Transcript The Energy Scene (cont`d)

China’s Energy and Environmental
Challenges: Regional and Global Implications
Dr. Kang Wu
Senior Fellow
Presented at the POST Conference 2013
Hilton Hawaiian Village, Honolulu, Hawaii
March 6, 2013
An Outline
•
•
•
•
•
•
Energy and Economy: Where China Stands
Structure of Energy Use and Future Growth
Rising Oil Demand and Imports
Emerging Natural Gas Market
A Net Coal Importer Forever?
Environmental Challenges and Future Energy
Options for China
• Concluding Remarks
2
Energy and Economy: Where China Stands
3
Size of the Economy
•
Measured by conventional exchange rates, China ranked as No.2 in the world in 2011
and accounted for 10.4% of the world’s total GDP.
4
Size of the Economy (cont’d)
•
In terms of PPP (purchasing power parity), China has a higher share of the world’s
total GDP at 14.3%.
The World's Ten Largest Economies Based on PPP Valuation, 2011
US
China
Japan
India
Germany
1. US' Share: 19.1% (US$15.1 trillion)
2. China's Share: 14.3% (US$11.3 trillion)
3. Japan's share: 5.6% (US$4.44 trillion)
4. India's share: 5.6% (US$4.42 trillion)
Russia
Brazil
UK
France
Italy
0
2
4
6
8
Note: PPP = purchasing power parity.
Source: IMF (October 2012).
10
12
14
16
GDP (US$ trillion)
5
Energy Use
•
China has taken over the US as the largest energy consuming country in the world
since 2009.
The World's Ten Largest Primary Energy Consuming Countries, 2011
China
US
India
Russia
Japan
Canada
Germany
Korea
France
UK
0
10
20
30
40
50
60
(mmboe/d)
6
Energy Use (cont’d)
•
However, when it comes to oil, China is a distant No. 2.
The World's Ten Largest Oil Consuming Countries, 2011
US
China
Japan
India
Russia
Germany
Korea
Canada
France
UK
0
2
4
6
8
10
12
14
16
18
(mmb/d)
7
20
Structure of Energy Use and Future Growth
8
The Energy Scene
• The direction of China’s PEC growth is largely set by coal.
Primary Energy Consumption in China, 1995-2013
Non-Commercial
Solar/Wind/Other Renewables
Nuclear
Hydro
Gas
Oil
Coal
70
60
(mmboe/d)
50
40
30
20
10
95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13
Note: Data for 2013 are projections.
9
The Energy Scene (cont’d)
• A closer look at the
structure shows
that China relies on
fossil energy to
meet 85% of its
demand.
• While the share of
coal is exceedingly
large, the share of
gas is the smallest
among major
economies in the
world.
Structure of Primary Energy
Consumption of China, 2011
Others*
8%
Nuclear
1%
Oil
17%
Hydro
6%
Gas
4%
Coal
64%
Total consumption: approximately 57 mmboe/d.
*Include solar, wind, other renewables, and non-commercial energy.
10
The Energy Scene (cont’d)
Primary Energy Consumption Forecast for China and Shares of
Individual Sources, Base-Case Scenario, 2009-2030
Coal
Oil
Gas
Hydro
Nuclear
Solar/Wind/Other Renewables
Non-Commercial
120
PEC
80%
70%
100
60%
80
50%
60
40%
30%
40
20%
20
10%
0
0%
2009
2010
2011
2012
Note: 2013-2030 data are projections.
11
2013
2015
2020
2025
2030
Share
(mmboe/d)
• Future growth of PEC
is led by gas, nuclear
power, and
hydroelectricity.
• Coal will continue to
play a dominant role
in the overall
structure though its
share is forecast to
decline.
• The role of oil in
overall energy use is
stable but the
volume is increasing
notably.
Rising Oil Demand and Imports
12
Outlook for Oil Imports
China's Crude Oil Production and Overall Oil
(Crude & Products) Imports, 2008-2030
Crude Production
mmb/d
6
4
3.8
4.2
4.2
4.2
4.2
4.1
4.1
4.1
3.8
Net Oil Imports/Future Requirements
4.3
2
(2)
(4)
(4.1)
(6)
(4.4)
(5.1)
(5.5)
(5.9)
(8)
(6.5)
(7.5)
(10)
(9.7)
(12)
(10.4)
(11.5)
(14)
2008
2009
2010
2011
2012
Note: 2013-2030 data are projections.
