WEBVTT - China Bets Big on a $167 Billion Tibetan Dam 0:00:02.720 --> 0:00:07.200 Bloomberg Audio studios, podcasts, radio news. 0:00:08.400 --> 0:00:13.320 Earlier this month, China officially started construction on a massive 0:00:13.520 --> 0:00:22.040 hydropower dam in tibetan Yaoum. The dam, when completed, will 0:00:22.079 --> 0:00:25.119 be the biggest power plant on the planet. 0:00:26.000 --> 0:00:28.200 It's three times bigger than the largest power plant in 0:00:28.240 --> 0:00:30.600 the world right now. It's more than all of the 0:00:30.640 --> 0:00:32.760 power plants in Poland combined. 0:00:33.120 --> 0:00:37.440 Dan Mortor covers the energy industry for Bloomberg from Beijing. 0:00:37.880 --> 0:00:40.320 The amount of cement their estimating their need it would 0:00:40.320 --> 0:00:42.600 be enough to fill more than fifty Hoover dams, and 0:00:42.680 --> 0:00:44.400 the amount of steel. It would be enough to build 0:00:44.400 --> 0:00:46.599 one hundred and sixteen Empire state buildings. 0:00:47.120 --> 0:00:51.520 This mega project comes with a mega price stack one 0:00:51.560 --> 0:00:54.640 hundred and sixty seven billion dollars. 0:00:55.280 --> 0:00:59.080 This would be one of the most expensive undertakings for 0:00:59.200 --> 0:01:03.880 infrastructure in human history, more expensive than the International Space Station. 0:01:04.400 --> 0:01:07.640 You're looking at decades long projects like building the US 0:01:07.680 --> 0:01:11.160 Interstate Highway system before you get to comparable amounts of investment. 0:01:11.480 --> 0:01:14.800 China says the dam will provide a major source of 0:01:14.959 --> 0:01:20.360 clean energy. More importantly, it will boost the country's slowing economy. 0:01:21.240 --> 0:01:26.720 But the project carries huge engineering and environmental risks and 0:01:26.880 --> 0:01:31.679 could strain relations with two of its neighbors, India and Bangladesh. 0:01:32.000 --> 0:01:34.920 The Indian government has been worried about if China was 0:01:34.959 --> 0:01:37.319 able to build a dam, they would then be able 0:01:37.319 --> 0:01:40.560 to use sort of water access as a pain point 0:01:40.640 --> 0:01:43.840 if there was an eventual conflict between the countries. And 0:01:44.240 --> 0:01:46.600 there's going to be all of this human activity in 0:01:46.640 --> 0:01:49.800 a place that's been remote for most of its history. 0:01:50.000 --> 0:01:52.440 You hope for the best, but human history has not 0:01:52.520 --> 0:01:54.640 been very kind to the planet Earth, and you just 0:01:54.680 --> 0:01:57.280 have to wonder if they're going to be able to 0:01:57.760 --> 0:02:03.080 rain in people from not damaging that really area. 0:02:03.320 --> 0:02:07.400 This is the Big Take Asia from Bloomberg News. I'm 0:02:07.400 --> 0:02:11.440 Mini Kadoshi filling in for one half every week. We 0:02:11.560 --> 0:02:14.480 take you inside some of the world's biggest and most 0:02:14.560 --> 0:02:19.880 powerful economies and the markets, tycoons and businesses that drive 0:02:20.080 --> 0:02:24.640 this ever shifting region. Today on the show, China bats 0:02:24.680 --> 0:02:28.760 big on a new mega dam, Why the project is 0:02:28.919 --> 0:02:33.120 raising alarm with its neighbors, and what its construction could 0:02:33.160 --> 0:02:43.239 mean for China's economy and its green energy ambitions. When 0:02:43.280 --> 0:02:47.040 it comes to building hydro dams, China has got plenty 0:02:47.080 --> 0:02:51.400 of experience. It operates two of the world's largest dams. 0:02:52.120 --> 0:02:56.000 That includes the world's biggest hydro dam, Three Gorges, which 0:02:56.040 --> 0:02:59.840 opened in central China in two thousand and nine. This 0:03:00.000 --> 0:03:04.400 this new megadam will be built in Tibet, a mountainous 0:03:04.440 --> 0:03:07.240 region just north of the border with India. 0:03:07.720 --> 0:03:11.359 It's in this bend on the Arlansangwo River that they 0:03:11.360 --> 0:03:14.560 call like the Medor or Moto Gorge. 