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Peak Energy and the Limits to China’s Economic Growth
Dr. Minqi Li, Assistant Professor
Department of Economics, University of Utah
Salt Lake City, UT 84112
E-mail: [email protected]
Website: www.econ.utah.edu/~mli
Presentation at the “China and the Chinese Study Group”
October 6, 2008
Main Findings
•
In the coming decades, the World’s and China’s
domestic energy resources will be unable to sustain
China’s rapid economic growth
•
China’s coal production is likely to peak by around
2025; oil production peak by 2015; natural gas
production peak by 2030
•
Even with optimistic assumptions of renewable
potentials, China’s energy supply will peak by 2030
and enter into decline thereafter
•
By 2020, China’s demand for energy imports will
impose an unacceptable burden on the rest of the
world and the growth in energy imports cannot be
sustained
•
Even with optimistic assumptions of energy
efficiency, China’s economic growth will slow down
sharply after 2020 and the Chinese economy will
decline in absolute terms after 2040
World Primary Energy Consumption（2007）
Oil
Coal
Natural Gas
Nuclear
Hydro
Renewable Electricity
Biofuels
36.6%
29.4%
24.9%
5.8%
2.5%
0.6%
0.2%
China’s Primary Energy Consumption（2007）
Domestic Coal
Domestic Oil
Domestic Natural Gas
Hydro
Nuclear and Renewables
Imports and Stock Change
71.8%
10.4%
3.5%
2.3%
0.9%
11.2%
Peak Oil
•
World Oil Discovery Peak: 1960s
•
Peak Oil: US (1970); UK (1999); Norway (2001);
Mexico (2004); Russia (2007?)
•
Germany Energy Watch
Production Peak (2006)
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ASPO: World Oil Production Peak (2008)
Group:
World
Oil
Hubbert Linearization
•
In 1956 M. King Hubbert predicted that the US oil
production would peak around 1970
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For any nonrenewable resource, its production will
first tend to rise, and then tend to fall, before eventual
depletion
•
The production peak is likely to take place when
about half of the ultimately recoverable resource is
depleted
•
As the production level approaches the peak, a linear
relationship will be formed between the cumulative
production and the growth rate of the cumulative
production
•
A linear regression of the two variables result in
parameters that can be used to predict the ultimate
recoverable resource and the peak year
（ BP Statistical Review of World Energy: World Oil
Reserve 168.6 billion metric tons or 193.4 billion tons if
oil sands are included）
（BP Statistical Review of World Energy: China’s Oil
Reserve 2.1 billion metric tons）
China: Peak Coal?
•
BP Statistical Review of World Energy: China’s coal
reserve 114.5 billion metric tons
•
German Energy Watch Group: Peak Coal Production
2015
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Dave Rutledge (Caltech, Chair of Division of
Engineering and Applied Science): China’s
remaining recoverable coal 88 billion metric tons
•
Hubbert Linearization suggests China’s remaining
recoverable coal to be 160 billion metric tons (Rsquare: 0197)
•
China’s Ministry of Land and Natural Resources:
China’s remaining recoverable coal 204 billion
metric tons (using this estimate and assume that the
recent production trend continues, China’s coal
production will peak before 2020)
China’s Energy Supply: From the Present to 2050
•
Peak Domestic Coal 2025; Peak Domestic Oil 2015;
Peak Domestic Natural Gas 2030
•
By 2050, 90% of the hydro technical potential is
exploited
•
Nuclear Electricity: generating capacity rises from
the current 7 GW to 60 GW in 2050
•
Renewable
Electricity
(Chinese
government
programs): Wind (100 GW, 2020); Biomass (30 GW,
2020); Solar (100 GW, 2030)
•
Renewable Electricity (2050 potential): 2,200 GW
(wind 1,000 GW; solar 1,000 GW; biomass 200 GW)
•
Imports: by 2020 energy imports rise to 16 percent of
world (ex. China) production of fossil fuels and
biofuels (China’s projected energy imports by 2020:
1.4 billion toe; China’s imports in 2007: 200 million
toe; US imports in 2007: 700 million toe)
Energy Consumption and Economic Growth
GDP = Energy Supply * Energy Efficiency
Economic Growth Rate
= Energy Supply Growth Rate + Energy Efficiency Growth Rate
Too Pessimistic？
•
Used the highest estimate of remaining recoverable
coal (and has not considered social and
environmental constraints)
•
Oil and natural gas peak estimates are consistent with
consensus
•
Hydro: near full exploitation of technical potential
•
Nuclear: the world’s existing reserve of uranium will
only last 30-70 years
•
Renewable electricity: 10 times of the Chinese
government’s long-term goals or 3 times of China’s
current total electricity generating capacity
•
Imports: extremely optimistic
•
Energy Efficiency: projected to exceed the present
European/Japanese level by 2050