Feature: China’s Energy: Continuous Struggle With Shortage (2)

Feature: China’s energy: continuous struggle with shortage (2) The issue is urgent and with far-reaching significance. “Energy has become an important factor that holds back economic and social development,” states a news release from the first LGED meeting convened June 2.

Statistics show by the end of 2004 China’s total power capacity reached 440,000 MW. Experts say that should be raised to approximately one million MW by 2020, which means an annual addition of 33,000 MW. The prospects cause concerns over diminishing energy reserves and the environmental impact.

Comprehensive, strong measures are needed to address the current shortage in supply, which include the termination of reckless projects to cool down the economy, many analysts say. And to ensure a healthy sustainable development, the structure of industries as a whole and the mix of energy sources should be optimized. And frugal use of energy should become compulsory.

In spite of negative effects on the environment, coal will remain the major energy source. Coal-fired power made up 73.72 percent of China’s total power consumption in 2004. Last year’s coal output was 1.956 billion tons, of which 800 million was produced by stretching the capacity. That may be a temporary move in response to urgent needs. In the future, analysts say, the share of coal in the energy portfolio will decline gradually.

Thanks to the booming auto market, China’s consumption of oil went up rapidly, by an average of 5.77 percent since 1990, while domestic output grew merely 1.67 percent. China is now the world’s second largest oil purchaser. Its dependence on imports grew to an alarming 45 percent last year. At present, oil accounts for 23 percent of primary energy consumption. Analysts predict consumption would climb at an annual pace of 3 percent in the following 15 years. The dependence on imports would reach 50 percent by 2020.

The difficulty in procuring oil on the global market has convinced the Chinese government to establish a national strategic oil reserve. Four sites have been chosen in October 2004. According to NDRC director Ma Kai, the three big state-owned oil companies are requested to make similar efforts. Increasing domestic yield is another solution. Huang Yicheng, the former energy minister, says the problem lies in prospecting. He believes much more oil could be found in the country’s east offshore areas and west hinterland. The oil reserves currently spotted for exploitation aggregates 4 billion tons.

The share of natural gas in China’s primary energy consumption is 2.7 percent, against the world average of 24.2 percent. The official targets for the following 15 years are an average growth of 10 percent in production and an ultimate share of 10 percent. Natural gas is expected to become the third largest energy source. (more)