Opinion

Is the energy sector in crisis?

By Christoph Frei (China Daily)
Updated: 2011-05-26 11:06

 

China is facing a real challenge, or is it a crisis, in managing the consequences of power shortage in many regions at a time when recent events in neighboring Japan remind us of the interrelationship between nature and our fragile natural resources. There is also concern in China and throughout the world over the effects of global warming.

The specter of dried up riverbeds and advancing deserts has caused much anxiety among the public. But it is not possible to directly link the water shortage along the Yangtze River and the consequent reduction in power produced by hydroelectric plants to this phenomenon. It is a timely reminder, though, that when we draw plans we need to consider the consequences of our actions.

The world has watched in amazement the growth that China has enjoyed. Such unprecedented economic growth comes both with risks and opportunities when we consider the challenge of providing sustainable supply of energy for the greatest benefit of all. It is at times like these that we sometimes need to step back from the fast pace of growth to remember that even the word "crisis" has two aspects: one representing potential risk and the other representing opportunity.

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There is a real risk that as China continues to grow at such an astounding rate that the energy sector will not be able to keep pace with demand. There is also the added risk that the choices we make today to meet this demand could lead to greater risks. That's why we welcome moves to develop a low-carbon economy.

As China becomes the largest consumer of energy in the world, being able to achieve an efficient and sustainable energy system will be a critical challenge facing the sector. The balance between failure and success often rests on a knife's edge, but a transparent, stable and strong energy policy framework with clear long-term objectives is crucial for delivering success. Thus China's scientific approach to policy planning holds great promise.

As the word "crisis" shows, where there are risks there are also opportunities.

China is already working hard to deliver on those opportunities. Lessons will be learned from the earthquake-tsunami-damaged Fukushima Daiichi nuclear power plant in Japan as China continues with its plans to build new, safe and modern nuclear reactors.

Despite the many issues associated with projects, the ability to supply power from facilities such as the Three Gorges Dam has proved how valuable renewable energy will be as we move forward. China is a world leader in producing renewable technologies. The massive challenge to invest in and smarten the electricity grids will ensure that bottlenecks are removed and power is supplied to cities and more rural areas, unlocking the potential of the whole country. The new State Grid DC line is a great achievement but much more needs to be done to secure the opportunity.

Energy efficiency projects such as the "Top-1000 Energy Consuming Enterprises Program" show the impact that reducing energy use can have on the overall supply chain. The forthcoming initiative with the Asia-Pacific Economic Cooperation to create a low-carbon model town forum should lead to more efficient use of energy. This is a vital area where the public can play its part in securing the opportunity.

But coal continues to be the largest source of energy in China, representing about 79 percent of the overall electricity mix as opposed to only 1.9 percent for nuclear. This presents difficult choices when one considers the potential impact that continuing with this approach could have on climate change. China is committed to diversifying the energy mix but even on current projections coal will remain the main provider of energy until at least 2025.

Can China demonstrate global leadership and deliver on development and upgrade of carbon capture and sequestration? Much is being done in the country to identify effective ways to scale the theoretical models into fully integrated projects that will result in tangible reductions in carbon dioxide emissions. The $1-billion GreenGen demonstration power plant is due to become operational later this year, with the first phase estimated to generate 250 MW of power, heat and synthetic gas. This is an important development, but much more is needed.

The government has recognized the opportunity and will host the 2011 Carbon Sequestration Leadership Forum Ministerial Meeting in September to discuss these challenges. And the World Energy Council is delighted to support this initiative.

As we have seen in other countries where supply does not keep pace with demand, there is the risk of heavy industries, including mining and large-scale manufacturing, or for that matter the entire economy being critically affected. That in turn would lead to the stifling of the much-vaunted growth.

So is the Chinese energy sector in crisis? No, probably not in crisis, but there are risks and there are real opportunities as long as we keep in mind the Chinese proverb, "without rice, even the cleverest housewife cannot cook".

The author is secretary-general of the World Energy Council, an alliance of more than 90 countries that provides information and resources on all aspects of energy.