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According to British Petroleum statistics, in 2010 China’s consumption of energy sources, ranging from oil and coal to wind and solar power, was equal to 2.432 billion tons of oil, compared to 2.286 billion tons for the U.S. This marked the first time China consumed more energy than the U.S.

Energy markets in China have become increasingly influential, and all forecasts point to sustained rise in the country’s energy needs into the future.

Coal continues to dominate China’s energy mix, accounting for 70 percent of the country’s total energy output. Coal dominance is one of the particularities of its energy market.  It’s hardly surprising that China is also “the world’s largest” in consumption and production of coal.

Another particularity in China is that while the country is the largest energy consumer in the world, on a per capita basis Chinese energy consumption levels are far lower than those of developed economies such as the U.S., Germany or Japan. China’s per capita oil consumption is a mere one-tenth of the U.S.’s.

A lack of knowhow in energy utilization technologies has resulted in low efficiency of energy use. At present, China’s energy consumption per unit of industrial value-added output is much higher than in advanced economies. This has led to the country having some of the world’s highest rates of land deterioration and air and water pollution. For instance, China’s building sector consumes two to three times the energy used in their counterparts in developed countries. Chinese factories are three to five times less efficient than their Indian, U.S. and Japanese peers, and steel factories use one-fifth more energy per ton than the international average.

 In 2007, China’s energy intensity ratio – the amount of primary energy consumed per unit of GDP produced – was 25 percent higher than that of the U.S. and EU. Nevertheless, it is encouraging that the country’s energy intensity has declined substantially since 1980.

For all these reasons and more, energy issues will be among the most serious problems China faces in its long-term economic development. Even today, China’s growing energy demands have raised concerns and are posing grim challenges for policymakers.

The major concern for China is to ensure sufficient, reliable, cheap, clean and convenient energy for sustainable economic and social development. Until the early 1990s, China was a net energy exporter. Now, the country’s domestic production falls short of domestic demand.

China’s reliance on imported oil in particular has increased, and it has overtaken Japan to become the second largest oil importer in the world, just behind the U.S.  The country’s oil import dependency ballooned from six percent in 1993 to 48 percent in 2008 and 56.5 percent in 2011. This heavy reliance on world energy markets and the widening gap between domestic energy supply and demand is seen as a major constraint on China’s future economic and social development.

The International Energy Agency projected China’s energy demands to double between 2004 and 2030. As part of this increase, the demand for oil is expected to increase by more than 130 percent. Growth in demand will need to be met by considerable imports.

Hence, China’s emergence as a huge energy consumer will continue to have wide implications for global energy markets. The situation portends fierce competition for resources in a context of declining nonrenewable resources.

A Long Way to Go

With increased dependency on foreign energy has come concern over energy security. Worried about exposure to the vagaries of international energy markets, China has been trying to increase the security of its oil supply by encouraging its oil companies to invest in major oil-producing countries. One of the primary objectives is to diversify its supply sources both in terms of primary sources and geographical location, while continuing to invest in coal-based power generation.

The reality is that China is relatively poor in energy resources. It lacks significant reserves of oil, and even now is facing a considerable decline in its proven recoverable petroleum reserves. Most of its major producing fields have passed peak production. 

Furthermore, China’s growing appetite for energy has led to severe environmental degradation. Extensive coal use has exacerbated pollution and wreaked havoc on the natural environment. Coal burning fouls the air and is a major source of greenhouse gas emissions. Air pollution not only results in soil acidification, reductions in crop output and the destruction of vegetation, but also provokes respiratory diseases, which directly threaten people’s health.  

Looking forward to 2020, continued rapid growth of industrial output and GDP suggests China will import increasing quantities of coal and oil from world markets.

China is aware of the threat that its soaring energy consumption poses and has acknowledged that under the current trend, development is unsustainable.

Over the past decade, the Chinese government has implemented a large number of measures and policies designed to promote renewable energy and increase energy efficiency. China has already made energy efficiency and conservation its highest priority. As a result, energy intensity has steadily improved over the past few years, declining by about 70 percent between 1979 and 2000 and by over 40 percent from 1994 to 2009.  

The central government has also devoted great attention to the promotion of renewable energy and low-carbon technologies, such as nuclear energy and clean-coal energy forms. China’s renewable energy sector has been steadily expanding, and it now ranks among the top few countries globally in solar heating and small hydropower production.  

Wind power generation is another “world’s largest” for China, with capacity forecast to expand by 20 billion watts annually over the coming years. At present, China also has over 3,000 solar cooker manufacturers. This “green” energy device is used by millions across the nation.

The path to energy sustainability is certainly not an easy one. Changes must be made and practical steps taken to improve China’s energy efficiency and ensure a better use of domestic resources, protect the environment and enhance supply security. Most importantly, the prerequisite for sustainable development is an ongoing commitment to shifting from a growth model focused on heavy industrialization to a more balanced approach.

While still a work in progress, it is clear that China can be proud of its achievements in increasing domestic energy efficiency. Efforts to move toward a green economy and use cleaner fuels have been particularly impressive. But there is still a long way to go toward sustainability.

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VOL.59 NO.12 December 2010 Advertise on Site Contact Us