T h e C h i n a S u s t a i n a b l e E n e r g y P r o g r a mT h e C h i n a S u s t a i n a b l e E n e r g y P r o g r a m中中 国国 可可 持持 续续 能能 源源 项项 目目

The David and Lucile Packard Foundation, the William and Flora Hewlett Foundation, in The David and Lucile Packard Foundation, the William and Flora Hewlett Foundation, in partnership with The Energy Foundationpartnership with The Energy Foundation

QuickTime™ and aGIF decompressor

are needed to see this picture.

Implications of China’s Energy Growth

• Michael Wang, Ph.D., Argonne National Laboratory

• Doug Ogden, The Energy Foundation

Foundation PartnershipFoundation Partnership

THE WILLIAM AND FLORA HEWLETTFOUNDATION

The Energy Foundation

Toward a Sustainable Energy Future

Why Energy?Why Energy?

0

20

40

60

80

100

CO2 NOx SO2 RadioactiveWaste

HeavyMetals

Percent of Percent of emissions due emissions due

to energyto energy

SMOGSMOG

ACID ACID RAINRAIN

NUCLEAR NUCLEAR WASTEWASTE

GLOBAL GLOBAL WARMINGWARMING

TOXICSTOXICS

Sources: EPA, DOESources: EPA, DOE

Why Energy: Global WarmingWhy Energy: Global Warming

0

500

1,000

1,500

2,000

2,500

1980 1990 2000 2010 2020

United StatesUnited States

ChinaChina

ProjectedProjected

Carbon EmissionsM

illio

n M

etri

c T

on

s

Source: LBNL

Why Energy: Chinese Pollution in U.S. Feb 23

Feb 24

Feb 25

Feb 26

Feb 27

Source: Harvard; USEPA

• 40% of U.S. mercury pollution originates overseas

• China emits 25% of global mercury

China: Coal DependenceChina: Coal Dependence

Source: EIA 2004

• China consumes 95% more coal per year than the U.S., and rising.

0

200

400

600

800

1000

1200

1400

1600

2000 2010 2015 2020 2025

Mill

ion

met

ric

ton

s

Carbon Emissions from Coal Use

China: Growing Oil DependenceChina: Growing Oil Dependence

• By 2020, China will By 2020, China will import 80%of its oilimport 80%of its oil

Source: EIA 2004

0

2

4

6

8

10

12

14

16

2000 2025

Mill

ion

ba r

rels

per

da y

(m

bd

)

Oil Use in China

China’s Energy MixChina’s Energy Mix

Source: IEA, 2004

oil39%

natural gas

24%

coal26%

nuclear8%hydro

2%non-hydro renewables

1%

World 2002

coal70%

nuclear1%

oil24%

natural gas3%

hydro2%

China 2002

China’s Energy Growth

• GDP: Rising at 9.1 percent

• Energy: Rising at 10%

• Electricity: Rising at 15.5%

• Oil up 18% in 2004 (1/3 US)

Source: International Energy Outlook, 2004

Heavy Industry GrowthHeavy Industry Growth• Industry is 63% of GDPIndustry is 63% of GDP

• Raw material sector growing faster than expectedRaw material sector growing faster than expected

• Infrastructure construction priorityInfrastructure construction priority

14

148

0

20

40

60

80

100

120

140

160

1990 2003

mill

ion

s of

ton

s

Iron Ore

1

5.6

0

1

2

3

4

5

6

1990 2003

mill

ion

s of

ton

s

Aluminum

0.02

1.6

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

1990 2003

mill

ion

of

ton

s

Refined Copper

0

61.5

0

10

20

30

40

50

60

70

1990 2003

thou

san

ds

of t

ons

Nickel

0.02

1.6

0

0.2

0.4

0.6

0.8

1

1.2

1.4

1.6

1.8

1993 2003

mill

ion

s of

ou

nce

s

Platinum

Health ImpactsHealth Impacts

500,000500,000 premature deaths premature deaths

75,155,00075,155,000 asthma attacks asthma attacks

Every year:Every year:

