power back to

principle, the grid should reconcile the difference between

the grid. Lack of coordination among the various gatekeeper

the premium tariff granted to CMM power and the

agencies can postpone any step in this process.73

benchmark price itself. However, electricity pricing in each regional market is strictly controlled by the provincial and

As some accounts indicate, the transaction costs involved

local government (such as the provincial and municipal

in this lengthy process are so high and deterring that they

branch of the NDRC and the price supervision agency),

tend to outweigh the potential gains of securing a grid

subject to NDRC approval. Out of fear of being blamed for

connection, so much so that some coalmine operators

fueling increases in the Consumer Price Index, the relevant

would prefer to operate the gas-power plant without a grid

agencies in Guizhou have been snail-paced in working in

connection. For instance, some collieries deliberatively cap

sync to formulate operational guidelines for implementing

the output of the CMM power plant in line with their in

the price hikes necessary to compensate for the subsidies.

situ electricity needs, letting the unused portion of the CMM

Consequently, the responsibility for subsidizing CMM power

gas get discharged into air; such a practice forgoes

falls on the shoulders of the grid company by default, eating

opportunities for maximizing the potential economic and

into its profit margin.75 This obviously makes the grid

environmental benefits that could be captured from CMM

company unhappy, given that its profit margin is not

power generation.

unnecessarily high.

72 Ibid. 73 Ibid. 74 Interview notes from Guizhou fieldwork. 75轶名 (2010). 贵州煤矿瓦斯发电规模仍偏小. 经济参考报. January 28. http://finan-

ce.qq.com/a/20100129/000588.htm 76 This may be attributed to the central planning legacy, when the grid tariff in each province was centrally prescribed based primarily on the cost of transporting the fuel to the power plant. In a coal abundant province like Guizhou, the assumption is that thanks to a locally available fuel supply, the electricity price should be lower. Interview with staff of the Guizhou Power Grid Company.

In fact, it was noted by the provincial grid staff that the difference between the electricity feed-in price and the sale price in Guizhou is among the lowest in China.76 As a result, the provincial grid is operating on a fairly thin margin. The grid operator’s staff cited the fact that in light of the complex geological conditions, as well as the increasing

5. CMM power-to-grid in Guizhou: community engagement as bridge

incidence of natural hazards (such as winter freezes) to be

the grid staff admitted that the grid signed such agreements

found in Guizhou, the grid has to bear the increasingly

mainly for compliance purposes, with the understanding

higher costs incurred from system operations and

that in most of these cases no surplus CMM power would

maintenance, let alone infrastructural development and

be immediately available for grid purchase (hence no

renovations.77

subsidy to pay). One can suspect that both the grid and the coalmine operating the CMM power plant would benefit

To lend credence to its arguments, the provincial grid made

from such a deal on paper, in that the grid company would

the following calculations based on hypothetical scenarios:

look good in the eyes of the government as well as the

should the grid buy 1 billion kilowatts of electricity from CMM

public, whereas the mine could leverage the deal for

power plants in Guizhou per year, it would have to provide

various gains, as illustrated by the Hong'guo case below.

250 million RMB in subsidies each year; once the combined provincial gas-to-power generation capacity increases to

Industrial insiders suggested that, given its infantile

120 million kilowatts, generating more than 1 million

development, there remain a host of technical problems yet

kilowatts of CMM power each year, the annual subsidy to be

to be resolved, before distributed CMM power generation in

borne by the grid would surpass the high watermark of 10

Guizhou can reach the economies of scale that make the

billion yuan, assuming that only 50 percent of such CMM

grid connection issue truly imperative. For now, coalmine

power would be surplus and fed into the grid. Given the

operators should concentrate on improving their drainage

small tariff differential, and also taking into account inevitable

system to ensure a more stable and high-quality gas supply

transmission losses, the level of subsidies for purchasing

for scaled up operations; this helps allay the urgency of

CMM power would be unbearable for the grid.78

tariff reform for now. For now, most insiders deem it too early and premature to resolve tariff issues, which should

When asked why a few CMM power plants in Guizhou still

be rightly seen as the ultimate hurdle for scaled-up CMM

managed to sign grid-connection agreements nonetheless,

power generation.79

5.4. Local strategies for overcoming the hurdles

5.4.1. The Hong'guo Mine

First, it is allegedly the sole and only coalmine in Guizhou

The Hong'guo (Red Berry) Coal Mine caught our attention

that has managed to sign both a grid-connection agreement

for two main reasons:

and a power-sale agreement, hence it became the first

77 This is a touchy and controversial point. Information providers working in coalmines and power plants indicate that as a state monopoly, the grid has captured a lion’s share of the profits generated by the power industry, hence enjoying a profit margin way higher than that of other industries, on average. They suggest that the grid company may have overstated the effects of these factors simply to defend its vested interests. 78 Interview with staff of the Guizhou Power Grid Company.

CMM power station to actually sell surplus electricity to the grid.80 As of the end of 2010, reportedly the Hong'guo gas power plant had realized about 12 million kilowatts of surplus electricity-grid sales.

79 Interview notes from Guizhou fieldwork. 80 On April 16, 2010, the Guizhou Provincial Price Bureau approved the grid tariff for the CMM power plant operated by the Hong'guo Mine at 0.517 yuan per kilowatt, at the recommendation and in coordination with the municipal Price Bureau of Liu Panshui City. [市物价局]积极帮助盘县红果镇红果煤矿低浓度瓦斯发电上网电价在省物价局审批通过, 信息来源：市物价局发布日期：2010-04-23 07:55:36. 81 In fact, as IEA (2009) reported, not a single power grid company was found to have been

Second, given that the mine is a privately owned, township

known to have actually purchased electricity from a coal-mine operator via a subsidized feed-in tariff in Guizhou and Sichuan Provinces as of November 2008. 82 The mine has been featured quite a few times in local and provincial media as being a role

attempting this process).81

model for TVCM. As an example, see 贵州日报 (2009). 小煤矿大作为. November 17. http://www.lpzhw.cn/content.php?contentid=782

and village coalmine (TVCM), one cannot help but wonder how it made it through the final step, even though stateowned (SOE) coalmines have failed (or refrained from even To decipher this puzzle, one needs to revisit the history of the mine.82 The Hong'guo Mine is located in a remote

5. CMM power-to-grid in Guizhou: community engagement as bridge

mountain village within the jurisdiction of the Liu Panshui

effectively boosting its production capacity from 633,000

Municipality in western Guizhou,83 where the main

tons a year ago to 985,700 tons, up 55.7%. In 2010, sales

provincial coal reserves are located. The mine was founded

revenue hit a high of 1.29 billion yuan, a yearly increase of

in August 1996, with an initial production capacity of less

86%; as a result, the mine generated a total of 207 million

than 30 thousand tons.84

yuan in taxes and fees, up 85.2%, and reaped a net profit upward of 357 million yuan, representing a 128% annual

In 2004, the Hong'guo Mine acquired the Baogu Mine in the

increase – the largest since the mine was founded. By all

same town. At the end of 2006, the mine saw a good

measures, the mine has become a cash cow for the local

opportunity to grow bigger via the newly promulgated

government, which is desperate for money in the wake of

national policy of consolidating small coalmines through

the budgetary reforms introduced in 1994.

massive M&A campaigns;85 it raised 5.6 billion yuan to acquire nearby micro-scale mines, engaging them in

In recent years, to address mounting government concern

technological renovations and transformation. As a result,

regarding worsening coalmine safety, the mine has

the mine managed to boost its combined annual production

allegedly made consistent efforts to implement the

capacity to 900,000 tons, well above the minimal

principle of “putting safety first”, emphasizing preventive

requirement for a mine to qualify as an M&A bidder.86 The

measures as well as.comprehensive treatment (”安全第

technological innovations ranged from the application of

一、预防为主、综合治理”) of gas control and management,

more integrated and fully mechanized excavation methods,

and has maintained a superb safety record with zero fatali-

to replacing obsolete ones, upgrading the system of coal

ties for many years. The mine achieved this by employing

transportation and gas monitoring/drainage, and the

both “sticks” and “carrots”. For one, the mine set higher

installation of gas power generators. At the same time,

standards, which is unusual for a private

the mine constructed a coal-washing plant capable of

instance, over the past few years, the mine made safety

processing 150 million tons of coal per year, which is

education and training mandatory for mine workers, and

supplied to several large state-owned enterprises (SOEs) in

has allegedly made unremitting efforts to improve such pro-

Guizhou and adjacent provinces.87

grams; it is purported to have also increased efforts to strict-

enterprise. For

ly enforce the practice of sending executives underground to Thanks to technological progress, the mine's production

work with the mine workers, as required by the State Work

has increased steadily. In 2010, the mine invested nearly 60

Safety Administration.

million yuan to purchase two sets of integrated excavation equipment from the Shandong Mining Machinery Group,

Futhermore, the mine has attempted to create strong economic incentives for improved gas control and management by utilizing CMM for power generation, in

83 Nawan village, Hongguo Township, Pan County, in the jurisdiction of Liu Panshui City, Guizhou Province. 84 The discussion below is based primarily on interviews undertaken in Guizhou, unless otherwise noted. 85 Such campaigns were meant to reign-in chaotic, run-away mining development that had caused increasing levels of coal mining accidents and a tremendous waste of resources. 86 In fact, each of the two shareholding mines - the original Hong'guo Mine and the previously merged Baogu - has had its designed capacity upgraded to some 300,000 tons per year, with the newly acquired micro mines adding to the safety margin. Under the national campaign for coalmine consolidation, any mine producing less than 30,000 tons per year would be forced to close down, while those with annual production capacity above 70,000 tons would be qualified to take over micro mines. Therefore, by being tactful, the Hong'guo Mine not only avoided being taken over, but also emerged as an entity qualified to initiate M&A deals. An illicit tactic is to fake the designated production capacity in collusion with the design institute. But this study does not intend to pursue that line of inquiry. 87 These include the Panzhihua Iron & Steel Plant in Sichuan Province, the Kunming Iron and Steel Plant in Yunnan Province, and Guizhou Huaneng Inc. -- all large state-owned enterprises, which have formed a long-term strategic partnership with the Honguo Mine. 88 In 2010 alone, the mine spent 140 million yuan on new equipment procurement.

hopes of fostering a virtuous cycle of gas-hazard mitigation based

the

principle

“draining

gas

before

excavation, promoting drainage through utilization, and ensuring mining safety through improved drainage” (“先抽后采、以用促抽、以抽保采”). To this end, the mine has steadily increased investment and efforts for improving drainage technologies and management.88 These efforts have not only increased the safety and the comfort level of underground workers, but have also improved the volume and quality of the CMM gas to be drained – and hence the performance of the Hong'guo Gas Power Station.

