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Page added on September 4, 2013
Robert Rapier: Prepare for the Chinese Energy Juggernaut
The Energy Information Administration (EIA) recently released its International Energy Outlook 2013 (IEO2013). While the EIA doesn’t have a sterling track record for predictions, many organizations make decisions at least partially based on EIA projections. Therefore the organization’s forecasts are worth reviewing.
Of particular interest to me were the agencies forecasts about China’s energy demand. Over the past decade, China has become the world’s largest energy consumer, as well as the world’s largest emitter of carbon dioxide. Chinese coal consumption is up 157 percent since 2002, and they now consume over 50 percent of the world’s coal. Their oil consumption rose by 5 million barrels per day (bpd) in the past 10 years, to nearly double the level of 2002.
But according to the EIA, we haven’t seen anything yet:
In order to attempt to meet this demand, China truly has an “All of the Above” energy strategy. Renewable energy advocates like to point to China’s huge investments in that sector as if to say that China is leading the way toward a clean energy future. But China is making major investments across their energy sector, including investments in many new coal and nuclear power power plants. (China is expected to account for 40 percent of the world’s new nuclear power capacity over the next three decades).
I know a lot of people who would say that the forecast is silly, because there simply won’t be enough energy to enable that sort of growth. A friend recently said to me “It’s a zero-sum game.” I wouldn’t go quite that far yet, but to the extent that the global acquisition of energy does become a zero-sum game, that means there will be fierce competition — much more so than we have seen to date — for the world’s energy supplies. The last decade saw $100/barrel oil as the new norm. How high might oil prices go if China grows their consumption by another 5 million bpd?
At the end of every year, I list my Top 10 stories for the year, and I make predictions for the upcoming year. And every year, China ends up pretty high on both lists. I have stated on many occasions my belief that China’s growth is presently the single largest driving force in the global energy markets. If the EIA forecasts are even in the ballpark, that’s going to continue to be the case for many years to come.
7 Comments on "Robert Rapier: Prepare for the Chinese Energy Juggernaut"
DC on Wed, 4th Sep 2013 10:33 pm
It IS a zero-sum game now. Just because incremental increases might still be possible, it wont change the underlying issue. US will never rise again because its drive-shop-consume economy can no longer support big increases in demand, if anything the opposite is like in store for amerika. This will leave a little extra for China to buy up, but not for very long. At some point, even China’s ability to pay for expensive depleting oil will run into limits as well.
Kenz300 on Wed, 4th Sep 2013 11:40 pm
China and India are driving world energy demand.
How they deal with it will impact future Climate Change around the world.
China has started to increase its use and projections for alternative energy sources. The transition to safe, clean alternative energy can not come fast enough.
BillT on Thu, 5th Sep 2013 6:29 am
Perspective please:
China has 4 times the US population therefor, they use 1/4 the energy per capita that, they will have about 4 times the pollution. If we still made all of the Walmart junk here, we would have the pollution here also.
We use about 1/4 of the world’s oil supply. If we had those 1.3+ billion people, we would need 100% of the world’s oil to have our same lifestyle.
Those 1.3+ billion want a Western lifestyle, but obviously cannot have it. Nor the 1+ billion Indians or the 1+ billion Africans or … Are you getting the picture?
BillT on Thu, 5th Sep 2013 6:30 am
… they use 1/4 the energy per capita that Americans use, …
rollin on Thu, 5th Sep 2013 7:49 am
Does anybody here believe that oil production will be above 40 mbpd in 2040? How about coal production, already on the downhill slide in many areas? Natural gas is going to be getting tight by then too.
So it will be nuclear and various types of solar that will power the world by mid-century. Or maybe the Chinese will be leaving the cities and heading back to the country before then.
The projection for population in Asia by 2050 is 5.2 billion. Believe that one?
BillT on Thu, 5th Sep 2013 10:14 am
rollin, nuclear is about dead. Fukushima will see to that.
As for solar, et all, nope. Not more than a small percentage of today’s use and what does exist will be for necessary use, not to drive you to the mall (which will also just be an empty building by then) or to power up appliances or to heat homes. It will be used to run hospitals, government, military, etc. Of course, by then the internet will be long gone and the I-toys will be moldering in the attic or a landfill.
RobertRapier on Thu, 5th Sep 2013 5:12 pm
Note that I am not saying that it won’t eventually be a zero-sum game, just that it isn’t yet. Energy supplies are still growing. They will stop growing and contract, and then it will be less than a zero-sum game. Understanding the timing of this should be of great interest to everyone.