20111102-Wikicommons Shuozhou coal plant.JPG

In 2009 China surpassed the United States to become the world’s top energy consumer according to the International Energy Agency, consuming 2,252 billion tons of oil equivalent energy from sources such as coal, nuclear power, natural gas and hydro-electric power---about 4 percent more than the United States. China has come a long way in a short period of time. In 2000, it consumed half the energy of the United States.

China now accounts for 12 percent of the world’s energy demand but its rate of consumption is growing more than four times the world’s rate. Energy consumption rose by 208 percent in China between 1970 and 1990, compared to 28 percent in most developed countries. It is expected to double in the next 20 years. Every two years China builds as many power plants and Britain has since the 18th century.

Demand for energy is soaring as Chinese are buying more cars, moving into bigger houses that need more heat, purchasing more televisions, refrigerators and other appliances and starting new businesses and factories. Some heavy industries still use outdated technology and waste and use too much fuel in the production process. Energy intensive industries (steel. aluminum, cement and chemicals) use a third of China’s total energy consumption. Construction accounts for 27 percent.

China used the energy equivalent of the burning of 2.7 billion tons of coal in 2006. China has vowed to cut energy consumption for every unit of economic activity by 20 percent by the end of 2010. But the opposite is happening. China is consuming energy at a rate much higher than experts had originally predicted, China will use the amount of energy in 2010 that experts originally predicted it would use in 2020.

left Both China and India have been warned by the International Energy Agency that they need to do something to curb their use of energy or else they will cause a number of serious problem including increased production of global warming gases and strain the global oil trade, causing shortages and price hikes. In 2006 and 2007 China and India accounted for 70 percent for the increase in energy demand. By 2030 the two countries are expected to account for half of the world’s energy consumption.

The energy bureaucracy has only 100 employees compared to 110,000 at the EPA in the United States.


Good Websites and Sources: U.S. Energy Information Administration Report on Energy in China ; U.S. Energy Information Administration Report on Electricity in China ;China Sustainable Energy Program ; China Energy Report pdf file ; Another Lengthy Energy China Report ; China Energy Production Statistics ; Beijing Energy Network (a Chinese grassroots environmental group)

Energy Consumption Slows During 2008 Global Financial Crisis and Then Picks Up Again

The extraordinary growth in power generation in China slowed somewhat because of the global financial crisis in 2008 and 2009. Researchers at Stanford University who closely track China’s power sector, coal use, and carbon dioxide emissions in a rough projection estimated that China emitted somewhere between 1.9 and 2.6 billion tons less carbon dioxide from 2008 to 2010 than it would have under business as usual and the economic crisis didn’t happen. [Source: Andrew C. Revkin, New York Times, January 6, 2009]

China had seen slowdowns in the growth in electricity supplies often because of shortages of coal or the ability to get the fuel where it was needed.

In late 2009 and early 2010---even as China has set ambitious goals for itself in clean-energy production and the world was still experiencing an economic down as a result of the Lehman Brothers crisis---China’s surging demand for power from oil and coal has led to the largest six-month increase in the tonnage of human generated greenhouse gases ever by a single country. [Source: Keith Bradsher, New York Times, May 6, 2010]

Coal-fired electricity and oil sales each climbed 24 percent in the first quarter of 2010, on the heels of similar increases in the fourth quarter of 2009. No country of this size has seen energy demand grow this fast before in absolute terms, and those who are most concerned about this are the Chinese themselves, Jonathan Sinton, the China program manager at the International Energy Agency in Paris, told the New York Times. [Ibid]

China’s leaders were so concerned about rising energy use and declining energy efficiency that the cabinet held a special meeting to discuss the problem, according to a statement Thursday from the ministry of industry and information technology. Premier Wen Jiabao promised tougher policies to enforce energy conservation, including a ban on government approval of any new projects by companies that failed to eliminate inefficient capacity, the ministry said. Wen also said that China had to find a way to meet the target in its current five-year plan of a 20 percent improvement in energy efficiency. [Source: Keith Bradsher, New York Times, May 6, 2010]

