Coal accounts for over 70% of China’ energy mix, whereas in the United States, coal is 44% of the energy mix. Below I analyze several reasons why China has such high coal requirements as a percentage of its energy supply and I attempt to explain why China’s coal requirements may remain high for a long time to come.
Just how fast are China’s coal demands rising? According to a study, “offsetting one year of recent coal demand growth of 200 million tonnes would require 107 billion cubic meters of natural gas (compared to 2007 growth of 13 BCM), 48 GW of nuclear (compared to 2007 growth of 2 GW), or 86 GW of hydropower capacity (compared to 2007 growth of 16 GW).” (Lawrence Berkeley National Lab. Study)
(See Part One of this series on China’s Coal and a chart comparing China’s energy use to the United States’ Here).
China has trouble diversifying energy supply sources because it lacks significant natural gas supplies, it is starting from a very low base in installed nuclear power plants, and because of other renewable energies’ technical limitations.
1. China’s Lack of Extensive Natural Gas Supplies
Natural gas provides over 20% of US energy, but China has much less natural gas reserves than are available in the US. The US has 79 trillion cubic meters estimated natural gas reserves, whereas China has 22 trillion cubic meters. (EIA). Natural gas only accounts for 3.5% of China’s total energy supply and it is unlikely that Chinese natural gas utilization will increase to anywhere near the levels that it is used in the United States.
Natural gas generally burns cleaner than coal, so use of natural gas is desirable from both a carbon and a sulfur emission point-of-view. “[I]n 2011, China [hopes to]… raise the ratio of natural gas in its total primary energy consumption by 1 to 2 percentage points. . . . Using natural gas … as opposed to coal, could reduce carbon dioxide emissions by 130 million tons a year and sulfur dioxide emissions by 1.44 million tons a year.”( China’s LNG.)
Still, much of China’s natural gas has a high sulfur content, which makes it expensive to produce in a usable, or clean form. However, unconventional gas reservoirs may increase China’s future output. Not all unconventional resources, however, are included in estimations of producible reserves (such as those given above). “[L]ow permeable gas, coal bed methane, and shale gas are each respectively estimated at 100 trillion cubic meters, 30 trillion cubic meters, and 100 trillion cubic meters.” (China Coal Resource, Sept 2009)
Even fast-increasing development of unconventional gas resources will only marginally affect coal’s dominance of China’s energy supply. A 2005 Oxford study determined that “the share of natural gas in the primary energy supply is predicted to rise no higher than 10 per cent by 2020, even in the most optimistic scenario in which natural gas use is significantly promoted.”
Realizing that its domestic resources may not be enough to guarantee sufficient natural gas supply, China has also planned natural gas pipelines to surrounding countries to import gas. China also constructed several LNG (liquid natural gas) terminals (The Guardian, Watts, 2006; see also p3 Oxford Energy Study for a map of planned LNG terminals as of 2005).
(A more in-depth study on the future of China’s natural gas industry is deferred until another article).
2. China’s Coming Nuclear Additions
Nuclear accounts for 20% of US capacity. China has plans to increase their nuclear capacity from ~1.3% of China’s current energy mix to 5% by 2020. Despite plans to construct the most nuclear plants of any country in the upcoming ten years (and subsequently demanding a great deal of uranium), China will find it difficult to quickly displace coal’s dominance of China’s energy supply.
The United States has over 104 nuclear reactors, built over a thirty-year period. Prior to 2002, China had less than three operating nuclear power plants. Today, China has 11 nuclear facilities and plans to construct at least 20 in the next 10 years. But even with a significant building program, it may not be in China’s energy security interest to rapidly increase its percentage of nuclear power. If a massive nuclear-buildout occurs, large quantities of uranium will need to be imported, and engineers will need to be rapidly trained. A more gradual increase in nuclear capacity may be in China’s best interest rather than a break-neck development speed.
3. China’s On-line Wind Capacity And Renewables
Wind and renewables have steadily increased as a percentage of China’s energy mix, rising from 0.06% of China’s energy mix to 1.3% from 2006 to 2008. Additionally, hydroelectric power capacity has grown significantly in the past three years. “In 2008, the country added 20.1 GWe of hydro capacity” (World Nuclear Ass.)
