Let’s start with China and see how it works. In 2010 they consumed about 100 quads. The EIA projects that to rise to about 163 quads by 2030 (based on Figure 14 of their report showing China as consuming 23.7% of the 739 quads projected for the world). That’s a CAGR percentage of 2.47%, higher than their estimated growth rate for the rest of the world—1.4%. But is it high enough? As mentioned above, China’s energy consumption grew in 2010 by over 11%, and they look set to match that in 2011.
On a per capita basis, China’s energy consumption rose from 29 million British Thermal Units (mbtus) to 56.2 mbtus between 1996 and 2006, the latest date available for examination at the EIA website.
China’s per capita GDP is also set to grow, from its 2010 level of $2,802 (measured in 2005 U.S. dollars) to $10,718 in 2030. And during this period, China’s population is also projected to grow from its current 1,341,335,000 to 1,393,076,000.
As it happens, Hungary had a very similar per capita GDP—$10,676—in 2006. It’s certainly not absurd to conjecture that their energy consumption per capita might be quite close to China’s energy consumption when it reaches Hungary’s level, whenever that might be.
Hungary’s per capita energy consumption that year was 114.7 million btus. Applying that to China’s projected population yields a total of 159.7 quads—and that’s far less than the EIA projects.
However, Hungary has been a well-developed nation for a long time, with a stable population and needing little in the way of fresh housing stock or road building, and its population’s needs for appliances and cars are for replacement rather than new acquisitions by people joining the middle class for the first time. The same would hold broadly true for other European countries with similar incomes. Is there a better example?
Apples and Apples
I offer for consideration Oman—a developing country whose population and GDP has grown quickly in recent decades, if not as quickly as China’s, and which had a per capita GDP of $11,528 in 2006. Their per capita GDP doubled between 1980 and 2006, showing that development was vigorous and sustained, much like China’s.
Although much smaller than China, Oman has many parallels, even to the extent of using 5-year plans to steer their economic development. They have spent the last 40 years taking a development path that may not be radically different from what China will be doing in the next 25. Their population growth rate has been similar to what China expects. They have a long coastline, and maritime developments may be similar between the two. Their neighbors have been as touched and troubled as China’s. The CIA World Factbook lists many features in common. So Oman seems a very good comparison and far more appropriate than Hungary, primarily due to China’s continuing development of basic infrastructure and the number of people moving into the middle class over the next 20 years.
Oman had per capita energy consumption of 177.2 mbtus in 2006. If China’s per capita energy consumption were to reach the same level as Oman’s, it would total almost 247 quads. Whether China achieves that level of development in 2020, 2035 or 2050 is not significant here; when their per capita GDP approaches $11,500, their energy consumption may be near 250 quads. And as far more analysts make their living projecting financial trends than energy consumption (and have far more at stake), we would expect to see fairly accurate projections of when China would arrive at that point. If the EIA has their GDP figures right, it will be in 2035. The Price Waterhouse Coopers study mentioned earlier predicts that China’s GDP will grow more quickly (at a 6.3% CAGR). If that’s correct, it would happen in 2032.
I should look at one more point before expanding our examination. Is it realistic to think that China actually can provide adequate energy to achieve the increase demanded by their rising GDP? After all, we are talking about a rise from 56 mbtus per person to 177 mbtus in as short a period as 20 years.
It would be nice if history provided some examples of that happening in non-island countries (island countries frequently have wild swings in energy consumption for a variety of reasons, usually stemming from dramatic changes in the primary fuel sources used).
There are several—the states comprising the former Yugoslavia increased per capita energy consumption from 77 mbtus to 174 between 1980 and 2006, and Iceland went from 250 to 348. And a number of countries either doubled (Turkey, Hong Kong) or even tripled (Malaysia) per capita energy consumption during the same period. And, as luck would have it, Oman doubled its energy consumption and per capita GDP between 1980 and 2006. There is also one other country that tripled its energy consumption in that time frame—China went from 17.6 mbtus per capita in 1991 to 56.2 in 2006. So it can be done.
Few people think that China will grow at the same rate it achieved over the past few decades. Indeed, very few developing countries—actually, no developing countries—have an unbroken streak of continuous growth at high levels for the fifty year period that we’re referring to for China. But then, very few believed that China could maintain this high rate of growth over the past three decades…