20111102-Wikicommons Power Plant Tianjin.jpg

Reasons for Increased Energy Usage in China

China’s ravenous appetite for fossil fuels is driven by China’s shifting economic base---away from light export industries like garment and shoe production and toward energy-intensive heavy industries like steel and cement manufacturing for cars and construction for the domestic market.[Source: Keith Bradsher, New York Times, May 6, 2010]

Almost all urban households in China now have a washing machine, a refrigerator and an air-conditioner, according to government statistics. Rural ownership of appliances is now soaring as well because of new government subsidies for their purchase since late 2008. [Ibid]

Car ownership is rising rapidly in the cities, while bicycle ownership is actually falling in rural areas as more families buy motorcycles and light trucks. A number of car companies in China have recorded record sales. [Ibid]

The increase in oil and coal-fired electricity consumption in the first quarter was twice as fast as economic growth of about 12 percent for that period, a sign that rising energy consumption is not just the result of a rebounding economy but also of changes in the mix of industrial activity. The shift in activity is partly because of China’s economic stimulus program, which has resulted in a surge in public works construction that requires a lot of steel and cement. Meanwhile, fuel-intensive heavy industry output rose 22 percent in the first quarter in China from a year earlier, while light industry increased 14 percent.

In the future, Zhou Xi’an, a National Energy Administration official, has said that fossil fuel consumption was likely to increase further because of rising car ownership, diesel use in the increasingly mechanized agricultural sector and extra jet fuel consumption for travelers. China’s recent embrace of renewable energy has done little so far to slow the rise in emissions from the burning of fossil fuels. [Ibid]

Energy Policy and the Government in China

Beijing subsidizes, shapes and “guides” the energy market. Electricity, coal, fertilizer and water are all cheaper than their real cost. This is done to control the economy, avoid hardships for ordinary Chinese and as a consequence prevent social unrest. When oil prices rose to $160 and then dropped to $70 a barrel consumer prices in China remained largely unchanged. Even when prices reached $3.50 a gallon in the summer of 2008, many drivers received subsidies or compensation.

right The mining and energy industries are notorious for ignoring directives and rules set by the central government and following their agenda, with local government officials being more wrapped up with local concerns and enriching themselves than following national policies.

The central government is trying to get local governments to stop building power plants and close down unsafe mines but these wishes are often ignored. Often it seems that the central government is too timid to enforce its orders or corruption culture is to embedded for anyone to anything about it. .

China Unable to Meet Energy Efficiency Targets

The shift in the composition of China’s economic output is overwhelming the effects of China’s rapid expansion of renewable energy and its existing energy conservation program, energy experts said. Already China has been unable to meet energy efficiency targets set in five-year plan, from 2006 to 2010, and seems unlikely to meet future targets---namely improving the energy efficiency by 40 to 45 percent by 2020. [Source: Keith Bradsher, New York Times, May 6, 2010]

For a while, China seemed to be on track toward of of improving energy efficiency by 20 percent. goal. According to the ministry of industry and information technology, energy efficiency by more than 14 percent from 2005 to 2009 but it deteriorated by 3.2 percent in the first quarter of 2010. [Ibid]

Without big policy changes, like raising fuel taxes, they can’t possibly make it, said Julie Beatty, principal energy economist at Wood Mackenzie, a big energy consulting firm based in Edinburgh, Scotland. [Ibid]

Dodgy Chinese Energy Data

Complicating energy efficiency calculations is the fact that China’s National Bureau of Statistics has begun a comprehensive revision of all of the country’s energy statistics for the last 10 years, restating them with more of the details commonly available in other countries’ data. Western experts also expect the revision to show that China has been using even more energy and releasing even more greenhouse gases than previously thought. [Source: Keith Bradsher, New York Times, May 6, 2010]

Revising the data now runs the risk that other countries will distrust the results and demand greater international monitoring of any future pledges by China. If the National Bureau of Statistics revises up the 2005 data more than recent data, for example, then China might appear to have met its target at the end of this year for a 20 percent improvement in energy efficiency. [Ibid]