There are limits to how much any country can depend on renewables, however. Engineers I have spoken with claim that an energy grid can only handle a maximum of around 25% of its power from wind. Wind is a variable source and needs scaling units (other energy sources that can turn on when wind is not blowing) to balance wind’s output. Wind’s average capacity utilization factor is only around 31%. In comparison, Combined Cycle Gas, Nuclear, and Coal steam turbines all rated capacity factors above 40%, according to the Nuclear Energy Institute.
Given current technology, at the most, wind could only account for about a fourth of China’s energy mix- and subsequent developments in battery storage or natural gas scaling units are required to make wind economically viable and reliable. (See China’s Dirty Wind for more on wind and scaling). (See “Capturing the Wind” by the House Research Organization for the Texas House of Representatives for an estimate of the maximum amount of wind that can be integrated onto the grid using existing technology without radical alterations– 15GW; as of 2007 Texas already had nearly 5GW of wind online- which was only about 2% of the state’s energy supply.)
4. Hydroelectric Power
Hydroelectric power has been met with some controversy in China. Although there are environmental concerns, property takings concerns, and rainfall has declined, hydroelectric has a lot to offer China. Over 37 GW of hydroelectric capacity was added in China between 2004 and 2007. An additional 20.1 GW of capacity was added in 2008. China’s total potential hydroelectric rating is one of the highest in the world- at 694 GW. However, only around 171.5 GW of China’s capacity is utilized. China hopes to reach 320 GW of installed hydroelectric capacity by 2020 (Huang, 1658).
Of all potential alternatives to Coal, hydroelectric power will likely remain the number two energy supply source. Hydroelectric power has also done a great deal to reduce the amount of ash, sulfur dioxide pollution, and carbon dioxide emissions.
Although China’s coal consumption is double the number two producer’s amount, China seems to have little other viable options to displace coal as an electricity source in the near term.
China is embarking on ambitious wind and nuclear development programs, and it has built pipelines for natural gas, but these programs take time to develop, and there are drawbacks to all alternative energy sources. Even massive hydroelectric expansions have resulted in environmental and land-relocation controversy (See articles on the Nu River Project and the Three Gorges Dam; specifically see the book China’s Water Warriors by Andrew Mertha).
Coal will likely continue to provide a significant portion of China’s energy for the next 20 years– simply because the alternatives are not practical enough to scale-up large enough to replace coal’s necessary position in China’s energy mix.
These next few years will bring large challenges for China’s leaders as they try to balance energy security, energy demands, resource depletion and environmental concerns. With luck, China’s leadership will use constructive and creative solutions to manage and confront these growing concerns.
The Lawrence Berkeley Lab. Government Sponsored Study of the Chinese Coal Industry (July 2009)
Andrew Mertha. China’s Water Warriors. 2008.
2008 was a rocky year for energy markets. Oil soared to $140/barrel, and then crashed to $40. Natural gas spot prices likewise jumped high to $13 MMBtu, then ended low around $6 (EIA). Investors, lulled by impending $200/barrel oil, poured record cash into renewable energy.
Below are some numbers from 2008’s first three quarters of China’s cleantech energy investment and development. The fourth quarter will probably post much smaller investment gains.
Venture capital investment in Chinese renewable energy quintupled in the first three quarters of 2008, rising from US$29.1 million in the same period in 2007 to US$165 million this year (MarketWatch).
Solar electricity generation-related venture capital investments raised US$85.2 million in China, up from under $4.6 million in 2007 (MarketWatch). The top energy capture efficiency of China’s photovoltaic cells is around 21% (PV Report, p41), which is competitive in the industry. Solar energy industry growth will likely be much slower in 2009. Businessweek cited concerns that worldwide solar growth may slow to just 15% in 2009, off from the 50% growth the industry has enjoyed every year since 2004.
China accounts for 11% of the market demand for solar power equipment. The US represents 9% and Germany dominates the industry with a 38% demand (Businessweek).
China produces significant solar photovoltaic capacity, but as of 2007 more than 90% of China’s local solar power manufacturing is likely exported (PV Report 2008, p11).