0:03:14.240 --> 0:03:18.440 And Bloomberg Energy reporter Dan Motor says the dam is 0:03:18.440 --> 0:03:22.440 in an area that till recently was very difficult to 0:03:22.520 --> 0:03:22.840 get to. 0:03:23.560 --> 0:03:28.239 It is a very, very very steep drop. The river 0:03:28.360 --> 0:03:31.520 drops about two thousand meters over a fifty klometer stretch 0:03:31.800 --> 0:03:34.400 as it curves and bends through the mountains of the Himalayas. 0:03:34.680 --> 0:03:37.320 The county that it's at is up until twenty thirteen 0:03:37.480 --> 0:03:39.640 didn't even have a highway that connected it. You'd have 0:03:39.720 --> 0:03:42.200 to walk a day, you know, or take a donkey 0:03:42.320 --> 0:03:44.280 or a horse to get to the river from the 0:03:44.320 --> 0:03:45.160 closest highway. 0:03:46.520 --> 0:03:49.960 Most dams, like the Hoover Dam, block the path of 0:03:49.960 --> 0:03:53.800 a river to create a reservoir. They then release the water, 0:03:54.040 --> 0:03:59.880 which turns turbines and generates electricity. This Yar Lungsangpo Dam 0:04:00.320 --> 0:04:00.880 is different. 0:04:01.520 --> 0:04:03.240 What they're trying to do here is a little bit 0:04:03.280 --> 0:04:07.440 more audacious. The idea is to drill a tunnel through 0:04:07.680 --> 0:04:11.560 the mountains down that steep, steep, steep gradient, and then 0:04:11.680 --> 0:04:14.760 divert some of the water from going around that big 0:04:14.800 --> 0:04:19.080 bend and instead go basically just vertically straight down the mountain. 0:04:19.400 --> 0:04:23.120 That steep gradient that this river moves on really allows 0:04:23.240 --> 0:04:26.520 you to get that water flowing at high enough speeds 0:04:26.560 --> 0:04:29.480 to be able to run the turbines to generate the electricity. 0:04:31.040 --> 0:04:35.200 At the groundbreaking ceremony earlier this month, Chinese Premier Li 0:04:35.360 --> 0:04:40.440 Chiang called the Yar Lungsanko Dam the project of the century. 0:04:40.960 --> 0:04:44.760 State engineers have said it has the potential to generate 0:04:45.080 --> 0:04:50.560 as much as seventy gigawatts of electricity. That's enough to 0:04:50.720 --> 0:04:52.240 power the United Kingdom. 0:04:52.640 --> 0:04:54.839 It's three times bigger than the largest power plant in 0:04:54.839 --> 0:04:58.279 the world right now. It is a national, country level 0:04:58.360 --> 0:05:02.880 type of generating asset, but China's huge. China has about 0:05:03.279 --> 0:05:07.040 four thousand gigawatts of total generating capacity right now. Its 0:05:07.120 --> 0:05:10.919 peak demand is about one four hundred and fifty gigawatts, 0:05:11.120 --> 0:05:14.240 and so this project isn't going to have a huge 0:05:14.400 --> 0:05:17.280 world changing impact on China's power sector, but it does 0:05:17.360 --> 0:05:19.919 do a couple of different things that are going to 0:05:19.920 --> 0:05:24.080 be really beneficial to China's attempt to clean up its 0:05:24.200 --> 0:05:27.960 energy sector and will help China meet its energy transition 0:05:28.080 --> 0:05:31.320 goals of peaking emissions by twenty thirty and then reaching 0:05:31.320 --> 0:05:32.920 net zero emissions by twenty sixty. 0:05:33.400 --> 0:05:37.560 China still relies on coal power plants to back up 0:05:37.720 --> 0:05:42.000 its more sustainable energy sources like solar and wind. 0:05:42.600 --> 0:05:46.799 Wind and solar, while cheap and wall abundant, only generate 0:05:46.880 --> 0:05:49.280 when the wind blows, and it doesn't really allow them 0:05:49.320 --> 0:05:52.440 to replace coal plants because at the end of the day, 0:05:52.760 --> 0:05:56.840 you still need backup generation to make sure that when 0:05:56.960 --> 0:05:59.279 there's a period where there's no sun out and the 0:05:59.320 --> 0:06:01.839 wind stops, that people can still turn on their lights. 