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China Energy Use to Soar, Driving Demand for Coal, Oil & Clean Energy Alike

Jesse Jenkins's picture

Jesse is a researcher, consultant, and writer with ten years of experience in the energy sector and expertise in electric power systems, electricity regulation, energy and climate change policy...

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  • Nov 11, 2010
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China’s demand for energy will soar 75% by 2035, according to the latest world energy forecast from the International Energy Agency (IEA), released Tuesday. The growing economic aspirations of 1.3 billion Chinese, who today use just one-third the amount of energy consumed by an average European or North American, will put pressure on global energy markets, driving demand for both clean and dirty energy alike.

Oil prices will rise to $113 per barrel (in constant 2009 dollars) by 2035, as oil producers struggle to keep pace with soaring global demand, according the IEA, the world’s global energy watchdog, based in Paris.

Oil markets will remain tight through much of this period, the agency expects, writing that “short‐term price volatility is likely to remain high.”

Much of the pressure on global energy markets will come from China, which will account for more than one-third of all global energy demand growth over the next 25 years, according to the IEA.

“Chinese energy demand will grow by such huge terms it will put pressure on the global energy markets in terms of oil, coal and, to a lesser extent, natural gas,” said Faith Birol, the IEA’s chief economist, speaking to the New York Times.

All told, the IEA expects virtually all (93%) of the increase in global energy demand will be driven by developing (non-OECD) nations. After China, the next largest driver of energy demand growth will be India, accounting for 18% of the rise in global demand by 2035.

China recently surpassed the United States as the world’s largest energy user, after doubling energy consumption since 2000. And China’s soaring energy demand may be the single greatest factor dominating global energy markets and driving up global oil prices and climate-destabilizing carbon dioxide emissions over the next quarter-century.

“It is hard to overstate the growing importance of China in global energy markets,” says the IEA report.

But China’s thirst for energy may also transform the global clean energy landscape, dramatically expanding markets for clean technologies and prompting major state investments in low-carbon energy alternatives.

So while China continues to build new coal plants at a staggering pace and purchase oil assets throughout the world, the country has also become the world’s most vibrant market for renewable energy, nuclear power, carbon capture and storage technology for fossil-fueled power plants, high-speed rail, smart grid technologies, high-voltage transmission lines, and is even home to a growing domestic market for electric and plug-in hybrid vehicles.

The Chinese government aims to build at least 40 gigawatts of nuclear power by 2020, and has roughly two dozen new plants under construction, the most in the world. More plants are planned, and the government may double the target for nuclear power.

The country also set targets of 100 gigawatts of wind power and 20 gigawatts of solar by 2020. Each target is supported by feed-in tariffs and other financial incentives for renewable energy projects, and in 2009, China surpassed the United States as the world’s largest market for wind power.

Alongside a major expansion of alternative energy sources, China is also making substantial investments in a modern electricity grid, pouring $161 billion of the country’s 2008 stimulus package into grid expansion. China’s state-owned China Grid Corporation is also planning to invest $44 billion in ultra-high voltage transmission technology by 2012, making China the world’s largest market for these advanced transmission lines. Meanwhile, the country has undertaken aggressive smart grid expansion projects aiming to help integrate the variable output of renewable energy sources more effectively.

When it comes to high-speed rail, China has no global contender, with plans to expand the nationwide high-speed rail network with over 8,000 new miles of track by 2012 and 16,000 miles by 2020, an effort backed by $300 billion in state funding over the next decade. In recent years, China has secured joint partnerships and technology transfer agreements with German, Canadian, French, and Japanese firms and has domesticated production of five different models of high-speed trains. Soon, China may be a global exporter of the advanced technology, even as a growing share of domestic markets are supplied by Chinese-built high-speed trains.

China’s major push into clean technology markets will be backed by a planned investment of roughly $740 billion (5 trillion yuan) over the next decade, a massive outpouring of capital that could redraw the map for global clean energy markets.

“Given the sheer scale of China’s domestic market, its push to increase the share of new low-carbon energy technologies could play an important role in driving down their costs through faster rates of technology learning and economies of scale,” the IEA noted.

So while China’s rise will push up global prices for oil and coal and increase pressures on already tight markets for fossil fuels, the country’s insatiable appetite for energy may also fuel a revolution in clean technology over the coming decades.

A silver lining perhaps in the dark cloud of particulate emissions now hanging over China’s notoriously polluted cities…

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Noel Flantier's picture
Noel Flantier on Nov 13, 2010

Smalley is one of those who sees the problem but somehow finds a way to ignore the solution sitting right in front of him.  He talks about solar power as if he’s sure its going to prove to be the solution – the Sun is a giant source, the tiny fraction of its energy that hits the planet is collosal compared to our needs, and there’s only a few tiny problems left.  I.e. how do we gather this energy up, what do we do at night, and how to we move it from where it can best be collected to where it is needed.  So he advocates a giant research effort on the scale of the Manhattan project, that may or may not succeed. 

Meanwhile he just buys into the line that nuclear power is too costly and too dangerous, without examining the question seriously.  MIT repeatedly finds that nuclear would be as cheap as the cheapest electricity source in the US, i.e. coal, if a few successful new builds convinced Wall Street that the “risk premium” it places on capital loans to nuclear projects could be eliminated.  Nukes wouldn’t even need a carbon tax to be competitive.  Radiation risk has been blown out of proportion and Smalley should be capable of understanding that.  Waste disposal being seen as a problem is a joke:  the wastes of fossil fuels threaten the existence of civilization, not nuclear waste.  The worst accident that could happen to a US style reactor happened and the reporters flying in to cover it were exposed to more radiation as a result than anyone living anywhere near the reactor.  Nuclear weapons proliferation is an issue, but Smalley doesn’t even get to it. 

Paul O's picture
Paul O on Nov 14, 2010

I pretty much agree with your comments Noel. If Climate change is the imminent problem many claim it to be, I just don’t see any other technology that is capable of making a real difference long or short term, at lest not any better than Nuclear. 

Massive, disperse wind power if backed up by equally massive storage could help, but I just don’t see that happening faster or with better results than Nuclear. I also don’t  trust in the “Smart-Grid” panacea.

I am not so concerned with Plutonium because the countries which produce the most  GHGs are also countries with existing nuclear weapons and access to plutonium, these countries like the US should use recycling technology to burn up their stockpile of waste, while ongoing further development of Generation 4 Nukes which on-coming none nuclear Countries can then later use to generate their own electricity.

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