Chinese Government Price Controls and Higher Energy Costs

Keith Bradsher wrote in the New York Times in May 2011: “The government, for its part, has imposed an array of price controls, including on electricity rates, as it struggles to insulate the Chinese public from inflation. Consumer prices are rising 5.3 percent a year according to official figures, and Chinese and Western economists say the true rate may be nearly double that. But coal prices, which the government deregulated in 2008, are rising even faster in China, which is a net importer of coal despite having its own extensive mining operations.” [Source: Keith Bradsher, New York Times, May 24, 2011]

“Huaneng, China’s biggest electric utility, said last month that electricity rates it charges customers should have been 13 percent higher last year to match the increase in coal prices. But regulators held utility rates essentially flat. Spot coal prices in China have surged an additional 20 percent this year---to a record $125 a metric ton for top grades---partly because of floods in Australia’s and Indonesia’s coal fields and partly because Japan is buying more from the global market to offset its lower nuclear power output.” [Ibid]

“But Chinese regulators have let electricity prices climb only 2.5 percent this spring. Residential users in China’s cities pay 8.2 cents a kilowatt-hour. That compares to a national average of 11 cents in the United States and 15 cents in the heavily urban mid-Atlantic region. Chinese industrial users in cities are supposed to pay 12 cents a kilowatt-hour, although politically connected businesses receive discounts; the average industrial rate in the United States is 7 cents, and 9 cents in the mid-Atlantic region.” [Ibid]

“Big power generators like Huaneng buy nearly half their coal on the spot market and the rest on long-term contracts with prices that rise more slowly. The government has put pressure on China’s coal mines, also largely state-owned, to continue supplying power companies with coal at below-market prices under long-term contracts. But the mines, which are also profit-oriented operations, have responded with their own form of passive resistance---by sending their cheapest, lowest-quality coal with the most polluting sulfur.” [Ibid]

“As a result, many power plants are now paying penalties to yet another arm of the government---environmental regulators---for burning the sulfur-spewing coal. That has further added to the utilities’ cost of doing business, said Howard Au, the chief executive of Petrocom Energy, a Hong Kong company that builds coal-blending facilities. Trying to help utilities reduce those environmentally and financially costly emissions, Petrocom has built a series of gray silos and red conveyor belts at Lianyungang port in northern China to dilute high-sulfur Chinese coal with low-sulfur imported coal.” [Ibid]

Energy Production in China

Energy production in 2005: 68 percent from coal, 23 percent from oil, 5 percent from hydro, 3 percent from natural gas and 1 percent from nuclear energy.

According to the World Bank China---with 20 percent of the world's population---possesses 2.34 percent of he world's oil reserves, 1.2 percent of the world's gas reserves, 11 percent of the world's coal and 13.2 percent of the potential hydroelectric resources.

China needs energy to make its economy run. Just to keep pace with growth, China must construct approximately a dozen 1,000-megawatt power plants every year. By contrast the United States only needs one or two a year to maintain its growth rate.

China is dependent on coal and oil. It is trying to diversify with natural gas, nuclear power and renewable sources but it will be long time before coal and oil are significantly displaced. Keith Bradsher wrote in the New York Times Looking ahead, China has placed big bets on wind turbines for generating electricity. And despite Japan’s recent nuclear travails, China is also cautiously proceeding with plans to lead the world in the construction of nuclear power plants in the coming decade. But coal is still king in China. The country has nearly half of the world’s total coal-fired capacity, and coal plants currently represent 73 percent of this nation’s total generating capacity. Hydroelectric power, at 22 percent, is a distant second and has been hampered by droughts.”


Energy, Industry and the Economy in China

China relies on energy-driven heavy industry to generate growth. Between 1980 and 2000 it relied more on light industry. These days it is producing lots cars, steel and things that other require lots energy to make. Some say this would not have occurred without government help.

China makes a lot of steel, aluminum, concrete and flat glass, all of which require lots of energy. Making matters worse is the fact that Chinese factories are not very energy efficient. On average China needs 20 percent more energy to produce steel than the international average, 45 percent more to make concrete. Makers of ethyl need 70 percent more energy.

The aluminum industry consumes as much energy as the entire commercial sector---all the hotels, restaurant, banks and shopping malls.

