China and its energy dilemma

Shahab Sabahi

Energy and Environment - Policy analysis research group

On May 2011, Chinese state-owned media reported that as many as 24,000 industrial businesses in the Shanghai area had been told that they face mandatory power cuts. In Zhejiang province, some factories had switched to diesel powered generators, despite the fact that diesel power costed as twice as those of the grid that would have increase production costs as well as emissions.

The vulnerability of China’s energy structure appears as a serious threat to social and economic stability, as rationing consumption imposed in as many as ten major areas for five month (Source BBC)

Despite intensive efforts to diversify the country’s primary energy supplying from hydropower, wind, solar and nuclear, still 70% of China’s energy are coming from coal. China uses 46% of the total world’s coal production. Imported coal price was doubled over the last five years and has played a major role in China’s rising inflation, at 6.7% in mid-July and which could go as high as 8% before by the end of the current year.

Even with the National Development and Reform Commission attempted to stabilize the market with keeping price flat, the rising international price had deterred this attempt and local consumers were forced to rely on domestic production. It caused additional strain on domestic production which went beyond the prevailing domestic production capacity.

Shifting to use additional domestic coal requires spare domestic transport network capacity. In some places where their infrastructures have yet needed development or are already deficient for additional load, cannot function effectively. It leads the employment of road transportation and heavy-trucks that will increase the road traffics, causing disruption in the normal traffic across the country.

China already stands first as the world’s worst pollutants, with burning huge amount of coal with a record high of 12% annual rising since 2000. Electricity demand keeps rising, particularly in the eastern manufacturing hubs around Shanghai and Beijing and the southern ones in Guangdong. China had an estimated total installed electricity generating capacity of 797 gigawatts (GW) in 2009, net generation was 3,446 billion kilowatt-hours, 81 percent of which came from conventional thermal sources, mostly coal.

Rapid growth in electricity demand this previous decade spurred significant amounts of investment in new power stations. Although much of the new investment was earmarked to alleviate electricity supply shortages, the economic crisis of late 2008 resulted in a lower demand for electricity. The government is investing in further development of the transmission network, integration of regional networks, and bringing on planned new generating capacity. Investment in the transmission grid was greater than that in the generation sector for the first time in 2008.

China is actively promoting nuclear power as a clean and efficient source of electricity generation. Although China's nuclear capacity of 10.8 GW makes up only 2 percent of total generating capacity that is a small fraction of the installed generating capacity, many of the major developments taking place in the Chinese electricity sector involve nuclear power. China's government forecasts that over 70 GW will be added by 2020. China has 13 operating reactors and 27 reactors under construction (source EIA)

China has become the leader in the manufacture of solar panels and by 2007 was producing 1.7 GW of them for sale, but solar took only less than 0.01 % of total electricity. China is also the world’s largest installed wind power, surpassing the United States in 2010, with capacity now 40 MW which is about 1 % of the total electricity production.
Hydropower now accounts for 20 percent of energy production, with 22,000 large dams built and plans to build more, many of them on the Brahmaputra and Mekong Rivers at their headwaters in China the subject of substantial controversy. However the severe drought in central and southern China reduced the effectiveness of the dams because they need to be full for maximum energy production. (Source PSA)

Yet China’s energy dilemma and challenge continues and the country’s energy and transport infrastructures appear deficient. It also comes into view that policies have been dysfunctional and should be reviewed. Perhaps it is time for China to turn down the pace of its growth if China cares about its domestic stability and its international reputation.