5. CMM power-to-grid in Guizhou: community engagement as bridge

5.4.2. The Hong'guo Gas Power Plant The gas power plant at the Hong'guo Mine was first introduced in March 2008, and its first phase was commissioned in May 2009. The power station was equipped with 12 sets of 500 kW gas generators, with total designed capacity of 6000kw (12×500 kW). The total investment in the plant amounted to 36 million yuan, all self-financed.

the foregoing discussion has indicated, for any given coalmine, the logic of action (or non-action) in this context is less straightforward; otherwise, one would see more successful cases of grid-connected CMM power stations in Guizhou and across the country. This situation begs two questions: what has motivated the Hong'guo Mine to act differently from other mines? What has enabled the Hong'guo Mine to act successfully?

The mine currently has two gas-drainage systems that

Anecdotal accounts indicate that the answers may lie

pump from underground nearly 3 million cubic meters of

elsewhere. Clearly, the Hong'guo Mine was more motivated

coalmine gas daily, under normal mining conditions. It is

than most other local mines to pursue grid-connection, but

said that previously all this gas would have been emitted

likely for benefits other than (or in addition to) subsidized

into the air, but now 60% is used to generate electricity, way

power sales. It may not be coincidental that less than

higher than the provincial CMM utilization rate (of around

six months before the mine started efforts to secure the

13%, on average). Reportedly, from its commissioning in

power-sale agreement (which was approved in April 2010,

May 2009 until February 2010, the gas power station

as noted above), the NDRC approved the CMM CDM

generated a total of 29.09 million kilowatts, utilizing 11.50

project of the Hong'guo Gas Power Station,89 hence ushe-

million cubic meters of CMM in total.

ring the validation process that normally would have taken six months to complete. The CDM project, if successfully

In the absence of a grid-connection agreement, however,

validated and registered, would bring in at least 12 million

only 6 of the 12 installed gas generators were in operation,

yuan in CER revenue annually to the mine (on top of the

with a daily power output of 50,000 to 70,000 kilowatts,

7 million or so in revenue from the subsidized sale of

which is equivalent to 1.5- 2 million kilowatts per month.

electricity to the grid).

It was indicated that if all 12 power-generation units were

Moreover, a successfully executed project based on

running at full steam, the power plant would have produced

international cooperation (as CDM is defined) would create

50,000 kilowatts of surplus electricity daily, available

a win-win situation from which all the local stakeholders

for sale to the grid, which would translate into more than

would benefit.90 The mine could leverage the CDM project

7 million RMB extra revenue annually at the preferential

to further boost its corporate social responsibility image and

tariff rate. This would mean that the capital invested in

legitimacy in the local community; CDM “branding” might

power-plant construction would have been recovered in

assist the mine to achieve many other goals: brightening up

three years or so.

the resumes of its senior executives, improving its

On the surface, it seems that the economic gains resulting directly from power sales to the grid would have been attractive enough to motivate the mine into action; and the mine indeed has taken action to fulfil all the requirements for getting connected to the grid (as noted above). But as 89 In Sept. 2009. The off-taker is Eco Security, with annual CERs amounting to 174,556 tons CO2 equivalent. 90 Though not in the way the Project Design Document (PDD) would typically state.

creditworthiness for loans, enhancing its chance to win various awards and certificates, and so on. The local government would love to see its “cash cow” get fatter, and the name of the locality better known globally through successful registration of the CDM. Therefore, the local officials would lend whatever support the mine needed to make its CDM a success. For the local community, which has much benefited from the growth and prosperity of the mine in the

5. CMM power-to-grid in Guizhou: community engagement as bridge

past (see below), the successful registration of the CDM

5.4.4. Benevolent entrepreneurship as strategy

bodes well for its future well-being.

Under his direction, the Hong'guo Mine has devoted

Therefore, all the local interests converged to bless the

revitalization since its early years.

enormous resources to community engagement and CDM. Hence, all was ready except for one crucial thing: given the well-known difficulties in registering CMM CDMs,

From day one, Mr. Yu adopted the practice of employing

grid-connection was likely to enhance the chances of

local villagers to work in his enterprise, setting his mine

success for the Hong'guo CMM CDM, or so the mine

apart from most of the other mines, which recruit migrant

executives thought.

workers from far away regions. As a result, many local families have relatives and significant others working for

By now, we already know the happy ending. But our story

him. This partially explains why workers are more loyal to

remains incomplete without profiling the man who put toge-

his mine, and the local community is willing to identify with

ther the missing pieces of this puzzle.

his cause.

5.4.3 The coal boss at the helm

The mine’s 400 million yuan project for “building a new

Mr. Yu Bangping is the man behind the helm at the

countryside, villa-style” was completed in 2010, and was

Hong'guo Mine, and the central figure that has made all

meant to improve the housing conditions of the local

things happen.91 Dark, and often wearing a black suit in the

residents. The mine also earmarked 10 million yuan to fund

field, Mr. Yu is talkative, enthusiastic, and often becomes

the renovation of minority villages, inhabited by fewer than

overtly sprightly when it comes to exciting topics. Already a

132 households. During the severe drought last winter and

wealthy “coal boss” (煤老板) by now, Mr. Yu is not the type

spring, the mine actively aided local villagers to build water

of rich upstart who tends to hide his humble origins.

cellars, while also organizing vehicles to distribute water to

A Hong'guo native in his late 30s, Mr. Yu grew up in an

the locals free of charge. To ensure a normal life for the

impoverished farming family. Since his boyhood, Mr. Yu has

villagers and to ease their worries, the mine dished out

firmly believed that the fate of poverty can always be

more than 500 million yuan in 2010 to fund construction of

changed. After graduating from junior high school, he went

two medium-sized reservoirs, connected with various

all over the country seeking ways to change his fate, as well

household caverns by pipelines, so as to help villagers

as the poverty and backwardness of his hometown. He has

better prepare for future natural hazards.

delved into all sorts of hard work, including individual transportation, but soon he realized that regardless of how

Mr. Yu has been concerned about improving the welfare of

much personal wealth he managed to amass, he had not

elders. Since 2004, his mine has consistently allocated

fulfilled his dream of making a difference for his hometown,

more than 300,000 yuan each Spring Festival to villagers

which was trapped in poverty. Therefore, at the age of 22,

over 60 years old (500-1000 yuan to each). During the 2010

Mr. Yu went back home, and chose to bring the rich local

Chinese New Year, a total of 378,000 yuan were handed

coalmine resources to bear on his quest for change. So he

out to more than 600 senior citizens.

bought the Hong'guo Mine. Thanks to the reform policies,

Mr. Yu also cares about the medical welfare of the local

he finally got his wish.

community. Since the central government unveiled the Rural Cooperative Medical Program (农村合作医疗计划) in 2008, his mine has paid membership dues for individual

91 Mr. Yu as an exemplary TVCM entrepreneur has been profiled in various media.Discussion in this section draws upon interviews with Hong’guo staff as well as the media sources listed below: 贵州商报. 2001. 盘县红果镇红果煤矿董事长余邦平：今年再投一个亿造福百姓.April;11. http://www.chinaguizhou.gov.cn/system/2011/04/01/011053043.shtml; 周运明. 2010. 大山情节盘县红果煤矿矿长余邦平 . 贵州政协报 . June 2. http://www.qswcn.com/2010/0602/297.shtml;王贵山曾孟达.2010. 余邦平： 15年无一起矿群矛盾的缔造人.中广网.February3. http://www.cnr.cn/guizhou/qy/qyj/201002/t20100203_505982816.htmvl

villagers, so that they would benefit from the program unwittingly, without having to pay out of their own pockets. Yu's mine has also made great contributions to sustainable rural development. The mine subsidizes villagers who are willing to convert farmland back to forest, with annual

5. CMM power-to-grid in Guizhou: community engagement as bridge

reforestation grants said to be nearly 100 million yuan. In

of the locale, and Mr. Yu as local entrepreneurship and

2010 alone, the mine spent more than 200 million yuan to

prosperity personified.

help villagers plant potatoes in the hills; funding was provided to help villagers employ various kinds of machinery,

It becomes evident from the foregoing that Yu's interests

buy seeds, repair roads and finish earth-moving projects,

have become so enmeshed with those of the local

as well as to help them plant buckwheat after harvesting the

government, the local villagers, and the local community

potatoes. All these efforts help promote the development of

overall that each of these parties could see potential

the local agricultural economy.

benefits from the prosperity of his enterprise, and hence be willing to sign on, endorse or facilitate his pursuits. No party

As a result, local people see Mr. Yu as a benevolent

wants to see Mr. Yu’s enterprise fail, and certainly not

entrepreneur akin to a “living Buddha.” His strong sense

even stumble. Such observations are confirmed by the

of social responsibility and benevolent deeds help the

overwhelmingly

enterprise under his helm win a long list of awards and

CDM stakeholder conference, as well as the expeditious

prizes from the local government, as well as certificates of

processing of Hong'guo's application by the local

recognition granted by social organizations. These include

authorities for grid-connected power generation. Under

the County Coal Production Safety Award, the County

such circumstances, the red-tape procedures that can turn

Exemplary Enterprise Award, the Municipal Exemplary

into a nightmare for average applicants may well come as

Enterprise Award, and the Municipal Grand Prize for

a breeze for Yu, and in hindsight, it looks like this was

Recognition, the Municipal Key Township Enterprise Award,

indeed the case.

