Figuring out China’s Energy Needs

Earthquake Lakes

At 0:45am on 8th June the waters of Tanjiashan Lake in China’s earthquake hit Sichuan province finally broke the sluice level and began draining safely down the valley.

Ever since the earthquake hit on May 12th armies of engineers, workmen and bulldozers have been working around the clock to avert a possible disaster caused by the ‘earthquake lake’ bursting its banks and their efforts seem to have paid off.

In the city of Mianyang downstream of the dam, the streets were virtually empty as people were evacuated and the sluice did its work. People heaved a sigh of relief as the concerted action of thousands of soldiers drained a lake the size of 50,000 Olympic sized swimming pools.

Yet the threat caused by the earthquake to millions of lives throughout Western China has thrown the whole future of dam building into question, raising concerns about the future of China’s energy needs that can no longer be ignored.

The Hydro Solution

Over the past 30 years, the country’s boundless appetite for energy has already made it the second largest consumer of energy in the world, after the US, with a growth rate reaching a staggering 16% in 2004.

Demand currently far outstrips supply and the push to develop Hydro power has made China the world’s largest producer with over half the globe’s stockpile of dams within its borders.

Whilst the nation relies primarily on coal to keep its economy surging, Hydro is cleaner, relatively efficient and in plentiful supply throughout the nation. The resource supplies 6 percent of China’s energy needs and the nation still only uses one fourth of its current potential.

However, while hydroelectric energy is renewable, the land its dams are built on is not and the geological instability of the area may have far-reaching repercussions for China’s hydroelectric future.

After two weeks of downplaying the problem, the Water Resources Ministry acknowledged Sunday that 69 reservoirs and dams were on the verge of collapse, and nearly 3,000 in China had sustained damage.
Dangerous times

Of China’s 87,000 dams, the country’s Economic planning agency initially declared that 391 were affected by the earthquake, two of them severely as they lay near the epicenter of the 7.9 earthquake.

Two weeks later this figure was massively revised to 3000 dams and reservoirs affected with 69 on the “verge of collapse,” threatening millions of lives downstream.

Zipingpu dam in Wenchuan county was one of the two dams most badly affected by the quake and a typical example of the country’s current ‘erect dams at all cost’ way of thinking.

Despite warnings from the Sichuan Seismological Bureau that the dam’s construction site lay near a major fault line in Sichuan province, the dam was still given the green light in 2000.

After the May 12th quake, thousands of engineers rushed to plug what the Chinese media reported as “extremely dangerous cracks” across its outer face and while no catastrophic disaster occurred, the event is being treated by many as a major warning of things to come.

We have a saying that bridges are silver, highways are gold, and dams are diamonds. If you get a contract to build a dam, there is so much money.

The International Rivers Network reports that China has 28,500 large dams across the country with many in areas prone to seismic activity.

The rush to build dams across China has also prompted speculation that dams may not always be constructed for need of energy alone due to the size of the construction contracts and the amount of money that can easily be sidelined and pocketed by local officials.

A recent government report in January 2008 stated that 37,000 dams built during the 50’s and 60’s were already dangerously unstable and Beijing has recently earmarked $1.3 billion to repair them.

The Grand Energy Plan

However in the push to achieve energy independence, does China really any choice in the push for alternative sources of energy? Rising energy prices, outstripped demand and rampant inefficient in the energy industry provide Beijing with few options to play around with.

Energy Security

With demand for energy predicted to increase at an average 6% annually for the next few years, China faces fresh challenges in its drive to power the nation.

Over 75 % of China’s energy needs come from coal, yet today the nation is a net importer (as of 2007). Though oil reserves exist in the East China Sea, China’s stake is relatively minor and many others are claimed by rival nations.

By 2025 a staggering 77 percent of China’s oil supplies will be foreign supplied prompting the country to scramble to secure energy wherever it can, including from questionable sources such as the Sudan.

Outstripped demand

Though the country’s per capita energy use pales in comparison with the US and Japan, the market potential for cars, air conditioners and other market appliances etc… has yet to take off and could do with frightening speed unless planned for.

In an economy dominated by heavy industry, demand already regularly outstrips supply leading to frequent blackouts across the country causing huge spikes in the global price of oil such as in 2004.

The very legitimacy of the Chinese Communist Party (CCP) is widely seen as resting on the economic prosperity of the country and an inability to supply enough power could further more lead to mass unrest in an already unstable society.


