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CHINA:
HUNGRY FOR POWER
Energy crisis threatens 'world's
factory'
Introduction
China is
often called "the world's factory" because of its
prodigious manufacturing and industrial capacity and
gargantuan output, and because of its hot - some would
say overheated - economy, that factory is running hard.
But it is not running efficiently. Its appetite for
energy far outstrips its production, and it may well be
slowing down. In short, China is confronted by an energy
crisis that can undermine its economic gains and
threaten its future.
It is famished for fuel.
Solving its energy crisis is a major challenge to
political, industry and business leaders, and the rest
of the world is watching closely.
In order to
keep the world's factory humming - and to realize its
Great Power aspirations, China needs energy security and
a coherent, long-term energy strategy covering
hydroelectric power, coal and oil. It needs to put in
place durable arrangements for oil imports to meet its
own production shortfalls, to develop Central Asian and
East Asian pipelines, to undertake drastic energy
conservation and develop alternative, efficient
technologies and sources of fuel, such as solar, wind
and hydrogen power.
As yet, however, China has
no energy strategy, even as all sectors of the economy
are urged to produce more, faster and better in order to
get rich and realize the Middle Kingdom's economic
miracle.
China has big problems with coal: it
burns more than a billion tons a year and gets 75
percent of its energy from highly polluting coal-burning
plants. And it doesn't have enough coal. Beijing has
ordered an increase in coal output, despite one of the
highest rates of mining accidents in the world. As of
December 21, 1,035 people had died in 50 "major" coal
mining disasters in 2003, and no one knows how many died
in "minor" accidents; China has thousands of small coal
mines and pits that account for a large part of its
total output.
The government, appalled by the
death tolls and bad international publicity, ordered a
coal-mine "rectification campaign" in order to improve
mine safety. That meant shutting some mines and slowing
or halting production in others until safety could be
improved. But when the price of the safety campaign was
a big drop in coal output, the campaign went by the
boards.
China does have a policy to wean itself
from over-reliance on coal, but that will take a long
time.
Only one week's oil reserves
The
nation is also shockingly short of oil. It cannot meet
rising demand and has no strategic reserves. Though the
fifth-largest oil producer in the world, China has
fallen from a net oil exporter in 1993 to the world's
fastest-growing importer. Its maximum exploitable oil
reserve is estimated at only 13 billion to 16 billion
barrels, about the size of a middle-sized oilfield in
Iran. That will last about one week.
Last autumn
the State Council received a research report on energy
security. One of the recommendations was establishment
of a domestic petroleum futures market and a related
legal and supervision framework. This would allow China
to bridge its gap with the international energy market,
have a greater say in petroleum pricing, better resist
price fluctuations and secure an oil supply into the
future.
That recommendation and others are under
consideration.
A nation of abundant but unevenly
distributed water resources, China historically has been
ravaged by floods and drought. So now it is harnessing
the water for hydroelectric power and flood control, as
in the case of the Three Gorges Dam on the Yangtze
River. The project is in its third phase.
But
hydroelectric power depends on seasonal water supply,
and in China the sun and rain gods can be capricious, as
Hunan province in the south has learned to its profound
pain and dismay. Lacking a coherent flood plan, fearful
and overzealous engineers and bureaucrats - important
national actors in China's unfolding energy drama -
lowered reservoirs too much during unexpected torrential
rains. And during an unexpected drought last autumn,
they ran out of energy. The lights went out - well, they
flickered - and severe rationing and power cuts have
been imposed.
The story of Hunan, the first in
this series, is a case study in what can happen when bad
weather and bad judgment combine. Throughout China,
there are similar cases of poor or non-existent energy
planning at a time when all sectors of the economy are
driven to produce.
To a large degree, China's
economic future depends on how - and if - it solves its
energy crisis. In a globalized international economy,
Asia and the rest of the world have a stake in China's
vision, pragmatism and leadership in keeping the world's
factory running. - ATol
Part 1: Hydropower, wave of
the future?
By Qu
Xin
Rejoicing over its burgeoning economy during
2003, China found itself struggling with a severe power
shortage at the end of the year, with regions along the
middle and lower reaches of the Yangtze River bearing
the brunt of the devastating national energy shortfall.
Seeking to wean itself from reliance on
polluting coal-burning power plants - China gets more
than 75 percent of its energy from coal - Beijing has
pumped huge investments into harnessing its abundant
water resources, building non-polluting hydroelectric
plants. The Three Gorges Dam, still in the third phase
of construction, is part of this mammoth effort to
further tap the nation’s hydroelectric power capacity.
Hydroelectric plants, however, are subject to
seasonal water supply. Southern China's Hunan province,
with 57 million people, is highly dependent on
hydropower and it has borne the brunt of China's
devastating energy shortfall. It is a case study of bad
weather compounded by bad judgment, and what can go
wrong without a coherent, long-term energy policy. Hunan
has none, and neither does China - yet.
Last
summer, a succession of unexpected torrential rains
panicked the local authorities into adopting a rash,
ill-considered flood drainage project. They lowered
reservoir levels to prevent flooding of cities, towns,
villages and croplands. But this huge drain-off later
created a provincewide water shortage leading to the
current power famine. When unexpected drought descended,
the lights went out. Now as the last resort, the
province has been rationing electricity since November
4.
