China to face challenges in energy in next 20 years

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Last updated at: (Beijing Time) Tuesday, December 16, 2003

China to face challenges in energy in next 20 years

China's rapid economic growth will lead to a 12 percent annual increase in petroleum demand and China will face energy challenges over the next 20 years as personage concerned predicted.

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China's rapid economic growth will lead to a 12 percent annual increase in petroleum demand and China will face energy challenges over the next 20 years as personage concerned predicted.

A research report recently made by the Development Research Center of the State Council (DRC) showed that China is going to face a series of challenges in the coming 20 years, according to report by Xinhua News Agency.

The report indicated that China's economy would be quadrupled by the year 2020 with a per capita gross domestic product (GDP) of over 10,000 US dollars. It is a critical period for China to realize industrialization and also a period in which it will see great changes in the economic structure, level of urbanization and residents' consumption structure. As represented in the field of energy, the situation China is going to face will be far more complicated than what developed countries ever faced in the same historical period.

Low per capita reserves and high energy consumption

China's exploitable energy reserve per capita is far lower than the world average. In 2000, China's extractable petroleum reserve per capita was only 2.6 tons, natural gas 1,074 cubic meters and coal 90 tons, being respectively 11.1, 4.3 and 55.4 percent of the world average.

In terms of the energy use efficiency, the energy consumption per unit product in China is comparatively high. At present, the efficiency of energy use in China makes up only 33.4 per cent, 10 per cent lower than the world average. In 2001, the expenditure on energy consumption of China's terminal energy consumers was 1.25 trillion yuan, accounting for 13 percent of the total GDP as against 7 percent in the United States. The level of energy consumed per unit product in China is relatively high. At present, the energy consumption per unit product in the eight industries with high energy consumption is an average of 47 percent higher than the world advanced level while the total energy consumption of the eight industries take up 73 percent of the total of the industrial sectors.

Energy security, especially petroleum security becomes more and more serious. As per capita income increased, China has seen a dramatic increase in its petroleum consumption.

China's petroleum dependency on outside supply increased from 7.6 percent in 1995 to nearly 31.0 percent in 2000. By 2020, China's petroleum consumption will be at least 450 million tons with a nearly 60 percent of petroleum depending on the outside supply.

Hiking energy demand

China has become the world's second largest energy consumer. According to the introduction made by Mou Shuling, vice president of Sinopec (China Petroleum and Chemical Corporation), China's demand for petroleum and natural gas will increase at a speedy rate in the coming 20 years. It is estimated that by 2020, China's petroleum demand will be 400 million tons with an annual average growth of 12 percent.

As to the consumption structure of natural gas, power generation with natural gas and the burning of natural gas in cities see the most rapid increase in consumption. The proportion of natural gas in primary energies will increase from the present 2.7 percent to over 10 percent in 2020.

In order to ensure a sustained development and a secured and stable supply of petroleum and natural gas, China must develop more energy resources by mainly depending on home supply and meanwhile cut the consumption, Mou Shuling said. China must strengthen the exploration and development of petroleum and natural gas and maintain a sustained and stable production. Meanwhile, China must speed up establishing petroleum and natural production bases overseas.

Energy conservation as breakthrough

In the future 20 years, the industrial sectors will remain China's largest energy consumers, which should become one with the most outstanding achievement in energy conservation.

As for the ways for realizing energy conservation, energy conservation through adjusting the industrial structure and product mix takes up 70-80 percent of the energy saving potential of the industrial department while that fulfilled through technological progress and reducing the energy consumption per unit product takes up 20-30 percent, according to Dr. Lai Youwei with the Development Research Center of the State Council (DRC) in a recent speech.

Therefore, the industrial department should combine technological advance with adjusting industrial structure and product mix in saving energy and should promote energy saving by means of revising energy saving design criteria, carrying out audit and report of the enterprises' energy, pushing forward technological progress, establishing energy management information system and popularizing achievement and efficiency contract.

According to Lai Youwei, besides the industrial sector, communications and construction sectors will see obviously faster increasing energy consumption. In order to realize energy conservation, the research report suggested the communications department begin to levy petroleum burning tax; formulate standards for fuel efficiency and petroleum quality; improve urban planing and transportation system and give priority to public transports; establish intelligent transportation system; encourage the development, purchase and use of automobiles burning alternative fuels.

As for the construction sector, the first is to break through the heat supply system and open the heat supply market. The construction department should enact and enforce energy saving rules in construction and enforce rigorously energy saving design standards; formulate the economic inspiration mechanism to encourage the production and use of energy-saving construction materials and equipment.

By PD Online with article adapted from International Finance News and China Daily and translated by staff member Gao Lanrong.

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