Auto Carrier outside of Nanjing China with Chinese-made Fiat sedans
Chinese-made Fiat autos ready for shipment. The more the expanding Chinese middle class embrace the dream of owning a car, the greater the demand on the world's supply of oil. By 2030, if current trends continue, China -- not the US -- will be the world's largest oil consuming nation.

The China Effect

MP3 audio from 2006 ASPO USA Peak Oil Conference, Boston, Massachusetts.

By EV World

Given China's rising economic posture in the world, and that it has now surpassed Germany in terms of total cars manufactured annually, a conference on the topic of peak oil wouldn't be complete without highlighting its growing energy needs.

Filling that role for the first time this year at the Association for the Study of Peak Oil (ASPO USA) conference in Boston was Harvard University's Kelly Sims Gallagher, PhD, the Director of the Energy Technology Innovation Project. She is also the author of the 2006 China Shifts Gears: Automakers, Oil, Pollution, and Development

Gallagher noted that the United States and China share certain similarities, especially in their heavy dependence on oil, oil that both now must import to make up for their own declining internal production. In the United States, this happened in the early 1970's; for China it happened in the 1990s.

China currently consumes two-thirds the amount of energy as the United States and emits 61 percent of the CO2, much of it from coal. It lags behind the U.S. in total oil consumption, burning one-third as much as the United States and imports one-third the U.S. total. She categorized as "hysteria" reports of China's energy demands.

"I just really want to emphasize, in total China's energy demand is much, much less than ours."

But where it lags behind the America in oil usage, it more than makes up for in its consumption of coal, mining and burning 37% of all the coal consumed in the world in 2005.

"Coal accounts for three-quarters of commercial energy supply in China," she stated, adding that the central government in Beijing has set a goal of increasing economic activity by 400 percent over the next 20 years, while only increasing energy usage by 200 percent.

"That would be a very impressive achievement in terms of energy efficiency."

She explained that most of the coal China mines is burned in pulverized coal power plants, which poses a serious environmental threat not just to China, but to the rest of the planet, especially in terms of the CO2 released into the atmosphere. Nuclear power represents only two percent of electric power generation in China, she noted.

"It would be difficult to expand that fraction very much into the foreseeable future."

Gallagher pointed out that a recent Nielsen survey that queried the purchase intentions of consumers in Beijing, Shanghai and Guangzhuo found that 13 percent said they intended to purchase a car in the next 12 months.

"There are a lot of people in those cities, so I think it is very likely that sales of passenger cars are going to continue to increase fairly dramatically." She said that automobile-generated emissions has become the leading source of air pollution in most of China's large cities.

"This is a function of China having weaker pollution control standards, of relatively poor fuel quality and the somewhat dated vehicle technology."

"As recently as the 1990s, China was producing less than 100,000 vehicles a year." By 2000, production has begun to soar and China is now poised to become the number two car producer in the world.

"As of 2005, there are 20 million passenger cars on the road, and probably more like 25 million today." She observed that the U.S. has ten times that number of vehicles at around 250 million.

China became the second largest oil consuming nation in 2004 and it now imports 3.5 million barrels a day, making it the third largest importer after the United States and Japan. More than half of these imports come from the Middle East, making it much more dependent on this volatile region than the U.S. However, this year, China's top supplier switched from Saudi Arabia to Angola. Its quest for oil has led it to spend over the last decade an estimated $15 billion to acquire some 100 oil companies around the globe.

Following the example of the United States, China just completed filling its own strategic petroleum reserve with a capacity of 32 million barrels of oil.

Yet, despite its impressive growth, China's demand to oil and growth in passenger cars is still paled by the United States, at least out to 2030, when it is slated to pass America in terms of its oil consumption. Carbon dioxide emissions, however, will pass the US by sometime around 2015, which doesn't bode well for the planet.

"No one wants to deny China, or the US, for that matter, the energy services they need to sustain their economies," she said. "I do believe that one way we can make a difference is through advanced technology." This is the purpose of the project she directs and the focus of her book, how to facilitate the transfer and use of energy saving technologies between the United States, China and India.

She concluded by highlighting several major findings of her book that include the following:

She commented that in the absence of more enlightened policy and incentives on the part of all concerned, there is a limit to how much China can "leapfrog" in a host of different technologies, including automotive. It will take the imposition of fuel economy and pollution control standards in the auto manufacturing sector in China -- as well as the rest of the world -- to avert the troubling future we are creating for ourselves and our children.

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Published: 21-Dec-2006


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