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China: Impact of Energy Production Research Paper

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Updated: Sep 5th, 2021

Energy production and utilization in China have undergone enormous changes throughout the 20th century. One of the poorest nations in the world during the 1930s, China has experienced tremendous growth in its energy sector since the 1949 Communist takeover. This growth quickly accelerated with the introduction of market reforms in 1978, and as a result, China is now the world’s fourth largest producer and consumer of electrical power.

China depends largely on its coal resources for its energy. In fact, 80% of China’s electricity comes from coal, and there are plans for 544 new coal-fired power stations to meet an insatiable demand for energy. Eighty percent means twice the average, worldwide. While it seems a logical method to utilize the natural resources for energy production, it must be noted that coal is a prime source of carbon dioxide – the global warming gas. If as planned, China were to build the 544 coal-powered plants, it would definitely impact global climate change in a negative way. It will be impossible to avoid dangerous climate change. Demand for electricity is on the rise in China.

This is due to increased prosperity of the country in recent times. One in four families in China owns a car. Hutong courtyard homes of Beijing’s poorest are being demolished and replaced with modern flats with energy dependent appliances. China depends on coal as coal is one of the cheapest ways of producing energy. And for the time being, as the demand for power grows, this means one thing – more emissions of climate-changing gases. There are also other costs associated with getting energy from coal. Many miners lose their lives in gas explosions. Officially, 6,000 were killed in China’s coal mines in 2004 – that’s 20 a day. This is mainly due to methane explosions. Not only is methane dangerous, it is also a greenhouse gas, 20 times as damaging as carbon dioxide.

Prior to 1949 more than 80 percent of the Chinese relied on kerosene lamps for illumination and burned wheat chaff and coal for heating. But when the CCP took power in October 1949, the new government immediately embarked on a major economic construction effort, putting dramatic increases in electrical generation at the core of China’s Soviet-inspired economic planning system. Large-scale energy production in thermal plants and other electrical generation facilities was achieved, with overall energy consumption growing by more than fourteen fold between the early 1950s and 1978. It was during this period that the government chose coal as an answer to China’s energy needs, without being aware of the threat of pollution and the finiteness of oil reserves

The Chinese economy developed from the 1950s to the 1970s through a series of Five Year Plans. The emphasis was mainly on expanding heavy machinery production and bringing electrification to both industry and residential areas. This lead to a great demand for energy and the government did not note that the rate of economic growth was rapidly outstripping energy supply, sometimes by as much as 2 to 3 percent per year. The 1980s witnessed very rapid economic growth of 8 to 10 percent a year.

Matching this were increases in electrical generating capacity, which expanded by 10,000 MW per annum, or 7.6 percent from 1984 to 1990, while overall energy consumption rose 208 percent between 1970 and 1990. Today, though there is a lot of debate among Chinese leaders about increasing underdeveloped and underutilized energy sectors–natural gas, nuclear, wind, solar and hydropower–three-quarters of electricity in China is still generated by burning coal, much of it high-sulfur in content.

China’s hydro reserves are still largely untapped and are by far the largest in the world–by some estimates capable of producing 680,000 MW of electricity. Present utilization, however, is merely 75,000 MW, a little more than one-tenth the potential output. During the 1950s hydropower was accepted as an inexpensive, clean and potentially unlimited source of energy in China. Unfortunately; over the course of the next three decades, the development of hydroelectric power in China stagnated.

In 1958 at the start of the Great Leap Forward, the CCP convened a major conference on energy that adopted an ambitious program of hydropower development calling for the construction of 275 projects with an installed capacity of 25,000 MW. At the same time, the State Council reinforced this position by deciding to merge the Ministry of Water Resources and the Ministry of Electric Power into a single super ministry.

Yet 40 years later coal burning remains the primary form of energy generation, while hydropower produces a little over 18 percent of China’s energy needs. This was partly due to the Sino-Soviet conflict of 1960 when Soviet advisors in China suddenly withdrew their technical aid, leaving several major projects unfinished. While some projects, particularly the Three Gate Gorge dam on the Yellow River, were eventually completed, the failure to deal with the problem of rapid siltation reduced this project’s generating capacity from 1,000 MW to less than 250 MW, casting a pall over the entire hydropower sector. In the 1970s hydropower recovered with an ambitious plan to construct thousands of small stations in rural areas. By 1980, 90,000 of these small hydro facilities on streams and small rivers dotted the rural landscape.

