Electrical Inefficiency A Dark Spot for China

Tourists dine by bright lights in Shanghai's Bund, where the government orders office buildings lighted until 11 p.m. Meanwhile, factories go dark.
Tourists dine by bright lights in Shanghai's Bund, where the government orders office buildings lighted until 11 p.m. Meanwhile, factories go dark. (By Cancan Chu -- Getty Images)
By Peter S. Goodman
Washington Post Foreign Service
Tuesday, August 9, 2005

SHANGHAI -- Beneath the cracked plaster ceilings of the Honghua Knitwear & Garment Factory, sewing machines sat motionless on a muggy afternoon, idled by a rolling blackout imposed to cope with chronic energy shortages. Laborers lolled on plywood bunks in a cramped and airless dormitory, resting before another illegal night shift.

Five miles away, as night fell on Shanghai's famed waterfront promenade, the Bund, neon hummed to life and lights glowed from the heights of the financial center across the river. The same city government that orders local factories to shut down in the name of energy conservation also forces skyscrapers to keep lights on so that investment bankers digging into their foie gras at waterfront eateries can gaze upon a glittering homage to modern China.

The recent failed attempt by the state-owned Chinese energy company Cnooc Ltd. to purchase U.S.-based Unocal Corp. underscores China's quest to lock up supplies of oil and gas around the world as the country's rapid industrialization demands ever more energy. But the contrasts in this and many other Chinese cities -- austerity side by side with state-mandated extravagance -- reveals another reason this country now scours the globe for energy: China has become among the world's most wasteful users of power, its growth in demand exacerbated by its striking inefficiency, say energy analysts and economists.

"A lot of China's energy security problem could be solved if you improved our domestic efficiency," said Yan Maosong, an industrial engineering expert at Shanghai University who advises the central government. "From generation to transmission to power usage, in every link of the chain, our energy industry is not very efficient. Top government leaders have not paid enough attention."

Energy Excess
By the government's own reckoning, China's economic growth is absorbing energy at a higher rate than many large economies. To produce $1 million in gross domestic product, China needs 2 1/2 times as much energy as the United States, five times that of the European Union, and nearly nine times that of Japan, according to the state Energy Research Institute.

Making steel in China in 2003 consumed 10 percent more energy per unit than in the United States, according to state statistics. China's electrical generators consume one-fifth more energy per unit of output than American plants, said Long Weiding, an expert at Tongji University in Shanghai. Chinese air conditioners -- now the fastest-growing draw on power -- are roughly one-fifth less efficient than the world average, Long said.

High and inefficient energy use may seem normal for poor nations going through industrialization and rapid economic growth. According to state statistics, China is more energy-efficient than fast-growing India. But much of China's wastefulness stems from the hybrid nature of its economy, which is caught between its communist roots and a free-market future, experts say. More and more of the demand for energy comes from companies that operate on market principles, but the majority of the supply is generated by state-owned monopolies forged in the time of central planning and with little incentive to increase efficiency.

China's leaders are trying to cut back on energy waste. Last year, the National Development Reform Commission -- a powerful policy-setting body -- released a conservation plan calling for China to more than triple its use of natural gas by 2020 to minimize use of coal, now the source of three-fourths of China's electricity.

State energy companies have been pursuing deals to bring liquefied natural gas from other parts of Asia to coastal cities, with Unocal's gas fields in Indonesia a prime attraction to Cnooc. The plan also calls for the development of more than 20 new nuclear power plants by 2020, doubling the role of nuclear power in China's overall energy supply from 2 percent to 4 percent.

China is in the early stages of implementing minimum efficiency standards for air conditioners. This year, the government imposed the first stage of new vehicle emission standards that could eventually make Chinese cars more fuel-efficient than American models.

And between 1990 and 2002, improved technology cut by one-fifth the amount of energy required to produce steel, according to the Beijing Energy Efficiency Center.

But this progress lands on top of a wasteful legacy -- an industrial base that includes power plants and factories built in the 1950s, when the Communist Party government pursued national development at any cost. The smog blanketing most Chinese cities and the black smoke spewing from factory stacks testifies to the continued role of low-grade coal and antiquated technology in powering China's industry.

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