ENERGY AND ELECTRICITY IN CHINA

China is the world's second largest energy consumer after the United States. Consumption on a per capita level however
remains low. The vast majority of Chinese still do not own a car and half the population still lacks access to winter
heating.

China is expected to surpass the United States as the world’s largest energy consumer by 2010. It now accounts for 12
percent of the world’s energy demand but its rate of consumption is growing more than four times the world’s rate.
Energy consumption rose by 208 percent in China between 1970 and 1990, compared to 28 percent in most developed
countries. It is expected to double in the next 20 years.

Demand for energy is soaring as Chinese are buying more cars, moving into bigger houses that need more heat,
purchasing more televisions, refrigerators and other appliances and starting new businesses and factories. Some heavy
industries still use outdated technology and waste and use too much fuel in the production process. Energy intensive
industries (steel. aluminum, cement and chemicals) use a third of China’s total energy consumption. Construction
accounts for 27 percent.

China used the energy equivalent of the burning of 2.7 billion tons of coal in 2006. China has vowed to cut energy
consumption for every unit of economic activity by 20 percent by the end of 2010. But the opposite is happening. China
is consuming energy at a rate much higher than experts had originally predicted, China will use the amount of energy in
2010 that experts originally predicted it would use in 2020.

Both China and India have been warned by the International Energy Agency that they need to do something to curb
their use of energy or else they will cause a number of serious problem including increased production of global warming
gases and strain the global oil trade, causing shortages and price hikes. In 2006 and 2007 China and India accounted for
70 percent for the increase in energy demand. By 2030 the two countries are expected to account for half of the world’s
energy consumption.

The energy bureaucracy has only 100 employees compared to 110,000 at the EPA in the United States.
 Links in this Website: ENERGY AND ELECTRICITY IN CHINA Factsanddetails.com/China ; DAMS AND
HYDRO POWER IN CHINA Factsanddetails.com/China ; THREE GORGES AND THREE GORGES DAM
Factsanddetails.com/China ; COAL IN CHINA Factsanddetails.com/China ; COAL MINE DEATHS IN CHINA
Factsanddetails.com/China ; OIL AND NATURAL GAS Factsanddetails.com/China ; CHINESE OIL AND NATURAL
GAS COMPANIES Factsanddetails.com/China ; NUCLEAR POWER AND ALTERNATIVE ENERGIES
Factsanddetails.com/China ; WATER IN CHINA Factsanddetails.com/China

Good Websites and Sources: U.S. Energy Information Administration Report on Energy in China eia.doe.gov/cabs ;
U.S. Energy Information Administration Report on Electricity in China eia.doe.gov/cabs ;China Sustainable Energy
Program efchina.org ; China Energy Report pdf file piie.com/publications ; Another Lengthy Energy China Report
ieej.or.jp ; China Energy Production Statistics indexmundi.com ; Beijing Energy Network (a Chinese grassroots
environmental group) greenleapforward.com

Energy Production in China

Energy production in 2005: 68 percent from coal, 23 percent from oil, 5 percent from hydro, 3 percent from natural gas
and 1 percent from nuclear energy.

According to the World Bank China—with 20 percent of the world's population—possesses 2.34 percent of he world's
oil reserves, 1.2 percent of the world's gas reserves, 11 percent of the world's coal and 13.2 percent of the potential
hydroelectric resources.

China needs energy to make its economy run. Just to keep pace with growth, China must construct approximately a
dozen 1,000-megawatt power plants every year. By contrast the United States only needs one or two a year to maintain its
growth rate.

China is dependent on coal and oil. It is trying to diversify with natural gas, nuclear power and renewable sources but it
will be long time before coal and oil are significantly displaced.
Energy, Industry and the Economy in China

China relies on energy-driven heavy industry to generate growth. Between 1980 and 2000 it relied more on light
industry. These days it is producing lots cars, steel and things that other require lots energy to make. Some say this would
not have occurred without government help.

China makes a lot of steel, aluminum, concrete and flat glass, all of which require lots of energy. Making matters worse
is the fact that Chinese factories are not very energy efficient. On average China needs 20 percent more energy to
produce steel than the international average, 45 percent more to make concrete. Makers of ethyl need 70 percent more
energy.

The aluminum industry consumes as much energy as the entire commercial sector—all the hotels, restaurant, banks and
shopping malls.
Inefficient Uses of Energy in China

China faces severe energy resource shortages despite aggressive efforts to increase production at home and purchase
more energy resources overseas.