However, their aggregate output hardly was not a significant factor in China’s overall energy needs. Even though hydropower as such is cheap, the initial investment for equipment and dam construction is very high. The situation for coal-power generation is the reverse, with relatively small investments needed for startup, and the high costs – especially environmental ones – arising later. Moreover, some of the relatively few hydro projects that were undertaken proved to be destructive to the economy, environment and people.

For instance, the collapse of iron dams on the Huai River in southeastern China in 1975 in the midst of a sudden storm caused an enormous loss of life. The Gezhouba Dam on the Yangtze River in Hubei province, built at great cost, has currently inadequate water levels in the reservoir. Moreover, river transportation has been severely disrupted by backups into the single ship lock, and serious water pollution in and around the reservoir has resulted in the near extinction of the famous white fin dolphin and the rare Yangtze River sturgeon.

Electrical power derived from the dam’s turbines is expected to provide up to one-ninth of China’s output, the government estimates. It is also expected to tame the fabled Yangzi River. However, the Three Gorges Dam project is now surrounded by controversies from within China and abroad. There are allegations of corruption among officials involved with the project and there is fear of shoddy construction. There is also concern over claims that toxic materials and potential pollutants from industrial sites are piling up in the dam.

Journalist Dai Qing was jailed for 10 months in 1989-90 after criticizing the Three Gorges project. She called the Three Gorges “the most environmentally and socially destructive project in the world.” She also calls for a halt to construction and supports the idea of a series of smaller, less disruptive construction projects on tributaries of the Yangzi. Since the 1992 approval, press scrutiny of the dam has been very limited by the government’s rigid control of the national media, who were instructed to provide only “positive reporting” about the project.

Coal Energy

In terms of verified coal reserves China ranks third in the world, behind the USA and Russia, with roughly 115Gt, or one ninth of the world’s total. This could support nearly a century of extraction at the current rate. In contrast, at the end of 1996 the total of 3.3Gt of China’s proved oil reserves amounted to just over 2 per cent of the global total (eleventh-largest in the world), enough for no more than two decades at the 1996 rate of extraction.

And the country’s proved natural gas reserves are much smaller still, amounting to a mere 0.8 per cent of the global total, ranking only twenty-third worldwide. China’s poor natural gas endowment is conspicuous. This unusually low natural gas endowment places China at a great disadvantage. Natural gas is both the most convenient and the cleanest fuel for a range of uses from residential and commercial heating to electricity generation during periods of peak demand.

In addition, it is also the best fuel and feedstock for numerous chemical syntheses, including plastics and nitrogenous fertilizers. A high share of natural gas consumption in a country’s primary energy balance thus assures lower energy intensity (total amount of energy used per unit of GDP) while minimizing the emissions of CO2, the world’s most important greenhouse gas. Because of its extensive coal deposits, China has large reserves of coal-bed methane, but this kind of natural gas is usually much more expensive and less convenient to recover than the resources in hydrocarbon fields.

China has the world’s highest potential for generating electricity from flowing water. Hydro generation is expensive and costs lots more than thermal power plants. There is a need for expensive long-distance transmission links to connect remote dam sites with populated regions.

These fundamental realities mean that China will continue to be dependent on its coal resources for a long time. In fact, coal’s share has actually increased since the beginning of China’s post-1979 modernization: the fuel provided about 72 per cent of China’s primary energy consumption in 1980, and it supplied just over 76 per cent of the total in 1996. Consequently, it is most unlikely that its share will fall below 60 per cent by the year 2010. This extraordinary dependence causes a number of problems whose impact has been aggravated by the generally low technical level of Chinese mining, inadequate coal processing, and underdeveloped transportation and irrational pricing.

Chinese bituminous coal, representing the bulk of the country’s solid fuel extraction, has energy content just short of 21MJ/kg. In reality, even this rate may be too high an average for the extraction of the late 1990s because of the rising share of raw coal with more than 30 per cent of incombustible waste. This qualitative decline arises from yet another longstanding Chinese peculiarity whose enormous effects go far beyond the coal industry: Chinese coal extraction originates from two very different kinds of enterprises, from large collieries owned by the state and administered from Beijing, and from a variety of local medium and small mines, most of which are run by counties, townships, collectives or individuals.

