Chinese Economic Growth Chinese Economic Growth and Atmospheric Pollution: and Atmospheric Pollution: An Overview An Overview Jie He Jie He CERDI, Clermont- CERDI, Clermont -Ferrand Ferrand David Roland- -Holst Holst David Roland UC Berkeley UC Berkeley dwrh@berkeley.edu dwrh@berkeley.edu 1 February 2006 1 February 2006
Motivation Motivation Why we should care about this: 1. Chinese GHG emissions are already a significant regional externality and could be decisive on a global basis. 2. China’s energy demand is “rocking the tanker.” 3. Because of its status as a populous DC, what happens in China in terms of sustainable living is of special significance. He & Roland- -Holst Holst 2 2 He & Roland 1 February February 2006 2006 1
Aerosol Optical Depth : April 2001 NASA-TERRA Satellite; MODI S I nst Source: Y. Kaufman: 2001, NASA-GSFC AOD (Unitless) He & Roland- -Holst Holst 3 3 He & Roland 1 February February 2006 2006 1
Source: Novakov, Ramanathan, Hansen, .. Sathaye, GRL, 2002 He & Roland- -Holst Holst 4 4 He & Roland 1 February February 2006 2006 1
Three Focal Points Three Focal Points 1. Where is China along the path of energy dependence? 2. How might energy prices and policies influence its course? 3. How can we decompose the ensuing environmental effects? He & Roland- -Holst Holst 5 5 He & Roland 1 February February 2006 2006 1
Energy and GHG Trends in China Energy and GHG Trends in China Two contending perspectives: 1. Optimists point to falling coal intensity in the late 1990s and massive technology infusion across the economy. 2. Others see resurgence of coal and overwhelming demand shifts in recent years, driven mainly by final consumption and completion of the process of modernization. He & Roland- -Holst Holst 6 6 He & Roland 1 February February 2006 2006 1
Reported Growth Rates of GDP and Commercial Reported Growth Rates of GDP and Commercial Energy Use in China Energy Use in China Source: Logan:2001 He & Roland- -Holst Holst 7 7 He & Roland 1 February February 2006 2006 1
Chinese Steel: An Optimistic View Chinese Steel: An Optimistic View He & Roland- -Holst Holst 8 8 He & Roland 1 February February 2006 2006 1
Chinese Steel: Reality – – Now below average, Now below average, Chinese Steel: Reality growing fast, and headed much higher growing fast, and headed much higher • Per capita consumption up 2.5 times in last decade • Likely to more than double again in coming decade • Even 15% annual growth would still be less than Korea in 1992 Annual Kilograms Per Capita Steel Oil Production Consumption Country 1992 2001 2000 China 59 132 905 Korea 499 809 2071 Japan 635 575 4136 France 382 390 4366 United States 330 373 8141 He & Roland- -Holst Holst 9 9 He & Roland 1 February February 2006 2006 1
Industrialization may be energy- intensive, but affluence is much more so. Per Capita Steel and Energy (Chinese levels = 100) 1000 900 Mountain 800 Normalized Quantity 700 Hill 600 500 400 300 200 100 China Korea Japan France United States Countries Steel Oil He & Roland- -Holst Holst 10 10 He & Roland 1 February February 2006 2006 1
rd Largest Car Market by 2010 China: The Worlds 3 rd Largest Car Market by 2010 China: The Worlds 3 He & Roland- -Holst Holst 11 11 He & Roland 1 February February 2006 2006 1
Demographics of Vehicle Demand Demographics of Vehicle Demand He & Roland- -Holst Holst 12 12 He & Roland 1 February February 2006 2006 1
Coal at at the the Foundaton Foundaton, , Oil Oil at at the the Margin Margin: : Coal Energy Composition by Type Composition by Type Energy A. Energy preduction structure B. Total energy consumption 160000 160000 140000 140000 Ton of equivalent coal Ton of equivalent coal 120000 120000 hydropow er 100000 100000 natural gas 80000 80000 crude oil 60000 60000 coal 40000 40000 20000 20000 0 0 8 5 0 2 4 6 8 0 2 7 8 9 9 9 9 9 0 0 8 5 0 2 4 6 8 0 2 9 9 9 9 9 9 9 0 0 7 8 9 9 9 9 9 0 0 1 1 1 1 1 1 1 2 2 9 9 9 9 9 9 9 0 0 1 1 1 1 1 1 1 2 2 Year Year He & Roland- -Holst Holst 13 13 He & Roland 1 February February 2006 2006 1
