While China’s Gross Domestic Product is currently less than half of the United States, China’s economy is expected to exceed the U.S.’s in just 15 years. Unlike the United States, China’s is working to dramatically increase its access to energy, both domestically and abroad. While the Obama Administration pulls back oil and gas leases,[1] halts a program to allow commercial oil shale leasing,[2] keeps new offshore energy exploration under lock and key,[3] and pushes for an energy tax under the name of cap-and-trade,[4] China is securing and expanding its energy resources around the world and at home.
China’s Coal Consumption
China already consumes more than twice the amount of coal as the U.S., but by 2025, its coal consumption is expected to be 3.7 times larger than ours[I1] . Reports suggest that China is building two coal-fired electric generating plants a week,[5] while the U.S.’s coal-based generating construction program is stymied by EPA reviews, re-reviews and legal delays. Forecasters have shown that under the climate change legislation currently working its way through Congress, U.S. coal consumption will be severely reduced and replaced by nuclear and renewable generating technologies, which are more costly forms of energy. And while China has professed that it will meet renewable generation goals, it will not partake in meeting targets for greenhouse gas reductions that will hurt its projected economic growth and its future status as a major world power.[6] Instead, China is willing to make reductions in greenhouse gas intensity (greenhouse gas emissions per unit of GDP), a measure proposed by the U.S. almost a decade ago, that allows for both economic growth and lower emissions per unit of GDP from improved efficiency and technology.[7]
Let’s compare energy consumption in China and the U.S. today to each country’s projected consumption in 2025. Data for 2006 is taken from the Energy Information Administration’s (EIA) International Energy Annual (IEA)[8] and the forecasts are taken from EIA’s International Energy Outlook (IEO)[9] for 2009. [10]
China’s Renewable Energy Production
China’s energy consumption today is dominated by coal, which supplies 70 percent of its demand, followed by oil, which supplies 20 percent. Renewable energy in China is largely hydroelectric power, particularly from the 18,200-megawatt Three Gorges Dam project, whose final generator went on line in October 2008. This project is the largest hydroelectric undertaking in the world. China has other hydroelectric projects planned, totaling an additional 57,720 megawatts of new capacity that will come on line in 2009. China has established a 30,000-megawatt target for installed wind capacity by 2020 (15 percent of its energy needs), and is currently installing wind power at a rate of at least 3,000 megawatts a year.
However, wind growth in China isn’t without its problems. The Wall Street Journal reports that China’s transmission network currently can’t absorb such high rates of growth in renewable energy. Last year, as much as 30 percent of China’s wind power capacity wasn’t connected to the grid.[11] As a result, more coal is being burned in existing plants and new coal plants are being built as backup to wind energy. Wind resources do not conform to the normal hours of peak demand and require flexibility in the transmission and distribution system to take down other generators when the wind blows. Unfortunately, coal-fired capacity was not designed to be quickly taken on and offline as the electricity from wind fluctuates. 
China’s electric generating sector today relies on coal for 79 percent of its generation and EIA only expects that figure to drop to 75 percent by 2030. China’s generating sector is also investing in nuclear power. Generation from nuclear power is expected to increase by 570 percent by 2025, according to the EIA. That increase is equivalent to an additional 40 gigawatts of new nuclear generating capacity—a lower forecast than some, who are reporting 60 gigawatts of nuclear power in China by 2020.[12]
China’s Liquid Fuels Consumption
China’s liquid fuel consumption is currently 7.2 million barrels per day, a rate of about a third of the United States. However, its projected growth far exceeds the U.S.; China is expected to increase its liquid consumption by 6.6 million barrels per day by 2025 (the largest growth of any country). At that time, China will consume about two-thirds of the U.S. level of liquids consumption. Unlike its vast coal reserves, China is not endowed with a lot of oil resources. Its oil reserves totaled 16 billion barrels in January 2009.[13] As a result, China has actively worked with other oil-producing countries (e.g. Venezuela, Angola). China has widely exchanged financial incentives for future access to oil supplies [14] including in U.S. waters in Gulf of Mexico.[15] China became the world’s second largest vehicle market in 2006, when sales exceeded those of Japan. In 2007, China produced nearly 8.9 million motor vehicles, an increase of 22 percent in production over 2006. China is the world’s third largest vehicle producer after the U.S. and Japan. The economic downturn reduced the growth in China’s vehicle sales to less than seven percent in 2008 and a lower rate is expected for 2009. Part of China’s economic stimulus package is expected to be used for infrastructure improvements in the transportation and electric power sectors.