China’s energy generation is massively inefficient using about three times as much energy per unit of GDP as the US alone and nine times more than Japan. Though reducing such waste is key to securing a healthier energy independent future, efficiency reforms are likely to be expensive, hurting the bottom line of power companies and driving up the cost which could cause unrest among a populace already struggling to make ends meet.

Beijing faces further problems with provincial Governments intent on adding to the ranks of cheap coal-fired power stations that whilst highly inefficient, are much cheaper than alternative sources and instantly help alleviate the power shortages plaguing much of the country throughout the year.

Renewable Saviour?

Even if Beijing heeds the warning of seismologists for now, and takes a new tack in its dam building drive, other problems still exist.

On January 1st 2006, China’s Renewable Energy Law came into effect aiming to double the country’s reliance on renewable energy sources by 2020 and thus increasing its hydro usage by up to 15%.

Whilst a noble goal, this would “require the construction of the equivalent of the huge Three Gorges dam project every two years” in order to succeed and as always there’s always the question of whose going to foot the bill.

Other thorns in the feet of government dam advocates include finding the locations to build the mega dams required to generate the huge amounts of power that the country needs.

Though the Chinese province of Tibet is the source of many of Asia’s major rivers, many of those rivers supply millions of people in South/South East Asia who are non too happy at planned developments.

At the site of the world’s deepest gorge on the Bangladesh-India-Chinese border, a mega dam planned at a bend in the Brahmaputra River, is causing intense concerns with the Indian and Bangladeshi Governments and even speculations of war in the Indian media.

If gone ahead with, the 40GW mega dam may ease Chinese energy fears but it will also divert water away from millions of Indian’s and Bangladeshis in some of the regions poorest areas making it an untold catasphrophe in the making.

Further issues with such mega dams come from the sheer volume of factory waste, toxic metals and household rubbish that build up behind dams and affect the purity of the water supply in a society where safety often bows at the knees of bribery.

Over reliance on hydro power may also leave the country overly dependant on regular rainfall with perhaps unexpected results especially in parts that rely to a large extent on the resource. In 2003, severe droughts in China caused stark power outages in parts of the country where dammed reservoirs didn’t have enough water to supply demand at the time.

For now, China’s choice is to keep building big dams, even as the social and environmental impacts of the projects are increasingly questioned.
No-win situation

Expanding deserts, an increasing population and talk of finally lifting the strict ‘One Child’ policy are bound to increase pressure on China’s resources and the Government is unlikely to abandon the potential that hydro power presents for now.

To say the country isn’t making progress in expanding its energy options is untrue and the market place itself may likely play the strongest role in solving China’s energy woes through increased efficiency.

With demand rapidly outsoaring supply the price of primary resources such as coal and oil has skyrocketed and profit margins at many of China’s power companies have halved over the past year through increased costs.

As profits get hit, many power companies may reconsider the waste produced in the power process and raise standards to increase efficiency at all levels of the supply chain.

Whatever China’s eventual course of action, the country faces multiple challenges on the road to energy security and the eventual solution will surely require a measure of compromise and certainly one of restraint and consideration.

There is no easy road to economic prosperity and as the country races forward towards it, shortcuts cannot be relied upon to achieve it and if any lesson can be learnt from the Earthquake, it’s that companies had better listen to the geologists first before that first bucket of concrete is poured.

Everything in nature has balance and for China’s Government this is something they’ll have to consider with care if their Hydro policy is to work out successfully.

By 2025, according to the US Energy Information Administration, foreign supplies will account for a dizzying 77% of China’s total oil consumption.
  • In 1994 approx 2 % of the world’s primary energy consumption was derived from hydro power, increasing to 16 % in 2004. (Reference)
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  • In 2004 hydro power produced 16% of the world’s electricity, almost one fifth of current supply. (Reference)
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  • China gets 75 % of its energy from coal powered plants, yet only uses one fourth of its hydro power potential. (Reference)
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  • China’s consumption of coal is expected to supply 78% of power demand until 2030. (China Daily 09 June 2008)
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  • Hydro power forms China’s second largest energy resource supply after coal. (Reference)
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  • China is the world’s second largest consumer of energy after the United States and was its third largest energy producer (2003). (Reference)
  • China is the fifth largest oil producing nation on earth with proven reserves of around 16 billion barrels. (Reference)
  • The largest dam in the world is China’s Three Gorges dam which cost $30 billion to build and which displaced more than 1 million people. (Reference)

Photo credit to the honglingfamily on flickr