13
2013
2015
2020
2025
2030
Crude Imports, 2012
• During the Year of 2012:
• Middle East : 50% (4%)
• Africa
: 24% ( 7%)
• Asia Pacific : 3% ( 11%)
• Elsewhere : 24% (16%)
Cumulative (kb/d)
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Saudi Arabia
Angola
Russia
Iran
Oman
Iraq
Venezuela
Kazakhstan
Kuwait
UAE
1,075
801
485
439
390
313
305
213
209
174
3. Russia
9%
8. Kazakhstan 4%
6. Iraq 6%
4. Iran 8%
9. Kuwait 4%
1. Saudi Arabia 20%
Top 10 Crude Oil Exporters to China
In the Month of December 2012 (kb/d)
Saudi Arabia
7. Venezuela 6%
10. UAE 3%
5. Oman 7%
1,043
Angola
771
Iran
593
Russia
443
Iraq
2. Angola 15%
Note: China’s cumulative crude imports: 5.41 mmb/d, up by 6.5%.
.
352
Venezuela
322
Oman
321
Kuwait
241
Kazakhstan
207
Libya
164
-
200 400 600 800 1,000 1,200
Emerging Natural Gas Markets
15
Natural Gas (Conventional) Balances
• Despite good prospects for domestic production, consumption is poised to
grow faster, leading to larger gas imports.
Outlook for Natural Gas Production, Consumption,
and Net Import Requirements in China
50
Rapid growth in demand:
three times higher by 2030
Production
40
Consumption
Good domestic production
potential but insufficient to meet
growing demand
Net Imports
30
(bscf/d)
20
10
0
-10
The result: Huge imports are required.
Both LNG and pipeline gas are needed.
-20
-30
2007
2008
2009
2010
2011
Note: Data for 2013-2030 are projections.
16
2012
2013
2015
2020
2025
2030
A Net Importer of Coal Forever?
17
China is Becoming a Net Coal Importer as Well
•
After decades of being one of the world’s major coal exporters, China became a net
importer in 2009. China has surpassed Japan to be the world’s largest importer of
coal.
China's Annual Coal Exports and Imports, 1990-2012
(mmt)
Exports
Imports
98
02
350
300
250
200
150
100
50
-
90
92
94
96
00
18
04
06
08
10
12
Environmental Challenges and
Future Energy Options for China
19
• Air, land, and water pollution is at an
all time in China.
• Beijing along with a huge area in
North, East, and South China has
experienced smog and foggy
weather with heavy pollutants since
the start of 2013. The PM2.5
readings are extremely high.
• In a joint study of ADB and Tsinghua
University of China, among the
world’s ten most air polluted cities,
seven are in China.
• China has already been the world’s
largest CO2 emitting country for
years.
20
Future Energy Options:
Fossil Fuels – Room to Improve
• Fossil fuels dominate the world and Chinese energy use today and it is nonrenewable. Overall, its future role will decline for technical, economical, and
environmental reasons. But in a few areas, the growth continues:
– Clean Coal Technologies (CCT): Widely used in developed countries but
far less in developing countries. China needs CCT technologies and has a
long way to go to fully implement them. The environmental benefits will
be huge.
– Natural Gas: A better fossil fuel than coal and oil. Has a bright future in
some parts of the world like the Asia-Pacific region where it is
underutilized. China is actively promoting the use of natural gas.
– Methane Hydrates: Still at the experimental stage, but could have a
huge impact if commercially viable.
– Coal-to-Liquids (CTL), Gas-to-Liquids (GTL), Coal-to-Methanol (CTM),
Coal-to-Gas (CTG): Limited future but pursued by many investors in
China.
– Carbon Capture and Storage (CCS): Also called carbon capture and
sequestration. CCS has now been developed in China, albeit slowly.
