An energy postcard from China

With a Post Script re: Simmons, Lovins and China

Everyone reading the Peak Oil Review knows the general story about China and energy. China has the world’s fastest growth rate in energy consumption. Its domestic oil production growth is slowing, its oil imports are rocketing, coal consumption continues a worrisome climb, etc. This writer recently had the opportunity to spend two weeks in China. What follows are some man-on-the-street observations that help put a little flesh on the data bones.

The Demand Side

• Normal Beijing traffic (14 +/- million people, according to most folks there) is probably worse than anywhere I’ve seen in the states, including D.C. Freeway traffic is often so slow that bus operators prefer surface streets, even during mid-day traffic.
• Drivers on city streets tend to go slower than in the US, partly due to narrower lanes and to more sharing of space with other modes: electric bikes, regular bikes, three-wheeled delivery vehicles (powered and pedaled), most in an adjacent marked lane.
• The electric bike? It tools around at around 10-15 mph. I think it could be the fastest way to get around during rush hour. No wonder Lee Iococca foresaw it as a great application in China.
• We observed few minor scrapes and fender-benders there, but no totaled vehicles, in part due to the slower speeds. Men out-numbered women drivers 9-to-1 (on-the-fly survey).
• One guide said it was much faster to take a taxi (40 minutes) than to try the over-crowded subway system (double that time). That didn’t make intuitive sense…
• Buses were heavily used, often jammed. A favorite phrase: “take the #11 bus”—walk on your two legs.
• On freeways and elsewhere in the largest cities, it appears that painted lanes are suggested guidelines rather than rules; New Yorkers would feel right at home. In Shanghai, a red light seemed to mean slow down. Local guide: “We don’t obey traffic lights here unless we have to.”
• Gasoline costing roughly $3 per gallon, the nationwide price, doesn’t seem to keep cars off the road, though cars are still a luxury: 1 vehicle per 40 inhabitants vs. 1 per 1.25 in the US.
• Enormous car advertisements are ubiquitous beside the freeway. Many are placed on large banners that are strung up around the edges of construction sites.
• It’s been reported that over ¾ of the world’s very-tall building cranes are operating in China. Supporting evidence was quite visible everywhere, especially in Beijing, Shanghai, and Xi’an. In the latter, an area the size of the World Trade Center site in New York was crawling with workers laying the foundations for huge new buildings. Many of the 300-400 on the 10+ acre site were working 24/7; they lived in portable housing units stashed around the perimeter of the construction site.
• Many city dwellers live in low-rise (7 stories and less). No elevators are required in these units, which helps explain why very few Chinese, including the elderly, appear over-weight. Everyone with a balcony or operable window sun-dries their clothes.
• Nearly every housing unit in the large cities has a split-system air-conditioning unit for their apartment. The condenser coils are placed vertically on the outside of buildings, which probably makes them less-efficient, but I’m open to correction here.
• Food? It’s plentiful, in markets and stores in major cities as well as the few smaller cities and towns we visited. A folktale saying: “We Chinese will eat anything with 4 legs except a table, and anything with 2 legs except a human.” Believe it.
• Energy-saving escalators in hotels? They slow down when no one is riding them, speed up when someone trips the infrared light at the bottom or top of the ride.
• Lots of demand for charcoal-like cylinders that are burned street-side in metal cones to cook food. These constitute a significant source of air pollution…
• An active street reduces travel distances for basics. On one side street just off a commercial street, you could see a barber shop (one chair, scissors/comb, white cloth over your cloths) next to a bike repair shot (a tool box, some spare parts) next to a clothing repair service (sewing machine on a table) next to a folding restaurant (four folding stools beneath a folding counter), etc.
• Tourism: since the mid-1990s, the Chinese have built a significant infrastructure to promote and handle tourism. While they are not yet slick, they expect to draw a lot of tourists next summer for the Olympics. Chinese tourists dominate many of the popular sites. Roughly 150 million were expected to take a long trip during their Apr 28-May 6th holiday; sound familiar? All but one of the in-country planes we flew on was full and the fifth was close.
• The sky wasn’t truly clear for two weeks. Said the river boat guide—a Canadian with 11 years spent in China—“the thing I fear the most for China isn’t the political situation which is changing; what I fear most is an environmental disaster.”

 A handful of supply-side items

• Ships carrying coal from the heart of China to many of its coal-fired power plants ply the waters of the Yangtze River in a nearly unbroken flow.
• Coal is hauled down to the river bank in large trucks, then dumped into open rock-walled bins on steep slopes and shoveled through chutes at the base of each one onto conveyor belts that carry to coal out to coal ships.
• From a distance, it appeared that exposure of workers to coal dust during the mining operation wasn’t an issue.
• The Three Gorges Dam, which both displaced 1.5 million people and reduced the risk of frequent flooding by the Yangtze, will eventually generate 18,200 megawatts of power. This equals only 3% of China’s year-end 2006 installed capacity of 622,000 megawatts.
• Passive solar water heaters are sprouting on the tops of many low-rise (3-6 stories) residential and commercial buildings. These were more prevalent in cities than in towns.

China forecasts: Simmons 1, EIA 0, Lovins 0

Finally, here’s a quick decade-old retrospective of three of the nation’s best-known energy commentators.

During 1998, Matthew R. Simmons (Simmons & Co., Int’l) wrote a 90-page report entitled “China’s Insatiable Energy Needs.” In it Matt developed three “plausible possibilities” for China’s oil consumption by the year 2005. He based his estimates on a continuation of past trends (6.3 mmb/day), an increase similar to Taiwan’s rate (8.2 mmb/day), and an increase similar to Korea’s growth pattern (11.8 mmb/day). This compares to EIA’s forecast for 2005 of 5.5 mmb/day. According to BP’s figures, China’s actual demand came in at 7 mmb/day during 2005. So actual consumption brackets the two more likely cases as Matt described them, at a rate more than twice that forecast by EIA during those same seven years.

In a 2000 exchange about China’s coal consumption with this writer, Amory Lovins (Rocky Mountain Institute; Snowmass, CO), wrote the following, per his fall/winter 2000 newsletter: “Coal is already defunct or on the way out in most of the world. Its use is now falling even in the U.S., China, Russia, and Eastern and Western Europe.” In truth, China’s coal consumption grew 62% from 2000 – 2005 (BP). Coal growth elsewhere slowed dramatically, yet China’s huge growth meant world coal consumption increased nearly 50% from 2000 – 2005.

The bottom line here confirms what is easily seen from the street: China’s growing energy appetite is stunning. Don’t expect it to slow down any time soon.

Steve Andrews is a co-founder of ASPO-USA

(Note: Commentaries do not necessarily represent ASPO-USA’s positions; they are personal statements and observations by informed commentators.)

ASPO-USA will hold its 2007 World Oil Conference, October 17-20, at the Hilton Americas in downtown Houston, Texas.