positive

comments

made

the

the Financial Contribution Award, and the Prize for Society Responsibility and Contributions. In fact, the local govern-

The puzzle is finally solved: unlike in the popular Guizhou fable,

ment often sees Mr. Yu’s enterprise as a window-display

here we have a donkey who is never exhausted with tricks.92

92 Our story about Mr. Yu Guizhou brings to mind the famous fable of “the donkey of Guizhou exhausted with tricks”. This idiomatic popular tale (“黔驴技穷”) has stigmatized Guizhou by portraying it as a backward province. Here, we use this idiom antonymically as a tribute to Mr. Yu. A retelling of the fable can be found at: http://www.chinesestoryonline.com/fable-story/96-the-donkey-of-guizhou.html

6. CMM transport from Shanxi to Henan: successful entrepreneurship breaks a deadlock

6.1. Background

As noted above, one of the key barriers for CBM/CMM

Five-Year Plan (2005-2010), nine of which would start from,

development in China is an infrastructure bottleneck

or go through, Shanxi Province. The 10 pipelines were to

(Huang, 2010, 2008; ESMAP, 2007). When the gas is

have a length of 1,441 kilometres, with a total capacity of

extracted from the CBM basin in one area, it needs to be

6.53 billion cubic meters and require an investment of 3.09

transmitted downstream to end-user markets often located

billion yuan (ESMAP, 2007). This massive national program

far away.

in CBM pipeline construction is to continue during the 12th Five-Year Plan. Upon completion, it will enable better explo-

The lack of gas-transmission capacity has been crippling to

ration and exploitation of the province's vast CBM

the province of Shanxi, home to one-third of China's coal

resources – a strategic energy resource supplementary to

reserves, where several of China's major coal bed meth-

natural gas.94

ane (CBM) reservoirs are found – in northern and southern Shanxi, respectively (SJCM, 2004).

Construction of the pipelines was initially given to, and divided among, the big energy SOEs, roughly in line with

To overcome this bottleneck, China planned to build 10

the sphere of influence they had already staked out in

CBM pipelines for the national CBM industry during the 11th

Shanxi Province (as noted in Part 4). For instance, PetroChina was to work mainly in the northern provincial domain, while CUCBM would undertake pipeline construc-

93 Together with interview notes, background information for the following discussion came from various web sources, to list a few: 戴民 (n.d). 煤层气：巨头的游戏. 中国企业家 11年第15期. (http://www.dooland.com/magazine/article_158265.html). 傅明, 郭纪亭 (2011). 逐鹿煤层气. 证券市场周刊. July 4. (http://stock.eastmoney.com/news/1406,20110704146264355.html). (http://news.sohu.com/20110517/n307697966.shtml). 郭芳 (2011). 煤气之争已超越产业层面谁能协调利益格局？. 中国经济周刊. May 17. (http://www.chinanews.com/ny/2011/05-17/3045119.shtml). 郭芳(2011). 瓦斯战争：煤矿杀手的钱景. 《中国经济周刊》 > 封面文章. June 9. (http://www.chinavalue.net/Media/Article.aspx?ArticleID=77433&PageID=1). 宋亮 (2011). 煤层气争夺如何休战_中国煤炭资源网. 中国经济和信息化. January 30. (http://www.sxcoal.com/gas/1419711/articlenew.html). 佚名 (2011). 煤层气激烈竞争地方和民营企遭三巨头清洗. 和瑞财经. June 3. (http://finance.horise.com/news/20110603/00571426.shtml).尹一杰(2011). 随着中石化的介入，煤层气基本形成了以三大石油巨头为主的开发格局_21 世纪网. 21世纪经济报道. June 2. http://www.21cbh.com/HTML/2011-6-2/xNMDAwMDI0MjExNQ.html). 94 Some of those CBM pipelines will be eventually connected with the nation's West-East Natural Gas Pipeline, while some will not. Given that the CBM pipelines are low pressure, while the West-East Natural Gas Pipeline is high pressure, the viability of linking the two pipelines is contingent on a wide variety of technical, economic and political considerations beyond the scope of this study. 95 尹一杰(2011). 随着中石化的介入，煤层气基本形成了以三大石油巨头为主的开发格局_21世纪网. 21世纪经济报道. June 2. (http://www.21cbh.com/HTML/2011-6-2/xNMDAwMDI0MjExNQ.html). 轶名 (2010). 山西•高平--全国首条跨省煤层气长输管线完工. November 29. 96 Interview notes. Also cf. Anonymous, 2009.

tion work in the eastern and central parts of Shanxi; other “smaller fish” were left to figure out remaining locations and routes, in hopes that they would get a share of the spoils left by the “big sharks.”95 However, this peaceful cohabitation by competing pipeline developers in certain parts of Shanxi Province tends to belie what was brewing in the Qinshui coal basin, located in the southeast of Shanxi. As one of the world's largest CBM reserves, the Qinshui Basin boasts 6.85 trillion cubic meters of detected geological methane deposits, which account for 23% of the national total.96 As previously noted, Qinshui has been a well-known “powder keg” in China's CBM turf wars. By then, CUCBM had developed Jincheng City in the Qinshui basin into a large CBM production base for the company. Together with

6. CMM transport from Shanxi to Henan:Successful entrepreneurship preaks a deadlock

PetroChina (CUCBM's former main shareholder, later

hurdle for the attainment of this goal was the lack of infra-

succeeded by CNOOC), national SOEs had built produc-

structure for gas transmission and distribution.98

tion facilities in the basin, with a capacity of 1 billion cubic meters of CBM per year.97

To help surmount this hurdle, two pipelines were planned for the Qinshui Basin: the first pipeline, to be connected

However, such a massive build-up of CBM production

with the West-East Natural Gas Pipeline ("西气东输”), was

capacity (encompassing gas extraction, processing and

commissioned to PetroChina. The second pipeline would

storage) inevitably requires large and growing downstream

become the first inter-provincial CBM pipeline ever built in

markets to consume the gas. It was projected back then,

China. Its construction was commissioned to CUCBM, the

that in 2015, coal-methane production in the Qinshui Basin

largest CBM company in China.

would reach 33 to 39 billion cubic meters. However, a key

6.2. The Duanshi-Jincheng-Bo'ai CBM pipeline

With the provincial government of Shanxi embarking on a

Therefore, the CUCBM decided to build China's first

course of “Gasifying Shanxi”, the provincial CBM market

trans-provincial CBM pipeline that would run from Duanshi

would have great potential. However, concerned about the

Township in Qinshui County, Shanxi Province to Motou

impact of pre-emptive strikes by competing SOEs on its

Township in Bo'ai County, Henan Province and would pass

market share in Shanxi, CUCBM found a growing market

through Yangcheng County and Zezhou County in Shanxi

across the provincial border. Henan, another major coal-

and Qinyang County in Henan.101

producing province on the other side of the Taihang

According to the initial design, the total length of the

Mountain, had seen mounting demand for energy and

pipeline would stretch 98.2 km, of which 76.2 km would fall

hence had a yawning gap in its energy supply. Lying far

within Shanxi, and 22 km in Henan. The pipeline was

away from the East-West Natural Gas Pipeline, it was not

designed to convey 1 billion cubic meters of gas, requiring

easy for Henan to find a quick solution. Some analysts

an investment of 458 million yuan. Upon completion, the

estimated the natural gas shortage in Henan to be in the

major cities to be served by the pipeline would include

neighbourhood of 1 billion cubic meters annually.99

Jincheng city in Shanxi, and Luoyang, Zhengzhou in Henan.

Transporting CBM gas from Qinshui to Henan would ease the natural-gas shortage in Henan Province. For example,

As China's first cross-provincial CBM pipeline, the

a big colour-TV plant located in Bo'ai County needed some

significance of the Duanshi-Jincheng-Bo'ai CBM Pipeline

500 million cubic meters of CBM a year. The company was

for central China’s energy supply and environmental

eager to get gas resources from Shanxi.100

enhancement should not be underestimated.102 The pipeline would not only help consolidate the status of Shanxi as China's pivotal CBM production base and gas

97 尹一杰 (2007). 中石油中联煤争采瓦斯中石油受阻矿权重叠体制. 财经时报. July 28. (http://money.163.com/07/0728/13/3KG8T9FD00251VE2.html). 98 Interview notes. 99 Ibid. 100 Interview with CUCBM executives. 101 高晓燕(2010). 煤层气事业的春天—省重点工程、“端氏—晋城—博爱煤层气输气管道工程”工作纪实. 山西日报. http://epaper.daynews.com.cn/shtml/sxrb/20100512/5363093.shtml. 102 Ibid. and interview notes. 103 河南启动瓦斯变废为宝计划将建煤层气加气站, http://www.henan.gov.cn/jrhn/system/2009/06/22/010141625.shtml 2009-06-22

powerhouse, but it would also ease the growing energy shortage in Henan, which is confronted with a combination of challenges. Those challenges range from the depletion of coalmine resources, lack of alternative energy resources (such as natural gas) and mounting environmental woes, to accelerated industrial growth under the aegis of the “rise of central China” ("中部崛起”) policies.103 Given all of these

6. CMM transport from Shanxi to Henan:Successful entrepreneurship preaks a deadlock

issues, the pipeline was listed as one of the key projects in

Qinshui.

the 11th Five-Year-Plan for CBM development and utiliza-

Duanshi-Jincheng-Bo'ai pipeline in 2003, did not break

tion. The date of commissioning was initially set for 2009.

ground for three years, despite repeated urging and personal intervention by national and provincial leaders.104

However, while PetroChina (which won the tender for the

The pipeline project was about to turn turtle, and someone

alternative pipeline) spared no time getting down to work in

had to come to its rescue. Here then came the protagonist

northern Shanxi, the scene was eerily quiet down south in

of our unfolding saga, and an aberrant one at that.

