The dark side of growth

The dark side of growth

Vaclav Smil
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A preview of the new number of World Energy (37), "China: The Overtake". China's advances, though impressive, have worrisome implications: The use of coal has made it one of the world's most polluting countries, and the new economy has created massive income disparities. A successful future will require determined approaches to these enormous challenges.

No country has expanded its energy consumption as rapidly, and as comprehensively, as  China since 1990. In order to appreciate the speed and the extent of this progress it is necessary to understand some of the country’s history. Ancient China pioneered two key energy conversions: it was the first country (during the Han dynasty two millennia ago) to use metallurgical coal in producing liquid (cast) iron for plows and cooking pots, and the first to use natural gas (extracted from wells drilled by percussion tools and transported in bamboo pipes) to evaporate brines and produce salt in land-locked Sichuan. China maintained its technical leadership until the 18th century, when its economy was still the world’s largest, and when its average per capita income and energy use were comparable to the richest countries of continental Europe.

When China had a backward economy

Subsequent economic stagnation and conflicts during the 19th century (wars with Britain and Japan, domestic uprisings), the collapse of the imperial power in 1911 and decades of war (civil and against Japan) left the new China (PRC was established in October 1949) a backward economy with very low energy use. In 1950, average per capita availability of modern energy was no more than 2.5 GJ (equivalent to just 100 kg of coal), and all but a small fraction of China’s population relied on an inadequate supply of wood and straw. Annual output of coal was only about 40 million tons (Mt), oil production was just 200,000 t and natural gas extraction and hydroelectricity generation were negligible. Maoist industrialization, based on the Stalinist model, boosted coal mining and at the end of the first five-year plan in 1957, coal output had nearly quadrupled. But the following years of profound economic mismanagement (the famine of the Great Leap Forward between 1958 and 1961 followed by the Cultural Revolution of 1966-1976) did little to improve personal access to energy or to promote the transition from coal.  

Mao Zedong died in 1976, Deng Xiaoping assumed power in December 1979, and his bold economic reforms slowly began in 1980. At that time China was still an overwhelmingly rural economy with major energy shortages. In 1980 wood, charcoal and straw supplied no less than 25 percent of the country’s total primary energy and 70 percent of the rural household demand, and 500 million peasants (63 percent of the total rural population) suffered from serious, months-long fuel shortages. Coal (1980 output of about 600 Mt) supplied 72 percent of all primary energy, crude oil production had just surpassed 100 Mt and gas extraction remained negligible.

Rural access to energy finally improved during the 1980s when rising output from small local coal mines and the return of privately owned woodlots raised the supply, while mass adoption of improved stoves reduced combustion losses. Biomass use fell to 13 percent of all energy in 2000 but in absolute terms it peaked in 2006 when it was equal to nearly 200 Mt of oil equivalent. Only the subsequent surge in fossil fuel consumption cut the contribution of traditional biofuels to less than 5 percent of the total by 2015, a figure comparable to that of America.

The role of coal in the last thirty years

Coal has always dominated China’s modern energy supply, but the post-1990 surge in its extraction has no precedent in history. During the 1990s, output rose by nearly 30 percent but during the first decade of the 21st century China added 2 billion tons (or gigatons, Gt) to its annual output, reaching nearly 3.5 Gt and then setting a new mining record, close to 4 Gt in 2013, when it accounted for 48 percent of the world’s coal output. Not surprisingly, coal-based generation has recently produced nearly 60 percent of electric power, and a large part of this historic coal surge was energy embodied in China’s impressive increased crop harvests and in unprecedented infrastructure expansion. Coal and hydrocarbons were used both as fuels and feedstock to boost ammonia synthesis. China has been the world’s leading user of nitrogenous fertilizers since 1979, and thanks to intensive applications it can now feed its 1.38 billion people and provide on average a daily per capita food supply higher than that of Japan while being less dependent on food imports (now about 20 percent of all grain, while Japan imports about 60 percent of its food energy). Metallurgical coke has driven  China’s rise to become by far the world’s largest producer of steel (half of the world’s output of 1.6 Gt/year), and China has also become the world’s dominant producer of cement (2.4 out of 4.2 Gt in 2016). This mass-scale supply of steel and cement has made it possible to carry on the largest urbanization program in history (the share of urban population rose from 20 percent in 1980 to 56 percent in 2015) and to build the world’s most extensive multilane highway and high-speed rail systems. The intensity of this effort is best conveyed by the fact that recently China has been emplacing more concrete in its infrastructures every three years than the U.S.did during the entire 20th century. China’s National Trunk Highway System reached 123,000 km in 2015, 60 percent longer than the U.S. Interstate network (the two countries have nearly identical area) while the high-speed rail links now surpass 22,000 km.

