Energy Efficiency and Sustainable Development in China

1. Energy Efficiency and Sustainable Development in China Professor Shujie Yao and Dr Dan Luo School of Contemporary Chinese studies University of Nottingham

2. Outline • Can China sustain its fast growth? • What is the implication on environment? • Energy consumption & growth • Structural changes • Factors for high energy demand and low energy efficiency • Conclusions and policies

3. Background • Sustainable development ----“development that meets the needs of the present generation without compromising the ability of future generation to meet their own needs”. • Economic growth and environment -- Past: Western Industrial Revolution: fossil fuels  pollution  global warming, ocean acidification, loss of tropical forests and water supply shortage -- Present: Emerging economies: emissions from BRICs

4. Current situation in China • Pressure: reducing CO2/GDP by 40-45%, 2005-20 • Internal challenges Highly energy-intensive growth path Massive consumption: 3.2 bil.TCEin 2010, 20% of world total, >US, largest energy consumer Massive imports: oil (2010) 239 mil tons, 53% of total demand. By 2030, import dependency, 80% of oil, 10-20% of coal  energy security problems Severe environmental pollution.

5. Chinese government policy • 11thFYP (2006-10): efficiency 20%, or 3.7%/year • 12thFYP (2011-15): efficiency by another 16-17% However, current trend not promising due to Poor industrial structure and lack of innovation

6. Growth and Energy: Challenge I • Limited domestic reserves and low per capita supply -- Energy reserves << demand, esp. oil  energy security; -- Per capita consumption low but aggregate demand massive a) Rapid urbanization and industrialization b) Changing consumption of people due to rising income

7. Energy consumption, China & US, 1971-2010

8. Energy consumption (TOE/head)

9. China’s oil consumption & imports 1980-09

10. Growth and Energy: Challenge II • Over-dependency on coal GHG emission Composition of China’s energy consumption, 1978-2009

11. Electricity output, 2008 (bilkwh)

12. Growth and Energy: Challenge III • Fast growth of energy demand and efficiency -- Fast economic growth with fast energy growth -- Low efficiency in China: 4.5 times energy and 3.8 times electricity for same amount of GDP compared to OECD -- Energy efficiency of China significantly lower than India and Brazil.

13. GDP, energy/electricity growth in China

14. China’s GDP growth/energy consumption

15. Energy & electricity per unit of GDP by country

16. High demand/low efficiency of energy in China: Factor I Economic and industrial structure: GDP dominated by industry

17. High demand/low efficiency of energy in ChinaFactor II: industry dominated by heavy industry

18. Energy/consumption by industry in China, 1995-09

19. Fast expansion of 8 energy intensive sub-industries • Industrial production and energy consumption of eight key industries to total

20. Energy consumption per unit output by 8 industries, 1995-09

21. Output of energy intensive products, 1978-09

22. Exports of energy intensive products, (billion US $)

23. High demand/low efficiency of energy in ChinaFactor III: Industry relocation coastalto inlandEnergy production/consumption by region, 1990-09

24. GDP, energy consumption &output of 8 industries by region, 1990-09

25. Conclusion & policy implications Factors for China’s rising energy consumption

26. Policy recommendations • Structure transformation, reducing reliance on heavy industry and polluting industries • Reducing dependency on exports of polluting goods • Price reforms • Alternative energy • Technology and innovation • Creating a self-enforcing endogenous growth model

27. Thanks for listening!