China’s Wind industry likely added an expected 7 GW of capacity in 2008,* which allowed China to leap-frog India into fourth place among countries with installed wind power. Comparatively, the United States added 7.5 GW (ABS Energy Research). Global wind energy installed capacity was 94 GW at the end of 2007 and may reach 120 GW by the end of 2008 (ABS and p 15 of the Global Wind Energy Outlook). 20 GW of capacity was added worldwide in 2007- 3.3 GW of that in China (Cleantech).
* NOTE: 1/10/2009 Caijing recently reported the actual added capacity was 4.66 GW.
China’s domestic manufacturing capacity of wind turbines and equipment consisted of 40 manufacturers at the end of 2007. Chinese manufacturing accounted for 56 percent of global wind equipment installed that year. As of 2008, “Domestic manufacturing capacity is about 8 GW and is expected to reach 12 GW by 2010.” (Cleantech).
The Chinese wind power market has changed significantly in the past four years. In 2004, 75% of the market demand was filled by foreign suppliers, in 2006 only 55% was, and in 2007 foreign suppliers’ share fell to 42.2%. Only 1.7% of capacity is constructed by joint ventures, the rest of capacity is produced and installed by Chinese companies. (p20). In that same time period, the China market has seen total installed wind capacity rise from under 1GW to 8GW.
Nuclear Power. China’s nuclear industry remained steady at 9GW of installed capacity as of December 2008. Nuclear energy accounts for about 1.3% of China’s total energy generation mix.
On August 1, China raised its planned development of nuclear power to account for 5% of China’s total energy mix by 2020 instead of the previously projected 4%. This would account for over 60 GW of power.
” The country would boost the development of the nuclear power industry by speeding up construction of nuclear power plants in the coastal areas and drawing up plans for the inland regions, said Zhang Guobao, director of the newly-established National Energy Bureau.”
As part of the development of new nuclear energy sources, on July 18, approval of development for a reactor on Hainan Island in Changjiang County was confirmed. China National Nuclear Corp. will construct the reactor. “[I]t is expected to come into operation in late 2014.” And, interestingly it is claimed that, “more than 70 percent of the plant’s equipment will be manufactured in China.”
Currently 1.3% of China’s energy (9 GW) comes from nuclear energy, originating from 11 reactors.
China’s 2006 agreement for Australian companies to supply uranium to China, has finally borne some fruit. (And see Forbes). Energy Resources of Australia (ERA), which is controlled by Rio Tinto and which produces 10% of the world’s uranium, agreed to make a one-off shipment in the fourth quarter to an unidentified Chinese electricity company. The uranium will come from the Ranger mine. Australia holds 40% of the world’s known uranium reserves (Forbes).
Ranger is Australia’s most productive uranium mine, producing 5256 tonnes in 2006-07. It is located in the Northern Territory. Politically, it is a slightly controversial mine, due to its location near a World Heritage site and some concerns regarding its safety record.
Other Uranium Sources
China domestically mines for uranium, but it also acquires it abroad from Kazakhstan . Other countries listed as sources include Namibia. It is important to note that although as I detail in China’s Nuclear Power, China believes it may have a fair amount of uranium, as of 2007 its “proven uranium reserves within China, even if it was possible to fully extract them, could only fuel 40 GW for 50-60 years, according to China Guangdong Nuclear Power Holding Co., the country’s second-largest nuclear builder by assets,” according to Dow Jones. And that dearth of power could by necessity make China an international player on the uranium markets since China wants to have 60 GW of capacity by 2020.
Kazakhstan – As of October 2007, “China will get a stake in a 2,000-ton-a-year uranium mine in Kazakhstan in exchange for its share in a uranium-processing business… Kazatomprom said on Oct. 12 it signed agreements in Beijing with the China Guangdong Nuclear Power Group and the China National Nuclear Corporation, China’s largest producers of atomic energy”, according to the NYT quoting a Bloomberg article. Kazakhstan currently has an agreement to ship nearly half of China’s uranium imports. (Kazakhstan holds 17% of known global uranium reserves). Kazatomprom is the world’s second largest uranium supplier as of 2007, accounting for 12% of global supply.
