China Per Capita Energy Use Outstrips Income Growth To Cross European Levels

According to the latest edition of  the Statistical Review of World Energy report (formerly brought out by bp), by the Energy Institute,  China now consumes more energy per capita than Europe.

Energy demand in China has gone up due to greater demand from the industrial sector of the economy. At the same time, energy demand from Europe has decreased due to high prices.

To make up for the higher energy demands, China has become a world leader in building new coal power plants. Yet, carbon intensity has decreased, due to the additions of wind and solar capacity added by China exceeding that of the rest of the world combined.

Despite all this, China still managed to produce more than half the word’s coal output last year. Combined with India, Indonesia and Australia, nearly 97% of global coal production could be accounted for.

China continues to be the largest consumer of coal-based energy, with 56% of the world total. India might be taking over this helm soon though, as revealed by its consumption exceeding that of Europe and North America combined. India’s renewed coal dependence is powered by faster than expected power demand in a growing economy, besides renewables roll out that is not as fast as it should be.

Chinese Consumption  Powered By Domestic, And Global Demand

Chinese consumption is driven by its rapid growth in data centers, 5G infrastructure and car charging along with factories running at full-tilt to meet demand for goods overseas. China’s emissions have grown by 10% year on year due to a furious appetite for coal used to power its cities and energy intensive industries like steel.

Considering China’s export economy makes up for 20% of its ever increasing GDP, it’s no wonder that the country is consuming more and more energy every year. As for the impacts of climate change, China’s densely populated and economically critical low-lying coastal cities would be in grave danger. GDP losses due to a fifth of the population being affected would be between 0.5 and 2.3 percent as early as 2030 if climate change continues unabated.

China remains the biggest market for renewable energy with $676 billion spent last year. However, this is an increase of only 6%, much lower than investments in the US, UK and Europe growing by at least 22%.

To reach net-zero emissions by 2060, China would need between USD 14-17 trillion in additional investments for green infrastructure and technology in the power and transport sectors alone. The IFC concludes that China would need policy and regulatory reforms to spur the private sector and fully tap the potential for investment and innovation.

Europe is not exactly doing it all right. While the continent continues to go down in CO2 eq per capita every year, a lot of it can be attributed to European companies offshoring production to China. “We should not ignore the energy and emissions that Europeans have effective exported to the Chinese manufacturers.” EI CEO Nick Wayth said. In Europe last year, fossil fuels accounted for less than 70% of primary energy usage for the first time since the Industrial Revolution, likely due to renewable growth and offshoring of manufacturing capacity to countries like China.

When it comes to green industries, 4/5ths of the EU’s solar panel needs and over 90% of its demand for rare earth permanent magnets and battery grade lithium are met by China. This further strengthens European dependence on Chinese manufacturers, especially with countries rushing to invest in renewables after they could no longer depend on Russian gas.

Despite efforts to decouple from China and move manufacturing to other countries in an effort to “friendshore” their industries, companies will continue to run their operations in location that make the most financial sense because they’re accountable to their shareholders, not to the wider public. In its 2019 survey, the European Chamber reported that “European companies had an increasingly firm commitment towards the mature and vibrant Chinese market.”

To conclude, if Europe and other developed countries don’t stop offshoring their production to China, global warming will continue unfettered, ultimately overshooting the 1.5 C goal set by the UN. While China’s emissions might peak by 2030, we might not have enough time left to wait for them to go carbon neutral by 2060. Countries like India look to take up some of the manufacturing burden, but that’d be no better than leaving it in China. India’s power consumption is still majorly dependent on Coal, despite massive investments into renewables over the past decade.

Yash Singh