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Energy and mineral resources
Energy :: Electricity:
Production: 2.8344 trillion kWh (2006)
Consumption: 2.8248 trillion kWh (2006)
Exports: 11.19 billion kWh (2005)
Imports: 5.011 billion kWh (2005)
Electricity – production by source:
Thermal: 77.8% (68.7% from coal) (2006)
Hydro: 20.7% (2006)
Other: 0.4% (2006)
Nuclear: 1.1% (2006)
Oil:
Production: 3,631,000 bbl/d (577,300 m3/d) (2005)
Consumption: 6,534,000 bbl/d (1,038,800 m3/d) (2005) and expected 9,300,000 bbl/d (1,479,000 m3/d) in 2030
Exports: 443,300 bbl/d (70,480 m3/d) (2005)
Imports: 3,181,000 bbl/d (505,700 m3/d) (2005)
Net imports: 2,740,000 barrels per day (436,000 m3/d) (2005)
Proved reserves: 16.3 Gbbl (2.59×109 m3) (1 January 2006)
Natural gas:
Production: 47.88 km3 (2005 est.)
Consumption: 44.93 km3 (2005 est.)
Exports: 2.944 km3 (2005)
Imports: 0 m3 (2005)
Proved reserves: 1,448k m3 (1 January 2006 est.)
Since 1980, China's energy production has grown dramatically, as has the proportion allocated to domestic consumption. Some 80 percent of all power generated from fossil fuel at thermal plants, with about 17 percent at hydroelectric installations; only about two percent is from nuclear energy, mainly from plants located in Guangdong and Zhejiang. Though China has rich overall energy potential, most have yet to be developed. In addition, the geographical distribution of energy puts most of these resources relatively far from their major industrial users. Basically the northeast is rich in coal and oil, the central part of north China has abundant coal, and the southwest has immense hydroelectric potential. But the industrialized regions around Guangzhou and the Lower Yangtze region around Shanghai have too little energy, while there is relatively little heavy industry located near major energy resource areas other than in the southern part of the northeast.
Although electric-generating capacity has grown rapidly, it has continued to fall considerably short of demand. This has been partly because energy prices were long fixed so low that industries had few incentives to conserve. In addition, it has often been necessary to transport fuels (notably coal) great distances from points of production to consumption. Coal provides about 70–75 percent of China's energy consumption, although its proportion has been gradually declining. Petroleum production, which grew rapidly from an extremely low base in the early 1960s, has increased much more gradually from 1980. Natural gas production still constitutes only a small (though increasing) fraction of overall energy production, but gas is supplanting coal as a domestic fuel in the major cities.
In the 1990s, energy demand rocketed in response to the rapid expansion of the economy but energy production was constrained by limited capital. As in other sectors of the state-owned economy, the energy sector suffered from low utilization and inefficiencies in production, transport, conversion, consumption, and conservation. Other problems included declining real prices, rising taxes and production costs, spiraling losses, high debt burden, insufficient investment, low productivity, poor management structure, environmental pollution, and inadequate technological development. To keep pace with demand, China sought to increase electric generating capacity to a target level of 290 giga watts by 2000.
According to Chinese statistics, China managed to keep its energy growth rate at just half the rate of GDP growth throughout the 1990s. Though these numbers are not reliable, there has been agreement that China had improved its energy efficiency significantly over this period. In the late 1990s, an estimated 10,000 megawatts of generating capacity was added each year, at an annual cost of about$15 billion. China imported new power plants from the West to increase its generation capacity, and these units then accounted for approximately 20% of total generating capacity. More power generating capacity came on line in the mid-2000s as large scale investments were completed. In 2001, China's total energy consumption was projected to double by 2020. Energy consumption grew at nearly 10 percent per year between 2000 and 2005, more than twice the yearly rate of the previous two decades.
In 2003, China surpassed Japan to become the second-largest consumer of primary energy, after the United States. China is the world's second-largest consumer of oil, after the United States, and for 2006, China's increase in oil demand represented 38% of the world total increase in oil demand. China is also the third-largest energy producer in the world, after the United States and Russia. China's electricity consumption is expected to grow by over 4% a year through 2030, which will require more than $2 trillion in electricity infrastructure investment to meet the demand. China expects to add approximately 15,000 megawatts of generating capacity a year, with 20% of that coming from foreign suppliers.
China, due in large part to environmental concerns, has wanted to shift China's current energy mix from a heavy reliance on coal, which accounts for 70–75% of China's energy, toward greater reliance on oil, natural gas, renewable energy, and nuclear power. China has closed thousands of coal mines over the past five to ten years to cut overproduction. According to Chinese statistics, this has reduced coal production by over 25%.
Only one-fifth of the new coal power plant capacity installed from 1995 to 2000 included desulfurization equipment. Interest in renewable sources of energy is growing, but except for hydropower, their contribution to the overall energy mix is unlikely to rise above 1–2% in the near future. China's energy sector continues to be hampered by difficulties in obtaining funding, including long-term financing, and by market balkanization due to local protectionism that prevents more efficient large plants from achieving economies of scale.
Since 1993, China has been a net importer of oil, a large portion of which comes from the Middle East. Imported oil accounts for 20% of the processed crude in China. Net imports are expected to rise to3.5 million barrels (560,000 m3) per day by 2010. China is interested in diversifying the sources of its oil imports and has invested in oil fields around the world. China is developing oil imports from Central Asia and has invested in Kazakhstani oil fields. Beijing also plans to increase China's natural gas production, which currently accounts for only 3% of China's total energy consumption and incorporated a natural gas strategy in its 10th Five-Year Plan (2001–2005), with the goal of expanding gas use from a 2% share of total energy production to 4% by 2005 (gas accounts for 25% of U.S. energy production). Analysts expect China's consumption of natural gas to more than double by 2010.
The 11th Five-Year Program (2006–10), announced in 2005 and approved by the National People's Congress in March 2006, called for greater energy conservation measures, including development of renewable energy sources and increased attention to environmental protection. Guidelines called for a 20% reduction in energy consumption per unit of GDP by 2010. Moving away from coal towards cleaner energy sources including oil, natural gas, renewable energy, and nuclear power is an important component of China's development program. Beijing also intends to continue to improve energy efficiency and promote the use of clean coal technology. China has abundant hydroelectric resources; the Three Gorges Dam, for example, will have a total capacity of 18 gigawatts when fully on-line (projected for 2009). In addition, the share of electricity generated by nuclear power is projected to grow from 1% in 2000 to 5% in 2030. China's renewable energy law, which went into effect in 2006, calls for 10% of its energy to come from renewable energy sources by 2020.
In May 2004, then-Secretary of Energy in the United States Spencer Abraham signed a Memorandum of Understanding (MOU) with China's National Development and Reform Commission (NDRC) that launched the U.S.–China Energy Policy Dialogue. The Dialogue strengthened energy-related interactions between China and the United States, the world's two largest energy consumers. The U.S.–China Energy Policy Dialogue has built upon the two countries' existing cooperative ventures in high energy nuclear physics, fossil energy, energy efficiency and renewable energy and energy information exchanges. The NDRC and the Department of Energy also exchange views and expertise on Peaceful Uses of Nuclear Technologies, and convenes an annual Oil and Gas Industry Forum with China.
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