21
Future Energy Options:
Nuclear Power – Huge Growth Ahead for China
• Despite Japan’s Fukushima nuclear crisis since March 11,
2011, the future still looks good for nuclear power in China.
– Nuclear fission power used today has its limitations and safety
concerns.
– Nuclear fusion power has greater potential but has not yet
been developed commercially.
• China is on track to massively expand its nuclear power
programs:
– Current installed capacity: 14.7 GW
– Under construction: 31 GW
– Government targets
• 2015: 43 GW
• 2020: 80 GW
22
Renewable Energy
• The future can be unlimited
– Hydroenergy: China has a huge hydroelectric power
sector. The total installed capacity has just passed the
mark of 230 GW and is still growing. By 2020, China is
likely to have more than 350 GW of hydroelectric
capacity.
– Wind Power: Surpassing the US recently, China is No. 1
in total installed capacity, reaching 63 GW at the start of
2012. China is the leader in new wind power buildup as
well.
– Biofuels and Vegetable Oils: Available and used today.
Can be expanded in China and elsewhere.
– Commercial Biomass and Biomass Power: Has growth
potential in developing countries, including China.
23
Renewable Energy (cont’d)
• Renewable Energy (cont’d)
– Geothermal: Developed well in some countries. Has room to
grow in China.
– Solar Energy (Heat): Developed well in China. Has room to grow.
– Solar Photovoltaic and Solar Battery: China is the leader and it
has a good future.
– Solar Power: Not well developed. Has good potential in China.
– Tidal Power Generation: Not well developed.
– Ocean Thermal Energy Conversion (OTEC): Not yet commercially
developed.
– Others: LED, smart grid, hydrogen, fuel cells, etc.
• More important is energy conservation and improvement of energy
efficiency!
24
Energy Efficiency and the Environment
• Government’s Energy Efficiency and Environmental Targets
• Energy Efficiency Targets:
• Reduce the energy intensity (energy use per unit of
GDP) by 16% by the end of 2015 from the 2010 levels
during the 12th Five-Year Program (FYP).
• Carbon Emission Targets
• Reduce China’s carbon emission intensity (carbon
emissions per unit of GDP) by 40-45% by 2020 from the
2005 levels. The target under the 12th FYP is a reduction
of 17% by 2015 from the 2010 levels.
• Raise the share of non-fossil energy in total energy use
to 11.4% by 2015 and 15% by 2020, from under 10% at
present.
25
Concluding Remarks
• As the world’s second largest economy, China is currently
the largest energy consuming and CO2 emitting country
in the world. It also has the world’s largest automobile
market.
• China ranks as No. 2 in terms of oil consumption and
crude imports. However, with stagnated domestic
production, the imports are rising fast.
• Natural gas is well underdeveloped and underutilized in
China. It has huge potential to grow.
• Despite being the largest coal producing country in the
world, China is also the largest coal user and now the
largest coal importer in the world!
26
Concluding Remarks (cont’d)
• China plays a leading role in hydroelectric power, wind power,
and solar heating developments in the world. Overall, the
importance of renewable energy is growing relatively fast in
China.
• However, the challenge for China is enormous. First and
foremost, China’s air, land, and water pollution is at an all time
high! Meanwhile, while it has huge room to massively develop
renewable energy, its need for fossil energy—oil, gas, and coal,
which are all non-renewable—will continue to grow, leading to
much larger imports where security of supply is at a bigger
stake. Moreover, with more energy to be used, China is under
heavier pressure to improve energy efficiency, conserve
energy, and ultimately reduce total CO2 emissions (not just
intensity of emissions).
27
Selected Sources of Data
• BP Statistical Review of World Energy 2012, June 2012.
• EIA (Energy Information Administration), International Energy
Outlook 2011, Washington, D.C.
• EIA, American Energy Outlook 2013 Early Release Overview,
December 2012, Washington, D.C.
• IEA (International Energy Agency), Oil Market Report: A Monthly
Oil and Stocks Assessment, various issues, 2013, Paris, France
• FGE’s Energy Database, 2013.
• China National Bureau of Statistics.
• Platt’s Price Database.
• Author’s own research.
28
Thank You