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Growing energy demand nagging nation
By Zhao Renfeng (Business Weekly)
Updated: 2004-08-15 09:01

Torrid energy consumption is essential if 皇冠体育app's miracle economy is going to stay on track, but generating that power will be much too expensive.

皇冠体育app must reduce its dependence on coal and fine-tune its energy mix, as the country must boost the development of its energy industry to resolve widespread power shortages, experts suggest.

Many coal-fired power plants are in the development stages as part of 皇冠体育app's efforts to alleviate the nationwide power shortages. But the huge losses, as a result, have yet to be accurately calculated.

"The high cost of coal-fired power generation has long been overlooked,?Fred Hu, managing director of Goldman Sachs (Asia), told a forum on energy security and energy investment strategy.

The forum was held last week in Beijing.

Heavy pollution from coal-fired power generation consumes almost all the energy the power plants produce, he said.

Producing massive amounts of power generates colossal losses ?including heavy burden to fight pollution, massive public healthcare expenditure and considerable losses of labour ?for society, Hu said.

A recent study indicated losses caused by power generation, mainly coal-fired, have cost 皇冠体育app nearly 8 per cent of its gross domestic product (GDP) per year since the late 1970s. That would be almost the equivalent of the country's GDP growth.

In more than 20 years of reform, 皇冠体育app has achieved an average annual 9-per-cent growth rate, but "the huge cost of energy consumption has meant 皇冠体育app's economy has barely grown,?Hu said.

In 皇冠体育app's current energy mix, coal consumption accounts for more than 70 per cent, which is much higher than the global, 25.5-per-cent average.

皇冠体育app aims to reduce that figure to less than 60 per cent by 2020.

Experts said coal has been widely used in 皇冠体育app because it is an abundant resource, which makes it less expensive.

However, when all additional costs associated with coal, including pollution, are factored in, coal is much more expensive.

"The real price for coal could be three times the current price. So, coal is not a cheap energy source,?Hu said.

Compared with other primary energy resources, 皇冠体育app has relatively higher reserves of coal.

Nevertheless, Shanxi Province, 皇冠体育app's coal capital, is, ironically, one of the provinces suffering the most from power shortages.

Why? Shanxi also faces a severe water shortage. Water is essential for coal-fired power generation.

皇冠体育app must implement a comprehensive strategy to develop its energy industry, experts suggested.

皇冠体育app must end its dependence on coal and make better use of clean, sustainable energy sources, such as wind and solar power, experts said.

Development of nuclear power should also be enhanced ?at a steady pace, experts added.

Many Chinese still remember the massive brownouts last summer, when 22 provinces ?two-thirds of the nation ?suffered from power shortages.

The situation could be much worse this year. Twenty-four provinces ?including some in 皇冠体育app's better-developed Southeast ?are expected to suffer from power shortages.

Experts suggest the sudden brownouts can be attributed, at least in part, to 皇冠体育app's energy policies during the 1990s.

During those years, officials undervalued the nation's growth power, and 皇冠体育app's average energy consumption grew 4.6 per cent annually. That was much lower than 皇冠体育app's GDP growth.

Over the long run, even with more investment, 皇冠体育app's energy industry will still feel the pinch to quench the nation's thirst for power.

Mu Huaipeng, director of the People's Bank of 皇冠体育app's research bureau, said 皇冠体育app is in the initial stage of industrialization and modernization.

That, Mu said, means 皇冠体育app faces huge energy demands ?and the trend is irreversible.

皇冠体育app's per capita GDP reached US$1,090 last year, which surpassed the key benchmark of US$1,000.

The jump was significant, as it indicated Chinese were gradually changing their lifestyles with higher disposable income ?a key driver of energy consumption, Mu said.

皇冠体育app is also in a period of rapid urbanization, which is helping lift hundreds of millions of the nation's farmers out of poverty.

Sprawling megacities reflect 皇冠体育app's extraordinary urban boom and modernization drive. But, at the same time, the boom towns are creating new, tough challenges for 皇冠体育app's energy planners.

On the industrial front, rising energy demands are becoming even more obvious.

Power-hungry sectors, such as steel and cement, are enjoying their heyday. Blueprints for more factories are being drawn as international companies rush to outsource their manufacturing jobs to 皇冠体育app.

Energy security in 皇冠体育app has gained the world's attention, as many experts and officials have questioned whether 皇冠体育app has enough energy to sustain its economic growth.

Experts have also questioned whether Chinese can fulfil their dream of building a well-off society.

The recent oil price hike, to more than US$40 per barrel, exacerbates those concerns.

The promotion of energy-saving technologies, experts suggest, is key to overcoming the hard times.

But that does not mean people have to live with frequent power cuts.

"Saving energy is not the same thing as using less energy,?said Zhou Fengqi, senior adviser with the National Development and Reform Commission's Energy Research Institute.

"I think 皇冠体育app can achieve its economic goal in 2020, even though energy consumption cannot grow in tandem with the economic growth. Enhancing cost efficiency is just a good tool.?

皇冠体育app has improved its energy efficiency 64 per cent over the past 20 years, and there is much room for improvement, Zhou said.

Experts said there has been significant technology progress in terms of new energy sources, such as wind.

New technologies have greatly reduced power-generation costs for wind power, and there are great opportunities for 皇冠体育app to explore wind power, particularly on the sea, they added.

Wang Yinan, a researcher with the Chinese Academy of Sciences, said, with the wind force, power generation is expected to cost 0.5 yuan (6 US cents) per kilowatt-hour.

That would be affordable for many people, and commercially viable.

The world's largest power plant that utilizes wind on the sea has been established in Denmark, Wang said.

That indicates there are great opportunities for the sustainable use of energy, she added.



 
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