0:06:02.320 --> 0:06:06.200 What hydropower does that when solar don't do is it's 0:06:06.560 --> 0:06:10.240 what we call a dispatchable source. You can use it 0:06:10.320 --> 0:06:13.960 when it's needed, you can hold it back when it's not. Now, 0:06:14.040 --> 0:06:17.440 hydropower is not perfectly dispatchable, like if you're using a 0:06:17.480 --> 0:06:20.200 fossil fuel power plant, a gas or a coal power plant, 0:06:20.320 --> 0:06:21.960 you can really just sort of turn it off and 0:06:22.000 --> 0:06:26.279 on as needed hydropower. There's still some external things like 0:06:26.320 --> 0:06:28.919 whether there's a drought, if there's you know, too much water, 0:06:29.160 --> 0:06:31.719 If there's rain, you know, you have to open the floodgates. 0:06:31.839 --> 0:06:34.400 It's not perfect, but it is a clean power source 0:06:34.480 --> 0:06:36.680 that allows the grid to be a little bit more 0:06:36.720 --> 0:06:39.839 flexible in terms of, you know, generating when it's needed 0:06:39.880 --> 0:06:41.839 and not just when the supply is available. 0:06:42.720 --> 0:06:47.240 That reliability and flexibility are just two of the reasons 0:06:47.520 --> 0:06:52.880 why building a hydroelectric dam is so expensive. The Yarlung 0:06:52.960 --> 0:06:56.560 Sungpo Dam will cost one hundred and sixty seven billion 0:06:56.640 --> 0:07:01.800 dollars more than the International Space Day did, and Dan 0:07:01.920 --> 0:07:06.039 says the power it generates will be several times more 0:07:06.120 --> 0:07:09.279 expensive than any other energy source. 0:07:09.640 --> 0:07:12.200 If it ends up being about a segmenty gigawatt project, 0:07:12.240 --> 0:07:15.120 as we expect it to be, you're talking about two 0:07:15.200 --> 0:07:19.080 point four million dollars per megawatt. Now. That compares to 0:07:19.480 --> 0:07:22.480 an onshore wind plant right now that China would spend 0:07:22.520 --> 0:07:25.600 about six hundred thousand dollars per megawat on, or a 0:07:25.600 --> 0:07:28.040 solar power plant that China would spend about four hundred 0:07:28.040 --> 0:07:32.920 thousand dollars per megadon. China infrastructure projects never lack for lenders. 0:07:32.960 --> 0:07:35.600 But this is not a white elephant. This is going 0:07:35.680 --> 0:07:38.520 to be a hydropower project that sells a lot of electricity. 0:07:38.720 --> 0:07:41.760 That electricity has value, and so they're going to be 0:07:41.800 --> 0:07:44.480 able to code to their lenders and say, listen, over 0:07:44.560 --> 0:07:47.280 twenty thirty years, we're going to make a ton of money, 0:07:47.280 --> 0:07:49.280 and we're going to have the revenue to pay you back. 0:07:50.040 --> 0:07:54.000 Dan says, there's another reason the Chinese government has green 0:07:54.080 --> 0:07:58.400 lit the project, and that's the state of China's economy. 0:07:59.040 --> 0:08:01.600 The way I think about it is this is less 0:08:01.640 --> 0:08:04.679 of a hydropower project that's going to provide some economic 0:08:04.760 --> 0:08:07.640 stimulus and more of an economic stimulus project that at 0:08:07.640 --> 0:08:09.400 the end of the day will be able to produce 0:08:09.480 --> 0:08:13.040 some hydropower. We're in this new sort of era where 0:08:13.160 --> 0:08:16.480 China's economy has been stagnant since COVID people have been 0:08:16.520 --> 0:08:18.960 waiting for a kind of stimulus boost to recover it. 0:08:19.280 --> 0:08:22.880 Sectors like cement, like steel, like construction, those have been 0:08:22.960 --> 0:08:26.520 particularly hard hurt by the burst of the property bubble, 0:08:26.840 --> 0:08:30.000 and so you've got this perfect storm here where there's 0:08:30.040 --> 0:08:33.160 this project that requires a lot of those materials that 0:08:33.320 --> 0:08:35.720 used to be seen as maybe a little bit risky 0:08:35.880 --> 0:08:38.559 and costly to do, but now it kind of fits 0:08:38.640 --> 0:08:42.360 this dual need of both providing some economic stimulus for 0:08:42.480 --> 0:08:47.960 some hurting sectors while also eventually providing a really, really 0:08:48.040 --> 0:08:49.800 large source of clean energy. 