China wastes a lot of energy. It uses four times more energy to each dollar of GNP than the United States and 12 times
as much as Japan. Even India is twice as efficient as China when it comes to efficiently using energy.

The Chinese energy system is full of inefficiencies. The government promotes industries such as aluminum, steel,
cement, pulp, silicon, glass and chemicals that suck up huge amounts of energy. In 2004, China produced more aluminum
than any other nation, and this accounted for almost 5 percent of all power used nationwide. Overall, industries accounted
for over two thirds of China’s power consumption compared to just around a third in Britain.

For a long time China did little to contain demand. Electricity rates have been kept down for years. Ping Xinqiao, a
professor of economics at the University of Beijing, told the Washington Post, “The current price policy encourages
people and companies to use electricity because electricity is so cheap.” There is no pressure of them to use energy
resources efficiently.

The government controls energy prices and has kept them artificially low through subsidies. Subsidies keep the cost of
gasoline and heating fuel low but encourages waste. Raising prices is very risky politically.

Each year for the past few years China has produced 75 billion square feet of commercial and residential space, more
than the combined space of all the shopping ,malls and strip malls in the United States. All these space not only requires
energy to build it also requires a lot of energy to heat and cool once it is occupied.

Chinese buildings are quite energy inefficient and Chinese homes tend to be thinly insulated. They require twice as
much energy to heat and cool as American homes.

China seems willing—for now anyway—to put up with energy inefficiency to hold off joblessness. But some policy
decisions seem to be poorly made. Why, for example, are aluminum smelters kept open when they use the same amount
of power as an auto factory that employ 100 times more people.

See Inefficient Energy Infrastructure Below

Rural Energy, Fires, Dung and Trees

Coal briquettes

For many people coal, dung, firewood or charcoal are the main sources of energy. The poorest people use dung and
agriculture waste fires. People slightly better off use wood or charcoal and those better off still have access to propane
and kerosene. Those lucky enough to have electricity usually only receive it for a couple of hours in the evening or
endure frequent brown-outs and power outages Gasoline is sometimes in such short supply and so expensive that it is
sold in small bottles.

In most homes cooking is done on a metal plate placed over a wood or dung fire. Cooking is often done outside because
there is a danger of fire. Kerosene, propane, oil and butter lamps are used to light a house. Candles are regarded by many
as prohibitively expensive.

People who rely on cow dung for energy, collect it in the morning from their corrals or fields. Some of the dung is
mixed with straw and made into a past that is used to plaster house walls. Most of the rest is flattened and broken into
pieces and used as fuel. Collecting and processing dung occupies much of the time of the children and women.

Trees cut down in deforested areas are often used for fuel or charcoal. Fuel wood consumption in the developing world
increased 35 percent between 1975 and 1986.

Many people suffer from respiratory illnesses caused by inhaling smoke from cooking and heating fires in huts with
virtually no ventilation. Health experts estimate that 4 million children die worldwide from smoke-related respiratory.
The illnesses are caused by inhaling carbon monoxide and particles of soot and ash—made with dung, agricultural waste
and/or wood— everyday for years. Children's lungs are more sensitive than the lungs of adults. Coal and charcoal also
cause a lot of air pollution.

Electricity in China
 China gets 70 percent of its electricity from coal burning plants (at a cost of $0.0375 to $0.05 per kilowatt hour), 3
percent from natural gas; 20 percent of its electricity from the hydroelectric power (at a cost $0.0125 yo $0.025 per
kilowatt hour), 5 percent from petroleum-fired plants and 2 percent from nuclear energy.

Electricity production: 2.732 trillion kWh. Electricity consumption: 2.197 trillion kWh. 2005.

Electricity prices are fixed by the government but the cost of oil and coal are not fixed so when the price of coal and oil
rise, the electricity-generating companies lose money because they can not raise their prices to adjust.

Huaneng Power International is the largest Chinese power producer. It is based in Beijing and listed on the Hong Kong
stock exchange. The State Power Company is the second largest company in China based in revenue. It once dominated
the energy industry in China. In 2002, it was broken up into two companies with stakes in the transmission grid and four
separate power-producing companies. The theory was competition would make the industry more efficient. Thus far the
plan has not worked and some doubt its wisdom.

Electricity Production in China

China is the world’s second largest electricity producer and consumer after the United States. There are about 7,000
power stations in China but only 129 of them are large enough to generate more than 1 million kilowatts. The average
output per plant is 55,000 kilowatts compared to 130,000 kilowatts in Japan. Low-voltage transmission lines are required
for so many small power stations, impeding the installation of power supply chains to supply wide areas.

