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JULY 18, 2010
China Tops U.S. in Energy Use
Asian Giant Emerges as No. 1 Consumer of Power, Reshaping Oil Markets, Diplomacy
By SPENCER SWARTZ And SHAI OSTER
China has passed the U.S. to become the world's biggest energy consumer, according to new data
from the International Energy Agency, a milestone that reflects both China's decades-long burst
of economic growth and its rapidly expanding clout as an industrial giant.
China's ascent marks "a new age in the history
of energy," IEA chief economist Fatih Birol said
in an interview. The country's surging appetite
has transformed global energy markets and
propped up prices of oil and coal in recent years,
and its continued growth stands to have longterm implications for U.S. energy security.
The Paris-based IEA, energy adviser to most of
the world's biggest economies, said China
China's emergence as the world's most voracious
consumed 2.252 billion tons of oil equivalent
energy consumer has wide implications for U.S.
last year, about 4% more than the U.S., which
national security and foreign policy. Wall Street Journal
reporter Neil King discusses.
burned through 2.170 billion tons of oil
equivalent. The oil-equivalent metric represents
all forms of energy consumed, including crude oil, nuclear power, coal, natural gas and
renewable sources such as hydropower.
China, meanwhile, disputed the IEA figures, but didn't offer alternative data, according to Zhou
Xian, spokesperson for China's top energy agency.
The U.S. had been the globe's biggest overall
energy user since the early 1900s, Mr. Birol said.
China overtook it at breakneck pace. China's
total energy consumption was just half that of
the U.S. 10 years ago, but in many of the years
since, China saw annual double-digit growth
rates. It had been expected to pass the U.S.
about five years from now, but took the top
position earlier because the global recession hit
http://online.wsj.com/article/SB10001424052748703720504575376712353150310.html
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China Becomes World's Biggest Energy Consumer - WSJ.com#printMode
China disputed the latest statistics from the International
Energy Agency showing it surpassed the U.S as the
world's largest energy consumer last year.
Correspondent Shai Oster gives WSJ's Jake Lee the
larger context on the story.
View Full Image
Reuters
Laborers in Hangzhou work on transmission towers in
May, as China boosts its electricity-generation
capacity.
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the U.S. more severely, slowing American
industrial activity and energy use.
China's economic rise has required enormous
amounts of energy—especially since much of the
past decade's growth was fueled not by
consumer demand, as in the U.S., but from
energy-intense heavy industry and
infrastructure building.
China's growing energy demands will present
new challenges to U.S. foreign policy, as well as
to international efforts to reduce emissions of
greenhouse gases linked to climate change.
China National Petroleum Co., the country's
biggest oil company, is pushing forward with oil
and gas projects in Iran, despite U.S. efforts to
enforce sanctions against the Tehran
government.
Beijing has refused to agree to cap its overall growth in its consumption of fossil fuels, or reduce
its emissions of carbon dioxide and other greenhouse gases. That frustrated President Barack
Obama's efforts to forge an international climate agreement at a United Nations summit in
Copenhagen last December.
China instead set a target to reduce emissions intensity—the amount of carbon dioxide emitted
per unit of gross domestic product—by 40% to 45% from 2005 levels by 2020. That meant China
was agreeing to make its economy more energy efficient—boosting its competitiveness—but not
to consume less energy overall.
China's Quest for Energy
China's growth has transformed global energy
markets and sustained higher prices for
everything from oil to uranium and other natural
resources that the country has been consuming.
Once, China was a major exporter of both oil and
coal. Its increasing reliance on imports has
sustained higher energy prices worldwide and
underpinned a natural-resource boom in Africa,
the Middle East and Australia.
"There is little doubt that China's growing
consumption changes what ability we have to
control our own destiny within global energy
More photos and interactive graphics
markets," said David Pumphrey, a senior fellow
at the Center for Strategic and International Studies. "China can now demand a large space
inside any energy-policy tent."
View Interactive
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China Becomes World's Biggest Energy Consumer - WSJ.com#printMode
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Grows
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China's rapidly expanding need for energy
promises to have major geopolitical implications
as it hunts for ways to satisfy its needs. Already,
China's rising imports have changed global
geopolitics. Chinese oil and coal companies have
been looking overseas in their quest to secure
energy supplies, pitching the Chinese flag in
places like Sudan, which Western companies
had largely abandoned under international
pressure.
