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Understanding China's Resource Crisis


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Keagan Rubel (MD, InnoCSR) presentation on the need to understand China's resource crisis and it's path towards sustainability

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Understanding China's Resource Crisis

  1. 1. Understanding  China’s  Resource  Crisis  And  its  Path  Toward  Sustainability  China’s  Underappreciated  Nexus  of  Energy,  Water  and  Food    Presented  at  ‘The  Future  of  Asian  Consump@on’  Green  Drinks  China  Event,  27  May  2013  
  2. 2. • Energy  • Water  • Food  China’s  Resource  Landscape:    Focus  on  3  “Must-­‐Have”  Resource  
  3. 3. China’s Resource Crisis: Key Take-AwayAc@on  is  being  taken  –  what  are  business  implica@ons?  Demand  outstripping  supply,  trends  are  unsustainable  and  could  lead  to  economic  &  social  disrup@on  Parts  of  complex  systems  (ecological,  human),  and  must  be  considered  holis@cally  Inac@on  will  lead  to  significant    economic  and  social    disrup@on  
  4. 4. Inter-­‐dependencies:    Energy,  Food,  Water  •  Understanding  these  elements  as  parts  of  interdependent  systems  –  both  natural  and  human  – Energy  requires  water  •  20%  China’s  freshwater  used  for  coal,  increased  evapora@on  from  hydro  electricity  – Water  requires  energy  •  Transpor@ng/pumping,  trea@ng  &  hea@ng  water  can  take  up  between  33%-­‐75%  of  energy  bills  in  many  ci@es  – Food  requires  water  and  energy  •  65%  Water  used  for  crop-­‐irriga@on  •  Fer@lizers  are  very  energy  intensive,  also  transporta@on/preserva@on  •  Bioenergy  crops  compete  with  food  crops  for  land/water  •  Fer@lizers  for  crops  are  pollu@ng  water-­‐systems  from  runoff  
  5. 5. China’s  1st  in  Consump@on  E.g.:  Steel,  Cement,  Glass,  Housing,  Power,  Cars,  Highways,  High-­‐Speed  Rail  Systems,  Airports  
  6. 6. Energy: Supply & DemandChina  annually  experiences  power  cuts  and  blackouts  •  High  thermal  coal  prices  •  Drop  in  hydropower  produc@on  •  Excessive  demand  •  Ra@oning  to  meet  regional  targets  
  7. 7. Example: Electricity demand spike
  8. 8. Water: Quantity and QualityChina  is  “mining”  its  water  about  25%  faster  than  it  can  replenish  A  compounded  problem:  Low  availability  and  low  quality  China’s  per  capita  water  is  2,100  cubic  meters    –  28%  of  the  world  average  According  to  the  Ministry  of  Environmental  Protec@on  (MEP),  25%  of  China’s  water  only  fit  for  industrial  or  irriga@on.    That  means  75%  of  water  does  not  meet  the  standards  for  fish  farming  and  municipal  use.  China  has  capped  water  consump@on  at  700  million  cubic  meters  –  current  consump@on  is  at  600  million  cubic  meters  currently  Source:  ADB,  2012  
  9. 9. Food: Driving Inflation
  10. 10. The Big Fear: Inflation
  11. 11. Energy: Consumption & CompositionSource:  IEA,  2011  
  12. 12. China’s  Resource  Landscape:    Energy  China’s  Energy  Produc@on:  1997   China’s  Energy  Produc@on:  2010  Source:              
  13. 13. The image part with relationship ID rId3 was not found in the file.China’s  Water  Resources:  2002   China’s  Water  Resources:  2010  China’s  Resource  Landscape:    Water  Source:              
  14. 14. China’s  Resource  Landscape:  Food  Food  produc@on,  1997   Food  produc@on,  2010  Source:              
  15. 15. Climate Change: Amplifier EffectChina  loses  an  average  of  10%  of  annual  grain  output  a  year  to    extreme  weather  such  as  floods,  droughts,  rainstorms,  and  high/low  Water  is  the  primary  vector  of  climate  change  and  is  apparent  through  changing  paherns  of  availability  and  extreme  weather,  droughts  and  floods.  China  is  the  3rd  most  vulnerable  country  to  Climate  Change  in  the  G-­‐20  Countries  (aier  India  and  Indonesia)  Climate  Change  makes  Energy,  Water  and  Food  problems  worse  
  16. 16. Sustainability  Targets  of  China’s  12th  FYP  Set  at  Na@onal  level    Province  level    City  level    Corporate  level  (some@mes)  
  17. 17. Electricity sector fuel mixes 2010   2020  
  18. 18. China’s Resource Nexus20%  water  used  in  coal  value-­‐chain  Biofuels  compete  for  land  w/  food  17%  electricity  from  hydro  65%  water  used  for  irriga@on  Land  use  changes,  and  soil  impacts  Irriga@on  prac@ces  quite  wasteful  Fer@lizers  are  energy  intensive    Conflic@ng  needs  of  forestry  Water  losses  from  hydroelectricity  Coal  in  N,  Food  in  NW,  Water  in  South  Resource  Conflict  –  Energy,  Water,  Food  
  19. 19. Key  points  +86  155  0213  6647  Resource  scarcity  must  be  considered  in  the  context  of  an  interdependent  system  Current  development  model  is  not  sustainable,  but  big  ac@on  is  being  taken  Understanding  the  context  is  the  key  to  aligning  with  these  strategic  priori@es  Being  part  of  the  solu@on  can  mean  big  profits  Addi@onal  Resources  Report:    Delloite,  2012:  No  Water  No  Energy,  No  Energy  No  Water  Report:    HSBC,  2012:  20  China  Climate  Risk  QuesCons  Website: