Last week we exposed how state-owned Chinese coal company Shenhua, the world's largest coal producer by volume, is overexploiting groundwater and illegally dumping toxic industrial wastewater.

In 11 field trips Greenpeace East Asia gathered alarming evidence of widespread ecological and social damage caused by Shenhua's coal-to-liquid demonstration project located in Ordos, Inner Mongolia.

In eight years of operations, the project has used 50 million cubic meters of valuable freshwater and has caused an important local lake to shrink by 62%. A total of 2,136 wells have dried up and the groundwater level has dropped by 100 metres. As natural and planted sand dune vegetation has died, the sand dunes have shifted, worsening the desertification of grasslands.

Due also to the fact that local water resources where the project is located had already been depleted due to decades of coal mining, Shenua also built a pipeline to extract and transport water from 100 km away, exacerbating the environmental crisis across the region.

It is difficult to grasp the scale of this devastation or imagine what the impacts are like and that is where the power of Greenpeace East Asia's investigation rests: it tells the stories, emotions and struggle of the local community to cope with the loss of water.


Shenhua's plundering of water at the costs of the local population and the environment is a clear example of how damaging the unchecked expansion of coal-reliant industries can be, especially given the growing conflict with China’s water resources.

Shenhua has also been illegally dumping wastewater in its backyard and when the company learned about Greenpeace East Asia's investigations, it started a hasty cover-up at the dumpsites. The cover-up could not clean the soil of toxic sediments, however.

This investigation reveals a lack of regulation and enforcement. According to the law, a project like this must involve consultation with locals.

A state-owned company, and certainly one as big as Shenhua, should also have higher environmental and social responsibilities than simply following the law. It should set an example to the rest of the industry, but Shenhua has so far refused to accept the evidence of environmental destruction and the criticism of the locals.

The situation uncovered by the Greenpeace East Asia investigation is just a preview of the water grab to come as China is planning 15 new mega-coal bases.

A joint study by Greenpeace East Asia and the China Academy of Sciences (CAS) last year indicated that these projects will consume an additional 10 billion cubic meters of water by 2015, equivalent to one-sixth of the annual flow of the Yellow River.

Although the 2012 report prompted a discussion about the approval of the coal-to-chemical bases based on water scarcity, most of those bases were still approved. Projected water consumption from coal power bases in 2015 will now exceed current provincial water consumption by more than 100% in Inner Mongolia, Shaanxi, Ningxia, Shanxi.

But where is the water going to come from?

If the coal expansion is allowed to go ahead, water grabs like Shenhua's Ordos project will most certainly be repeated because there is simply not enough water to cover the needs of these bases. In a recent report, investment bank HSBC has also warned that the water challenge faced by China’s coal and power sector is 'inescapable'.

A serious revision and scaling back of the proposed coal expansion is desperately needed. Greenpeace is calling on Shenhua to end the water grab and for the Chinese government to impose strict supervision and enforcement of the principles governing coal-to-chemical projects.

Iris Cheng is a coal campaigner at Greenpeace International.