Serious accidents are unavoidable in situations where an ambitious, impetuous or complacent organisations deploying advanced technology encounter strong natural forces, especially when these organisations are operating in regulatory environments characterised by complacency or conflicts of interests. In this respect, the Macondo oil spill in the USA in April 2010, the Fukushima nuclear accident in Japan in March 2011, and the high-speed rail accident in China in July 2011 display significant similarities.
The official investigations into all three accidents are still continuing, and so I do not intend to carry out any detailed comparison in this column. Rather I seek to develop the general observation in the previous paragraph along with some of the major, yet unsubstantiated allegations made in the press relating to the high-speed train accident, in order to examine the relevance to China’s energy industry.
The development China’s high-speed rail system has been seen as emblematic of the country’s modernisation and of its technological prowess. Technologies from Japan and Germany were combined and adapted in order to produce not only what was to be the world’s fast high-speed train, but what would also soon have become the longest network of high-speed trains in the world. Construction was carried out very rapidly.
Coming from the United Kingdom where infrastructure projects can take many years to complete, I am often in admiration of the speed with which construction is undertaken in China.
Such haste may be suitable for conventional construction projects, but it is not so wise when operating at the frontiers of technology, for two reasons. First, certain construction projects require time to be allowed for the ground beneath the structure to settle before the project is commissioned. This is certainly the case for high-speed rail networks. Second, it is usually advisable to operate the first project of a particular type for a number of years before building further projects. This allows time to learn lessons relating to the new technology itself, as well as to the construction and operation of the projects.
The rapid deployment of a new technology also raises challenges relating to human capacity: training the staff and giving them experience in the operation, maintenance and repair of the new infrastructure. This not only requires that a substantial period of time is allowed for training each individual, but also that organisational learning can take place through expanding the infrastructure at a pace which is not too rapid. At present it appears that neither of these approaches was taken in the development of China’s high-speed trains.
Whilst many organisations across the world may be tempted to push ahead in such an impetuous manner, it is the responsibility of the government to establish and to enforce the required standards of behaviour through their regulatory agencies. Though I myself do know not exactly where such responsibilities lie in the case of the high-speed rail system, it is clear that these systems were defective. Part of this deficiency may lie in the fact that it was the government itself which was constructing the network.
Finally, it has been argued that the construction of such an advanced rail network was not a wise use of government funds. It might have been more useful to build a more extensive conventional rail network which would serve more people, albeit at slower speeds.
A number of these alleged deficiencies have a relevance to the nation’s energy sector. China now has the largest energy sector in the world, at least in terms of annual energy consumption, and the installed capacity and the output are growing at between 6% and 10% per year. Much of the technology is relatively advanced and is, in part, indigenous, having been adapted from imported technologies. Even where the technology is not advanced, the training and experience of the labour force is often inadequate for the risks encountered.
The extraction of primary energy from nature is always susceptible to safety and environmental risks. China’s coal mines have a particularly bad safety record, though the most dangerous mines are not technologically advanced. The uncontrolled release of poisonous gas from a gas field in Chongqing Municipality killed more than 200 local people in 2003, showing that an apparently routine operation can be easily overwhelmed by nature. Examples of large industrial plants which process energy include nuclear power stations, liquefied natural gas plants, super-critical thermal power stations, oil refineries and petro-chemical plants. All these plants carry inherent risks which challenge the best companies, even those which are not expanding rapidly.
As I have discussed in this column before, the technological and human challenges relating to China’s rapid growth of nuclear power industry will test the regulatory capacity of the government to the limit. In addition to the types of plant mentioned in the previous paragraph, the country is already embarking on the development of shale gas and on the testing of carbon capture and storage. Both of these processes carry substantial new types of risk relating to safety and the environment.
Whilst it is clearly necessary for the country’s energy companies to expand their capacity to generate energy, to pursue new forms of energy and to constrain carbon emissions, the government has the obligation to establish and enforce rules and procedures in order to ensure the highest standards of management. Failure to do so will result not only in fatal accidents but also in a major economic set back, as Japan is discovering. This obligation to regulate effectively is even stronger in China than in many western countries because the majority ownership of the energy companies in China lies with the government. As a consequence, the companies do not face the threat of corporate bankruptcy or hostile take-over.