Inefficient Uses of Energy in China

China faces severe energy resource shortages despite aggressive efforts to increase production at home and purchase more energy resources overseas.

China wastes a lot of energy. It uses four times more energy to each dollar of GNP than the United States and 12 times as much as Japan. Even India is twice as efficient as China when it comes to efficiently using energy.

The Chinese energy system is full of inefficiencies. The government promotes industries such as aluminum, steel, cement, pulp, silicon, glass and chemicals that suck up huge amounts of energy. In 2004, China produced more aluminum than any other nation, and this accounted for almost 5 percent of all power used nationwide. Overall, industries accounted for over two thirds of China’s power consumption compared to just around a third in Britain.

For a long time China did little to contain demand. Electricity rates have been kept down for years. Ping Xinqiao, a professor of economics at the University of Beijing, told the Washington Post, “The current price policy encourages people and companies to use electricity because electricity is so cheap.” There is no pressure of them to use energy resources efficiently.

The government controls energy prices and has kept them artificially low through subsidies. Subsidies keep the cost of gasoline and heating fuel low but encourages waste. Raising prices is very risky politically.

Each year for the past few years China has produced 75 billion square feet of commercial and residential space, more than the combined space of all the shopping ,malls and strip malls in the United States. All these space not only requires energy to build it also requires a lot of energy to heat and cool once it is occupied.

Chinese buildings are quite energy inefficient and Chinese homes tend to be thinly insulated. They require twice as much energy to heat and cool as American homes.

China seems willing---for now anyway---to put up with energy inefficiency to hold off joblessness. But some policy decisions seem to be poorly made. Why, for example, are aluminum smelters kept open when they use the same amount of power as an auto factory that employ 100 times more people.

See Inefficient Energy Infrastructure Below

Energy in Poor Areas

20080312-coal briquettes 2 westport.k12.ct.jpg
Coal briquettes
For some people coal, firewood or charcoal are the main sources of energy. Coal briquettes like those pictured here have traditionally been used in many homes. The poorest people sometimes use dung and agriculture waste fires. People slightly better off use wood or charcoal and those better off still have access to propane and kerosene.

Some people suffer from respiratory illnesses caused by inhaling smoke from cooking and heating fires in huts with virtually no ventilation. Health experts estimate that 4 million children die worldwide from smoke-related respiratory. The illnesses are caused by inhaling carbon monoxide and particles of soot and ash---made with dung, agricultural waste and/or wood--- everyday for years. Children's lungs are more sensitive than the lungs of adults. Coal and charcoal also cause a lot of air pollution.

Energy Conservation in China

China is working very aggressively to improve its energy efficiency. Columnist Thomas L. Friedman wrote in the New York Times: “China has already adopted the most aggressive energy efficiency program in the world. It is committed to reducing the energy intensity of its economy---energy used per dollar of goods produced---by 20 percent in five years. They are doing this by implementing fuel efficiency standards for cars that far exceed our own and by going after their top thousand industries with very aggressive efficiency targets. And they have the most aggressive renewable energy deployment in the world, for wind, solar and nuclear, and are already beating their targets.” [Source: Thomas L. Friedman New York Times, July 4, 2009]

The Chinese government is trying to shift towards a more sustainable model of development. It is experimenting with ecocities and introducing new green building codes. The government heavily subsidies wind and solar energy; imposes higher taxes on large cars than smaller ones.

The U.S.-based Natural Resources Defense Council is working with Chinese businesses to audit energy consumption and develop a fund to bankroll the installation of more efficient equipment. The China Clean Energy Program estimates it could negate the need for 3,000 new power plans over the coming decades.

If all the drivers in China would stop driving for a day it would save about 39.7 million gallons of gasoline. If all the drivers in the United States did the same it would save 385 million gallons of gasoline.”

Energy Conservation Measures In China

In a speech in March 2007 Chinese Premier Wen Jibao said that conserving energy was a top priority. China had tightened the energy efficiency requirements on new buildings and imposed fuel-efficiency standards on automobiles that are stricter than the ones in the United States.