The first kind of enterprise, each producing annually more than half a million tonnes of coal, is now increasingly modernized and relatively highly productive. Yet, these large Chinese mines have a long way to go in order to achieve acceptable levels of coal dust and work safety. Currently, chronic bronchitis and pneumoconiosis incapacitate miners in their thirties, and fatal accidents are at least thirty times as frequent per million tonnes of extracted coal as in the USA. Less than half of all coal produced by large mines is processed – i.e. crushed, washed in order to separate coal from incombustible waste and sorted by size according to the needs of different customers.

Therefore, since 1987, collectively or individually owned local mines have been responsible for virtually all output growth. This has gone a long way towards reducing China’s long-standing coal supply shortages, as well as alleviating environmentally undesirable cutting of trees for fuel wood and the burning of crop residues in rural stoves. The race to open small mines, usually without any geological and technical evaluation, has led to an enormous waste of resources in an uncoordinated and often illegal quest for instant profits.

Operators of small mines pay scant attention to the environmental consequences of coal extraction. Predictable results include extensive destruction of arable and grazing land, accelerated erosion of exposed topsoils, and increasing air and water pollution. A recent survey in coal-rich Shenmu county on the Loess Plateau illustrates these perils. Streams filled with mine spoils and increased sediment aggravate local floods, and erosion caused by mining adds almost another 300Mt of silt to the Huang (Yellow) River already overburdened with eroded loess.

Local air pollution has increased twenty-four times for sulfur dioxide (SO2 ) and seventeen times for particulate matter. This unacceptably high air pollution level can be attributed to coal’s dominance in China’s energy supply, to inadequate coal cleaning capacities, and to inefficient combustion.

Only modern large coal-fired power plants and a growing number of newly installed industrial boilers are equipped with electrostatic precipitators which effectively remove particulate matter from hot flue gases. Consequently, Chinese emission factors per unit of delivered useful energy are extraordinarily high in comparison with rates prevailing in Western countries.

The average sulfur content of major Chinese coal deposits, about 1.2 per cent, is not high by international standards, and statistics for large state mines show that they produce coal with average sulfur content of just 1.04 per cent. But some southern coals, most notably those from Sichuan and Yunnan, have unusually high sulfur content (up to 5 per cent). In the future, fuel gas desulfurization will be thus necessary not only in parts of southern China where highly acid rains (with pH commonly below 4.5) are already causing serious damage to forests, but also in the north.

During the next generation that region will acquire the world’s largest concentrations of coal-fired power plants, whose emissions will be carried eastward toward Korea and Japan. Current emissions are already causing concerns in both countries, but large-scale desulfurization is an expensive proposition.

China is a relatively hydrocarbon-poor place (Figure 2.2). The absence of substantial natural gas reserves is particularly unfortunate. Its heavy reliance on coal as a source of energy has made China a major contributor to carbon emissions. In 1996 total emissions were 805 million tons, or 13 percent of the world’s total, second only to the United States in gross terms. Encouraging China to sign on to major international agreements to control air and other forms of pollution has been, not surprisingly, a major goal of participants at international conferences, such as the 1997 Kyoto Protocol on the United Nations Framework Convention on Climate Change.

China’s energy use has also been a focus of interest by the Clinton Administration in the United States and by the increasingly active environmental bureaucracy in the Chinese government. Yet despite the fact that five of the top 10 most polluted urban areas in the world are located in China–including Chongqing in the province of Sichuan–the Chinese government has is continuing to expand its electrical power generation by as much as 9 percent annually, with much of it coming from increased production and burning of coal.

During the late twentieth century, China’s insatiable demand for electricity seemed to ebb and the nation as a whole focused increasingly on environmental protection and energy conservation measures. This was when, policy conflicts arose over the possibility of giving up coal in favor of hydropower. There also raged a debate if it was right for China to rely on a mammoth energy project as the Three Gorges Dam on the Yangtze River to power the economy into the 21st century.

The Yangtze River is the third longest river in the world and is known in China as simply the “long river” (Changjiang). Just north of the city of Yichang in Hubei province, where the Yangtze spreads out across the fertile regions of central China is Sandouping, the site of the Three Gorges Dam. It was authorized in 1992 by the National People’s Congress (NPC), China’s nominal parliament. The Three Gorges project is expected to be the world’s largest hydroelectric and water control project upon its completion, estimated to be completed by the year 2009. It is expected to rise to 185 meters and extend 2 kilometers across the river.

It will be capable of storing 40 billion cubic meters of water. On the downside, the reservoir will displace 1.9 million Yangtze Valley residents, half of whom are farmers, and cause damage to some of the country’s most cherished cultural antiquities from a region that has been inhabited since Neolithic times.

In terms of electrical generation, the dam is to have an installed capacity of 18,000 megawatts (MW) providing 85 billion kilowatt hours of electricity–that is, 10 percent of the country’s entire capacity as of 1993. According to estimates, it would thereby eliminate the annual burning of 40 to 50 million tons of coal, thus significantly reducing air pollution in the Yangtze Valley.

In addition, the dam is officially advertised as providing long-term solutions to the perennial problems of severe flooding on the Yangtze, which have caused the loss of tens of thousands of lives over the past century and periodic losses in agricultural and industrial production. Indeed, the Three Gorges Dam was first approved by China’s Communist leaders in the 1950s as a response to devastation wrought by the 1954 Yangtze River flood, which cost nearly 30,000 lives.

Flood control, was the main reason behind the building of the massive dam. However, the Three Gorges project was delayed by over three decades due to natural disasters and political failure in China. Amidst serious opposition in the National People’s Congress, where one-third of the delegates voted against or abstained on the Three Gorges Resolution the project was begun and construction was soon accelerated to ensure its completion by the year 2009.

Three Gorges Dam was executed without all the necessary facts and with less than optimal transparency The long-awaited assessment report that preceded the 1992 approval of the dam by the NPC was extremely unscientific and rife with understatements of potential problems, especially regarding the enormous difficulties posed by resettlement. This was due in part to critics of the dam being largely excluded from participating in the assessment and then prevented from voicing their concerns at the NPC meeting.

Li Peng, the chief proponent of the Three Gorges Dam project was trained in the Soviet Union as a power engineer and he believes that the completion of the Three Gorges Dam with its planned 18,000 MW capacity will make hydropower the prime source of energy. But then, an increase of 18,000 MW constitutes less than 25 percent of the planned expansion of 75,000 MW for the year 2010 called for by national economic planners. Meanwhile, many ancillary problems associated with construction of this huge project have sprouted.

Perhaps the most serious consequence of the dam project is the planned displacement of 1.9 million residents from the intended reservoir valley, the largest such population relocation effort in the history of the world. Today, years before the waters will rise to inundate 30,000 hectares of arable land and flood 19 cities, 326 towns and over 1,300 villages, voices have emerged at both the grassroots level and within the CCP itself in opposition to the probable social turmoil that such consequences would entail. Some farmers designated for relocation from below the reservoir water line, have steadfastly refused to move, while others have slipped back into the area to cultivate their rich alluvial soil after initially agreeing to resettlement on nearby mountains and other barely habitable land. Party leaders, especially those in Sichuan province upstream from the dam, have voiced concern for the future plight of these “reservoir refugees.”

Other concerns include possible disruption to river traffic both during and after the dam’s construction; degradation of the Yangtze River’s water quality, especially in the huge reservoir; damage to surrounding flora and fauna; and the possibility of the dam’s catastrophic failure from earthquakes or other natural calamities. On the other hand, in terms of navigation, dam supporters feel that the dam would ease the passage of vessels through the link to two major inland cities of Chongqing and Wuhan.

Dam critics, however, predict that there may be an obstacle at the dam site itself. Twin five-stage ship locks will be relied upon to circumvent the dam and this might cause major slowdowns or a complete halt to river traffic in the case of their breakdown. Jin Hui predicts that there is the potential for dramatic increases in water pollution as water is likely to be gradually poisoned by the billions of tons of largely untreated wastewater from outworn civilian and military industries that flow into the Yangtze above the proposed dam site. Furthermore, the reservoir waters can cause flooding to pristine tributaries and historical sites. Thus the impact of the dam’s construction is overall predicted to be destructive.

Finally, there is the issue of cost. Initially set at $6 billion in the late 1980s, the total projected cost estimated by the Chinese government in late 1998 up to the project’s completion in 2009 has now risen to $25 billion. But the real cost, dam critics charge, may in fact be more than $75 billion, given the record of huge budget overruns that have plagued earlier dams and other such mega projects sponsored by government agencies in China. To give the project an air of private economic activity, several dummy agencies such as the Three Gorges Project Development Corporation have been created to oversee and manage the dam’s construction. But the Three Gorges Dam is, in reality, a government sponsored project. In this sense, the project runs counter to China’s overall privatization and reform program launched in the late 1970s.

