Energy, pollution, and growth of China


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Energy, pollution, and growth of China

  1. 1. Energy, pollution, and the Growth of China Zhigang Li
  2. 2. Outline <ul><li>The energy issue of China </li></ul><ul><li>The environmental costs of the growth of China </li></ul><ul><li>Environmental costs, energy policy, and economic growth </li></ul>
  3. 3. How to think about the energy issue of China? <ul><li>How long can China rely on coal? </li></ul><ul><li>Substitutability of coal by other energy sources that are renewable. </li></ul><ul><li>The impact of rising energy costs on the Chinese economy. </li></ul><ul><li>Predictions </li></ul>
  4. 4. Energy features of China <ul><li>Resource-scarce </li></ul><ul><ul><li>Coal: 11% of world </li></ul></ul><ul><ul><li>Petroleum: 2.3% </li></ul></ul><ul><ul><li>Natural gas: 0.8% </li></ul></ul><ul><li>Coal is the major energy consumed in China </li></ul><ul><ul><li>70 percent of total energy consumed. </li></ul></ul><ul><ul><li>Two-third of electricity is generated by coal (hydro power the second). </li></ul></ul><ul><ul><li>Second largest exporter of coal (less than 5% of the coal output of China), probably due to the under-pricing. </li></ul></ul><ul><li>The current coal consumption is not sustainable. </li></ul><ul><li>China’s domestic uranium resource will be exhausted in about 70 years if the current nuclear power plan is implemented. </li></ul>
  5. 6. Reserves-to-production ratio (years) (BP Statistical Review of World Energy) <ul><li>2001 2005 2006 2007 </li></ul><ul><li>China 105 59 52 45 </li></ul><ul><li>USA 246 245 240 234 </li></ul><ul><li>OECD 215 190 178 168 </li></ul><ul><li>Soviet 500+ 500+ 487 463 </li></ul><ul><li>India 246 229 217 118 </li></ul><ul><li>Share of the world (2006): China(13%), USA(27%), OECD(41%), Soviet (25%), India (10%). </li></ul>
  6. 8. The physical efficiency of China’s energy system is about 36 percent
  7. 9. Price comparison 表 5-17 中国和国际清洁能源发电的成本比 单位:元 / 千瓦时 国内执行的上网价格 国际的平均发电成本 煤电 0.35 水电 0.25 0.278 风电 0.51-0.61 0.625-0.833 太阳能发电 1.09 1.667-2.917 生物质发电 0.58 0.347-0.833 核电 0.414 2.083-3.472
  8. 10. Prospects for renewable energy <ul><li>Hydro electricity now accounts for about 15 percent of China’s total electricity generation. The current hydro electricity generating capacity of China is 100 giga-watts. China’s long-term technical potential of hydro electricity is estimated to be 500 giga-watts. </li></ul><ul><li>By 2020, the Chinese government plans to expand China’s wind electricity generating capacity to 100 giga-watts. China’s long-term onshore and offshore wind electricity potential is estimated to be 1,000 giga-watts. </li></ul><ul><li>Given the severe constraints imposed by China’s limited biological capacity and water shortage, biomass is unlikely to make a major contribution to China’s future energy supply. </li></ul>
  9. 12. Model prediction (Mingqi Li, 2008) <ul><li>China’s total energy supply peaks around 2030 and declines at an accelerating pace from 2030 to 2050. By 2050, the Chinese economy sinks into negative growth and permanent decline. </li></ul><ul><li>The above assumptions are between optimistic and wildly optimistic. The coal projection is based on the highest estimate of China’s remaining recoverable coal. The oil and natural gas projections are fairly uncontroversial. The hydro electricity is expanded to the limit. Barring unexpected technological miracles, there is little scope for further expansion of nuclear electricity. Both the renewable and energy efficiency projections are on the optimistic side. Energy imports are allowed to grow to the point beyond which the rest of the world would be forced into energy starvation. </li></ul>
  10. 13. (Costless) renewable resources and economic growth <ul><li>Land </li></ul><ul><ul><li>T indicates the (costless) renewable resources, the supply of which are constant. </li></ul></ul><ul><ul><li>In a Solow model, rewrite Y=AK α T β L 1- α - β , then the growth rate with land is g- β n/(1- α ) . </li></ul></ul><ul><ul><li>The higher the population growth rate, the lower the economic growth rate when natural resources are restrictive. </li></ul></ul>