Most electricity comes from coal-burning thermal plants. There were 2,300 coal-fired plants in 2005. China is adding
new, mostly coal-fired capacity equivalent to the entire electrical output of France or Canada every two years. Most of it
has come from small and medium-size thermal plants, which can be built quickly and cheaply but are inefficient.
 Electricity capacity jumped 20.3 percent to 622 gigawatts in 2006 and is expect to rise by 15 percent to 720 gigawatts
in 2007. It is estimated that China’s total electricity demand will reach 2,600 gigawatts by 2050. To supply that much
energy China has to build the equivalent of four 300-megawatt plants every week for 45 years.

China is exploring every avenue to produce more electricity: biomass, hydro, solar to reduce its reliance on coal and oil.
But thus far it has declined to use combined-cycle turbines, the most efficient coal-burning technology even though it has
been experimenting with it for more than decade. It is assumed they are not built because they are too expensive and take
too long to build. China’s short-sighted decisions not only make matters worse now they will affects the country and the
world for the next 40 to 50 years.

State Grid

State Grid—which operates the vast networks of power distribution lines across 26 of China’s 32 provinces—is one of
the world’s largest companies, ranking 24th on the Fortune Global 500, with $133 billion in revenues in 2007. As part of
its plan to expand abroad, it signed a 25-year, $3.9 billion contract with Philippines in January 2009.

State Grid has developed a commercial power line that carries 1 million volts as opposed to the United States standard
of 764,500 which is used in much of the world. The new “ultrahigh transmission” are regarded as a major breakthrough.
They are more efficient over long distances and could help reduce pollution by moving power plants away from
populated areas.

The State Grid’s economic research institute predicts that electricity demand will rise 85 percent in China between 2010
and 2020.

Electricity in Remote Areas in China

Some 98 percent of all Chinese household now have electricity. The two percent that don’t are generally in remote
mountain villages. In 1995, 120 million Chinese lived without electricity but now only about 25 million or so do .

In remote areas villages near the main roads may have had electricity for 15 years. They have enough energy to power
refrigerators, electric stoves, televisions, water filters and washing machines around the clock. A three-hour walk up a
river brings one to villages that have had electricity for seven years and receive enough energy to keep appliances
running 24 hours day. Two hours further upriver the villages have had electricity for only a couple years and have power
supplies from 8:00am and to 12:00 midnight, long enough to extend farming time because many activities formally done
during daylight now can be done after dark. Six more hours up river brings one to villages where electricity has been
available only for several months and is only on at night from 7:30pm and 10:30pm, long enough for villagers to watch
television and read books under electric lights.
 In remote villages energy is supplied by coffee-can-size hydro generators that sit on top of some bricks along a
riverbank and provides light and television for five hours. Perhaps the profoundest impact of electricity has been the
spread of television using satellite broadcasts and the providing lights. In some places villagers no longer have to spend
hours collecting pine branches for torches. Refrigerators have allowed farmers to preserve meat without having to salt it
and gives them more flexibility when to harvest fruits and vegetables.

Inefficient Electricity Infrastructure in China

The whole electric power system—from generation to transmission to usage—is very inefficient. Some power plants
consume huge amount of coal but are not flexible enough to adjust production with peak and off-peak consumption times

State-run distribution companies do a poor job getting energy to where it s needed when it needs it. The antiquated
transmission grid is poorly coordinated and, in many cases, outfit with out of date technology. It cannot automatically
reroute power from one region to another as demand and supply rise and fall, which makes it difficult or impossible to
move energy from areas with surpluses to areas with shortages.

Because China traditionally has not had the resources to build a nationwide electricity grid it has built power stations as
close as possible to users. This strategy is fine except when there is power failure at one station and there is no back up

China limits increases in electricity prices which encourages waste. In 2007 there was some discussion of raising prices
to compensate for the higher coal costs.
 Heavy industry eats up too much of China’s electricity supply. Steel, nonferrous metals, cement and chemicals
consumer 29 percent of China’s electricity.

Electricity consumption has been keeping pace with economic growth, increasing about 10 percent a year since 2000,
but the construction of electricity infrastructure and the installation of power transmission lines has lagged behind. the
problem is particularly acute in coastal areas where economic activity has created high demand for electricity and power
outages have occurred with some regularly since 2002.

