Forget global terrorism, China is about to flick the switch on a global energy crisis
SWITCH on a light in your home. Any light. Then list the other uses of domestic electricity. Fridge, freezer, washing machine, tumble drier, vacuum cleaner, computer, DVD player, TV and video, mobile phone chargers, toaster … And that’s just for starters.
Now think of China. At present, this vast nation of 1.3 billion inhabitants – and rising – is using the equivalent of one 100-watt lightbulb per head, per year. But its population is developing an insatiable appetite for consumer goods.
Forget global terrorism. One of the scariest stories today is how the Chinese are going to meet their energy demands over the next 20 years. While Scotland fumbles with issues of wind farms blighting the landscape, we should wake up to the potential energy horror story that will impact on everyone.
No matter how many wind turbines Scotland uses, it is going to have an infinitesimal impact on the global environment compared with the coal-fired power stations being built all over China.
John Constable, senior UK economist of ExxonMobil, and author of the recent World Energy Outlook, explained: “In China today, the commercial energy consumption in the traded domestic sector is the equivalent to one 100-watt lightbulb per day.
“Just increasing this to two lightbulbs and a washing machine will mean a massive increase in energy use.”
This is before the addition of all the welter of consumer goods now so eagerly sought in China. While much of rural China still uses firewood and camel dung for fuel, the demand for electricity is already outstripping supply. Constable says the 100-watt lightbulb is purely a household figure and does not include the rapidly increasing consumption in commerce and industry.
While the US economy is expected to grow by 4.5% this year, the UK will grow by 3.2%, and the Eurozone by 1.7%. But China’s economy will grow by 8.7%. Constable reckons that real gross domestic product (GDP) growth across the world will only be about 2.8% by 2020.
The big story is the importance of India and Asia, excluding Japan and Australia, with China having double digit GDP growth of over 10-15%.
Constable’s research indicates that oil and gas will remain the primary global source of energy until 2050 – heartening for an oil major such as Exxon. But coal will compete increasingly with natural gas for power generation.
“And while UK government subsidies will support high levels of growth in renewable energy, in global terms this will remain very small. World energy demand is continuing to grow by 3% per annum, so by 2020 it will be up by over 40%. Most of this growth will be in China,” says Constable. “The future lies in energy efficiency but consumption is rocketing.”
Paradoxically there will be no coal-fired power stations left in Scotland by 2015. By then, we will depend on a combination of renewables – wind, hydro and wave power – and imported oil and gas. There is also speculation the next generation of nuclear power stations could be part of the mix.
China, however, is in the midst of its Industrial Revolution and is already the top market for consumer goods multinationals such as Proctor & Gamble.
Bill Thomson, founder and executive director of East Kilbride-based engineering firm, Clyde Blowers, will be heading to Beijing this weekend for his 85th business trip to China over 11 years.
“When I first started coming out to China, there were four items most people aspired to: a bicycle, a small transistor radio, a wristwatch and a foot-powered sewing machine. Now, in many urban areas, the middle-class Chinese own their apartments, have a car, a colour television, DVDs and even go on foreign holidays.”
Thomson says China’s 10th five-year plan has already had to re-adjust its figures for electricity consumption. “In 1999, the country produced 300,000 megawatts, by 2002 that was 338,000MW. The five-year plan was for 380,000MW, but it has been upgraded to 430,000MW. The state planning has set the target of 900,000MW by 2020. That’s a tripling of energy supply over 15 years.”
That means adding enough new power stations to supply the entire energy needs of Sweden each year for the next 15 years. Whole power and coking plants are being dismantled in countries such as Germany to be rebuilt in China.
By 2020, China will be burning its way through over 100m tonnes of coal each year, fuelling global warming. Last year its total coal production reached 114m tonnes, having doubled since 1981.
But, says Thomson, consumer demand makes up only 13% of energy consumption in China at the moment. It is the heavy industries of iron, steel and cement-making that are using the vast bulk of the energy – and causing the greatest pollution. China already makes 30% of the world’s iron and is the biggest steel producer in the world.
Coal is abundant and cheap. With the world’s third largest deposits, China leads in its production and consumption. In 1994, coal accounted for 75% of China’s total energy consumption and that will continue until 2020. But China needs oil for the rapid rise in car and truck usage and for its plastics industries, but it has to import it which means currency flowing out of the country. Having become a net importer of oil only in 1994, China now imports half its daily requirements and is the world’s leading importer. According to the International Energy Agency, China was responsible for one-third of the rise in daily global oil consumption last year, and is expected to account for another third of this year’s projected two million barrels per day increase in daily demand.