Niger – China also explores for uranium for its nuclear power plants in Niger. In what is perhaps too much wishful thinking, ” Niger hopes to become the world’s number two uranium producer by 2011 thanks to new mines being opened by France’s Areva and the China Nuclear International Uranium Corp. (Sino-U)” (Reuters). In production capacity, Niger is currently behind Canada, Australia, Kazakhstan, and Russia.
Tajikistan – Only accessible by Subscription, the Times of Central Asia (Kyrgyzstan) , quoted “China’s company eyes uranium deposits in Tajikistan” in Google News which claimed that “China’s Guangdong Corporation is interested in participation in development of uranium deposits in Tajikistan.” So it appears that talks have begun for uranium development in that Central Asian country. More news stories on this will hopefully develop.
Mongolia -There have been some talks (May 2007) http://www.mongolia-web.com/content/view/1044/2/ about China acquiring Mongolian uranium. Future agreements appear to be in the developmental stage. Mongolia may attempt to play China and Russia against each other for better deals. Russia appears to currently have the upper-hand in current prospective deal-making. “In April 2008 Russia and Mongolia signed a high-level agreement to cooperate in identifying and developing Mongolia’s uranium resources” (World Nuclear).
* More on China’s Nuclear Power industry in my article, “China’s Nuclear Power.”
* An interesting article on the Kazakh Uranium Industry. (I’m a little concerned about some of the numbers used in the article, but haven’t had time to double-check [it would take hours]. They seem okay, and the article IS on CNN, but if something seems out of place, it’s probably worth further investigation.)
* CFR also had a good report on the world’s Uranium Industry.
* Factsheets on Uranium from Cameco (slightly outdated in some places, but nice.)
In February 2008, construction began on the Ningde Nuclear Reactor in Fujian province. According to China Daily, the reactor should cost around $7.1 billion to construct and will open for generation in 2012. Yearly, it will generate 33 billion kWh of power (3.3 GW). Ningde is just one of China’s nearly 30 reactors planned to be constructed between 2008 and 2020.
China is embracing nuclear energy. However, China’s nuclear industry is still nascent. Compared to France’s 59 operational reactors, and Japan and the United States’ 55 and 104, respectively, China only has “11 nuclear reactors currently in operation” and six under construction as of June 2008. These reactors “last year generated 62.86 billion kWh [6.2 GW], up more than 14 percent on 2006… [N]uclear power still accounts for less than 2 percent of the country’s total output… [But China] wants to boost this figure to 4 percent by 2020,” according to China Daily. By 2010, China plans to have 12 GW online. As of 2008, China can generate 9 GW a year.
China’s planned amount of nuclear power as a percentage of their energy mix (4 percent) amounts to an insignificant amount compared to nuclear’s predominance in the United States. In the US, nuclear power accounts for “20 percent [of power]… and nearly 80 percent in France,” according to the Washington Post.
It does not appear nuclear energy will become a significant source of energy insecurity should future geopolitical problems arise between China and foreign countries. Coal remains the main ingredient in China’s energy mix.
In 2020, the Chinese hope to have nuclear power capacity of 60 GW. Also according to China Daily, China “will need to start construction on about 4 new generators a year through 2015 to meet its ambitious target.”
WILL CHINA MEET ITS TARGET OF ADDING NEARLY 50 GIGAWATTS OF NUCLEAR POWER IN 12 YEARS?
China needs to satisfy a few strategic areas before they can have a strong, functioning nuclear industry.
Uranium Acquisition- China purchases uranium from Kazakhstan and signed an agreement with Australia (2006). Imports of uranium account for 700-800 tons of the 1,600 it consumes yearly. Its uranium needs should expand to 4,000 yearly tons in 2010 (according to Bloomberg) and then 8,000 tons a year by 2020, according to AFP.
According to China Daily, more domestic exploration will be undergone. “Key areas that would be scoured for natural uranium include the Yili Basin in” Xinjiang and parts of Inner Mongolia. NTI has a chart of existing Chinese uranium mines and supplies. “China has [at least] an estimated 57,000 tons of uranium in the [already explored] south.” In 1995, the OECD estimated China’s readily-extractable uranium supplies at 65,000 tons, according to NTI. A 2007 Bloomberg news report estimates China’s domestic supplies at 300,000 tons, but that’s probably optimistic even though Chinese geologists are discovering new sources, mostly located in China’s border provinces. The location of these uranium deposits means that the Chinese government will have an even greater desire to increase border and internal security in these provinces.