6.3. Tan Yuanrong: a maverick entrepreneur

CUCBM,

the

winning

bidder

for

the

105

At the age of 56, Mr. Tan has an innate ability to strike

seat, walks restively across the room, and begins to draw

anyone as a charismatic, warm and passionate chap on

illustrative diagrams on a board (if one is available)

first encounter. With a broad forehead and draping hair, he

to explain his points. His mannerisms strike an eerie

looks more like an artist than a businessman. In fact, Mr.

resemblance to those of a bandit chieftain. In any event, no

Tan's childhood dream was to become a painter, and his

one will doubt that Mr. Tan is driven and fanatically devoted

career started as a primary school teacher in his hometown.

to whatever he does.

Now an energy tycoon, he still aspires to his childhood dream.

As late as 1999, Mr. Tan’s hometown area, where the majority of damn-displaced immigrants were resettled, had

Sturdily built and thinly moustached, Mr. Tan speaks with

not been served by gas pipelines. As a result, average

a thick, stentorian Chongqing accent that immediately identifies his origins. Mr. Tan hails from Kaiyang County in

households in the area still relied mainly on burning coal to satisfy daily energy needs.106 Having hit his first jackpot by

the dammed valley upstream of the Three Gorges, where a

subcontracting and running a profitable beverage venture,

whole generation of wayward entrepreneurs went from

Mr. Tan spotted the hidden gem in the yet-to-be-developed

obscurity to stardom over the past two decades, in a

gas market. Acting quickly to seize the opportunity, Mr. Tan

struggle with dammed, but not condemned, fate. They

formed the Three Gorges Energy Group Inc. to undertake

include Mr. Tan's younger brother – the founder and head

pipeline construction in the reservoir areas, which became

of Tan's Comb Empire.

a remarkable success. Since then, Mr. Tan has not only established his venture as the unrivalled gas supplier in the

When talking, Mr. Tan is inclined to become agitated about

reservoir area, but he has also extended the tentacles of its

his favorite topic – the Duanshi -Jincheng-Bo'ai Pipeline,

pipeline network into western Hunan province.

progressively heating up to the point that he abandons his

104 Interview notes. 105 Background information for the following discussion is based on the author's interview

with Mr. Tan and various media sources, including but limited to the following: 周意立 (2011). 谭传荣：不做生意后，想当一名画家. 重庆晨报. August 26. http://www.cqcb.com/weekly/business/2011-08-26/317537.html.. 刘晓林. 2010. 新能源大亨谭传荣. 刘晓林专栏首页>九天散论. September 18. http://zj.cangcn.com/u/4988.shtml.. 吴浩. (2010). 中流击水唱大风_中国经济导报—中经在线. 中国经济导报. March 6. http://www.ceh.com.cn/ceh/jjzx/2010/3/6/60344.shtml.. 轶名(2011). 多地齐现电荒油荒油气开采有望首次向民企放开. 重庆时报. April 26. http://business.sohu.com/20110426/n280414247.shtml. 轶名. 谭传荣. 百度百科. http://baike.baidu.com/view/3934361.htm. 轶名 (2010). 谭传荣：煤层气是一种价值观 .民商. July 21. http://www.bjcqsh.org/E_ReadNews.asp?NewsID=272. 106 "民营企业家的煤层气理想", 《小康》杂志, 2009年04月02日.

6. CMM transport from Shanxi to Henan:Successful entrepreneurship preaks a deadlock

6.4. Seizing the opportunity

Fast forward to 2004, when Mr. Tan decided to settle in the

the project. The provincial officials, concerned about

national capital Beijing to pursue more and better

protecting local interests, were reluctant to see Shanxi's

opportunities. When he mingled with energy experts and

treasured energy resources become the fuel for others'

officials in Beijing, Mr. Tan immediately saw a blip on his

growth engine.

radar screen: although it had a massive CBM/CMM reserve comparable to that of natural gas, China had a

What is more, since the planned route of the pipeline cut

woefully low coal-methane drainage and utilization rate. It

through geologically challenging terrains in the Taihang

was imperative for China to tap into CBM/CMM for the sake

Mountains, the project would require great engineering

of national energy security, environmental protection and

expertise in addition to a huge investment. Moreover, the

national sustainable development.

pipeline would traverse through some 40 townships and villages, hence inevitably involving huge amounts of arduous

Mr. Tan also heard that a consensus was forming among

and tedious negotiation work to settle compensation for

top policy makers to develop a national strategy for

demolitions and land requisitions. National SOEs,

CBM/CMM exploration and exploitation, and that the

sometimes described as arrogant by local actors, were not

consensus was being translated into a slew of action plans.

willing to take on such menial but requisite work. Last but

To his great interest was the news that the Qinshui Coal

not the least, the profitability prospects of the pipeline were

Basin in southern Shanxi Province had been identified by

shrouded in a thick veil of uncertainty, for there were many

the national government as a pilot CBM/CMM development

unknowns (and “unknowns about unknowns”) in both the

zone.

upstream and the downstream markets that encompass the

Through investigation, Tan discovered that for lack of

two provinces.

transmission and distribution facilities, most of the gas wells that had been drilled in the Qinshui basin would likely be

It was in this seeming deadlock that Mr. Tan scouted his

temporarily closed, short of actual gas-extracting opera-

golden opportunity. Firmly convinced of the economic

tions. Although the national government had drawn up

value of coal methane, Mr. Tan started to deliberate on

plans to build two gas pipelines for Qinshui (see above), the

alternative strategies for cutting the Gordian Knot in

southern line had not yet broken ground after three years'

Qinshui. Soon he found an opportune point of entry.

delay. Curious and business savvy as he is, Mr. Tan was determined to find out why.

Mr. Jie Mingxun, then CUCBM boss, was deeply worried about the fate of the project. It was early 2006, when the

Soon Mr. Tan soon found the culprit. The work crawled to a

11th Five-Year Plan was in its first year of implementation,

standstill mainly because of the bewildering complexity of

but construction of the pipeline had been indefinitely post-

vested and competing interests in the region. For one thing,

poned. Realizing that his time was finally coming, Mr.

due to internal dissension (as noted above), the two

Tan could not wait to reach out to Mr. Jie. However, it

CUCBM shareholders failed to work out the working

is socially unacceptable in Chinese hierarchical and

relationship required to pull things off. For another, the

authoritarian society for a private businessman out of now-

provincial government in Shanxi, catering to parochial coal

here to request an appointment with a top executive of an

and industrial interests, was not willing to lend support to

SOE. Having never been a conformist, Mr. Tan persevered.

6. CMM transport from Shanxi to Henan:Successful entrepreneurship preaks a deadlock

Manoeuvring through a web of connections and not without

project from CUCBM; should Mr. Tan fail, the money would

setbacks, Mr. Tan finally met with Mr. Jie in person.

be forfeited, PERIOD. It was worth it! So Mr. Tan reckoned. He told Mr. Jie that he was willing to have a lien put on all

At the first meeting, Mr. Tan volunteered to help trouble

his personal assets to secure the deal. The deposit was

shoot Mr. Jie's dilemma. He reassured Mr. Jie that he had

instantly paid and the deal was cut. This was in March

the will, the passion, the ability and all the resources

2006.

required to accomplish the mission. After hearing Mr. Tan's

At that time, many thought Mr. Tan had made a bad, if not

story, Mr. Jie was deeply touched by his courage,

ruinous, business decision. It was hard to believe that a

determination and entrepreneurial spirit. At his wits' end to

private firm could accomplish such a Herculean task, at

find a way out of the impasse, Mr. Jie agreed to let Mr. Tan

which a mighty SOE (CUCBM) has failed. Not a few people

have a try, but with a counterproposal: Mr. Tan must put

thought Mr. Tan must be crazy.

down 3 million yuan as a deposit for subcontracting the

6.5. Seeking the least common denominator to secure an alliance

As Mr. Tan later admitted, he was not sure at all whether,

someone had to compromise and sacrifice in order to

and how, he could make good on his words. He was certain

salvage the deal. Under the circumstances, that someone

about only one thing, though: he would not be able to get

could not be anyone but Mr. Tan himself.

things done solo. What was desperately needed was a cooperative mechanism, best embodied in certain institution-

Compromise or not? This TO-BE-OR-NOT-TO-BE question

al arrangements that could enable concerted effort toward

haunted Mr. Tan for days, and he was painfully weighing

a goal, while ensuring the fair and equitable allocation of

alternative options. Should he refuse to buckle down, then

benefits, costs and risks among the stakeholders. As it

the fragile negotiations would certainly fall apart; the project

turned out, however, this was easier said than done. In fact,

would again be thrown on the back-burner as result, and so

when Mr. Tan shared this idea with Mr. Jie, Mr. Jie reported-

would his dream of breaking the SOEs' monopoly, together

ly laughed at him and brushed it off. Mr. Tan soon found out

with the massive deposit he had put down. He would also

why.

be breaking his promise and profoundly disappointing his

When Mr. Tan brought together representatives of the

colleagues and partners. This option was ruled out; Mr. Tan

various stakeholders at a business meeting, they each put

was extremely frustrated

up a haughty posture, and were quick to haggle over every penny and square centimetre of land. The meeting soon

If Mr. Tan were to compromise, he would have to accept a

erupted into fierce arguments, and some participants

weak position hence forward in the alliance, plus less

walked out of the room in anger. The disputes eventually

profit, and even an immediate loss. However, his partners

spiralled out of control, and Mr. Tan became frustrated and

would feel happier. Mr. Tan realized that in order to fulfil his

perplexed.

ambition, he might have to pay a costly entry fee and learn to live with the pain. As long as the stakeholders agreed to

As a leader, Mr. Tan had to expand great effort – often by

put in a concerted effort to jump-start the construction, Mr.

talking, enticing, and imploring each and every one –

Tan could look good in the eyes of the government as

in order to bring mutually distrustful parties back to the

well as the SOEs, and eventually his firm would benefit

negotiation table. Over the tiresome trust-building process,

financially from the project; this not only represented a

Mr. Tan finally came to terms with reality and arrived at

win-win situation for all, but would also bring about a strong

this insight: because no party was willing to give in, then

sense of achievement for Mr. Tan.

