China's Panicked Growth

Filed in archive Future , Market , World on June 29, 2006

by Ben Kenney, theWatt.com, theWatt Podcast

In 2005, China added 170 GW of coal power generating capacity. That's the equivalent of a new 1GW coal power plant every 2 days. Coal now supplies 70% of China's energy needs, the second most in the world after South Africa. China's energy requirements are growing at 3.2%/year (compared to the 1.1%/year energy growth in the U.S.) and they have the third largest coal reserves in the world (at 12% of the world's coal reserves) but only 1.3% of the world's oil reserves. Add this to the fact that 80% of China's oil imports travel through the Strait of Malacca, which some say is increasingly under the influence of the U.S. navy and it's plain to see that coal is China's growth vine.

The incredibly fast economic growth in China has created an energy crisis in the country. The panic has left them using three times the world average on energy to produce the same amount of GDP. Environmental problems ensue. As Thomas Freidman corroborates, on some days in Beijing and other major Chinese cities, the air quality is so poor and the smog so thick that you can't make out buildings a mere six blocks away. The good news is that the government is well aware. China's Environmental Protection Agency has admitted that pollution is costing the country 10% of its GDP (US$200 billion) every year.

As bad as this sounds, we should all remember that per capita, China consumes just 1/8th the energy that the U.S. consumes and produces just 1/7th of the CO2 emissions per capita compared to the average American. The gap will likely decrease as China is scheduled to become the largest automotive market early next decade, but China has clearly identified their shortfalls and a fix is in the process. China's renewable Energy Law, passed in February 2005, will increase renewable energy in the country to 10% in 2010, 18% by 2020, 30% by 2030 and 50% by 2100. They also have plans to improve their energy efficiency within the next 5 years by 20% over the previous planning period, to reduce the major pollutants being discharged by 10% and increase forest coverage from 18% to 20%. Although coal will likely still play a major role in China's growth, these renewable energy and environmental targets are commendable.

The bottom line is that the western world got rich off of oil, and in the process, consumed half of it. The fallout is that the western world must now do everything in its power to provide cheap, clean energy to China and the rest of the developing world, or watch 80% of the world population attempt to improve their standard of living with coal.