The Greening of the Middle Kingdom: The Story of Energy Efficiency in China

Abstract

The dominant image of China's energy system is of billowing smokestacks from the combustion of coal. More heavily dependent on coal than any other major country, China uses it for about 70 percent of its energy (NBS, 2008). Furthermore, until recently, China had very few environmental controls on emissions from coal combustion; recent efforts to control sulfur dioxide (SO{sub 2}) emissions appear to be meeting with some success (Economy, 2007, 2009). Figure 1 shows the dominant use of coal in China's energy system from 1950 to 1980 (NBS, various years). However, this is just one side of China's energy story. Figure 2 illustrates the second part, and what may be the most important part of the story - China's energy system since 1980, shortly after Deng Xiaoping assumed full leadership. This figure compares the trends in energy consumption and gross domestic product (GDP) by indexing both values to 100 in 1980. The upper line shows what energy consumption in China would have been if it had grown at the same rate as GDP, since energy consumption usually increases in lockstep with GDP in an industrializing, developing country, at least until it reaches a high economic level. The lower line in Figure 2 shows China's actual energy consumption, also indexed to 1980. The striking difference between the lines shows that GDP in China grew much faster than energy demand from 1980 to 2002. As a result, by 2002 energy and energy-related carbon dioxide (CO{sub 2}) emissions were more than 40% percent of what they would have been if energy and GDP had grown in tandem. In the next chapter of China's energy history, from 2002 to 2005, the increase in energy demand outstripped a very rapidly growing economy, and because of the large size of the Chinese economy, the increase had substantial impacts. The construction of power plants increased to 100 gigawatts per year; over the three-year period newly constructed plants had a capacity of more than 30 percent of total electricity-generation capacity in the United States. At the same time, energy-related CO{sub 2} emissions in China increased dramatically. In the latest stage, another abrupt change, this time for the better in terms of energy efficiency, began late in 2005. As senior officials in the government turned their attention to the problem of growing energy demand, the government set a mandatory goal for 2010 of a 20 percent reduction in energy intensity (defined as energy use per unit of GDP) from 2005 levels. To meet this goal, China undertook significant legislative, regulatory, and organizational reforms at the national, provincial, and municipal levels to ensure that measures to reduce energy intensity would be implemented in all sectors and activities in China. At the time of this writing, it appears that China is on its way to meeting the 20 percent goal, thus reducing CO{sub 2} emissions by 1.5 billion tones, as compared with consumption at 2005 energy-intensity levels. In this paper, we describe and assess these three significant periods in China's energy story and provide a context by briefly reviewing the three decades prior to 1980.