Energy Future of China
In the last quarter century, China's breakneck economic growth has lifted over 50 million people out of poverty and tripled energy demand. At stake are issues of global importance, including climate change and competition over dwindling oil resources. Perhaps more important for China, however, are domestic concerns such as severe urban air pollution, energy security, and sustained economic growth.
China's current energy mix is strongly influenced by resource availability. With 13 percent of global coal reserves--compared to only one percent for oil and natural gas--China meets over two-thirds of its domestic energy needs with coal. As the dirtiest of fossil fuels, coal combustion accounts for the vast majority of domestic emissions of carbon dioxide (CO2), sulfur dioxide (SO2), and nitrogen oxides (NOx). As a result, China has many of the world's most polluted cities: urban air pollution accounted for 3.4 percent of all deaths in 2001.
The Kyoto Protocol is a protocol to the United Nations Framework Convention on Climate Change (UNFCCC or FCCC), aimed at fighting global warming. China is part of the Non-Annex I, which means they are not obliged as of yet to comply with the Kyoto Protocol regulations as they are a developing country and economy.
As the Chinese economy grows, power consumption must grow right along with it.
And unlike the U.S., where energy usage peaked in the latest bubble, China's per capita energy usage still has a ton of room to grow. That's because by comparison, the average Chinese consumer burns five times less energy annually than the average American does, leaving nothing but upside as the Chinese workforce consistently consumes more. It's a pattern that will continue, even if the economy begins to “slow.” According to new data from the International Energy Agency, China consumed 2,252 million tons of oil equivalent energy last year — about 4% more than the U.S. It was only 10 years ago that China consumed half of what the U.S did.
China accounts for 15 percent of the world's energy demand, most of which is satisfied by fossil fuels. With less than two percent of the world’s oil reserves, most of China's growing oil needs are going to have to be imported.
China's current path of energy growth is not sustainable - significant opportunities for improvement remain:
- Improve energy efficiency
China has set a goal to quadruple GDP by 2020 while only doubling energy consumption, a challenging proposal considering that energy demand has grown faster than the economy since 2001. Reversing this trend will require decreasing energy intensity (energy use per unit of GDP produced) in all of China's economic sectors. Chinese industry, for example, requires 20 to 40 times more energy to create one dollar of goods than does industry in OECD countries (Rosen & Houser 2007). Greater efficiency could be encouraged by pricing energy, particularly electricity generated from coal, to reflect its full environmental and social costs. Other opportunities include installing energy-efficient appliances in homes and buildings and setting rigorous fuel efficiency standards for vehicles. - Transition to renewable fuels
Even with improved energy efficiency, demand for fossil fuels will continue to grow unless alternative energy sources are pursued. China has set a preliminary goal to increase the share of renewable energy in total energy use to 16 percent by 2020. Much of this growth will be achieved via hydroelectric power, although wind power is also becoming cost competitive in some areas and contains enormous potential. The controversial Three Gorges Dam, which displaced nearly two million people, will become the largest hydroelectric facility in the world upon completion in 2009. However, building new dams is also environmentally problematic, especially considering escalating water scarcity throughout the country. - Minimize pollution
For the foreseeable future, China will remain heavily dependent on fossil fuels. Technologies exist, however, to mitigate some of the worst effects of fossil fuels, and introducing taxes or incentives will facilitate the adoption of such technologies. For example, in 2006, Beijing raised the sulfur pollution tax on power plants and introduced a market incentive to help offset the cost of installing flue gas desulfurization (FGD) equipment, which removes SO2 from a plant's emissions stream. Virtually all of coal power plants built since then have installed FGD systems. This instance reveals the potential of market-based incentives in regulating other pollutants, including NOx and CO2.
(http://earthtrends.wri.org/updates/node/274)
