"With existing environmental fees and taxes of between 30 to 50 yuan for each tonne of coal, the country's current pricing system has largely failed to reflect the true costs," Teng said.
Tiny particulate pollutants, especially those smaller than 2.5 micrograms (known as PM2.5), were linked to 670,000 premature deaths from four diseases - strokes, lung cancer, coronary heart disease and chronic obstructive pulmonary disease - in China in 2012, Teng said.
That translated to an external cost of 166 yuan for each tonne of coal consumed. Authorities levied only about 5 yuan as a pollution fee per tonne of coal used by consumers including power companies and iron, steel and cement producers.
Mining and transport add 94 yuan per tonne, including through damage to groundwater resources, subsidence, deaths and occupational diseases.
Beijing is considering replacing pollution charges with more stringent environmental protection taxes, but progress on legislation has been slow.
Li Guoxing , from Peking University's School of Public Health, said the full impact of coal use was still underestimated as the study did not take into account medical costs associated with other pollution-induced diseases such as asthma.
"The health cost [of the study] is only based on the premature death figures due to the limitations of our research data," said Li. "It could be way higher if we also include medical costs for other chronic illnesses."
The study found that in 2012, more than 70 per cent of the population was exposed to annual PM2.5 pollution levels higher than 35 micrograms per cubic metre, the country's benchmark for healthy air quality.
The World Health Organisation sets its PM2.5 safety limit at an annual concentration of 10mcg/cubic metre. That class of particulate was officially recognised as a human carcinogen last year by the International Agency for Research on Cancer, especially its link to lung cancer and a heightened risk of bladder cancer.
In 2012, some 157 million people in China lived in areas where the annual PM2.5 concentration was higher than 100mcg/cubic metre - 10 times the WHO's recommendation.
A previous study published in British medical journal said outdoor air pollution contributed to 1.2 million premature deaths in China in 2010, or 40 per cent of the global total. Former health minister Chen Zhu said this year that pollution caused 350,000 to 500,000 premature deaths a year in China.
The new study - based on research from Tsinghua and Peking universities, the China Academy of Environmental Planning and other government-backed institutes - represents the latest lobbying efforts by some Chinese experts to cap coal consumption.
But this is a difficult task, as the country relies on the fuel for nearly 70 per cent of its energy.
Teng estimates there would be a further cost of 160 yuan per tonne, on top of the 260 yuan calculated in the study, if the long-term social impact of climate change from coal burning were considered.
Zhou Fengqi , a former energy official, said it was impossible for the country to radically slash coal consumption in the coming decades.
This article appeared in the South China Morning Post print edition as: Deadly cost of China's reliance on coal
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