0:08:50.320 --> 0:08:54.040 The project is estimated to generate two hundred thousand new 0:08:54.160 --> 0:08:59.599 jobs and boost China's GDP every year for the next decade. 0:09:00.120 --> 0:09:03.960 They've estimated that it's likely bigger than multiple different monetary 0:09:04.000 --> 0:09:06.520 policy actions that the Central Bank has taken over the 0:09:06.520 --> 0:09:09.440 past few years, so it could really help reflate the 0:09:09.480 --> 0:09:12.760 economy as they try to do their supply side reform 0:09:12.800 --> 0:09:14.080 over the coming years. 0:09:18.400 --> 0:09:22.240 How China plans to transmit all that clean energy, and 0:09:22.360 --> 0:09:26.520 what the dam's construction means for simmering tensions between Beijing 0:09:26.880 --> 0:09:43.160 and New Delhi. That's after the break. China has been 0:09:43.280 --> 0:09:47.520 talking about building a mega dam on the Yurlanngsungpur River 0:09:47.960 --> 0:09:53.120 for decades, but construction was approved only in December last year. 0:09:53.880 --> 0:09:57.960 Bloomberg Stan Mertor says that's largely because the challenges to 0:09:58.040 --> 0:10:00.000 the project are so formidable. 0:10:00.520 --> 0:10:03.360 In past conversations I've had with people, they were a 0:10:03.400 --> 0:10:05.839 little bit iffy on whether it would ever get built. 0:10:05.840 --> 0:10:09.120 Because this is an incredibly remote site. It's very very 0:10:09.160 --> 0:10:12.960 far away from any major population centers, and so you 0:10:13.120 --> 0:10:17.040 have to transport millions of tons of cement and sand 0:10:17.120 --> 0:10:20.440 and aggregate and tens of thousands of workers up to 0:10:20.520 --> 0:10:21.640 this remote area. 0:10:22.120 --> 0:10:25.880 The project site is in a seismically active area. That 0:10:26.040 --> 0:10:29.520 means engineers will need to ensure that the dam is 0:10:29.640 --> 0:10:34.240 strong enough to withstand earthquakes. And then there's the question 0:10:34.320 --> 0:10:37.440 of how to get the power generated by the dam 0:10:37.760 --> 0:10:42.440 to the places that need it. Beijing, Shanghai, Hong Kong. 0:10:43.080 --> 0:10:47.439 They're all thousands of miles away, which means this isn't 0:10:47.559 --> 0:10:50.720 just one massive infrastructure project, it's two. 0:10:51.280 --> 0:10:54.840 Earlier this year, when China announced this project as part 0:10:54.840 --> 0:10:57.280 of their work plan for this year, they not only 0:10:57.320 --> 0:10:59.480 said we're going to try to develop hydropowered the is 0:10:59.600 --> 0:11:01.599 Ensemble River, but they said we're going to try to 0:11:01.600 --> 0:11:03.880 build a power line from Tibet to the Hong Kong, 0:11:03.960 --> 0:11:06.880 guangzhosh and Jen Bay area to transmit some of that. 0:11:06.880 --> 0:11:09.320 That itself is going to be a major undertaking. It's 0:11:09.360 --> 0:11:12.600 going to require lots of copper and aluminum steel itself. 0:11:13.000 --> 0:11:16.560 City Bank has estimated just the transmission alone could be 0:11:16.679 --> 0:11:19.960 another seven hundred billion yuan about one hundred billion dollars, 0:11:20.000 --> 0:11:23.000 and so that will also be a difficult thing. 0:11:23.640 --> 0:11:28.359 The domestic considerations in building this mega dam are considerable, 0:11:29.000 --> 0:11:34.680 but they might be overshadowed by international complications. Downstream from 0:11:34.679 --> 0:11:39.120 the site. The Yar Lungsangpu River flows into India and 0:11:39.160 --> 0:11:43.720 then into Bangladesh and is critical to livelihoods in the region. 