I don’t know why I’m posting this right now. It’s a term paper from the fall. Perhaps someone will get a giggle out of it.
ENGR350H
December 3, 2005
Chinese Energy Security
China has a long history of self sufficiency. Until recently, all energy consumed within China was domestically produced. Within the last two decades, China has become an energy importer. Energy security is a hot topic in many of the power circles of Beijing. This paper discusses current energy demands, the energy mix, energy security threats, the energy security debate, future energy expansion, and the implications for sustainability.
Energy Demands
China’s economy is energy hungry. It generated an estimated 1.91 terawatts (TW) of electricity in 2003 (CIA – The World Factbook). It consumed an estimated 6.53 million barrels of crude oil a day (bbl/d), of which 2.91 million were imported, in 2004. Consumption of coal was estimated at 1.53 billion short tons and natural gas at 1.21 trillion cubic feet (Tcf) for 2003(China Country Analysis Brief).
By comparison, the USA consumes 20.8 million bbl/d, of which 12.2 million is imported. Electrical generation is at 3.839 TW (CIA – World Fact Book), coal consumption is at 1.102 billion short tons, and natural gas consumption runs at 22.4 Tcf(United States).
In British Thermal Units (BTUs), China consumes approximately 52 peta-BTUs while
the USA consumes 97 peta-BTU’s. In terms of energy consumed per capita, China consumes 40 million BTUs compared to the USA at 333 million BTUs (China’s Energy Outlook).
While the USA currently consumes more energy than China, indications are that China will surpass the USA in oil consumption by 2023 (A Strangling Embrace). China already consumes more coal than America (CIA – The World Factbook) and will soon surpass the rest of the world in other forms of non-renewable energy consumption.
The dramatic increase of energy consumption in China has been and continues to be fueled by strong economic growth rates of around 9% per year (CIA – World Factbook). All indications are that robust growth will continue for the foreseeable future.
Mix of Energy
In 2002 China’s primary energy supply was divided among several renewable and non-renewable sources. Coal accounted for 57.6%, oil for 19.6%, renewable and waste for 17.7%, gas for 2.6%, hydro for 2.0%, and nuclear for 0.5% (IEA Energy Statistics).
Over the last 30 years, coal has by far seen the largest percent increase in the energy mix. Nuclear has also seen modest increases but this is due to the relative recent introduction of nuclear power into China’s energy supply. In absolute terms, most sources of energy have stayed constant while coal consumption has tripled (IEA Energy Statistics).
China looks set to continue coal consumption increases.
Energy Security Threats
A number of threats exist to China’s energy security. They include both threats from other countries and threats from within.
China is in an ongoing dispute with Japan over natural gas and oil reserves in the East China Sea. According to Japanese reconnaissance data, China recently brought on its first drilling platform and is expected to bring five more online by the end of the year. The new platforms are protected by a small contingent of Chinese warships. Japan is threatening to dispatch its own drilling platforms escorted by a fleet of coastguard vessels. At stake are an estimated 7 Tcf of natural gas and 100 billion barrels of oil (Faiola, Anthony).
The rapidly increasing demand for oil, fueled largely by growth in automobile use, has left China particularly vulnerable. Currently, a majority of China’s oil imports come through the South China Sea and must pass quite close to Taiwan. The American Military’s presence in the Straights of Taiwan creates a potential flashpoint for disruption of China’s energy supply lines.
One of the largest threats to Chinese energy security is also one of the largest threats to the rest of the oil importing world’s energy security. Many of the major oil and natural gas exporting regions of the world happen to fall over politically and socially unstable countries. Saudi Arabia, the world’s largest oil exporter, is of particular concern. A disruption in production in Saudi Arabia could have potentially grave consequences in China. This is due to China’s reliance on the global oil market.
China also faces threats from within. Repeated attacks against power generation and distribution systems throughout China in recent years have raised alarm among some party officials. Thieves have also been quite active, sabotaging many high tension electric lines in search of scrap metal. It is not entirely clear who is behind the attacks and sabotage. Separatists, thieves, and international saboteurs all have been named as possible culprits by various sources. The official word is that inclement weather and thieves are behind the majority of the service disruptions (Lie, Ma).
Energy Security Debate and Future Energy Expansion
Beginning at about the same time as China’s shift from a net oil exporter to a net oil importer, the security, defense, political, and business communities within China began wrestling with issues of national energy security. Several different schools of thought have developed.
One school of thought wants to continue business as usual. They want to continue letting the market dictate energy policy. A focus is placed on energy importation by the cheapest and most economically viable methods available. If it turns out that oil importation from the Middle East is the best way to go, then oil will be imported in tankers. If pipelines are the best route, then pipelines will be built. If nuclear energy is better, then nuclear energy will take over, and so on down the line (Yang, Xiyun).
Currently we see China floating its energy sources on the open market. China buys oil on the global market and has begun buying gas as well. China also has minor electrical importation agreements with several neighboring countries including Pakistan and India (Yang, Xiyun).
