17 December 2013, The Ministry of Water Resources (MWR) announced Water Allocation Plan for the Development of Coal Bases. This ‘Water-for-Coal Plan’ is part of the “Most Stringent Water Management System” released in January 2013, which set provincial water use quotas in order to meet the “Three Red Lines” (the national water use quotas for 2015, 2020 & 2030) and signaled industrial, agricultural and municipal water allocation and water efficiency ratios. This Water-for-Coal Plan pertains to the development of large scale coal bases in China and includes:

• total water allocation control for coal bases to be “taken seriously”;
• water use must be within provincial quotas;
• coal mines & coal fired power plants must coordinate water usage;
• implementation of water efficiency measures for the development of coal bases;
• construction of coal mines must complete feasibility reports to be submitted to the MWR & other bodies for approval;
• implementation of water efficiency measures for new build coal-fired power with a “first save water, then use water mentality”; power plants in particular those located in the North to prioritise water reuse & water efficient technologies encouraged;
• stricter use of surface water;
• prohibited use of groundwater with the exception of mine drainage;
• water pollution control for coal bases & coal-fired power plants through treatment of wastewater & mine drainage;
• restrictions on the transfer of water use rights by the coal base.

The announcement also states that future coal base development plans should not be made independently but to be carried out simultaneously with relevant bodies responsible for water administration in the relevant provinces. A “Water Resources Planning Study” should be conducted for new large scale coal mines.

In short, this plan indicates that regional water availability in China will dictate coal development plans for the future.

For avoidance of doubt, whilst the Water-for-Coal Plan talks about managing water in the future development of coal, it does not say that coal output will fall.  On the contrary… as Debra Tan says, “More power is inevitable, it’s how we get there that is important. Miners can invest in technology that not only treats wastewater but allows them to extract more coal with less water. Plans to add more renewable energy capacity and energy savings (encouraged as part of the new strategic emerging industry) all help. If China does not employ these strategies, China’s hunger for power will mean that China’s water resources will be even more stretched” 

For full announcement – click here (Chinese only)

Read more on coal and how it fits into the water-energy nexus in China:

• China: No Water, No Power HSBC asks if China has enough water to fuel its power expansion as China plans to add more than the total installed power capacity of the US, UK & Australia by 2030 
• Water for Coal: Thirsty Miners? With up to 83% of China’s coal reserves in water stressed & scarce regions, the recent CLSA report asks if there is enough water to grow coal production. If not, what are our options? Debra Tan expands
• Spend to Quench Coal Thirst Can China manage to balance her limited water resources & coal expansion? Debra Tan argues that the sector can spend to quench coal thirst with consolidation or more investment in aggressive water savings tech