But there has been a price to pay for these advances: coal resources have provided a rapidly rising and reliable supply of energy, but environmental and health consequences have been predictably negative. The dangers begin with mining that is mostly underground. During the first decade of the 21st century, accidental deaths in China’s coal mines were nearly 40 times the U.S. mean (U.S. coal is extracted mostly in open-cast mines) and even after recent improvements, fatalities per ton of coal are still more than ten times the U.S, rate. Air pollution in large northern cities, where emissions from coal combustion have been augmented by emissions from millions of newly sold cars (record of 28 million in 2016, 10 million above U.S. sales), reached levels without precedent.

An air quality index (AQI) of less than 50 indicates clean air, and levels between 151 and 200 are generally unhealthy.  Since 2010, some Chinese cities have experienced days with AQI surpassing not just 300 but even 500 and, exceptionally, as high as 700, compared to the mean AQI of about 30 for more than 600 monitored U.S. sites. And in 2006, much sooner than expected, China had also become the world’s largest emitter of CO2 from fossil fuel combustion;   by 2015, it produced twice as much as the second-place U.S., whose emissions have been declining thanks to a massive shift from coal to natural gas. Reducing China’s dependence on coal will take time. In 1980, 72 percent of energy supply (excluding biomass fuels) came from coal. In 2015, the share was still 64 percent and domestic output declined a bit after having reached  a record level in 2013. But while the plans are to reduce coal extraction capacity by 800 Mt by 2020 (mostly by closing outdated mines), coal consumption is expected to rise by 2020 to 4.1 Gt.

Following the American example

Given its minimal demand for refined fuels (no private cars, chemical industries based largely on coal, growing, but still limited, crude oil extraction), demand rose from 106 Mt in 1980 to 162 Mt by the year 2000, making China a small net exporter until 1994. Rising demand necessitated higher imports; by 2004 they surpassed 100 Mt, and in 2016 were, at about 380 Mt, just 3 percent lower than U.S.imports. Higher dependence on imports led China to follow the U.S. example and set up a new large strategic oil reserve. But even the combination of rising production and higher imports could not prevent a slight decline in crude oil’s share of primary energy supply as it fell from a peak of 22 percent at the beginning of the 21st century to about 18 percent by 2015. Production of natural gas had nearly quadrupled during the 1990s (from a low base) but by 2015, the fuel’s share in primary supply reached only 6 percent, double the 1980 level.

Coal’s share in China’s primary energy supply should fall due to rising domestic oil output and plans to make natural gas a major component of overall energy supply. A new 2016 assessment of potential gas resources raised the previous total by nearly 160 percent, the fuel’s share should reach 10 percent of primary supply in 2020, and 2015 extraction should triple by 2030. Starting in 2006. China joined other East Asian countries as a major importer of LNG (from Australia, Indonesia and Qatar); three parallel pipelines already bring natural gas from Turkmenistan, Uzbekistan, and Kazakhstan to China’s Xinjiang, and in 2014, a long-term deal was signed with Russia to import natural gas from Eastern Siberia (Chayanda field in Sakha) and Kovykta (west of the Lake Baikal) starting in 2018.