The most ambitious effort to secure overseas
energy supplies was the failed 2005 attempt Cnooc Ltd. to take over California-based Unocal in
an $18 billion bid, which was trumped by politics and rival Chevron. Despite a short pullback in
the aftermath of that failed deal, Chinese companies have expanded overseas, buying assets in
Central Asia, Africa, South America, Canada and even small stakes in the Gulf of Mexico. While
their overall overseas footprint is still small compared with that of big international oil
companies, these companies are expanding with access to cheap credit through China's stateowned banks.
Voracious energy demand also helps explain why China—which gets most of its electricity from
coal, the most polluting of fossil fuels—passed the U.S. in 2007 as the world's largest emitter of
carbon-dioxide emissions and other greenhouse gases.
In the past, being the world's biggest consumer of fossil fuels went hand in hand with being its
dominant economy. The question now is whether this will hold true in the future, as nations
compete to develop new ways to produce more wealth with less energy. While China is No. 1 in
consumption, the U.S. remains the world's biggest economy.
More
China Real Time: We're Not No. 1!
China Says IEA Data Not Accurate
The U.S. is also by far the biggest per-capita
energy consumer, with the average American
burning five times as much energy annually as
the average Chinese citizen, said Mr. Birol.
Thirst for Energy Drives Beijing's Global
Push
The U.S. also remains the biggest oil consumer
by a wide margin, going through roughly 19
Heard: Dubious Energy Accolade
million barrels a day on average. China, at about
9.2 million barrels a day, runs a distant second.
But many oil analysts believe U.S. crude demand has peaked or is unlikely to grow very much in
coming years, because of improved energy efficiency and more stringent vehicle fuel-efficiency
regulations.
Firms More Vocal Regarding China
China's rise is also helping shift the focus for oil producers in the Organization of Petroleum
Exporting Countries. Key OPEC states like Saudi Arabia long looked to U.S. oil consumption for
guidance in adding new pumping capacity. But in recent years, OPEC states including Saudi
Arabia and the United Arab Emirates have built or started building refineries and storage
facilities in Asia. Saudi Arabia, the world's biggest crude exporter, now ships more to China than
to the U.S.
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Prior to the global economic crisis, China had been expected to become the biggest energy
consumer in about five years. Economic malaise and energy-efficiency programs in the U.S.
brought forward the date, Mr. Birol said.
Journal Community
DISCUSS
I wonder how much diesel is
consumed by those massive
engines in the hundreds of
container ships that bring
our merchandise from
China... and then head back
empty?
—Andrew Moore
The decreased "energy intensity" of the U.S.
economy is a key reason energy investors, such
as General Electric, have increasingly looked to
China as a driver of growth. Mr. Birol said China
requires total energy investments of some $4
trillion over the next 20 years to keep feeding its
economy and avoid power blackouts and fuel
shortages.
Mr. Birol, formerly an economist at OPEC, said
China is expected to build some 1,000 gigawatts
of new power-generation capacity over the next
15 years. That is about equal to the current total
electricity-generation capacity in the U.S.—a
level achieved over several decades of
construction.
China's energy intensity actually fell during the first phase of its economic growth in the 1980s
and 1990s, which was driven by light manufacturing. But in the early 1990s, China became a net
oil importer for the first time as its demand finally outpaced domestic supplies. China's energy
demand surged again after China joined the World Trade Organization in 2001.
Before China joined the WTO, most international prognosticators, including the IEA, predicted
energy demand would increase at an annual rate of 3% to 4% from 2000 to 2010. Demand
wound up growing four times faster than they predicted.
There is a chance the growth in China's energy appetite could
slow, as the pace of industrial expansion slows and energyefficiency policies backed by the government—such as
tougher fuel-efficiency standards for cars—take hold.
In a few years, there won't be much infrastructure left to
build. Urbanization will continue, but at a slower pace. And
the heavy factory jobs that consume huge amounts of energy
may start to shift away to other countries partly as China's
workers demand better conditions and higher salaries.
But the same force that could be moving factory jobs away—
rising incomes—could also underpin even greater energy
needs as richer Chinese start consuming more. The question
is whether China will adopt a low-energy pathway pioneered
by places like Japan and Europe or follow a high-energy lifestyle of big houses and big cars pioneered by the U.S.
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Write to Spencer Swartz at [email protected] and Shai Oster at [email protected]
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