With the region requiring an extra 20 million
kilowatt-hours (kW-h) in electricity supply every day,
the severe power shortage plaguing Hunan province will
persist at least until the spring of 2004, according to
estimates of the official Hunan Electric Power Co (HEPC)
and the provincial Economic and Trade Commission.
"The power shortage has become a bottleneck in
provincial political and economic development," Zheng
Maoquing, vice governor of Hunan, declared last August.
But the gap is far wider than what officials
acknowledged, according to Qin Hongsan, chief engineer
of the HEPC. Qin was quoted by the China Youth Daily as
saying that Hunan province needed an extra 30 million
kW-h in electricity supply every day, and he said the
situation would get worse as falling temperatures
increased the need for heat.
Authorities
impose rationing
Confronted with the power
shortage, the provincial government has not yet found an
effective solution. Last July 22, in an effort to ensure
smooth operation of the local power network, provincial
officials ordered some industries to avoid electricity
consumption during peak hours, and the next day they
ordered local governments to control their power use by
rationing electricity.
On August 2, the
provincial government issued an emergency rationing
circular throughout Hunan. It extended rationing to big
power consumers such as enterprises and public
facilities in order to guarantee the supply for civil
life, anti-drought and flood relief works and public
security. Short of electricity, various workshops or
factories, small or large, were temporarily shut down.
In Changsha, the provincial capital, department
stores and recreation places were ordered to close after
7pm to ensure civilian power consumption. Meanwhile,
only half of street lamps went on.
Some
observers say the power shortage can be attributed in
part to the provincial authority's imprudent plan last
summer to reduce the level in reservoirs for flood
control.
In July, the province was drenched by
heavy rain, especially in its northwestern part. Hit by
the once-in-a-thousand-year rainstorm, Both Shidi and
Zhangjiajie hydrological stations registered rainfall of
408 centimeters and 379cm respectively.
The
provincial hydrological units predicted that floodwater
would exceed the warning level for Chenglingji city near
Dongting Lake on July 12, and then rise to 32.5 meters.
Explosives were placed at the dam and would be detonated
to protect the city in case of emergency.
The
explosion was not necessary, though no detailed coverage
of emergency measures and flood discharge was seen in
the domestic media. One glimpse was given by the July 16
edition of Science and Technology Guide, a weekly
affiliated to the Hunan Daily. It said, "Under the
leadership of the Party and the State Council, local
authorities scored another resounding triumph over the
flood by promptly relocating people from risky areas,
effectively channeling floodwaters into nine
floodwater-storage areas, and finally releasing it into
the Yangtze River by river-to-sea channels, as per its
flood-control plan."
Flood control took
highest priority
Some officials pointed out that
discharging so much floodwater could result in stalling
the power generation in a drought, but they emphasized
that flood-control work had to take the highest
priority.
Then an unexpected drought plagued the
unfortunate land from summer to autumn, an extraordinary
duration in China. The hope for an autumn flood or
October rainfall evaporated, as the sun blazed down for
more than a month.
Since the summer, declining
rainfall along the Xiang River basin eventually reduced
the water level of the Changsha section of Xiang River
to 25.24m at 8pm on November 1, breaking the record low
of 25.25m in 1999. After the summer drainage for flood
control, the level in various reservoirs dropped
dramatically, resulting in a major reduction in
power-generating capacity, and the current severe power
shortage in Hunan.
For better - and sometimes,
as in this case, for worse - Hunan relies heavily on
hydroelectric power. According to the Hunan Department
of Water Resources, one power grid, covering 97 cities
and counties, is composed largely of hydroelectric
plants with a cumulative installed capacity and annual
output of 2.44 million kW and 8.13 billion kW-h,
accounting for 45 percent and 40 percent of the
provincial total respectively.
The severe
flooding in summer and the outbreak of severe acute
respiratory syndrome (SARS) last year has dealt a
powerful blow to Hunan’s economy. That prompted the Hunan
provincial committee of the Chinese Communist Party and
the provincial government to put forward a new strategy
of development: the industrial sector should try to
exceed its pre-set target and make up the loss in what
is called the "third industry", the service sector,
which had been hit hard by the disaster and epidemic.
However, Hunan is still plagued by power
shortages despite the government’s pledges to boost the
economy. In December, authorities activated a new
rationing plan: a 24-hour power cut every three days for
factories, which might soon be shortened to every two
days. Municipal officers say the rationing probably will
remain unchanged in the short term. Presumably, the
underpowered industrial sector is unlikely to achieve
substantial growth this year, reducing the possibility
of a higher overall economic growth rate for the
province.
It would be unfair to place all the
blame for the current power shortage on the officials
who ordered the emergency draining of reservoirs last
summer. The torrential rains precipitated a crisis that
called for urgent, quick-win disaster-relief tactics.
However, long-term policies and strategies
should be developed, taking into consideration the pros
and cons of different approaches and tactics. As Chinese
President Hu Jintao said in a national symposium last
March, "The work of water conservancy should be carried
out on the basis of unified planning with due
consideration for all prospects."
Hunan has
already paid a heavy price for its power shortage. So
that history does not repeat itself, other provinces
should draw a lesson from Hunan's suffering.
Next: Coal tradeoff - safety for output
(Copyright 2004 Asia Times Online Co, Ltd. All
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