Besides pushing coal extraction, post-1980 China had also embarked on record-breaking development of its water power (its generating potential is the world’s largest). Hydrogeneration had more than tripled between 2000 and 2010, the decade that saw the completion of the world’s largest hydro project, the Three Gorges Dam (22.5 GW) on the Yangzi connected to coastal load centers by extra-high-voltage direct current (± 500 kV) transmission. Other megaprojects are underway or in planning stages, insuring that hydroelectricity will remain much more important than nuclear generation (37 reactors are now in operation, 20 under construction). Given its high levels of air pollution and its position as the world’s largest emitter of greenhouse gases (besides CO2 from fuel combustion there is also CH4 from rice fields and N2O from nitrogenous fertilizers) it is not surprising that China has promoted both wind and PV generation, and in 2016, their combined contribution surpassed that of nuclear generation but equaled only about a quarter of more predictable hydro generation. Moreover, hasty, subsidized construction has resulted in some inferior load capacity factors.  In 2016, China’s PV generation had an overall load factor of just 10 percent.

A "relatively" rich country

All of China’s post-1980 economic aggregates are stunning: since 2009, the country has been the world’s largest energy consumer. When the comparison is done in terms of purchasing power parity, it is now also the world’s largest economy (ahead of the E.U. and the U.S.). But in relative terms the country is still far from rich, clearly being a middle-income economy, In per capita terms China ranked only 79th in 2016, just ahead of Brazil and behind Thailand, and Italian per capita GDP is 2.5 times and Germany’s GDP more than three times higher. Increase in annual per capita primary energy use has been impressive, from only about 25 GJ in 1980 to almost 40 GJ/capita in the year 2000 and then to 95 GJ (about 2.25 tons of oil equivalent) in 2015, the latter rate comparable to Spanish mean in 1990 or to the French average of the mid-1960s.

But the allocation of China’s energy use is very different from the norms in the, E.U. and North America. Chinese energy consumption is highly skewed: according to China’s Statistical Bureau in 2015, almost 70 percent of the total was claimed by industrial production. This is hardly surprising given China’s enormous output of infrastructural materials (the world’s larger producer of basic metals, cement, bricks, glass, synthetics) and its post-1990 role as the workshop of the world, exporting industrial and transportation machinery (from large ships to bicycles) and a huge array of consumer products (from apparel and kitchenware to furniture and smart phones). In contrast, in 2015, only about 10 percent of all energy went into transportation and 12 percent is claimed by households (annual equivalent of only about 10 GJ/capita).

These rates should be kept in mind when seeing the images of China’s modern downtowns (the country leads in the total number of skyscrapers) and when noting ostentatious consumption of China’s newly rich, at home and abroad. Post-1980 developments did lift about 500 million people from poverty (as defined by the World Bank), another unprecedented achievement. But a notable rural-urban divide still persists (in 2015 44 percent of population was still rural), new economic opportunities have also brought very high levels of corruption, now a major concern for the government, Transparency International puts China on par with India at 79th place in the worldwide corruption ranking from Denmark to Somalia), and the country has experienced increasing income inequality. China’s rise could not have taken place without the hundreds of millions of migrants who left their families in villages and now live in often  dismal conditions while building new cities. By 2015, this floating population (this is an official Chinese term) reached 250 million people, and none of them is buying coastal properties abroad and paying excessive prices for cars or paintings.

As with any historical appraisal, a closer look reveals a mixture of commendable advances and worrisome developments. Coal has energized China’s economic rise, but its use has exacted a high environmental price and made the country the world’s largest emitter of greenhouse gases. Surging energy use has created a new economy that has lifted hundreds of millions from the decades of Maoist misery, but previously unthinkable income disparities and ubiquitous corruption are affecting China’s social foundations. Given the country’s importance in global economy, and now also in geopolitics, the world’s future will be, in no small degree, determined by how successfully China will tackle these enormous challenges.

 


Vaclav Smil is Distinguished Professor Emeritus at the University of Manitoba in Winnipeg, Canada. He has published 37 books with a main focus on interdisciplinary studies of energy and technical advances. He is a Fellow of the Royal Society of Canada, and a Member of the Order of Canada. In 2015, he received the OPEC Award for Research