• Air pollution levels exceed WHO standards

• China has 16 of the 20 most air polluted cities globally

Source: World Bank; World Health Organization

China’s Emissions With Advanced TechnologyChina’s Emissions With Advanced Technology

China’s Energy InvestmentChina’s Energy Investment

2020 Development Target2020 Development Target

• Quadruple 2000 GDP (4 x $1.08 trillion)

• Increase per capita GDP from $850 in 2000 to $3000 in 2020

• Attain “Three Transcendences”:

1. Sustainable development

2. Peaceful rise as a great power

3. Rule of law; harmonious socialist society

World GDP Thru 2050

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2004 2025 EST. 2050 EST.

China India US Japan Other EU

28%15%

4%

Source: Keystone India

PopulationPopulation

0

200

400

600

800

1000

1200

1400

1600

U.S. China

20042025

Source: International Energy Outlook, 2004

GDP Per CapitaGDP Per Capita

Source: CIA World Factbook, 2004

$0

$5,000

$10,000

$15,000

$20,000

$25,000

$30,000

$35,000

$40,000

U.S. China

Energy Consumption Per CapitaEnergy Consumption Per Capita

Source: Energy Information Administration, 2002

0

50

100

150

200

250

300

350

Mil

lion

s of

BT

Us

U.S. W. Europe China

China’s Energy IntensityChina’s Energy Intensity

China’s Reach for Oil SecurityChina’s Reach for Oil SecurityWorld Crude Oil Flows: 43 million barrels/day (2004)

of which 35 million via sea lane “chokepoints”

China’s Oil DiplomacyChina’s Oil Diplomacy

Canada Sudan LatinAmerica

Iran

0

20

40

60

80

100

120

Mil

lio

ns o

f D

oll

arsQuickTime™ and a

TIFF (Uncompressed) decompressorare needed to see this picture.

Source: Foreign Affairs, Sept./Oct. 2005

1. Diversifying supply relationships

2. Buying equity in oil fields

3. Strengthening diplomatic & trade ties with exporters/rogues

4. Seeking sea lane security

5. Asserting South China Sea territorial claims

6. Building strategic petroleum reserve

Implications for the U.S.

• Rise of “energy nationalism”

• Competition for control of sea lanes

• Cooperation with rogue nations (e.g., Iran)

• Solution: Actively build cooperative institutions

Invite China’s participation in G-8, IEA joint oil reserves initiative

Actively help China reduce energy demand

Energy Efficiency and Energy Efficiency and Renewable Energy PotentialRenewable Energy Potential

Renewable Energy

Fossil

Efficiency

0

20

40

60

80

100

120

140

1988 2000 2010 2030

Role of GovernmentRole of Government

• Address failure of Address failure of markets to recognize markets to recognize public impacts of public impacts of technologiestechnologies

• Penalize externalities, Penalize externalities, incentivize beneficial incentivize beneficial technologiestechnologies

• Commercialization Commercialization policies: guarantee policies: guarantee volume, catalyze volume, catalyze learning curvelearning curve

China’s Efficiency ProgressChina’s Efficiency ProgressChina's Energy Efficiency Gains

0

500

1000

1500

2000

2500

3000

3500

1952

1954

1956

1958

1960

1962

1964

1966

1968

1970

1972

1974

1976

1978

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

Sources: China Statistical Yearbook, 1998; Lawrence Berkeley National Laboratory.

Pri

mary

Energ

y C

onsu

mpti

on (

Mtc

e)

Energy consumption at 1981 intensity(what consumption would have beenwithout energy efficiency improvements)

Actual Energy Consumption

China’s Efficiency InvestmentChina’s Efficiency InvestmentPercent of Total Energy Investment Used for

Energy Efficiency

0.0%

2.0%

4.0%

6.0%

8.0%

10.0%

12.0%

14.0%

1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 2000 2002 2003

Energy Growth Far Faster Than GDP Since 2001Energy Growth Far Faster Than GDP Since 2001

90

100

110

120

130

140

150

2001

2002

2003

2004

2001

= 1

00 GDP

Energy

Lawrence Berkeley National Lab