IAEA data on country-by-country estimated recoverable uranium reserves are available HERE. China is estimated to only possess 1% of the world’s available reserves. Australia (24%) and Kazakhstan (17%) account for the lion’s share.
To reduce China’s reliance on uranium imports, it has established a strategic reserve for uranium. The reserve should be completed by 2010. According to the IHT, “China is building storage tanks in Zhenhai, Zhousan and Qingdao and in the northern city of Dalian.”
Enrichment Expertise- China has been aggressive in pursuing nuclear energy independence. In May 2008, Russia and China signed an agreement for a $1 billion investment in the completion of a gaseous centrifuge enrichment plant. The completion of the agreement, by 2010, should bring the Russian constructed capacity of Chinese Uranium enrichment plants to an ability to process over 1,600,000 SWU (Separative Work Units) per year. Compared to other countries’ capacities for enrichment in 2003; China’s amount will still be low. Russia, for example, can enrich over 25,000,000 SWU a year. The US can enrich 11,300,000 a year, and Japan can enrich 1,150,000 SWU a year.
Equipment- China has several indigenous nuclear power equipment plants being constructed. The most recent was built from June 2007-June 2008 in Shandong province. The plant produces steel containment vessels, according to a Hong Kong Ta Kung Pao article. Its “annual output volume is able to meet the demand of two sets of generating units in the AP1000 [type] nuclear power plant. “
Reactor Designs- China is attempting to develop its own reactor design, so it will not have to transfer technology from abroad. According to the Washington Post, “Groundbreaking for an experimental $416 million Chinese plant is scheduled for 2009.”
Operational Expertise- China “is relying heavily on Western contractors such as Westinghouse to teach its engineers to build and operate plants,” according to the Washington Post. In December 2006, US-based but Japanese Toshiba-owned Westinghouse signed an agreement to build four new 3rd generation plants in China.
Waste Disposal- China plans to deposit its nuclear waste in the Beishan Mountains in Gansu province near Dunhuang, according to the Washington Post and The Asia Times. The repository will not be opened until 2050. Before China can begin transporting spent fuel to its interior, it will need to upgrade rail lines and security.
Conclusion- China’s nuclear industry faces a number of challenges in becoming self-sufficient and self-sustaining. It will also likely not be a major player in the country’s total energy supply until after 2020, since it will account for so little of China’s total energy supply (Around 4% of the mix).
Beijing will probably need to confront Uranium supply dearths more aggressively, whether by beginning massive domestic extraction investments (with all the environmental destruction and populace dislocation that may involve) or increasingly seeking investments abroad in places that can supply said Uranium, such as by going back into Niger and more aggressively exploring resources in Australia.
Currently, China lacks the technical expertise to completely self-develop their nuclear energy program, as Xinhua admits. However, after 2020, when China’s capacity is expanded, Chinese indigenous reactor designs, expertise and operators may become players on the world market and the Chinese could be exporting their expertise elsewhere in the world.
Chinese Nuclear Reactors
The above map suggests more nuclear reactors are soon planned for the north of China; however, by examining actual work orders, all power plants planned to be built before 2015 are in China’s south.
After 2015, one reactor should be operational in Shandong, with several others under construction.
Chinese Nuclear Power Companies (Partial List)
China Guodian Corp. (also produces other types of energy)
Chinese Nuclear Reactors (Partial List)
* Ningde Nuclear Reactor in Fujian (construction begins- Feb 2008; planned open- 2012)
* Sanmen Nuclear Reactor in Zhejiang (construction begins- 2007; planned open- 2011)
* Daya Bay (2) in Guangdong (~2 GW) (1994)
* Yangjiang in Guangdong (Planned)
* Tianwang (2) in Jiangsu (~2 GW) (2007)
* The World Nuclear Association has a more technical indepth report on the Chinese Nuclear Industry.