0:11:44.559 --> 0:11:47.440 When China first announced back in December that there was 0:11:47.480 --> 0:11:50.560 going to go forward with this, the Indian government reach 0:11:50.640 --> 0:11:55.080 out to the Chinese government. They raised alarm bells, an 0:11:55.120 --> 0:11:58.120 Indian minister set in March. This was part of discussions 0:11:58.120 --> 0:12:01.559 the countries had in January. The Chinese government clearly thinks 0:12:01.600 --> 0:12:04.800 that they've told the Indian government the downstream areas won't 0:12:04.800 --> 0:12:08.640 be affected, and they think that they've convinced Indian officials 0:12:08.640 --> 0:12:12.360 that this is not a project that will harm the ties. 0:12:13.880 --> 0:12:18.320 The relationship between China and India has worsened in recent 0:12:18.440 --> 0:12:22.200 years after a long history of border disputes in the 0:12:22.240 --> 0:12:23.160 Himalian region. 0:12:23.720 --> 0:12:26.400 It is too early to say how this is going 0:12:26.440 --> 0:12:31.599 to develop. Already, India has mooted building its own hydropower 0:12:31.600 --> 0:12:35.120 station across the border from this plant where they would 0:12:35.160 --> 0:12:37.040 be able to at least put in a little bit 0:12:37.040 --> 0:12:38.960 of their own control over the flow of the water 0:12:39.040 --> 0:12:40.559 and produce their own electricity. 0:12:41.160 --> 0:12:45.960 There's another complication. Tibet is a highly sensitive area. The 0:12:46.040 --> 0:12:51.959 region has long endured intense social security and religious controls 0:12:52.280 --> 0:12:57.480 under Beijing's policies, and though China has denied them, allegations 0:12:57.520 --> 0:13:02.120 of mass labor systems and repression persist. 0:13:02.480 --> 0:13:06.040 Tibet is a politically sensitive area. It's been in the 0:13:06.120 --> 0:13:10.720 sort of global crosshairs for decades. Tibet and the Beijing 0:13:10.760 --> 0:13:15.959 government have a very long and fraught history, and you know, frankly, 0:13:16.000 --> 0:13:18.760 as a foreign journalist, Tibet is an area that I'm 0:13:18.880 --> 0:13:20.160 not allowed to visit. 0:13:21.000 --> 0:13:24.320 It's not just the political situation in Tibet. There are 0:13:24.400 --> 0:13:28.760 significant concerns around the environmental implications as well. 0:13:29.760 --> 0:13:33.000 This is a really really fragile area. It's really unique there. 0:13:33.120 --> 0:13:35.040 You know, you have this dry mountain air coming down 0:13:35.080 --> 0:13:38.280 from the Himalayas meeting up with this humid, warm air 0:13:38.320 --> 0:13:40.600 coming up from the Indian Ocean. It's one of the 0:13:40.600 --> 0:13:44.520 most uniquely biodiverse spots in the world. And the idea 0:13:44.559 --> 0:13:48.320 of bringing tens of thousands of workers. Plus However, many tens, 0:13:48.360 --> 0:13:50.920 if not hundreds of thousands of more wolves will pop 0:13:51.040 --> 0:13:53.880 up to create like the restaurants and food trucks and 0:13:53.960 --> 0:13:57.640 bars and karaoke and stuff to service these people. The 0:13:57.720 --> 0:14:00.720 idea that there's gonna be all of this human activity 0:14:00.760 --> 0:14:04.000 in a place that's been remote for most of its history. 0:14:04.240 --> 0:14:06.640 You hope for the best, but human history has not 0:14:06.760 --> 0:14:08.880 been very kind to the planet Earth, and you just 0:14:08.920 --> 0:14:11.240 have to wonder if they're going to be able to 0:14:11.360 --> 0:14:15.000 rain in people from not damaging permanently. It's really eigue area. 0:14:21.560 --> 0:14:24.680 This is The Big Take Asia from Bloomberg News. I'm 0:14:24.680 --> 0:14:27.360 mad A Kavoshi. To get more from The Big Take 0:14:27.680 --> 0:14:31.800 and unlimited access to all of Bloomberg dot Com, subscribe 0:14:31.840 --> 0:14:36.720 today at Bloomberg dot com slash podcast Offer. If you 0:14:36.920 --> 0:14:40.360 liked the episode, make sure to subscribe and review The 0:14:40.360 --> 0:14:44.320 Big Take Asia wherever you listen to podcasts. It helps 0:14:44.320 --> 0:14:47.720 people find the show. Thanks for listening, See you next time.