Predictable Problems from The Chinese Coal Addiction

03/05/2014 09:54 am ET | Updated May 05, 2014

Beijing cityscapeI prefer to solve predictable problems before they happen. It is amazing how easy it is to see problems before they happen when you learn what to look for. Of course, predicting the problem is just the beginning. The big opportunity is to solve the problem before it occurs.

Back in the early 2000s, when the Chinese were building one coal-fired power plant per week with almost no pollution controls on them, it was easy for me to predict that in ten years the major cities in China would be choking on their own pollution. Now, over a decade later, we have Beijing with the worst pollution on the planet.

In other words, it was a very predictable problem. Unfortunately, the Chinese government did not see the future impact, and today they're paying the price for not seeing the predictable future as well as their slow reaction to this rapidly growing problem.

And what a price it is ... when I was speaking at an international conference in Taiwan recently, I read a Chinese newspaper report that people from Beijing went to an outlying coal-fired power plant and destroyed it because they were so tired of the pollution it was creating. The article explained that even though the central government wants to reduce air pollution and has many green initiatives, there are few mechanisms in place for them to control what local officials are doing in regard to shutting down highly-polluting power plants.

The article went on to say that one of the big problems China's central government faces in doing so is the fact that local government officials collect a large amount of tax money from those dirty, old power plants that should be closed down, and they have no current means to monitor and enforce plant closures. Without a mechanism to monitor and enforce shutting these plants down, it's no wonder that they stay operational.

Now, however, it appears that the people in Beijing are starting to take the matter into their own hands. One other interesting part of the news report was that the central government did not crack down on the protesters that damaged the plant. In fact, the article implied that the Chinese central government condoned it as a way to make something happen at the local level. But reacting is never as good as anticipating.

In another related news story from China, it was reported that the Chinese have mined twice as much coal in 2013 as they did in 2012. So, is the air pollution problem going to decrease over the next five years for Beijing and the rest of Asia for that matter? The answer, of course, is "no," especially if they're mining and burning twice as much coal last year as they did the year before. The problems are predictable and visible, and they're not going to go away soon unless someone acknowledges the predictable future impact and takes action now.

What predictable problems can you see in your company right now? What steps are you taking to stop the problem from occurring? I'd love to hear your thoughts.