CHONGQING—Coal powers China. In addition to producing about 75 percent of its electricity, the dirty, black rock is burned everywhere from industrial boilers to home stoves. More than 4,000 miners die every year digging up the fossil fuel, shortages abound forcing curbs in electricity use, and the country's transportation infrastructure creaks under the weight of distributing it across the country.

But the Chinese reliance on coal is most visible in the air. Smog cloaks cities, rendering them all but invisible from the sky, which in many spots is little more than a blue patch amid a blanket of haze. And it's not just confined to China: as the pollution builds it forms a brown cloud, visible from space, that takes about a week to cross the Pacific to the western U.S., where it accounts for as much as 15 percent of the air pollution.

There is no true horizon in this inland port city where the majority of China's motorcycles are produced, one of several industrial goods produced here. This "furnace" of China, as it's known, is akin to the entire Rust Belt of the U.S. crammed into a single community of 30-plus million people (twice the size of the New York City metropolitan region)—and its residents breathe air filled with so much lung-clogging soot that it would fail both U.S. and European Union (E.U.) safety standards.

The choking smoke produced by all that coal burning insinuates itself into the lungs of Chinese men, women and children and costs China an estimated $100 billion in health costs associated with respiratory ills, according to the World Bank. Further, it can literally stunt the growth of the next generation in this city in the heartland of China, according to recent research from Frederica Perera of Columbia University and her colleagues.

The Chinese have been burning coal for centuries. Venetian trader and explorer Marco Polo said that one of the most surprising sights during his travels through Asia in the 13th century was the Chinese practice of burning a strange, black rock for heat—and the mountains along the Silk Road that smoldered due to underground coal fires, like the ones burning throughout the country today. In fact, these underground blazes burn through an estimated 20 million tons of coal a year, the equivalent of the entire coal production of Germany last year.

But that pales in comparison to the amount of coal mined and deliberately burned annually by the Chinese: some 2.5 billion tons—double the amount burned by the U.S.—and doesn't even include ever growing imports. Much of it goes to the country's 541 coal-fired power plants, which pumped out 554,420 megawatts of electricity last year, according to the State Electricity Regulatory Commission.

China is a developing country undergoing an energy transformation unprecedented in human history, but fired by an engineering optimism reminiscent of the U.S. in the 1950s. China opens one large coal-fired power plant a week on average to generate enough electricity to service its 1.3 billion population and fuel industries that manufacture cheap goods for the U.S. and Europe.

China has a plan designed to reduce pollutants such as sulfur dioxide, linked to climate change and breathing problems, by as much as 10 percent over the next five years. And part of that plan is simply shuttering small, inefficient coal plants and replacing them with larger ones, meaning the abundance of new coal power plants will actually help clear the air somewhat. "To close small plants, it will be very effective to improve air quality," says Greenpeace spokeswoman Sarah Liang.

But that still leaves a load of pollution: China this year surpassed the U.S. as the world's largest emitter of greenhouse gases behind global warming.

Despite the surfeit of smut, the average Chinese citizen is responsible for a fraction of the greenhouse emissions of the average American—and the country is not bound by any international treaty to reduce its emissions. Yet, the government has launched a pilot project to address the problem by capturing and storing the carbon dioxide (CO2) produced by using coal as a fuel for electricity generation at a power plant dubbed GreenGen.

The project in the port city of Tianjin will proceed in three phases. First, a consortium of power and coal companies will fork over funds to construct a so-called integrated gasification combined cycle (IGCC) power plant (in which coal is turned to gas and pollutants removed before burning) that is capable of producing 250 megawatts of electricity. Such technology could cut acid rain–causing sulfur dioxide emissions by more than 90 percent, smog-forming nitrogen oxides by 75 percent, and—ultimately—capture more than 80 percent of the CO2 normally produced by combustion, storing it in nearby depleted oil fields by 2015.