Energy Policy and the Government in China

Beijing subsidizes, shapes and “guides” the energy market. Electricity, coal, fertilizer and water are all cheaper than
their real cost. This is done to control the economy, avoid hardships for ordinary Chinese and as a consequence prevent
social unrest. When oil prices rose to $160 and then dropped to $70 a barrel consumer prices in China remained largely
unchanged. Even when prices reached $3.50 a gallon in the summer of 2008, many drivers received subsidies or
compensation.

The mining and energy industries are notorious for ignoring directives and rules set by the central government and
following their agenda, with local government officials being more wrapped up with local concerns and enriching
themselves than following national policies.

The central government is trying to get local governments to stop building power plants and close down unsafe mines
but these wishes are often ignored. Often it seems that the central government is too timid to enforce its orders or
corruption culture is to embedded for anyone to anything about it. .

Electricity Shortages in China

 Electricity shortages are a serious problem in China. Black outs, brown outs and shortages occur even though power-
generating plants are being built a record pace. Among the hardest hit areas are places where economic growth is very
high such the Shenzhen area in Guangdong Province and the Yangtze River Delta, which includes Shanghai and the
provinces Zhejiang and Jiangsu.

In the summers of 2003, 2004 and 2005 China was forced to ration energy and limit production in industrial areas even
though it had expanded its generating capacity by the equivalent of the energy used in Spain. In the summer of 2005,
China’s’ four major cities and 18 of 27 provinces experiences blackouts. Beijing set a daily record for electricity
consumption and generating capacity as air conditioners were cranked up in the high summer heat.

Local governments use phone and text-message systems to send out warnings of impending black outs. When these
messages are received generators kick on. Many factories have generators to supply electricity when there are blackouts.
Running these generators is expensive. They use a lot diesel fuel. China now is the world’s leading buyer of industrial
generators.

The shortages in southern China are expected to continue in the near future at least and be especially severe if problems
occur such as generator malfunctions or furl shortages.

Consequences of Electricity Shortages in China

In some places the electricity is turned off one out of every four days. Electric heaters are banned; hotels turn off the
heat; people avoid taking elevators out of fear of being trapped by a blackout. Even in big cities children do their
homework by candle light because of rolling blackouts. Some places have even forced to turn off traffic lights.

Energy shortages have forced factories to cut production and ration their energy supplies. In some cases factories
operate only a night when demand for energy is low. In other cases they have been forced to shut down completely for
more than two weeks. The shortages were particularly hard on industries that need a lot of energy like aluminum, steel
and cement and ones with furnaces that need a constant supply f energy or they break.

Factories in Guangdong were told that their power would be cut one day a week, then two days a week, then five days a
week, during peak hours. Under these conditions the factories switched production to the night and on weekends of
bought their own diesel generators, which increased manufacturing costs by around 5 percent.

In Shanghai there have been runs on power generators and power has been cut to factories while neon lights were
allowed to keep blinking on the Bund; decorative lights on skyscrapers are kept on late into the night; and air
conditioning is kept on the fancy shopping malls so that everything seems to hunky dory to visitors ib Shanghai.

Power outages have been a boon for makers of diesel generators of all sizes. General Electric, Siemens and Mitsubishi
heavy Industries have won large contracts supplying turbines and other technology for China’s power-generating plants.
Causes of Electricity Shortages in China

Electricity shortages are primarily the result of the booming economy outstripping energy supplies and the inability of
the energy producers to keep up with industrial demand. Industries are increasing output; people are buying more energy-
consuming appliances; construction and development need energy-hungry industries like steel and cement to keep going.

Energy shortages have been exacerbated by droughts reducing water used in hydroelectric plants, depletion of coal
supplies in some areas; closing of coal mines due to worries about mine safety and pollution; slowness in conversion
from coal to oil; and the inability to build electric infrastructure fast enough. Bottlenecks hold up the transportation of
energy supplies. Railways can not move coal fast enough. Tankers have to wait days in the ports before they can be
unloaded because port facilities are not adequate.

The supply of energy is tightly regulated and is still largely controlled by Communist planners who think in terms of
five-year plans. These five year plans are largely to blame for China’s energy shortages. Building electricity
infrastructure takes advanced planning. In the late 1990s plans for the early 2000s were made after the Asian financial
crisis and growth rates were predicted to be around 7 percent. When 10 percent growth rates materialized in the 2000s,
not enough power stations had been built, especially in Guangdong, where growth rates of 15 percent materialized. the
result: energy shortages,

Power outage in 2008, See Weather

Saving Energy and Addressing Electricity Shortages in China

Effiicient heating systems

China is busy building power plants, dams and pipeline and upgrading port facilities and railroads but the construction
is lagging behind demand. Many aren’t expected to be ready for a couple of years.