  11. 14. Some predictions <ul><li>Economic growth stagnate. Negative long-term growth rate is possible. </li></ul><ul><ul><li>Social instability (in two decades)? </li></ul></ul><ul><ul><li>The growth of China will lag behind the rest of the world (again) until the next generation of production technology or energy resources are discovered (if they exist). </li></ul></ul><ul><li>One-child policy will continue </li></ul><ul><ul><li>A long transition periods with an severely ageing economy (retirement age raised; crime rate decline; health sector expands) </li></ul></ul><ul><li>Spatial distribution of economy may change </li></ul><ul><ul><li>Trade sector declines due to the shortage of labor. Inland economy grow. Coastal economy (land prices) declines. </li></ul></ul><ul><li>Dramatic change of economic structure </li></ul><ul><ul><li>Energy-intensive industries exit (unemployment spike; another painful transition). </li></ul></ul>
  12. 15. Pollution
  13. 16. Pollution by 1997 (Edmonds, 1999) <ul><li>Water pollution </li></ul><ul><ul><li>The seven major river systems have been badly polluted. </li></ul></ul><ul><ul><li>Ground water and coastal regions are polluted to various degrees. </li></ul></ul><ul><li>Air pollution </li></ul><ul><ul><li>The SO 2 emission levels in all major Chinese city centres exceed legal limits. </li></ul></ul><ul><ul><li>NO x emission (mainly due to automobile traffic) also exceed safety levels in city centres. </li></ul></ul>
  14. 17. Pollution by 1997 (continued) <ul><li>Intensification of agriculture and the growing TVEs has increased pollution outside cities. </li></ul><ul><ul><li>China’s fertilizer usage per hectare is twice the world average. </li></ul></ul><ul><ul><li>Rural industrial wastes accounts for 38% of total sold wastes, 7% of industrial waste water, and 56% of industrial dust. </li></ul></ul>
  15. 18. National average of air visibility
  16. 19. E-Waste of China (Tong and Wang, 2004)
  17. 23. How costly is pollution?
  18. 24. Population and Environment of China (Banister, 1998)
  19. 25. Death causes of China <ul><li>1973-75 1995 </li></ul><ul><li>Urban Rural Urban Rural </li></ul><ul><li>Com. 49 116 9 15 </li></ul><ul><li>Card. 208 189 187 186 </li></ul><ul><li>Inj. 48 80 32 63 </li></ul><ul><li>Dig. 32 71 14 23 </li></ul><ul><li>Cancer 87 78 107 84 </li></ul><ul><li>Resp. 60 126 66 109 </li></ul>
  20. 26. Air Pollution and Mortality (Brajer and Mead, 2004) <ul><li>Data </li></ul><ul><ul><li>Pollution and population figures for 38 Chinese cities. </li></ul></ul><ul><ul><li>Pollution data are mostly from annual environmental report posted on the Internet by municipal environmental protection bureaus. </li></ul></ul>
  21. 28. Environmental cost of water pollution in Chongqing (Vennemo et al., 2001) <ul><li>The waters of Chongqing are widely polluted </li></ul><ul><ul><li>Almost half of the rivers are heavily or severely polluted by 1996. </li></ul></ul><ul><ul><li>Major pollutants: coliform bacteria, ammonia, oil, and other organic pollutants, and heavy metals. </li></ul></ul><ul><ul><li>Causes of pollution: industrial waste water, urban sewage, waste, soil erosion, and atmospheric deposition. </li></ul></ul>
  22. 31. Environmental Kuznets Curve <ul><li>Environmental Kuznets Curve </li></ul><ul><ul><li>A hump-shaped relationship between per capita income and pollution. </li></ul></ul>
  23. 34. Anti-Pollution Institution and Policies (Vermeer, 1998) <ul><li>State Environmental Protection Agency (SEPA) </li></ul><ul><ul><li>A nation-wide control network built in the 1980s </li></ul></ul><ul><ul><li>Partly supported by foreign project funding </li></ul></ul><ul><ul><li>Employees doubled between 1985 and 1995 to 88,000 people. </li></ul></ul><ul><ul><li>Very limited power: TVEs hardly monitored; inspection is uneven and infrequent. </li></ul></ul>
  24. 35. Pollution Enforcement in China (Wang and Wheeler, 2003) <ul><li>Data </li></ul><ul><ul><li>Around 3,000 heavily polluting firms in China in 1993. </li></ul></ul><ul><ul><li>Self-reported pollution </li></ul></ul><ul><ul><li>Actual pollution levy </li></ul></ul>
  25. 36. China’s Pollution Levy System <ul><li>The idea of a pollution charge system was adopted in 1978. </li></ul><ul><li>By 1982, 27 of 29 provinces in China established some pollution levy system. </li></ul><ul><li>Process </li></ul><ul><ul><li>Self-reporting </li></ul></ul><ul><ul><li>Verification and collection of levies by local environmental authorities. </li></ul></ul><ul><li>Effective levy rates vary significantly across Chinese provinces. </li></ul>
  26. 38. Water Pollution Levy Rate in 1993
  27. 39. Wastewater Charge (Can you see the problems?)
  28. 40. Air pollution charge (Can you see the problems?)
  29. 41. Total Charge (Can you see the problems?)