China's Energy Intensity Climbs Despite Targets

Policymakers Under Pressure to Boost Energy Savings
Worldwatch reports
n the first half of 2006, China’s energy intensity (the amount of energy required for every dollar produced in the economy) climbed 0.8 percent above the corresponding period last year, the country’s Security Times reportedon August 2. During this period, China’s energy consumption grew faster than its economic growth of 10.9 percent, casting huge challenges to the nation’s stated goal of a 4-percent decrease in energy intensity by the end of this year.

A recent National Energy Intensity Report issued jointly by China’s National Development and Reform Commission (NDRC), the National Energy Office, and the National Statistics Bureau reveals that during the first half of the year, energy use per unit of value-added mounted in several industrial sectors, with coal use jumping 5.5 percent, petroleum and chemical use 8.7 percent, and electricity generation 0.8 percent. In contrast, sectors such as steel, building materials, and textiles showed moderate declines in energy use of 1.2 percent, 4.5 percent, and 5.5 percent, respectively, said Security Times.

Insiders contend that continued rapid investment in high-energy sectors like construction is a key hurdle to achieving China’s year-end energy-savings goal. China Energy News reported that during the first half of 2006, highly energy consumptive items such as steel, metals, chemicals, and building materials accounted for more than 70 percent of China’s industrial energy use, while contributing only 20 percent to the industrial value-added. Electricity, coal, and petroleum consumption all increased at rates that overtook GDP growth, with total power generation jumping 12 percent, coal production 12.8 percent, and oil consumption more than 16 percent, according to Xinhua News Agency.

China’s large-scale investment in energy consumptive sectors in recent years has generated tremendous production capacity. Continued enthusiasm for such activity is driven largely by local officials’ desire for outstanding growth rates, Zhou Dadi, the director of the NDRC, told Xinhua News. Yet domestic economists warn that such breakneck growth is unsustainable, as surplus capacity continues to expand in highly energy consumptive sectors such as steel and metal.

The Chinese government’s goal is to reduce the energy intensity of the economy by 4 percent by the end of this year and 20 percent by 2010. But the Paris-based International Energy Agency has noted that to stick to these targets, China will need to embark on major new investments aimed at reversing current energy usage trends.