China Energy Gorilla Will Eat Less, Do More


China has been the proverbial gorilla in global energy for much of the past two decades. And it will remain so for another three decades at least, according to the International Energy Agency’s latest long-term outlook, released Tuesday.

What isn’t known is exactly what this gorilla will do — not just in how it consumes its energy but, importantly, how it invests in energy.

What China did over the past 16 years, primarily, was grow. It has accounted for more than half the world’s increase in energy consumption since 2000, and even higher percentages for some individual sources:

You can see that China dominated growth in coal and oil demand, though it also led the way on hydro-power, too. However, when you look at the various sources on an energy-equivalent basis, it’s clear how much oil and coal have fueled China’s economic miracle:

Looking ahead, the IEA’s central scenario — which takes account of existing and currently proposed energy policies, among other things — has China responsible for just over a fifth of the growth in global energy demand through 2040. That actually trails India, at 26 percent. Even so, China’s energy demand overall will still be almost double the size of India’s in 2040 under these projections, and bigger than the U.S. and the EU combined. That’s still a gorilla in my book.

The mix of that extra energy demand looks quite different from what’s come before, though:

The shift away from coal toward natural gas, renewable energy and nuclear power reflects myriad factors, but two broad ones dominate. First, having undergone massive industrialization, China’s economic growth is set to move away from just building stuff toward providing services off the back of that stuff.

Second, China has paid a heavy price for its reliance on coal (and diesel). The IEA estimates only 2 percent of China’s population breathes air that meets the World Health Organization’s air-quality guideline on particulates. 

And China is set to repeat the American experience of the late 20th century in terms of relying on energy imports — only more so. By 2040, more than 80 percent of China’s oil demand will be imported from elsewhere, up from 68 percent last year (the U.S. topped out at 60 percent in 2005, and that has come down sharply). And more imports mean more risks to supply. True, by 2040, we might all be vacationing in NEOM at the heart of a prosperous and peaceful Middle East. But maybe we won’t.

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