China - Now Number 1!

This week, the International Energy Agency (IEA) announced that China had passed the United States in overall energy consumption. While this may not seem seem significant to many, it is a stunning change in the world's energy consumption pattern. The United States had been the world's largest energy consumer for over a century and has been overtaken by a rapidly growing economic powerhouse.

The IEA measures energy consumption in oil equivalents; all forms of energy consumed including nuclear, oil, coal, natural gas and hydro are measured and converted to how much oil would be required to produce the same amount of energy. In the past decade, China has gone from half of the total energy used by the United States to surpass the United States in 2009 partially because of the economic slowdown which hit American industries hard. More importantly, China's rapidly growing economy accelerated its need for more energy sooner than was expected with most energy growth needs coming from the industrial sector rather than consumer demand. The IEA statistics show that in 2009, China consumed 2.252 billion tons of oil equivalent compared to 2.170 billion tons of oil equivalent for the United States.

While these numbers are interesting on their own, looking at them on a per capita basis is more revealing. With a population of 1.3247 billion people, per capita annual energy consumption in China is 1.7 tons of oil equivalent. By comparison, with a population of 307 million people, per capita annual energy consumption in the United States is 7.07 tons of oil equivalent. Should China reach the same per capita energy consumption as the United States, they will require 9366 billion tons of oil equivalent. I realize that my logic here is a bit sketchy however, if we were to inflate the useage of all energy types including oil to the United States consumption standard, China could need 4.16 times more oil than they need now, raising their consumption to 35.87 million BOPD, 45 percent of the world's current daily oil production of 79.948 million barrels of oil per day rather than the 11 percent that they are now consuming.

The dramatic increase in China's energy requirements is being partially met by projects like the Three Gorges Dam which is now producing hydroelectricity after 14 years of construction and will be fully operational in 2011. This dam alone will be able to produce 22500 megawatts of much needed electricity. By comparison, the Grand Coulee Dam, the largest hydroelectric dam in the United States, produces 6809 megawatts of power. China also has 23 nuclear power reactors under construction and has set a target of 86,000 megawatts of nuclear power by 2020 with another 18,000 megawatts under construction at that time. China's current oil consumption is about 8.6 million barrels of oil per day and has grown at nearly 5 percent annually over the past 5 year and by 93% over the past 10 years. Coal provides the vast majority of energy consumption in China with approximately 70% of energy consumed being derived from coal; in 2009, China consumed nearly 47 percent of the global supply of coal using 1.56 billion metric tons. At this point, China's consumption and production of coal are roughly in balance, however, that appears to be changing as China's coal consumption is set to grow at around 10 percent annually. In the first 5 months of 2010, China's People's Daily reported that coal imports had jumped by 114 percent to 69 million tonnes. This compares to 2009 when net imports amounted to 104 million tonnes and 2007 when China was a net coal exporter.

For my next posting on this subject, I will be focussing on China's oil consumption. As a prelude to the subject, here is a chart from BP's Statistical Review of World Energy 2010.

This chart shows that world oil production has not grown since 2004; holding steady at roughly 80 million barrels of oil per day. Many geoscientists believe that, at the very least, the world has reached peak cheap oil if not peak oil itself. Peak oil is defined as "the point in time when the maximum rate of global petroleum extraction is reached, after which the rate of production enters terminal decline."

As a geoscientist, I firmly believe that we have reached (or passed the point) of peak oil and this week's IEA report that China's total energy needs have surpassed that of the United States will have a huge impact on the world's geopolitical picture in the coming years. As well, with China's economy growing at or near double digit rates, this impact may be felt sooner rather than later.

References:

For further information on peak oil, please refer to The Association for the Study of Peak Oil and Gas (ASPO) website located here.