6. CMM transport from Shanxi to Henan:Successful entrepreneurship preaks a deadlock

Being a businessman, Mr. Tan did his own calculations. He concluded that giving in at the start to keep things moving

project. Estimated conservatively, the pipeline would eventually result in a 80-90 million yuan profit.107

would be rewarding in the long run. This was because the

Therefore, even if Mr. Tan advanced all the registered

project would require a 20 to 30 million yuan down payment

capital in exchange for a tiny portion of the floating shares,

(as registered capital) at the beginning, followed by a 10 to

he would still have a decent chance of reaping a good

20 million yuan additional investment over the course of the

return on his investment

6.6. The Shanxi Tongyu CBM Transmission & Distribution Company

After agonizing for a week, Mr. Tan finally chose to make a

registered capital in advance, but did not become the

unilateral

CBM

controlling shareholder. Even though he was the sole finan-

Transmission & Distribution Company was formed to carry out the pipeline construction work, at his own expense.108

cier of the resulting entity, Mr. Tan did not even assume the

Its shareholding structure was as follows: the Shanxi

allocated the shares given out by Mr. Tan free of charge,

Energy & CBM Investment Holding Co., Ltd. became the

under the guise of shareholders. “I am an idealist. I think to

largest shareholder (with 35% equity), followed by the

get things done is the most important thing. Probably it is

Chongqing Three Gorges Gas Group (26%), the Three Gorges International Energy Corporation (20%), the CNCG

my altruism that finally moved the crowd into action”, Mr. Tan said.109

(10%), and the Henan Central China Oil & Gas

With the construction team in place, in August 2008 the

Development Co., Ltd. (9%), which represents the end-user

National Development and Reform Commission formally

province of Henan. The name of the new company was

approved construction of the Duanshi (Shanxi), Boai

simple and articulate: Shanxi Tonyu, which means “mar-

(Henan) coal bed methane transmission pipeline.

compromise:

the

Shanxi

Tongyu

title of legal representative. All the other parties were

ching from Shanxi toward Henan”. It was already the third year of the 11th Five-Year Plan; the The Shanxi Tongyu is an unconventional corporate

initial date for the pipeline's commissioning was less than

creature by any account. The Chongqing Three Gorges

two years away.

Gas Group Inc., under Mr. Tan's control, provided all the

6.7. A “mission impossible”

NDRC approval, and the successful formation of Tonyu,

Although the project falls under the purview of the Ministry

represented only the first step of a Long March.

of Energy, its registration and approval involves a long list

Mr. Tan had to run around the various ministries of the

of regulatory agencies: the Ministry of Land Resources

national government to get the required paper work done.

(MLR), the Ministry of Environmental Protection (MEP), the

107 By Mr. Tan's calculation, if the maximum transmission capacity of 30 billion cubic meters

Forestry Administration, the Administration of Work Safety,

annually could be fulfilled, then factoring in a profit of 0.3 yuan per cubic meter and a total investment of 460 million yuan, the pipeline would generate annual profits of 0.9 billion yuan. Based on these estimates, the project would likely warrant a 20-30 times price-earnings (P/E) ratio should its stock be sold through an Initial Public Offering (IPO) (Interview with Mr. Tan). 108 Its corporate website can be found at http://www.tycbm.com/.

the Ministry of Water Resources, the Ministry of Railways,

109 Interviews with Mr. Tan.

challenge. For instance, within the Ministry of Land and

and so on. Lack of coordination between these pertinent regulatory agencies turned the process into an immense Resources (MLR), authorization for coalmines and coal

6. CMM transport from Shanxi to Henan:Successful entrepreneurship preaks a deadlock

methane were lodged in two different departments, and

because Henan was thirsty for gas, hence it would be

these two departments were in dispute from the very start,

anxious to see the completion of the pipeline at the earliest

leaving Mr. Tan to wonder about how to proceed. The

possible date. This was a tactic for pushing things forward

project was about to hit the wall again.110

along the path of least resistance. By working from downstream upward, Mr. Tan hoped to exert pressure on Shanxi

Refusing to give up, Mr. Tan found a way out of the

to break down its recalcitrance. If the grand opening in

predicament.

Shanxi six months previously could be seen as a tactic of “doctoring a dead horse”, then the groundbreaking in

In December 2008, nine months after Mr. Tan cut the deal

Henan was like "putting the cart before the horse”.112 The

with CUCBM, the official groundbreaking ceremony for

double-flanked strategy worked well in hindsight. Seeing

the pipeline project was held with big fanfare; the event

Henan so exulted over the ground-breaking, the Shanxi

attracted wide attention from the media, industrial

side could not help but collaborate lest it be blamed for fur-

observers, and the public across the country. In the eyes of

ther project delay.

the outsiders, the gala event was nothing but a propitious sign that the project had finally cleared up its problems and

In the summer of 2009, the State Energy Administrator Mr.

was now on track. But in truth, the Shanxi Tongyu was not

Zhang Guobao visited Shanxi for an inspection tour of the

at all ready to kick off construction: the shareholders were

provincial CBM industry. Upon completion of the tour, a big

still wrestling with each other; the required funds were not

crowd of government officials and industrial leaders

yet in place; the management team was in disarray. Mr.

gathered at the airport to bid farewell to the national energy

Tan's partners all thought he was making a risky gamble;

czar. Already on the plane, Mr. Zhang saw through his cabin

but why?

window Mr. Tan's face flash in the crowd. So impressed and inspired was he by Mr. Tan's feat, that Mr. Zhang made a

Mr. Tan later disclosed his considerations as follows:

surprising gesture. He reportedly got out of the plane,

"I meant to employ showmanship to attract public attention,

walked down the staircase, and went straight to Mr. Tan to

and to publicize our project as widely as possible. By so

extend his personal salute, in spite of the awaiting

doing, I hoped to give a shot to the stagnant project

plane and retinue. Holding Mr. Tan's hand, Mr. Zhang

and revitalize the momentum to move forward. Besides, I

commented: “I know what you have done is not easy;

wanted to create a “fait accompli” to force a consensus

you have done a tough job!" Mr. Zhang's words of praise,

among the quarrelling shareholders, so that they would

empathy and compassion moved Mr. Tan to tears.

stop fighting and concentrate on how to get things done.”111 Clearly, Mr. Tan knows too well how the system

However, personal attention from national leaders would

works in China: once a project becomes national headline

not fundamentally abate the hardships and difficulties Mr.

news, then all the lights in the approval procedure will

Tan had to confront in the field. Over the course of the

likely turn green.

pipeline construction, Mr. Tan was constantly admonished by his colleagues that he should prepare himself for the

Mr. Tan's political acumen was also shown in his choice of

worst-case scenario, his fate likely to be that of a tragic

site for the actual ground-breaking in June 2009, six months

hero.

after the symbolic ceremony was held. Mr. Tan was fully aware that Shanxi thought it had the upper hand, with its

They had good reason to feel worried. Along the 100-km

gas resources as its trump card, so he thought it wiser to

pipeline lie five counties, 20 townships and 80 villages that

hold the ground-breaking in Henan instead. This was

are scattered in two provinces, with each step forward

110 Interview notes. 111 Interview with Mr. Tan. 112 Ibid.

likely involving land requisition or demolition; therefore, reparation payments inevitably became the daily business of the Shanxi Tonyu Company. Once the family graveyard,

6. CMM transport from Shanxi to Henan:Successful entrepreneurship preaks a deadlock

farming plots, or private housing was at stake, collateral

legitimate local concerns to advance their own agenda.

claims would quickly bid up the pricing. In some cases, no

When Mr. Tan realized that some other local officials

matter how much was to be paid, villagers simply refused to

attempted to reap undue sums for reparation under the

move; in other instances, villagers reportedly resorted to

false pretence of communal interests, he was ready to fight

mob-like acts to boycott the project.113

back.114

During those days, Mr. Tan was so overburdened that he

However, Mr. Tan had learned to deal with local officials

went through numerous sleepless nights, constantly

diplomatically. He knew too well that Chinese local

worried about the progress. The work’s momentous tasks,

officialdom fills a huge vacuum in policy implementation,

odd tales, and adventurous escapades have been likened

making things happen or letting them die out. Sometimes,

to accounts in Pilgrimage to the West.

the interests of top leaders and the grass-roots public are well-aligned in pushing a project forward (as with the

To add to Mr. Tan's woes, frequent incidents of violence

Duanshi-Jincheneg-Bo'ai Pipeline), only to see the effort

induced by land grabs rendered the project politically

blocked or torpedoed by local officials who hold the project

sensitive. Therefore, Mr. Tan and his team could not afford

hostage. Nevertheless, these local officials can often be a

a single misstep; any iron-fist approach to land requisition

wonderful ally, willing to help speed up things or detonate

and demolition might well ruin the public image of the

potentially explosive situations. For Mr. Tan and his team, it

project. Over time, they learned to take a low-profile

was critical to engage them constructively so as to avoid

approach, talking to individual households with great

harm in their quest for local support.115

patience. As such, they learned to employ a combination of tactics ranging from exhortation, persuasion, and

Mr. Tan's effort paid off. On one occasion, the progression

occasionally coercion; the ultimate goal was to reach a

of the pipeline intersected with a military communications

compensation deal satisfactory to all.

cable, leaving the construction team at loss about what to do. Unlike with farming fields and graves, where fair

Mr. Tan's compassionate approach is rooted in his humble,

compensation would fix the problem, military facilities are

rural origins; his grass-roots upbringing engrained in him a

by no means violable. Confronted with such a seemingly

strong sense of social justice. This sometimes put him in

insurmountable obstacle, Mr. Tan pondered: if he requested

confrontation with local officials; in such encounters, Mr.

a meeting with the military commanders to address the

Tan can be as cavalier and formidable as a soldier (and

issue, they would either slam their doors on him, or would

indeed, Mr. Tan used to serve in the army). He was duly

refer him higher up the command chain for a solution; either

angered by some local officials who revoked already signed

scenario would likely cause unbearable delay.

agreements in the name of the public. He was also vigilant against a few local cadres who seemed to make use of

The quick fix, and probably the only viable solution, was to act first and report later, pretending that the construction

113 For instance, it was reported that villagers lay down in the path of a moving bulldozer, or

team was not aware of the presence of the cable. To play it

they occupied the driver’s cabin for days to stop the machinery from being properly operated (interview notes). 114 In one instance, Mr. Tan discovered that the reparation due to villagers should have been

safe, however, Mr. Tan would need the local government on

1200 yuan per household, but the amount the villagers actually received was only 700 yuan. The villagers were so upset that they launched a boycott against the project. It turned out that some village cadres had pocketed the difference. Mr. Tan was so angry that he immediately rushed to find the cadres at fault, calling their names with the most abusive language he could possibly muster. In another instance, he was said to have confronted a corrupt village leader, pointing a finger at him and yelling "Damn you! You are not fit to be a cadre at all!" (from interview notes and various media sources). 115Mr. Tan admitted that it was almost a daily routine for him and his team to chat up and

Mr. Tan finally won the sympathy of the local officials who

toast local officials obsequiously in order to get a task done. Mr. Tan recalled that on numerous occasions, when his subordinates were called upon to report on a final solution for a problem, the official asking for the information could barely speak under the influence of alcohol (interview notes).

his side to cover things up. Mobilizing his resources, tacitly consented to his action. Mr. Tan and his team then moved swiftly to push the pipeline across the military zone. Faced with a fait accompli, the military had to abide with the discomfort and refrained from taking punitive action; this was also thanks to Mr. Tan's damage control efforts in concert with the local government.

