A general view shows a coal-burning power station at night in Xiangfan, Hubei province this month. China needs huge flows of clean technology investment to maintain hope of keeping greenhouse gas emissions below levels that could help push the planet deep into dangerous global warming, a Beijing energy thin
Photograph by: Reuters, Reuters
“There are only seven percent of the people of the world living in the United States, and we use thirty percent of all the energy. That isn’t bad; that is good. That means we are the richest, strongest people in the world and that we have the highest standard of living in the world. That is why we use so much energy, and may it always be that way.”
Richard Nixon, who spoke those blunt words in 1973, may feel restless in his grave knowing that it is not “that way” any more, knowing that the United States has been overtaken in energy consumption. We woke up to that fact last week when front page headlines heralded that China now uses more energy than any other nation in the world. The past US President’s insight into the relationship between energy use, strength and standard of living is probably why the news resonated so loudly in Western media. In a 20th century Nixonian context, there was an unspoken message beneath last week’s energy headlines: being superseded in the game of devouring trillions of BTUs per year is like losing the World Cup of power and influence.
Of course, in the context of today’s environmental, geopolitical and economic issues we’re all getting wiser and mostly understand that binging on energy is no longer a virtue to brag about. That’s why the relevant news story of last week was not that China consumes more energy than the United States, but an announcement by the Chinese government that it is embarking on an impressive, 5 trillion RMB (~$750 billion) directive to change the way it is supplied its energy over the next 10 years.
Figure 1 shows energy consumption profiles for both the United States and China between 1965 and 2009 inclusive. The top line in the stacks for both countries confirms that in one year China now consumes as much energy or more than the United States, about 45 million barrels of oil equivalent per day.
To be sure, it is interesting to know whether China or the US shovels more coal, guzzles more barrels of oil or pushes more nuclear fuel rods, but more striking is the difference between the growth profiles and the share of fuels that drive each of the two nations.
All Western industrialized countries, including the United States, have altered their “diet” of fuels over time, especially after the oil price shocks of the 1970s when aggressive government policies induced change. Such change is characteristic of an energy “break point”, a point in the evolution of a country’s energy needs marked by abrupt diversification in fuel use and greater tendency toward more efficient consumption. Figure 1 shows that the US uses a more balanced diet of primary fuels that has gradually leveled off compared to the 1960s and early ‘70s. Of course, a large part of falling demand in the US over the past two years is a consequence of the financial crisis.
China’s economy on the other hand is still overwhelmingly fed by coal (70% of the total) and oil (19%), followed by a small fraction of hydroelectric power (6%), and even smaller portions natural gas (4%), nuclear (0.7%) and renewables (0.3%). Figure 1 shows that this economic juggernaut with a straight-up energy consumption trend since 2001, has not yet hit its energy break point. Or at least not until last week.
More details about last Tuesday’s plan proposed by China’s National Energy Administration (NEA) will likely be revealed as it goes to the State Council for approval, but the gist of the directive is to moderate demand and rapidly diversify the country’s share of fuels over the next 10 years through aggressive government policy – a classic sign of an energy break point. What was reported last week was that the NEA wants the fraction of non-fossil fuels (hydroelectric power, renewables and nuclear) to rise to 15% from 7% by 2020. The goal for natural gas is to see its share double from almost 4% to 8%, a very positive signal for global gas markets.
As is usual, the environmental and security objectives of the plan are to lessen the dependence on coal and oil. And because China’s use of these two fuels is so pronounced, the global growth rate for both are likely to moderate by mid decade – a notable point for oil markets in particular.
Over the last decade the world witnessed the almost unbelievable growth in China’s top line energy consumption to the point where Nixon might have been humbled in his day. If China executes its three-quarter of a trillion dollar plan, the ensuing changes will be of similar magnitude to what happened in the early 1980s when policy-induced efficiency gains and rapid diversification of energy sources materially altered the world’s energy markets. The net winners will be the same as thirty years ago: nuclear power, natural gas and renewables.
For Canadians there is a footnote to this story. To this point we have had bragging rights in saying that we serve, “the world’s biggest energy consumer.” We can’t say that any more. And won’t be able to say it again unless we shift our market focus and ensure that the energy products we sell match the evolving customer needs.
© Copyright (c) The Calgary Herald
Read more:http://www.calgaryherald.com/business/Tertzakian+China+hits+energy+break+point/3321904/story.html#ixzz0unZDIu3H
No comments:
Post a Comment