China has invested in energy-intensive industries, such as steel and aluminium production, and plastics, which use naphtha derived from crude oil. This combination of heavy industrial expansion and car usage has doubled Chinese oil consumption over the past 10 years to around six million barrels a day. It is now second only to Japan for oil usage.
So the Chinese are consuming the world’s raw resources at a ferocious rate.
In her new book, The River Runs Black, Dr Elizabeth Economy says that pollution already shrouds much of China. It rivers are flooded with toxic waste and fishermen use dynamite on its coral reefs to flush out dwindling fish stocks. And while the Chinese have traditionally used timber for home fires, the woodlands are exhausted and its demand for kindling is stripping the forests of Southeast Asia and Latin America.
The developed world can look on aghast at this desolation – but it is difficult for the West to lecture the Chinese. During the 19th and early 20th centuries, the now advanced economies of Europe and North America were just as exploitative of cheap energy, and created their own blight – witness the coal and shale slagheaps of Scotland’s central belt.
Speaking to the Harvard Asia Quarterly roundtable, Dr Economy, a China expert in the US Council on Foreign Relations, said: “China’s reliance on low quality, high sulphur coal is responsible for roughly half of all sulphur dioxide emissions, which causes acid rain throughout East Asia – a situation that has contributed to tensions with Japan and South Korea. Globally, China is one of the world’s largest contributors to ozone depletion, biodiversity loss and climate change.
“There is some positive movement in all these areas, but it is very slow. It is important to remember that integrating environmental protection with economic development is a continuous battle that every country wages.”
She pointed out that China only recently started to factor environmental concerns into its development plans. “After all, this is a country that has only had an independent environmental protection agency for a little over a decade.”
Most of China’s environmental problems stem from its overwhelming reliance on coal, which it may even end up importing due to the inefficiency of state controlled production. Burning coal is responsible for seven-10ths of smoke and dust in the air and 92% of the sulphur dioxide in China.
Dr Economy says China has made substantial strides in developing alternative sources of energy, including hydropower, natural gas, and to a lesser extent nuclear, solar, and wind power.
“The Three Gorges Dam, the West to East Pipeline from Xinjiang to Shanghai, and many other smaller projects will help reshape China’s energy mix long term. As for the Three Gorges Dam, I must point out that it will not only produce benefits as an alternative source of energy but also cause problems, such as biodiversity loss, loss of farmland, loss of precious artefacts from ancient Chinese civilisations and a likely dramatic increase of water pollution in the reservoir area – certainly, the ideal would have been to build several smaller dams.”
Chinese environmentalist Liang Congjie shares her view . “If each Chinese family has two cars like US families, then the cars needed by China, something like 600 million vehicles, will exceed all the cars in the world combined. That would be the greatest disaster for mankind.”
He predicts that China would need the resources of four worlds to do this.
Clyde Blowers’s Thomson is more optimistic. “Of course there are huge concerns about the environment in China today. They realise that the economy is on a short fuse if you destroy the landscape and the health of the people and the new five-year plan talks about ‘sustainable development’.”
Thomson says new environmental authorities are being created and filthy factories shut down and there is greater promotion of green technologies.
Clyde Blowers has three clean technology products being used in China and Thomson says it will make a turnover there of $50 million from a standing start 11 years ago. The company now employs 200 people in Shanghai and Beijing.
“Our soot-blowing technology uses electrostatic pressure to take the gas out of the power station ash. The drier ash is easier to handle and dispose of. We also handle the ash in boiler slag and we are using our own technologies to shift bulk powder materials in a more environmentally sound way.”
He predicts China’s new generation of power stations will meet international standards and there will be massive investment in Flue Gas Desulphurisation (FGD). Electricité de France, parent of London Energy, invested £110m on FGD plant at two coal-fire power stations in Nottinghamshire and reduced sulphur dioxide emission by over 90%.
Thomson says more clean coal technologies could also help to limit the environmental costs of coal burning. But Economy sees little progress in China.
Fanmakers Howdens and boiler- makers Mitsui Babcock in Renfrew have made inroads in China and energy companies such as ScottishPower have expressed an interest in the possibilities of technology transfer. Already a £600m deal has been struck between the Chinese government and an international consortium for the construction of an underground coal slurry pipeline between Shanxi Province and Shandong on the coast, one of the first major infra structural projects with Western financial and management control.
Constable says technology is the key to helping China. “The Stone Age didn’t end because they ran out of stone; technology developed . People have talked about the end of the coal era. That might be true in Britain but it still has a significant future around the world.”
The River Runs Black: The Environmental Challenge to China’s Future, Elizabeth Economy, Cornell University Press
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