Beijing has set up an “energy police” force whose job is to crack down on excessive lighting and heating and other wastes of energy in shopping malls and office buildings in the capital. The energy police will have the authority to fine violators. This is a step up from other energy efficiency programs that lacked concrete punishments.

In the summer of 2007, several local governments banned the use of air conditioning except when it was excessively hot, over 33̊C, as part of the campaign to cut energy consumption and use energy more efficiently. In Beijing, the “energy police” were put work enforcing limits on air conditioner use and some government offices shut their air conditioning off in a show of solidarity for the campaign.

China and Japan and companies in each country are increasingly cooperating in energy sectors. Japan has the technological know-how to use energy cleanly and efficiently and China has the need. A number of Japanese companies in the energy conservation business are looking for opportunities in China. They include companies involved in improving thermal power plants, heat waste recovery and boiler efficiency. Some Japanese companies in this sector are reluctant to do business in China out of concern that their methods, patents and intellectual property will be stolen or compromised.

There is s drive to improve energy efficiency by 4 percent a year. China cut its average energy consumption by 3.53 percent in the first half of 2009 according to the National Development and Reform Commission.

Improvements made by China in energy efficiency include 1) removing subsidies for motor fuel, which now costs more than it does in the United States; 2) enacting tough new fuel efficiency standards for new urban vehicles (36.7 miles per gallon); 3) setting high standards of energy efficiency for coal plants and buildings; 4) targeting the 1,000 top emitter of greenhouse gases to boost energy efficiency by 20 percent; and 5) shutting down many older inefficient boilers and power plants.

Energy Conservation in Chinese Buildings

Chinese buildings are quite energy inefficient. They require twice as much fuel to heat and cool as building in North America. A third of China’s carbon emissions and seven percent of the world’s emissions come from electricity and gas used by Chinese buildings. Improvements on making buildings more energy efficient may be outweighed by the sheer number of buildings going up as a result of China’s real estate boom.

An effort is being made to get homeowners, builders and developers to make dwellings more energy efficient. The multibillion dollar drive includes revoking the business licenses of developers that don’t comply with energy-saving laws and offering tax breaks and other incentives to homeowners to install low-energy lighting and better insulation.

China has passed new regulations for making buildings more energy efficient but enforcing them is difficult. Only 10 building had applied for recognition in 2009 under a green-building rating system launched in 2007.

The Chinese government is encouraging real estate developers to adopt energy saving measures and use more energy-efficient appliances.

The buildings in China Overseas Plazas are among the most eco-friendly on China. Built in accordance with international Energy and Environmental Design (LEED), they heat insulation, waterproofing, out open-end windows to ensure fresh air, temperature control, and maximum use of natural light.

Growth Thwarting Efforts to Improve Energy Efficiency in China

Industry by industry, energy demand in China is increasing so fast that the broader efficiency targets are becoming harder to hit. According to a New York Times article: “Although China has passed the United States in the average efficiency of its coal-fired power plants, demand for electricity is so voracious that China last year built new coal-fired plants with a total capacity greater than all existing power plants in New York State.” [Source: Keith Bradsher, New York Times, July 4, 2010]

“While China has imposed lighting efficiency standards on new buildings and is drafting similar standards for household appliances, construction of apartment and office buildings proceeds at a frenzied pace. And rural sales of refrigerators, washing machines and other large household appliances more than doubled in the past year in response to government subsidies aimed at helping 700 million peasants afford modern amenities. Also as the economy becomes more reliant on domestic demand instead of exports, growth is shifting toward energy-hungry steel and cement production and away from light industries like toys and apparel.”

“Chinese cars get 40 percent better gas mileage on average than American cars because they tend to be much smaller and have weaker engines. And China is drafting regulations that would require cars within each size category to improve their mileage by 18 percent over the next five years. But China’s auto market soared 48 percent in 2009, surpassing the American market for the first time, and car sales are rising almost as rapidly again this year. One of the newest factors in China’s energy use has emerged beyond the planning purview of policy makers in Beijing, in the form of labor unrest at factories across the country.” [Ibid]

One management consultancy firm estimates that China will erect up to 50,000 new skyscrapers between 2010 and 2025. Along with smaller structures, McKinsey estimates that buildings will account for 25 percent of China's energy consumption by then, up from 17 percent today.