While critics of the Three Gorges Dam list its many drawbacks and possible destructive consequences, advocates point to its potential contribution in reducing the burning of coal and bringing the serious floods along the Yangtze River under control. Moreover, international advocates of hydropower have long argued that hydroelectric dams are a perfect example of renewable and sustainable development, largely because of the fact that dams employ technologies that do not emit greenhouse gases.

It has even been suggested that industrial countries should meet their obligations to limit greenhouse gas emissions under the United Nations Framework for Climate Change by helping to pay for hydropower development in developing countries. In the case of the Three Gorges Dam, however, neither the World Bank nor the U.S. Export Import Bank has agreed to assist its financing, citing the negative environmental impact of the dam.

China in 1996 extracted 141Mt, enough to be the world’s fifth-largest producer of Except for gasoline, China is now a net importer of all refined fuels, with fuel oil accounting for just over half of 15.8Mt bought in 1996. Oil security is now among the top concerns of China’s energy planners with rising demand. The only way to avert the need for steadily increasing imports would be to discover large hydrocarbon deposits in Xinjiang, China’s only remaining great hydrocarbon frontier.

The region already produces almost 5 per cent of China’s crude oil, but much of it remains to be properly explored. After years of Chinese drilling, Exxon, Agip and several Japanese companies are now active in the area, and recent discoveries of both oil and gas have been fairly encouraging. Heilongjiang’s Daqing oilfields, discovered in 1959, remain by far the largest of the country’s nearly 300 fields, producing just over a third of China’s crude oil total.

Shengli in Shandong, another old field discovered in 1962, has recently been adding about 17 per cent. China now participates in oil extraction in Canada (its first foreign involvement began in 1993), Russia, Mongolia, Thailand, Papua New Guinea, Iraq, Sudan, Peru and Venezuela. These foreign projects were expected to supply up to 15Mt by the year 2010. No matter where most of its crude oil will eventually come from, China has a great deal of work to do in order to improve the quality of its liquid fuels. A very important step in that direction was taken in April 1997, when it was announced that only unleaded gasoline would be sold in all of China’s major cities by the year 2000. Beijing was to be the first city to convert to lead-free gasoline.

Nuclear generation is China’s distant choice for large-scale generation of electricity. After years of delays China’s first domestically designed nuclear power plant, a 300MW facility at Qinshan near Shanghai, was completed in 1992, and two years later the six-times-larger Daya Bay station in Guangdong, equipped with light-water French reactors based on a US design, began producing electricity.

Long-term prospects for China’s nuclear power were given a major boost by the US decision, announced during Jiang Zemin’s American visit in October/November 1997, allowing American companies to sell pressurized and boiling water reactors to China. The magnitude of the task, particularly when combined with China’s still limited technical capacities, means that the expansion of the country’s modern electricity generating capacity has been, and will continue to be, highly dependent on foreign participation.

The one issue that is a great deal of concern in the context of energy in China is that with about one eighth of the global total, China is currently the world’s second-largest producer of greenhouse gases. Its emission rates are greater than Russia’s and a little over half as large as America’s. But while Russian emissions have actually been declining with the post-Soviet collapse of industrial production, and while US emissions are growing only very slowly and, given political will, could be stabilized at current levels or even cut, China’s emissions will increase substantially during the coming generation.

Rapid economic expansion and the continuing reliance on coal can be expected to more than double China’s current carbon dioxide emissions and other greengas emissions as well. As China develops its natural gas reserves, methane losses will rise.

Chinese energy will face many challenges, even if there were no signs of relatively rapid global warming during the coming generation. Expected consequences will be rising concentrations of ozone, excessive losses of highly productive farmland, huge economic penalties for time wasted idling in stalled traffic, further degradation of urban environments, a rising toll of deaths and injuries in car accidents – and greater dependence on oil imports. The two main concerns, already clearly discernible in and around large coastal metropolitan areas, are the effects of photochemical smog on human health and on crop yields.

Producing enough energy for a country the size of China, with an economy that until recently was growing at a rate of 10 percent a year, involves difficult decisions and choices. Dams and coal burning seem to be accompanied by environmental hazards. The alternatives are neither attractive nor cost-free. Decisions on how to meet the country’s voracious energy appetite remain difficult, with the problems undoubtedly compounded by a closed political system that prevents better judgment from becoming national policy.

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