So here's parts of the term paper I hinted at in
a comment in CT's recent blog along with some of my own current thoughts scattered throughout and at the end.
I've cut half the length or more, but it's still a crazy-long post.
I think I wrote this in November or December, 2006. Gasoline had hit all time highs of $3+ the previous summer.
This investigation considers the effect of an increasingly globalizing energy market on China's economic growth and energy demands, at present and in the near future. China's rapid economic growth rate may be unsustainable at the current rate of increase in energy demand. The link between globalized markets, resource depletion, and concomitant (and often steep) price increase has been widely demonstrated; the rapidly rising price of oil is just one example. The characteristics of the current global economy, one dependent on oil for worldwide transportation, bring a complicated dilemma to China as she tries to expand her middle class. China's major energy sources are considered as well, along with their future viability. On the whole, this investigation examines current trends in energy use and the oil market; shows their direct relationship to globalization; and evaluates the repercussions for a rapidly growing Chinese economy. Finally, we consider some possible alternatives to an oil crunch.
The next paragraph is basically statistics in prose, so it'd be better & space-saving to just give it as bullet points. All statistics are for China:
-China's economic growth rate over 9%/yr for the past 25 years (Wen, 2005)
-Expected to maintain growth rates around 7-8%/yr for decades to come (Crompton & Wu, 2004; Shen et al, 2005).
-
GDP expected to overtake Italy, France, Great Britain and Germany by 2010
-Japan by 2020
-the EU and US by 2050
-2nd largest energy consumer (Crompton & Wu, 2004)
-3rd largest consumer of oil (behind Japan & US) (He et al, 2005)
-total energy consumption climbed 9%/yr from 1953-96, from 54 million tons coal equivalent (MtCE) to 1377 MtCE, and rose about 3%/yr to 1678 MtCE by 2003 (Crompton & Wu, 2004)
-40% of the world's total growth in energy consumption btwn '00-'04 (Crompton & Wu, 2004)
-China's oil consumption increased 4%/yr for the last 2 decades (He et al, 2005)
-Btwn '97 & '02, the transportation system's share of national oil consumption rose from 23% to 32%; it will be the dominant share within 20 yrs (He et al, 2005). This is a sign of the burgeoning middle class and the growing number of cars; very soon, China will have more cars than America.
Visit
DOE and look at the oil statistics; then feel free to click on the links on the right side for other pretty graphs showing China's ravenous growth.
I also pulled some graphs from
Oilnergy, another place that CT has pointed us before. But the graphs in my paper are from 2006; the link is current.
...These trends will make it difficult to supply oil for the multiplying cars of the growing middle class. An oil crunch will have a chilling effect on China's hot economy.
The link between globalization and resource depletion has been demonstrated before... A free market encourages consumption, which in turn causes depletion (Reed, 2002)... It can be presumed, under supply & demand, that the rapidly increasing rate of oil consumption will similarly cause the price of oil to spike after world peak oil production is reached (Barnett, 2006). This could cause transportation and thus the global economy to slow to a virtual standstill, unless alternative transportation fuels are rapidly integrated:
"...the major factor that enables globalization to flourish around the world...is still cheap oil. Cheap oil runs the ships, planes, trucks, cars, tractors...that globalization needs; cheap oil lifts the giant containers with their global cargos off the container ships...cheap oil even mines and processes the coal, grows and distills the biofuels, drills the gas wells, and builds the nuclear power plants while digging and refining the uranium ore..." (Ehrenfield, 2005)
Note especially that oil is the major fuel source for all major forms of transportation; and transport is a prerequisite for global trade. Transportation accounts for 27% of the world's energy consumption (Gan, 2003). The nature of the internal combustion engine..requires a volatile liquid fuel to aerosolize and mix with air in the proper ratio for efficient, explosive combustion. Consequently, fuels that see use in combustion engines today include ethanol, C/LNG, vegetable oil, biodiesel, and of course refined petroleum gasoline and diesel. Therefore, global economic growth must be intimately tied to the price and availability of oil...
More statistics:
-69% of China's energy is from coal (it was 65% in 2006, when I wrote the paper, an upward trend I [and many others] predicted then), about 25% from oil (DOE, ibid)
-If economic growth rates are maintained, China's energy consumption should grow anywhere from a factor of 7 to a factor of 20 by the year 2050 (Gan, 2003; Crompton & Wu, 2005)
...These calculations aren't perfect forecasts, as there is great question as to the sustainability of current growth rates. Coal, the most prevalent fuel worldwide, will likely maintain relatively stable prices throughout this period; but considering the current unstable oil prices...it is likely that the price will become prohibitive...chilling....the global economy. As transportation costs become an increasing fraction of total production costs, non-profitable markets will start disappearing. Eventually, the price of oil will make its use for electricity generation prohibitive. Except perhaps for fueling vehicles for the transport of goods and commuting, China will need to turn away from oil as an energy source.
...Coal produces most of the world's energy, because of its ubiquity and low cost. With almost limitless, globally-distributed reserves and a price that is projected to fall for the next decade before increasing, coal will likely be the path of least resistance for developing countries seeking an alternative path as the price of oil becomes prohibitive for energy generation. In the future, developing countries with growing GDP will most likely see their transportation shares of total oil consumption approach unity, and their coal shares of total energy production should also rise. Preparing for these emerging trends will be valuable for developed and developing countries alike. Important environmental considerations include air pollution, public health (especially respiratory hlth.), ecological damage, and global climate change. The primary economic considerations are energy conservation and viable new transportation fuels.
It goes on with China's environmental problems. You can probably find a good list somewhere if you were to look. Acid rain, desertification, smog in major cities worse than Los Angeles' worst days, low water per capita, low average arable land per capita, net importer of food... you get the idea. See J. Diamond's
Collapse or Lester Brown's
Plan B for more on China's env'tal problems..