China's $1 billion GreenGen power plant became the world's leading clean coal technology project after the U.S. government in February pulled the plug on FutureGen, a similar program that lost steam as the costs for building the demonstration plant in Mattoon, Ill., skyrocketed. Yet, the U.N. Intergovernmental Panel on Climate Change (IPCC) and leaders of the world's eight richest nations, including President Bush, among others, have called the development of clean coal technology essential to preventing the consequences of climate change.

But completing GreenGen may yet prove a challenge as well. "There's no co-benefit to doing the carbon capture and storage," says energy technology expert Kelly Sims Gallagher of the Harvard Kennedy School of Government. "There's an argument for doing GreenGen in terms of research and getting experience with it but from a commercial point of view it doesn't make sense." The reason: it requires extra energy to turn the coal to gas and then to capture the CO2 as well—in effect requiring the burning of more coal to generate the same amount of electricity.

GreenGen is a for-profit power plant, so economic gains or losses will play a pivotal role in whether to proceed with the capture and storage portion. "It may well be in this environment where oil is above $100 a barrel that it is economically viable and valuable for nations that are rich in coal, like China, to use that coal and to sequester the CO2 for purposes of producing more oil," says Vic Svec, senior vice president of investor relations and communications at U.S. coal giant Peabody, which is also a part owner of GreenGen. The Chinese also "view it as being a long-term benefit to remove CO2."

Thanks to the Olympics and ongoing efforts
, the air in cities like Chongqing (and particularly Beijing) is vastly improved. Factories have been shifted to industrial parks on the outskirts of town and small, inefficient coal power plants closed in favor of larger, higher heat facilities in an effort to clear the air for visiting athletes and tourists. "When I was young, the sky was green and we [could not] see stars at night," says local government official David Lee, a lifelong Chongqing resident "This year, we see blue skies and stars. We think it's much better."

Perhaps, but the air is still not so clear—it can be tasted on the tongue, felt in the lungs and obscures the horizon. Part of the problem is a lack of enforcement of existing clean air laws—and efforts to avoid them. Factories and power plants turn on pollution control equipment when government officials visit but, when they leave, such controls are shut off to boost power production. "The government cannot check every day," Lee says.

The government "needs to enforce the environmental laws, if they want blue skies," insists Li Jungfeng, director of the Chinese Renewable Energy Industries Association.

Other Chinese cities, such as Zhengzhou in China's most populous province Henan, have little hope of such clear skies any time soon. There the stars remain invisible at night, according to former resident Li Jia, now a college student in Beijing.

The atmosphere in Beijing is still so thick with pollution (despite a ban on coal burning and spending $17 billion, or 120 billion yuan, on clean air measures in the last decade) from cars, factories and other sources that some athletes, including marathon runner Haile Gebrselassie of Kenya, voluntarily withdrew from the games and a shot at Olympic Gold because of health concerns.

"It is bitter air that you can feel," says Timothy Hui, a program manager at environmental group Natural Resources Defense Council and a Beijing resident. "People hate it. They complain."

Efforts such as GreenGen bode well for resolving those complaints, but China is also moving ahead with efforts to turn coal into liquid fuel—a costly transformation that emits twice as much CO2 as does simply burning the black rock and consumes yet more energy.

Fundamentally, however, a good portion of China's air pollution is simply outsourced smog: industry that has migrated from the U.S. and E.U. to China to help maintain low prices or clean Western skies. A full 23 percent of China's greenhouse gas emissions can be linked to Western exports, according to an analysis by researchers at the Tyndall Center for Climate Change Research in England. And researchers at Carnegie Mellon University in Pittsburgh put the percentage even higher: 33 percent.

That doesn't absolve China of responsibility to cut back on noxious emissions and it is clear that the fate of the world's climate will be forged in the crucible of its industrial cities. "Gradual warming of the earth's atmosphere is caused by the developing countries as well as the developed countries," says English professor Wang Xiansheng of Zhengzhou University, which is also facing rolling blackouts as a result of the current coal shortage. "The whole world should get united to deal with the problem."