Another school of thought suggests that through increased military might, China can secure foreign energy sources in times of crisis. Creating a modern military to project force into distant countries is on the top of this group’s list (Downs, Erica).
China is purportedly in the process of developing its own aircraft carriers to counter the United State’s aircraft carriers and to extend the Chinese Air Force’s reach into the South and East China Seas. There are, however, several large hurtles that must be surmounted to achieve even one operational carrier battle group. These include a lack of technical expertise, a lack of strategically located navel bases capable of berthing a carrier, and a lack of money. India is currently in negotiations with Russia to refit a decommissioned Russian carrier to the tune of $2 billion. It appears China wants to follow the same model, having bought three carrier hulls from the former USSR and one from Australia (The World Aircraft Carrier List: China). It should also be noted that whatever China comes up with from the aged Russian and Australian carriers will be at least two generations behind what America, China’s largest perceived threat, has (Storey, Ian, You Jin).
A different group advocates building pipelines and buying foreign assets to assure a continued energy supply. Several recent acquisitions and new drilling and construction activity lend credit to this school of thought (The Dragon Tucks in).
Efforts are underway to build pipelines from oil and natural gas fields in Kazakhstan and Iran into China. However, such pipelines and the attached pumping stations are particularly vulnerable to aerial bombardment and supply disruptio
n. Recent acquisitions and investments within foreign countries indicate a strong desire for Chinese energy independence(Energy and Mining – China and Energy). China recently acquired large stakes in the Canadian energy sector (China Invests in Canadian Energy Sector). A Chinese company recently tried to purchase Unocal, an American petroleum and natural gas company with significant oil reserves. The American government ultimately disallowed the acquisition (The Dragon Tucks in).
Yet another group believes that China should become completely energy self-sufficient. This group advocates nuclear reactor construction, domestic coal consumption, and increased reliance on hydropower. This is a classic “fortress mentality.” Other factions point out that relying on coal and hydropower will only work for so long (Downs, Erica).
President Hu Jintao recently committed to spend $50 billion to increase nuclear power generation capacity from 8.7 GW to 40 GW by 2020. Westinghouse and GE are both pressing hard to sell reactors to china. At stake for the American companies are contracts for 30 new reactors (Reactors? We’ll Take Thirty, Please).
The Three Gorges Dam is scheduled to come online in 2009, pumping 18.2 GW of electricity into the Chinese national grid. It will be the largest single generation plant in the country and will be the largest single increase in electrical capacity in Chinese history (China: Environmental Impacts).
Finally, another school of thought believes China should move toward environmentally friendly and sustainable methods of energy production. There is an increased interest in wind, wave, and solar energy. This approach not only pleases environmentalists and xenophobists, but it also is amenable to the central government and the security and defense communities (Yang, Xiyun).
Up to 1.5 trillion yuan (US$184 billion) is scheduled to be invested in renewable energy sources by 2020 in an attempt to boost China’s renewable energy consumption to 15% of the country’s energy mix (Jing, Fu). That is more than triple the rate scheduled for investment in nuclear power generation facilities.
Businesses can earn a 50% tax break when investing in solar, wind, and other renewable energy sources (Jing, Fu). Additional tax breaks for using sustainable energy have been proposed within the central government.
Several large wind farms already exist in China. Many more are slated for development. An estimated 3226 GW of wind energy potential exists in the country primarily in the grasslands and deserts of the north, and the coastal areas and islands in the east and southeast. It is unclear how easy and economical these resources are to develop. The provinces with the largest wind energy potential are also the provinces with the least coal deposits (China New Energy).
A push is on to increase reliance on solar energy in residential housing. Not only is solar electrical generation being pushed but many “green building” designs are also finding their way to the forefront. Solar water heaters and cook stoves have found limited adoption in China with over 30 million units in service. Projections are for an increase to 100 million units in the near future. Already, over 1000 manufacturers are creating solar energy products for domestic consumption (Solar Energy to be Widely Used in Buildings).
Conclusion: Implications for Sustainability
Clearly, China’s reliance on coal, oil, and natural gas is unsustainable. Sooner or later, these fossil resources will run out not only in China but worldwide. There has been a subtle shift in the last few years toward a sustainable energy policy.
China continues to go down several different paths toward energy security. The debate has been slowly shifting in favor of the sustainability advocates, especially in light of recent world energy spikes (Yang, Xiyun). Despite continued expansion in non-renewable sectors, a realization of the necessity of sustainability for survival is slowly dawning on the central government. Methods, such as heavy taxes on automobiles, and tax breaks for renewable energy sources and sustainable businesses, are being implemented across China (Clark, Marco).
The only way that China can be assured of a secure energy supply is to move toward sustainable and renewable energy production. Purchasing energy on the free market, drilling in the East China Sea, pumping in crude from Iran, building large dams, burning coal, and shipping oil around the world will not address the problem of long-term energy stability and security. Only through a distributed renewable energy generation complex will these goals be achieved.
To have energy security, Chinese energy consumption will have to become domestically sustainable.
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