...The nature of coal emissions can increase the impacts of all of these problems...sulfur content...responsible for acid rain...harmful to ecologies, leaches minerals from the soil, and thereby contributes to soil erosion and desertification. China, with only 1/3 to 1/2 of the global average arable land per capita due to its massive population, suffers tremendously when land area is lost to these processes (Wen, 2005). In terms of global climate change, a hypothetical increase in coal consumption will increase greenhouse gas (GHG) emissions. Already, China is the world's 2nd largest GHG emitter, and could exceed the U.S. as early as 2020 (Wen, 2005). Chinese models predict that warming would cause less rainfall in arid northern China, and more...in "humid" southern China; [the North is subject to extended drough, and the South to flooding], so global warming is expected to exacerbate these problems [while seriously hurting grain production] (Wen, 2005). For a nation with 1/4 the water resources of the global average, that is more heavily populated than any other, this...could mean serious environmental crises: famine, crop failure, erosion...Although coal, based on price and ubiquity, seems like an attractive alternative in an oil-starved energy market, the environmental imapcts would be too severe for a major, sustained reliance on coal.
The last concern I raise is number of vehicles; I'll hash it out quickly.
-1980, 2 million vehicles
-'90, 6.2 million
-'98, 13.2 million
-'03, 36 million
-
'08, 120 millionAt that rate, China will have more cars than the U.S. by 2015.
I favorably review the CAFE standards passed by China in 2002;
the first set went into effect in 2005, and higher standard was/will be adopted this year.Unfortunately, the rate of growth in car ownership has far outpaced CAFE savings; the trend in car ownership shows no sign of abating. And so we're in the mess we are today with $4 gas and no end in sight to the rising prices.
At the time of the writing, America had not yet adopted new CAFE standards, and I advocated strongly for them (predictably).
The food security issues make biofuels (ethanol, biodiesel) a tricky question for China; at the time, I didn't really have a good answer, and I still don't. Things like crop wastes end up being used as cooking fuels; they can't spare any food for biofuels either. Every society produces unused biomass, but China's so strapped that the available biomass streams are probably not adequate to meet the country's liquid fuel needs.
Had the U.S. felt like being more constructive against climate change in the last 8 years, we might've had a prototype CO2-sequestration coal-fired power plant up and running by now, and several years of time to observe whether the idea even works. I say build two, right now, in China and the U.S. I don't care if the U.S. has to pay for it all, it should be done, and we should've gotten started a long time ago. If the technology works, then we might see carbon emissions from coal drop significantly within a decade or two.
Fortunately, China has a more functional rail system than the U.S., so there will be a not entirely uncomfortable reversion to this old mainstay for many in the middle class.
The last suggestion I made in this paper was for the formation of an Asian Energy Union, with China, India, Russia, and maybe Indonesia as main partners. China and India had already started collaborating on joint bids for projects at the time. The petrodollar skews the price of a barrel of oil by as much as $2-4 for many of the world's markets, and an alternative to OPEC has long been needed. The hope was that such a union might help create more stable oil prices, and a secure regional energy market. But the point is sort of becoming moot with the price of oil as high as it is right now.
Or is it? I heard on NPR the other day that a quarter of a trillion dollars of speculator money is ballooning the price of oil. The socialist in me has always thought it seemed slightly unethical to profiteer off of a resource so vital to economic development, transportation, trade, food security, etc.. But the environmentalist comes back and says that this oil price spike is putting a much-needed brake on the world economy, at a time when we all need to step back, take a deep breath, and reevaluate what is necessary to prevent or at least mitigate the collapse that
CT elaborates in his other recent post.In any case, our best minds need to be considering the China bomb. Didn't I hear not too long ago that growth in GHG's is outpacing even the latest IPCC report's modelled worst case scenarios? This is all the more reason for us to figure out how to build a zero emissions coal fired power plant, because as long as we intend to rely on cheap energy, the trends we've observed will continue and coal becomes the last cheap option. The best way to fight global warming would be to develop zero emission coal technology and give it to China; and even help them retrofit and/or build their plants while we're tweaking all of our domestic ones simultaneously. The sheer number of such power plants to retool is staggering though; perhaps even unrealistic. Even so, the idea has been out there, untested and untried, for the last 8 years at least; I advocate strongly that we should at least try, since coal and coal-fired power plants are everywhere. If it turns out the technology works, and it's adaptable to many of the power plant designs in wide use, then we have our work cut out for us.
Congratulations, you have reached the end. Hit recommend if you feel enlightened as to the depth of the China/Energy problem.
Works Cited
Barnett, Courtenay. “Oil, Conflict, and the Future of Global Energy Supplies.” 1/22/2006
Crompton, Paul and Wu, Yanrui. “Energy Consumption in China: Past Trends and Future Directions.”
Energy Economics, 27, p195-208; 2004.
Ehrenfield, David. “The Environmental Limits to Globalization.”
Conservation Biology, 19, p318-326; 2005.
Gan, Lin. “Globalization of the Automobile Industry in China: Dynamics and Barriers in the Greening of the Road Transportation.”
Energy Policy, 31, p537-551; 2003
He, Kebin, et al. “Oil Consumption and CO2 Emissions in China’s Road Transport: Current Status, Future Trends, and Policy Implications.”
Energy Policy, 33, p1499-1507; 2005
Reed, Darryl. “Resource Extraction Industries in Developing Countries.”
Journal of Business Ethics, 39, p199-226; 2002
Wen, Dale. “China Copes with Globalization: A Mixed Review.” International Forum on Globalization document, published 2006