Using Energy Now to Save Energy in the Future in China

To some extent, China’s energy consumption now might actually help limit its global warming emissions in the future. China, for example, used 200 million tons of cement in building rail lines in 2010, year, while the entire American economy only used 93 million tons, said David Fridley, a China energy specialist at the Lawrence Berkeley National Laboratory. Although production of that cement raised energy use and emissions of global warming gases, it also expanded a rail system that is among the most energy-efficient in the world. [Source: Keith Bradsher, New York Times, May 6, 2010]

China currently moves only 55 percent of its coal by rail, for example, which is down from 80 percent a decade ago, as many coal users have been forced by inadequate rail capacity to haul coal in trucks instead. The trucks burn 10 or more times as much fuel per mile to haul a ton of coal, Fridley said. But now, with new high-speed passenger lines leaving more room on older lines to haul coal and other freight, the percentages could begin shifting away from energy-inefficient trucking, he said. [Ibid]

China Imposes Nationwide Tax on Energy, Resources

October 2011, AP reported: In China is imposing a nationwide tax on production of oil and other resources to raise money for poor areas and possibly ease public anger at the wealth of state energy and mining companies. The measure is aimed at generating revenue for poor areas that produce much of China's oil and other resources but receive little of the wealth. That imbalance has fueled ethnic tensions in Tibet and the northwestern Muslim region of Xinjiang. [Source: AP, October 10, 201]1

The tax took effect November 1 and applies to crude oil, natural gas, rare earths, salt and metals, the Cabinet said on its website. Oil and gas will be taxed at 5 to 10 percent of sales value while other resources will be taxed at different levels. An experimental version of the tax was imposed last year on oil production in Xinjiang and President Hu Jintao said at that time that revenues "should be focused on improving local people's lives."

The announcement gave no indication how much money Beijing expected the new tax to raise but the official Xinhua News Agency said last year the oil tax in Xinjiang could bring in 4 to 5 billion yuan ($615 million to $770 million) a year. That could help local governments pay for costly obligations imposed by Beijing to provide additional education, health and other services.

The new tax would cut profits at state-owned energy and mining companies, possibly helping to defuse public irritation at the windfall they have enjoyed due to soaring prices and China's boom in auto sales. Critics say energy companies and their well-paid bosses benefit from official favors and profit unfairly at the expense of China's public while ordinary people struggle with rising living costs. China previously charged a small oil and gas tax based on production volume rather than value. That meant revenues failed to rise during the global commodities boom.

Energy, Foreign Relations and Trouble for Chinese Workers

Around the world, China---much like the United States in the past century or Britain before that---offers hope of greater prosperity but is also a target for anger, fear and resentment, despite its oft-stated insistence that it just wants to do business and doesn’t tangle itself in the affairs of other states. In the past few weeks, Chinese oil-drilling contractors working for a subsidiary of state-controlled Sinochem have been kidnapped by leftist guerrillas in Colombia, a Chinese hydropower project in Burma has gotten caught up in fighting between Kachin rebels and government forces, and some 35,000 Chinese workers on oil projects and other enterprises have fled Libya to escape violence there.

In late January 2012, rebels in Sudan kidnapped 29 Chinese workers from a camp run by China's Power Construction Corp. in volatile South Kordofan. Eighteen other workers in the camp escaped the raid, which the Sudanese military blamed on the Sudan People's Liberation Movement-North -- a rebel force in the border region with neighboring South Sudan. One worker died in the raid, according to Xinhua. About a week later the workers were released [Source: Peter Shadbolt, CNN, February 7, 2012 ]

An additional 25 Chinese workers were abducted by restive Bedouin tribesmen in Egypt’s Sinai Desert.

Saving Energy, See Automobiles,

Image Sources: BBC, Environmental News; Westport School; Nolls China website ; The Stand, Environmental News; AP; China Daily and Environmental News

Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, National Geographic, The New Yorker, Time, Newsweek, Reuters, AP, Lonely Planet Guides, Compton’s Encyclopedia and various books and other publications.

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© 2008 Jeffrey Hays

Last updated April 2012

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