To conserve energy, factories are encouraged to operate at off peak hours, shopping centers are encouraged to turn off
neon lights and turn down the heat and air conditioning. Many companies give employees time off and shift work
schedules to reduce demand for electricity. Some factories stagger their working hours, in some cases shutting down
during the week and operating on weekends to keep from using energy during times of peak demand.

China is trying make its factories more energy efficient (they are currently 10 to 50 percent less efficient than factories
in developed countries) by improving the efficiency of its coal boilers and electric motors; closing down particularly
wasteful factories; constructing houses with more insulation and doubled glazed windows; implementing energy
efficiency cars, air conditioner and refrigerators.

The government is encouraging banks to finance energy projects and allowing foreign energy companies to explore for
new energy sources. It also taking away money and support of energy-sucking construction and development projects and
shut down small coal power stations and stopped the construction of new small power stations. Officials in Shanghai
have considered imposing restrictions on air conditioner use to prevent the collapse of the city’s electrical grid.

The new five year plan issued in 2006 calls for a reduction of energy use by one fifth. Some progress has been made in
making energy through the ending of coal subsides, a shift to market prices for fuels and policies that reduce pollution
and encourage conservation. These kinds of improvements have reduced the need to build new power plants but not by
much.

Energy Conservation In China

 In a speech in March 2007 Chinese Premier Wen Jibao said that conserving energy was a top priority. China had
tightened the energy efficiency requirements on new buildings and imposed fuel-efficiency standards on automobiles that
are stricter than the ones in the United States.

Beijing has set up an “energy police” force whose job is to crack down on excessive lighting and heating and other
wastes of energy in shopping malls and office buildings in the capital. The energy police will have the authority to fine
violators. This is a step up from other energy efficiency programs that lacked concrete punishments.

In the summer of 2007, several local governments banned the use of air conditioning except when it was excessively
hot, over 33°C, as part of the campaign to cut energy consumption and use energy more efficiently. In Beijing, the
“energy police” were put work enforcing limits on air conditioner use and some government offices shut their air
conditioning off in a show of solidarity for the campaign.

China and Japan and companies in each country are increasingly cooperating in energy sectors. Japan has the
technological know-how to use energy cleanly and efficiently and China has the need. A number of Japanese companies
in the energy conservation business are looking for opportunities in China. They include companies involved in
improving thermal power plants, heat waste recovery and boiler efficiency. Some Japanese companies in this sector are
reluctant to do business in China out of concern that their methods, patents and intellectual property will be stolen or
compromised.

There is s drive to improve energy efficiency by 4 percent a year. China cut its average energy consumption by 3.53
percent in the first half of 2009 according to the National Development and Reform Commission.

Improvements made by China in energy efficiency include 1) removing subsidies for motor fuel, which now costs more
than it does in the United States; 2) enacting tough new fuel efficiency standards for new urban vehicles (36.7 miles per
gallon); 3) setting high standards of energy efficiency for coal plants and buildings; 4) targeting the 1,000 top emitter of
greenhouse gases to boost energy efficiency by 20 percent; and 5) shutting down many older inefficient boilers and
power plants.

Energy Conservation in Chinese Buildings

Chinese buildings are quite energy inefficient. They require twice as much fuel to heat and cool as building in North
America. A third of China’s carbon emissions and seven percent of the world’s emissions come from electricity and gas
used by Chinese buildings. Improvements on making buildings more energy efficient may be outweighed by the sheer
number of buildings going up as a result of China’s real estate boom.
 An effort is being made to get homeowners, builders and developers to make dwellings more energy efficient. The
multibillion dollar drive includes revoking the business licenses of developers that don’t comply with energy-saving laws
and offering tax breaks and other incentives to homeowners to install low-energy lighting and better insulation.

China has passed new regulations for making buildings more energy efficient but enforcing them is difficult. Only 10
building had applied for recognition in 2009 under a green-building rating system launched in 2007.

The Chinese government is encouraging real estate developers to adopt energy saving measures and use more energy-
efficient appliances.

Saving Energy, See Automobiles,

Image Sources: BBC, Environmental News; Westport School; Nolls China website
http://www.paulnoll.com/China/index.html ; The Stand, Environmental News; AP; China Daily and Environmental News

Text Sources: New York Times, Washington Post, Los Angeles Times, Times of London, National Geographic, The New
Yorker, Time, Newsweek, Reuters, AP, Lonely Planet Guides, Compton’s Encyclopedia and various books and other
publications.