6. CMM transport from Shanxi to Henan:Successful entrepreneurship preaks a deadlock

The achievements of Mr. Tan and his team made a stir in

Mr. Tan was accepted mainly because he had entered

the Chinese CBM industry. Some SOEs eyed the project

through the cracks between the staked-out domains. To

covetously, aiming to get a free-ride. At one point, the CEO

survive in this context, Mr. Tan needed the political support

of the North Oil Field of PetroChina (an industry leader)

and patronage of the national leaders, and this is exactly

approached Mr. Tan, offering to buy out his venture. The

what he has gotten so far. On one occasion, Mr. Tan was

CEO reportedly said to him earnestly: “Dear Mr. Tan, you

asked to report to the national leaders along with senior

had better quit from this venture. Why not sell the project

executives of several national SOEs, including PetroChina

to me? Otherwise it is likely you will end up buying high

and Sinopec. When it came to a comparative progress

and selling low.” Mr. Tan firmly rejected the proposal on

review, it turned out that Mr. Tan's team was beating the

the spot.116

SOEs on almost all performance measures. The top leaders reproved the SOE executives on the spot, and

Certainly, Mr. Tan shared the CEO's concern, which was not

asked them to learn from Mr. Tan's team.119

unfounded. In rapidly changing China, the business environment is fraught with regulatory uncertainties. The

At a recent national conference call attended by several top

trend emerging at the time seemed to be the advance of the

national leaders, Mr. Tan's team was again singled out for

State and retreat of private sector. Therefore, it was not a

national commendation; his venture was acknowledged

groundless fear that someday the prevailing policy winds

and endorsed by the national leaders as an inspiring

would all of a sudden shift, and Mr. Tan's pipeline would

example of the innovative arrangements required for over-

become subject to nationalization; should that occur, Mr.

coming the gridlock in CBM/CMM development, and hence

Tan would be out of the picture.117

it should be encouraged and disseminated.120

But the battle had just started; Mr. Tan did not want to

When the massive construction work was coming to a close

be distracted by future uncertainties. He made candid

and the pipeline was soon due to be commissioned (in July

revelations to reporters that deep down, he saw this

2011, as scheduled), Mr. Tan looked back in time and

pipeline project as the last big gamble of his life. However,

across the geographic canvass he had so painstakingly

instead of simply waiting and keeping his fingers crossed,

pieced together. His journey across space and time recalls

Mr. Tan never stopped from identifying the project with the

the ancient story of the “Old Foolish Man Moving the

national interest; he stressed repeatedly that the pipeline is

Mountains.”121 It is in fact in the current Taihang Mountain

significant to China’s national energy strategy, and that

region that the Old Foolish Man allegedly moved the big

what he was doing would help resolve a central concern for

mountain. But Mr. Tan's CBM/CMM pursuit will not stop

the national leaders. He would often quickly add (not

at the end of the mountain range. He envisions that his

without a measure of flaunting), that otherwise, the State

pipeline will radiate out from Bo'ai County to the provincial

energy czar would not have made an exceptional gesture to

capital of Zhengzhou, then on to the ancient capital of

salute him.118

Luoyang, and from there it will extend further south, finally reaching the Yangtze River in Hubei Province.122

However, Mr. Tan still showed signs of insecurity. As an outsider in an industry heavily contested by national SOEs, 116 Interview with Mr. Tan. 117 Ibid. 118 Interview notes and various media sources. 119 Ibid. 120 Remarks by the Vice Premier Ministers Zhang Dejiang and Li Keqiang, as reported in the media (interview notes). 121 See http://www.chinavista.com/experience/story/story3.html. for the story, which was popularized by a Mao essay. 122 Interview notes.

7. Conclusion

The preceding sections have attempted to explore the

mining rights, and the power-to-grid cases all speak

multiple dimensions of CMM/CBM development in China,

voluminously to the negative, often unanticipated outcomes

as well as the actors, structures and strategies that impact

of “disjointed implementation,” “conflictual implementation”

policy implementation. Here, we take a step back from our

and maybe “self-contradictory implementation,” depending

studies and offer concluding thoughts.

on how the researcher characterizes these cases.

At the beginning of this paper, we committed to a bottom-

Signs of “selective implementation” can be found in cases

up approach and developed a typology of various

where competing groups try to selectively interpret policy

implementation modes to guide our study. We further

goals in favour of their own agenda, such as some

proposed three research questions to be borne in mind

coalmines engaged in certain dubious CMM utilization

when undertaking case analyses. We are now tempted to

practices for economic gain, under the pretence of

revisit these issues with a few more refined thoughts.

promoting CMM utilization. On the other hand, evidence of “transformative implementation” also abound, which

Our research has clearly confirmed our hypothesis, as well

manifest variously in our three in-depth case studies,

as the advantages of taking a bottom-up approach. Our

whereby local leaders have managed to transform the

study has yielded overwhelming evidence for the various

implementation environment to make a difference in policy

implementation modes we proposed, albeit not without

outcomes by utilizing windows of opportunity and various

nuances and twists. As shown in our institutional and policy

unconventional tactics.

overview and case studies, implementing CMM/CBM policies (plural emphasized) in China poses a real challenge,

Although our study does not yield definitive answers to the

for the policy domain is characterized by a highly

three key research questions regarding policy implementa-

fragmented and increasingly decentralized structure of

tion, the following insights might shed some light:

authority, a patchwork-like policy framework, the rise and diversification of non-state actors, and on top of that, the

1. Our findings have confirmed our suspicion that the

complex character of coal methane as a regulatory

various implementation modes are by no means mutually

concern.

exclusive. This is because, in not a few cases, we have observed a mixture of elements from more than one

It is difficult for implementation within such a messy

approach within a given area of policy implementation.

environment to be anything but “disjointed”, as manifest

Attention needs to be paid to the role of policy

in the manifold challenges of striking a balance between

entrepreneurship in driving policy change. Policy entrepre-

energy needs vs. climate change concerns, between

neurs have played a key role in some of our case studies,

underground CMM drainage vs. surface CBM exploration,

proving critical to problem solving and “transformative

between coal vs. coal methane interests, and between

governance” by fostering ”constructive flexibility” in the

coalmine safety and energy resource development. Such

implementation process, within a fragmented, often rigid

examples as the MEP’s universal ban on the venting

system. They often surface at times of policy malaise,

of high-concentration CMM, the scramble for CMM/CBM

possess the ability to detect and understand changing

7. Conclusion

opportunities, forge alliances to bridge the gaps and bar-

Not only may the central government not care as much as

riers, and take strategic action to make things happen.123

it appears to about CMM/CBM development, but one should also note the lack of powerful and organized interest

2. The diversity of implementation modes we observed

groups with a strong stake in the development of

underscores the dynamics of divergence in policy

CMM/CBM use. This situation does not help CMM/CBM

implementation within China, across provinces and local

come to the top of the agenda. The community of CMM

situations, rather than convergence. It takes amazing effort

users is in fact a very fragmented one, as it includes

by devoted policy entrepreneurs to counter at times this

a whole range of typically small and local actors. This

chaotic tendency.

patchwork configuration does not help create powerful and well-organized interest groups that would be able to lobby

3. Finally, the question remains whether the diversity of

efficiently for subsidies in Beijing.

local actors, strategies and policy outcomes tends to work in the best interests of the country or rather for the benefit

Certainly, there are some powerful SOEs involved in the

of specific and segmented interests. This is a very difficult

CMM business. Yet, can this agenda really hope for help

question, especially when one takes into account the fact

from them, to gain political significance? One would expect

that even China’s central government is itself a complex

that such powerful entities would use all their political

structure that encompasses many sub-groups.

muscle to promote CMM/CBM on the national scene as a cleaner energy. However, just as with the national govern-

In fact, despite the critical role of methane in short and

ment, their interest in this issue may be much lower than

medium-term climate impacts (Dessus and Laponche,

they proclaim it to be. For instance, SOEs have no

2008), the central government might not find in the

business, and thus no interest, in CMM grid connection

development of CMM/CBM sufficiently powerful motivation.

per se. Moreover, given the low profit margins of the CBM

Of course, dealing with worker safety seems a clear

business, it may well be the case that they are in fact far

priority, as it can lead to social discontent. Yet, some

more interested in the coal business rather than the CMM

interviewees have pointed out that this “new” gas source

business.

will probably never form a significant share of China’s total energy mix, or even gas mix, no matter the speed of its

Along this line of reasoning, it would not be absurd to

development. There are further signs that tend to support

imagine that the whole CBM issue may have been used as

this hypothesis of reduced governmental interest, such as

a mere entry point through which these companies could

the absence of national subsidies to provincial grids to help

grab a share of China’s coal business. Indeed, although

support the connection of electricity units powered by CMM.

they have no legal rights to operate mines on their own,

This lack of subsidies contrasts with those provided, some-

ownership by these companies of large amounts of land for

times generously, to foster the development and grid

CBM exploration and exploitation give them in many

connection of other cleaner or renewable energies. Also, it

instances a critical edge and important negotiating leverage

is a fact that connection to the electricity grid has not been

over mining enterprises, when it comes to exploiting coal.

made compulsory for coalmines – just an advisable path of development.

