Built-In Carbon Production

As I read this article on at Politico on China’s economic condition (hat tip: Glenn Reynolds) a number of thoughts occurred to me but I wanted to zoom in on the thought provoked by this section:

For example, the Chinese already consume more cement than the rest of the world combined, at 1.4 billion tons per year. But they have dramatically ramped up their ability to produce even more in recent years, leading to an estimated spare capacity of about 340 million tons, which, according to a report prepared earlier this year by Pivot Capital Management, is more than the consumption in the U.S., India and Japan combined.

The emphasis is mine. Now it may not be intuitive but in the United States cement production is one of the leading sources of carbon production, just behind fossil fuel consumption:

The largest source of U.S. carbon dioxide emissions other than fossil fuel consumption is cement manufacture (see Table 15 below), where most emissions result from the production of clinker (consisting of calcium carbonate sintered with silica in a cement kiln to produce calcium silicate).

That’s undoubtedly true in China, too.

This single point highlights a number of others. First, despite its market flourishes over the last couple of decades China’s remains a planned economy or at least a planned economy to a much greater extent than is true in the United States or even in Europe. That level of overcapacity is a wonderful example of deadweight loss. And the Chinese authorities will be very reluctant to reduce that capacity because of the unemployment and attendant social unrest that the move would make. So they’ll prop up cement production just as they’ve propped up their coal mines (not to mention their banks).

The Chinese authorities have created a built-in, institutionalized excess level of carbon production and they probably won’t change that any time soon, regardless of the announcements in front of the camera crews for the benefit of the rubes in the United States and Europe. To reverse that course would fly in the face of the most important of their policies, promoting harmony, i.e. preserving the position of their elites.

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