China’s Natural Gas Consumption
While China’s use of natural gas today is only at three percent, it is expected to triple its usage by 2025. Since China is not home to much of the World’s natural gas reserves (only 1.3 percent)[16], it will rely on imports to meet much of its natural gas demand. In 2030, EIA expects imports to make up more than one-third of China’s total natural gas consumption. To meet this growing need, China opened its first liquefied natural gas facility in 2006 and is expected to have a natural gas pipeline built by 2011 from Turkmenistan via Kazakhstan. Recently, Qatar has decided to divert around 10 percent of its liquefied natural gas exports to China from the United States because China is willing to pay more for the product.[17] It is a good thing that hydraulic fracturing has helped immensely to increase domestic U.S. supplies of natural gas, although the technology is currently being threatened by federal politicians, who are looking to restrict its use.[18]
China’s Carbon Dioxide Emissions
As fossil fuels represent 93 percent of China’s current energy demand, it is not surprising that China ranks first in carbon dioxide emissions in the world, with 6,018 million metric tons released in 2006. By 2025, that number is expected to increase to 10, 707 metric tons, an increase of 78 percent from its 2006 value and 75 percent higher than expected carbon dioxide emissions in the U.S. in 2025.
Bottom Line
China wants to become the world’s largest economic power, and China’s leaders understand the fundamental reality that abundant supplies of affordable, reliable energy are essential to economic growth. This is in stark contrast to the U.S. government’s actions to severely limit access to our domestic energy resources and the current proposals to tax carbon dioxide emissions from about 85 percent of our energy (oil, coal, and natural gas) through cap-and-trade. Unlike the United States, China is ambitiously pursuing energy policies to make sure its people have enough energy to grow their economy and make their lives better.
[1] Paul Foy, Interior Secretary Sued for Revoking Utah Leases, ABC News, http://abcnews.go.com/Business/wireStory?id=7592093.
[2] Daniel Whitten, Salazar to rewrite Bush oil-shale plan, Bloomberg News, http://www.chron.com/disp/story.mpl/headline/biz/6280852.html.
[3] Jim Tankersley, Salazar puts expanded offshore drilling on hold, L.A. Times, http://articles.latimes.com/2009/feb/11/nation/na-offshore-drilling11.
[4] Institute for Energy Research, President Obama’s Budget includes $1.6 trillion in new taxes—the largest tax increase in history, http://www.instituteforenergyresearch.org/2009/02/26/president-obama-budget-includes-16-trillion-in-new-taxesthe-largest-tax-increase-in-history/.
[5] Roger Harrabin, China building more power plants, BBC News, http://news.bbc.co.uk/2/hi/6769743.stm.
[6] Institute for Energy Research, Lost in Translation, http://www.instituteforenergyresearch.org/2009/07/28/lost-in-translation/.
[7]http://online.wsj.com/article/SB125409730711245037.html
[8] http://www.eia.doe.gov/iea/
[9] http://www.eia.doe.gov/oiaf/ieo/index.html
[10] EIA is an independent statistical agency within the U.S. Department of Energy that forecasts future energy outlooks for the U.S. and the world.
[11]http://online.wsj.com/article/SB125409730711245037.html
[12] http://www.eenews.net/Greenwire/2008/12/23/
[13] “Worldwide Look at reserves and Production,” Oil and Gas Journal, Vol. 106, No. 48 (December 22, 2008), pp23-24.
[14]Venezuela signed a $16 billion investment deal with China over three years. The deal could raise oil output by several hundred thousand barrels a day. http://www.eenews.net/Greenwire/2009/09/18/
China National Petroleum Corp. received a $30 billion low-interest loan from a state-run bank to finance overseas acquisitions, Beijing’s latest bid to secure mineral resources to fuel the country’s burgeoning economy. http://www.eenews.net/Greenwire/2009/09/09/
CNOOC and Sinopec have agreed to buy a 20 percent stake in an oil field off the coast of Angola for $1.3 billion, the latest in a series of Chinese acquisitions of overseas energy and mining assets. http://www.eenews.net/Greenwire/2009/07/20/
[15] David Pierson, China’s push for oil in the Gulf of Mexico puts U.S. in awkward spot, L.A. Times, http://www.latimes.com/business/la-fi-china-oil22-2009oct22,0,2776603.story?track=rss.
[16] “Worldwide look at Reserves and Production,” Oil and Gas Journal, Vol. 106, No. 48 (December 22, 2008), pp. 22-23.
[17] Reuters, “Qatar diverts LNG to higher-paying China from U.S.”{, October 27, 2009, www.reuters.com/article/companyNews AndPR/idUSLR15622520091027
[18] “States to U.S. Congress: Hands Off Hydraulic Fracturing”, May 19, 2009, www.energyindepth.org/2009/05/1005/
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