All of these “politics” do bear consequences from a climate

123 As we have noted, the CMM/CBM policy domain seems to feature a heightened level of

change perspective, as they may hinder a range of

ambiguities and conflicts as compared with traditional coal-production policies. In this connection, one interesting question about the role of policy entrepreneurs is how they manipulate the level of ambiguities and conflicts in policy implementation through transformative governance. As Matland (1995) rightly noted,“policy ambiguity can be characterized broadly as falling into two categories: ambiguity of goals and ambiguity of means.” He further notes that “for conflict to exist there must be an independence of actors, an incompatibility of objectives, and a perceived zero-sum element to the interactions…[ ] Certain types of conflicts are manipulable.” These observations apply well to many of our case studies. 124 The gas output of a given mine is likely to provide far more energy than necessary for the mine itself – which could lead to the release of methane into the air if surplus electricity cannot be sent to the grid.

important policies. Grid connection, which is not really happening, as we saw, would significantly lower methane emissions from mines in the long run.124 As for the terrible turf wars taking place around the coal and CBM businesses, they also bear climate impacts since they generate important delays in the efficient exploitation and use of coal methane.

7. Conclusion

In such a context, local and enlightened policy

expansion of donor presence – such as of that of the

entrepreneurs are more important than ever. Identifying

bilateral and multilateral agencies – in China's provinces,

and supporting them should be of primary concern for

including the posting of commercial and economic officers

international donors willing to support CMM use and

there, could strengthen opportunities to develop such links,

recovery in China.

identify relevant policy entrepreneurs and better tailor international support to the realities of China’s policy

Certainly, international donors should recognize that the

implementation scene.

Chinese national government has no capacity to enforce

Finally, in this study, our preference for a bottom-up

absolute obedience to its edicts. Therefore, policies

approach needs to be put in context due to a peculiar

formulated at the national level have to gauge carefully

structural feature of the CMM/ CBM industry that involves

what they can (and cannot) get away with vis-à-vis Chinese

essentially two modes of operation, encompassing both

local authorities; how much political capital will be required

bottom-up and top-down elements. All CMM utilization

to enact controversial policies at the local level; and

projects are born out of gas drainage-and-capture efforts

how much discretion to allow local authorities in policy

undertaken by individual mines to facilitate the safe

implementation.

production of coal. They are locally executed and operated, with local communities as the primary beneficiaries. As

They will have to build interest-group coalitions in China

such, they represent small-scale, distributed energy

that are not just top down but also offer a broader national

production naturally aligned with decentralized, bottom-up

consensus, including at the local level, in favor of global

regulatory schemes.

public goods. Such coalition-building may require more nuance, patience, and effort than many international donors

On another hand, surface CBM operations are typically

are used to exercising. The current temptation of

undertaken on a much larger scale, primarily for energy

international donors, as well as western governments, is to

production; this naturally aligns CBM projects with more

pound away at the top, to browbeat Beijing into agreeing to

centralized, top-down schemes. Admittance of this duality is

doing something about international concerns. However,

critical: a bottom-up view might be more justified from a

this does not take the reality of the governance dynamics

descriptive and methodological – rather than a prescriptive,

within China into account. This approach will certainly not

normative – point of view (cf. Matland, 1995).

be effective in the long term at delivering meaningful results for global interests.

Indeed, a national CMM strategy may well demand a more comprehensive system for energy policy making and

It would be advisable for donor agencies to venture beyond

implementation and a more integrated approach to coal and

Beijing and the large Chinese metropolitan centers

CMM

to explore lesser-known localities, establish working

CMM/CBM policy making consists of a wide diversity of

relationships with local officials, and become familiar

policies, incentives, and instruments, the bottom-up view

with their respective policy priorities. In this regard, the

may need to be reconciled somehow with a top-down pers-

development.

Therefore,

and

also

because

pective in order for us to develop a finer understanding of 125 In this regard, Matland (1995) provides a clue. He proposed a model to reconcile the bottom-up and top-down approach by concentrating on the theoretical significance of ambiguity and conflict in policy implementation. He identified a number of factors crucial to policy implementation that he sees as varyingly dependent on a policy’s ambiguity and conflict level. He then proposed four implementation paradigms, each with a predominant principle, that determines the outcome: low conflict-low ambiguity (administrative implementation, with the predominant principle being resources); high conflict-high ambiguity (symbolic implementation, with the predominant principle being coalition strength); high conflict-low ambiguity (political implementation, with the predominant principle being power); and low conflict-high ambiguity (experimental implementation, with the predominant principle being contextual conditions). It seems that implementation of coalmine safety policy bears a close resemblance to administrative implementation; whereas coal methane utilization involves policies that lean more toward other categories. In this context, regulatory transformation may very well require conversion, rebalancing and re-mashing of these different policies.

the varying requirements for successful implementation in the different areas of CMM/CBM development in China.125 Given this duality, the formal organization of the CMM/CBM regulatory system may need to be transformed from a topdown structure toward something like what Ostrom (1971) characterized as a “compound” system of governance, which features “polycentric” authorities instead of

7. Conclusion

decentralization without central control. This would require

cially between the provincial offices of SAWS and those of

that certain authorities and responsibilities for management

NDRC (e.g., see IEA, 2009). In this regard, implementation

of CMM/CBM resources be re-arranged and reassigned to

studies informed by both bottom-up and top-down analyses

provincial and local government agencies, with better

would be extremely useful for institutional and policy design

coordination across different levels of government: espe-

based on a “compound” system of governance.

Acronyms and Abbreviations

ADB

Asian Development Bank

CBM

Coal Bed Methane

CCII

China Coal Information Institute

CDM

Clean Development Mechanism

CNOOC

China National Offshore Oil Corporation

CERs

Certified Emission Reductions

CH4

Methane

CHP

Combined Heat and Power

CMM

Coal Mine Methane

CNG

Compressed Natural Gas

CUCBM

China United Coal Bed Methane Company Limited

FYP

Five-Year Plan (China)

GWP

Global Warming Potential

IPCC

Intergovernmental Panel on Climate Change

LNG

Liquefied Natural Gas

MCI

Ministry of Coal Industry (China), abolished in 1998

MEP

Ministry of Electric Power (China)

MLR

Ministry of Land and Resources (China)

MOC

Ministry of Finance (China), established in 2003 to combine the former SETC and the former Ministry of Foreign Trade and Economic Cooperation

NDRC

National Development and Reform Commission (China), replaced the former State Planning Commission (SPC) in 2003 and incorporates partial functions of the State Economic Trade Commission (SETC) and the former State Economy and Institution Reform Office

SACMS

State Administration of Coal Mine Safety (China)

SETC

State Economic and Trade Commission (China), replaced by MOC (see above) in 2003

Sinopec

China Petroleum and Chemical Corporation

SOE

State-Owned Enterprise

SPC

State Planning Commission (China), since 1952 but replaced by SDPC in 1998

TVCMs

Town and Village Coal Mines (some privately owned)

UNECE

United Nations Economic Commission for Europe

USEPA

United States Environmental Protection Agency

VAM

Ventilation Air Methane

VAT

Value Added Tax

VCBM

Virgin Coal Bed Methane

Units of Measure

Kilometer

Kilowatt = 103 watts

Meter

Cubic meter

Million Tons (106)

Megawatt (s)

Tonnes

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Economic Integration and Investment Incentives in Regulated Industries Emmanuelle Auriol, Toulouse School of Economics, Sara Biancini, Université de Cergy-Pontoise, THEMA, Comments by : Yannick Perez and Vincent Rious - April 2009.

N° 82

Capital naturel et développement durable en Nouvelle-Calédonie - Etude 1. Mesures de la « richesse totale » et soutenabilité du développement de la Nouvelle-Calédonie Clément Brelaud, Cécile Couharde, Vincent Géronimi, Elodie Maître d’Hôtel, Katia Radja, Patrick Schembri, Armand Taranco, Université de Versailles - Saint-Quentin-en-Yvelines, GEMDEV Contact : Valérie Reboud, AFD - juin 2009.

N° 83

The Global Discourse on “Participation” and its Emergence in Biodiversity Protection Olivier Charnoz, AFD - July 2009.

N° 84

Community Participation in Biodiversity Protection: an Enhanced Analytical Framework for Practitioners Olivier Charnoz, AFD - August 2009.

N° 85

Les Petits opérateurs privés de la distribution d’eau à Maputo : d’un problème à une solution ? Aymeric Blanc, Jérémie Cavé, LATTS, Emmanuel Chaponnière, Hydroconseil Contact : Aymeric Blanc, AFD - août 2009.

N° 86

Les transports face aux défis de l’énergie et du climat Benjamin Dessus, Global Chance. Contact : Nils Devernois, AFD - septembre 2009.

N° 87

Fiscalité locale : une grille de lecture économique Guy Gilbert, professeur des universités à l’Ecole normale supérieure (ENS) de Cachan Contact : Réjane Hugounenq, AFD - septembre 2009.

N° 88

Les coûts de formation et d’insertion professionnelles - Conclusions d’une enquête terrain en Côte d’Ivoire Richard Walther, expert AFD avec la collaboration de Boubakar Savadogo (Akilia) et de Borel Foko (Pôle de Dakar) Contact : Nicolas Lejosne, AFD - octobre 2009.

N° 89

Présentation de la base de données. Institutional Profiles Database 2009 (IPD 2009) Institutional Profiles Database III - Presentation of the Institutional Profiles Database 2009 (IPD 2009) Denis de Crombrugghe, Kristine Farla, Nicolas Meisel, Chris de Neubourg, Jacques Ould Aoudia, Adam Szirmai Contact : Nicolas Meisel, AFD - décembre 2009.

N° 90

Migration, santé et soins médicaux à Mayotte Sophie Florence, Jacques Lebas, Pierre Chauvin, Equipe de recherche sur les déterminants sociaux de la santé et du recours aux soins UMRS 707 (Inserm - UPMC) Contact : Christophe Paquet, AFD - janvier 2010.

N° 91

Capital naturel et developpement durable en Nouvelle-Calédonie - Etude 2. Soutenabilité de la croissance néocalédonienne : un enjeu de politiques publiques Cécile Couharde, Vincent Géronimi, Elodie Maître d’Hôtel, Katia Radja, Patrick Schembri, Armand Taranco Université de Versailles – Saint-Quentin-en-Yvelines, GEMDEV Contact : Valérie Reboud, AFD - janvier 2010.

N° 92

Community Participation Beyond Idealisation and Demonisation: Biodiversity Protection in Soufrière, St. Lucia Olivier Charnoz, AFD - January 2010.

N° 93

Community Participation in the Pantanal, Brazil: Containment Games and Learning Processes Participation communautaire dans le Pantanal au Brésil : stratégies d’endiguement et processus d’apprentissage Olivier Charnoz, AFD - février 2010.

N° 94

Développer le premier cycle secondaire : enjeu rural et défis pour l'Afrique subsaharienne Alain Mingat et Francis Ndem, IREDU, CNRS et université de Bourgogne Contact : Jean-Claude Balmès, AFD - avril 2010

N° 95

Prévenir les crises alimentaires au Sahel : des indicateurs basés sur les prix de marché Catherine Araujo Bonjean, Stéphanie Brunelin, Catherine Simonet, CERDI - mai 2010.

N° 96

La Thaïlande : premier exportateur de caoutchouc naturel grâce à ses agriculteurs familiaux Jocelyne Delarue, AFD - mai 2010.

N° 97

Les réformes curriculaires par l’approche par compétences en Afrique Francoise Cros, Jean-Marie de Ketele, Martial Dembélé, Michel Develay, Roger-François Gauthier, Najoua Ghriss, Yves Lenoir, Augustin Murayi, Bruno Suchaut, Valérie Tehio - juin 2010.

N° 98

Les coûts de formation et d’insertion professionnelles - Les conclusions d’une enquête terrain au Burkina Faso Richard Walther, Boubakar Savadogo, consultants en partenariat avec le Pôle de Dakar/UNESCO-BREDA. Contact : Nicolas Lejosne, AFD - juin 2010.

N° 99

Private Sector Participation in the Indian Power Sector and Climate Change Shashanka Bhide, Payal Malik, S.K.N. Nair, Consultants, NCAER Contact: Aymeric Blanc, AFD - June 2010.

N° 100

Normes sanitaires et phytosanitaires : accès des pays de l’Afrique de l’Ouest au marché européen - Une étude empirique Abdelhakim Hammoudi, Fathi Fakhfakh, Cristina Grazia, Marie-Pierre Merlateau. Contact : Marie-Cécile Thirion, AFD - juillet 2010.

N° 101

Hétérogénéité internationale des standards de sécurité sanitaire des aliments : Quelles stratégies pour les filières d’exportation des PED ? - Une analyse normative Abdelhakim Hammoudi, Cristina Grazia, Eric Giraud-Héraud, Oualid Hamza. Contact : Marie-Cécile Thirion, AFD - juillet 2010.

N° 102

Développement touristique de l’outre-mer et dépendance au carbone Jean-Paul Ceron, Ghislain Dubois et Louise de Torcy. Contact : Valérie Reboud, AFD - octobre 2010.

N° 103

Les approches de la pauvreté en Polynésie française : résultats et apports de l’enquête sur les conditions de vie en 2009 Javier Herrera, IRD-DIAL, Sébastien Merceron, Insee. Contact : Cécile Valadier, AFD - novembre 2010.

N° 104

La gestion des déchets à Coimbatore (Inde) : frictions entre politique publique et initiatives privées Jérémie Cavé, Laboratoire Techniques, Territoires et Sociétés (LATTS), CNRS - décembre 2010.

N° 105

Migrations et soins en Guyane - Rapport final à l’Agence Française de Développement dans le cadre du contrat AFD-Inserm Anne Jolivet, Emmanuelle Cadot, Estelle Carde, Sophie Florence, Sophie Lesieur, Jacques Lebas, Pierre Chauvin Contact : Christophe Paquet, AFD - décembre 2010.

N° 106

Les enjeux d'un bon usage de l'électricité : Chine, Etats-Unis, Inde et Union européenne Benjamin Dessus et Bernard Laponche avec la collaboration de Sophie Attali (Topten International Services), Robert Angioletti (Ademe), Michel Raoust (Terao) Contact : Nils Devernois, AFD - février 2011.

N° 107

Hospitalisation des patients des pays de l’Océan indien - Prises en charges spécialisées dans les hôpitaux de la Réunion Catherine Dupilet, Dr Roland Cash, Dr Olivier Weil et Dr Georges Maguerez (cabinet AGEAL) En partenariat avec le Centre Hospitalier Régional de la Réunion et le Fonds de coopération régionale de la Réunion Contact : Philippe Renault, AFD - février 2011.

N° 108

Peasants against Private Property Rights: A Review of the Literature Thomas Vendryes, Paris School of Economics - February 2011.

N° 109

Le mécanisme REDD+ de l’échelle mondiale à l’échelle locale - Enjeux et conditions de mise en oeuvre ONF International Contact : Tiphaine Leménager, AFD - mars 2011.

N° 110

L’aide au Commerce : état des lieux et analyse Aid for Trade: A Survey Mariana Vijil, Marilyne Huchet-Bourdon et Chantal Le Mouël, Agrocampus Ouest, INRA, Rennes. Contact : Marie-Cécile Thirion, AFD - avril 2011.

N° 111

Métiers porteurs : le rôle de l’entrepreneuriat, de la formation et de l'insertion professionnelle Sandra Barlet et Christian Baron, GRET Contact : Nicolas Lejosne, AFD - avril 2011.

N° 112

Charbon de bois et sidérurgie en Amazonie brésilienne : quelles pistes d’améliorations environnementales ? L’exemple du pôle de Carajas Ouvrage collectif sous la direction de Marie-Gabrielle Piketty, Cirad, UMR Marchés Contact : Tiphaine Leménager, département de la Recherche, AFD - avril 2011.

N° 113

Gestion des risques agricoles par les petits producteurs Focus sur l'assurance-récolte indicielle et le warrantage Guillaume Horréard, Bastien Oggeri, Ilan Rozenkopf sous l’encadrement de : Anne Chetaille, Aurore Duffau, Damien Lagandré Contact : Bruno Vindel, AFD - mai 2011.

N° 114

Analyse de la cohérence des politiques commerciales en Afrique de l’Ouest Jean-Pierre Rolland, Arlène Alpha, GRET Contact : Jean-René Cuzon, AFD - juin 2011

N° 115

L’accès à l’eau et à l’assainissement pour les populations en situation de crise : comment passer de l’urgence à la reconstruction et au développement ? Julie Patinet (Groupe URD) et Martina Rama (Académie de l’eau), sous la direction de François Grünewald (Groupe URD) Contact : Thierry Liscia, AFD

N° 116

Formation et emploi au Maroc : état des lieux et recommandations Jean-Christophe Maurin et Thomas Mélonio, AFD - septembre 2011.

N° 117

Student Loans: Liquidity Constraint and Higher Education in South Africa Marc Gurgand, Adrien Lorenceau, Paris School of Economics Contact: Thomas Mélonio, AFD - September 2011.

N° 118

Quelles(s) classe(s) moyenne(s) en Afrique ? Une revue de littérature Dominique Darbon, IEP Bordeaux, Comi Toulabor, LAM Bordeaux Contacts : Virginie Diaz et Thomas Mélonio, AFD - décembre 2011.

N° 119

Les réformes de l’aide au développement en perspective de la nouvelle gestion publique Development Aid Reforms in the Context of New Public Management Jean-David Naudet, AFD - février 2012.

N° 120

Fostering Low-Carbon Growth Initiatives in Thailand Contact: Cécile Valadier, AFD - February 2012

N° 121

Interventionnisme public et handicaps de compétitivité : analyse du cas polynésien Florent Venayre, Maître de conférences en sciences économiques, université de la Polynésie française et LAMETA, université de Montpellier Contacts : Cécile Valadier et Virginie Olive, AFD - mars 2012.

N° 122

Accès à l’électricité en Afrique subsaharienne : retours d’expérience et approches innovantes Anjali Shanker (IED) avec les contributions de Patrick Clément (Axenne), Daniel Tapin et Martin Buchsenschutz (Nodalis Conseil) Contact : Valérie Reboud, AFD - avril 2012.

N° 123

Assessing Credit Guarantee Schemes for SME Finance in Africa: Evidence from Ghana, Kenya, South Africa and Tanzania Angela Hansen, Ciku Kimeria, Bilha Ndirangu, Nadia Oshry and Jason Wendle, Dalberg Global Development Advisors Contact: Cécile Valadier, AFD - April 2012.

N° 124

Méthodologie PEFA et collectivités infranationales : quels enseignements pour l’AFD ?

N° 125

High Returns, Low Attention, Slow Implementation: The Policy Paradoxes of India’s Clean Energy Development

Frédéric Audras et Jean-François Almanza, AFD - juillet 2012 Ashwini Swain, University of York, Olivier Charnoz, PhD, AFD - July 2012 N° 126

In Pursuit of Energy Efficiency in India’s Agriculture: Fighting ‘Free Power’ or Working with it?

N° 127

Quel niveau de développement des départements et collectivités d’outre-mer ? Une approche par l’indice de dévelop-

Ashwini Swain, University of York, Olivier Charnoz, PhD, AFD - August 2012 pement humain, Olivier Sudrie, cabinet DME . Contact : Vincent Joguet, département Outre-mer, AFD