Tipping the Trade Balance: the Trade Balance: Tipping Energy Demand Demand and and Supply Supply Composition Composition Energy 30000 20000 total export 10000 MTEC total import 0 1980 1986 1988 1990 1992 1994 1996 1998 2000 total -10000 consumption total production -20000 -30000 Year He & Roland- -Holst Holst 14 14 He & Roland 1 February February 2006 2006 1
Macro Efficiency Efficiency Determinants Determinants Macro GDPPC and industrial GDPPC (1995 USD) 2500 production (kg equivalent oil/person) Per capita energy consumption and Per capita SO2 emission (g/person) 2000 Energy production 1500 Energy consumption GDPPC 1000 industrial GDPPC SO2 emission 500 0 8 0 2 4 6 8 0 2 4 6 8 0 2 8 8 8 9 9 9 9 0 7 8 8 9 0 9 9 9 9 9 9 9 9 9 9 9 0 0 1 1 1 1 1 1 1 1 1 1 1 2 2 Year He & Roland- -Holst Holst 15 15 He & Roland 1 February February 2006 2006 1
China: Per Capita Waste Gas Emissions China: Per Capita Waste Gas Emissions (1,000 cubic meters) (1,000 cubic meters) Source: Aufhammer et al: 2003 He & Roland- -Holst Holst 16 16 He & Roland 1 February February 2006 2006 1
Projections to 2025 Projections to 2025 • We use a recursive dynamic CGE model to forecast trends for China over the next two decades. • Around a calibrated baseline of consensus GDP growth, we evaluate the effects of rising oil prices. He & Roland- -Holst Holst 17 17 He & Roland 1 February February 2006 2006 1
Sectoral Output Composition Sectoral Output Composition 100% 80% Percentage 60% Service Construction 40% Manufacture Agriculture 20% 0% 1997 2000 2003 2006 2009 2012 2015 2018 2021 2024 Year He & Roland- -Holst Holst 18 18 He & Roland 1 February February 2006 2006 1
Inverted Kuznets Kuznets Curve Curve? ? Inverted Real GDP and SO2 Emission Trends Real GDP and SO2 Emission Trends 12 6000 Real GDP (10^9 USD) SO2 emission 10 5000 SO2 emission intensity 4000 8 (kg/1000USD) (10^4 Tons) SO2 3000 6 Real GDP 4 2000 SO2 intensity 1000 2 0 0 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 Year He & Roland- -Holst Holst 19 19 He & Roland 1 February February 2006 2006 1
CO2 as the Hidden Hidden Dragon: Dragon: CO2 as the Final Consumption Consumption Trends Trends Final 100% 80% Percentage 60% Service Construcution 40% Manufacture Agriculture 20% 0% 1997 2000 2003 2006 2009 2012 2015 2018 2021 2024 Year He & Roland- -Holst Holst 20 20 He & Roland 1 February February 2006 2006 1
Ills of Affluence of Affluence Ills 6 Emission intensity (Kg/1000 USD) 5 4 Agriculture Manufacture 3 Construction Service 2 1 0 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 Year Mfg reverses course because of electricity production. Services are about transportation. He & Roland- -Holst Holst 21 21 He & Roland 1 February February 2006 2006 1
Real Sources Of Emission Intensity Intensity Real Sources Of Emission Petrol and coke intensity (TCE/millon USD) 300 O il in te n s ity (T C E /m illo n U S D ) 180 C o a l in te n s ity (T C E /m illo n U S D ) 250 160 250 140 200 200 120 100 150 150 80 100 100 60 50 40 50 20 0 7 0 3 6 9 2 5 8 1 4 0 9 0 0 0 0 1 1 1 2 2 9 0 0 0 0 0 0 0 0 0 1 2 2 2 2 2 2 2 2 2 0 1997 2001 2005 2009 2013 2017 2021 2025 Ye a r Agriculture Manufacture Construction Year Year Service He & Roland- -Holst Holst 22 22 He & Roland 1 February February 2006 2006 1
Composition of Environmental Incidence: Composition of Environmental Incidence: Primary Drivers and the Pollution Troika Primary Drivers and the Pollution Troika Economic sources of pollution can be decomposed into three parts: 1. Growth effects – expanding the envelope of economic activity. China’s successes here are now legendary, and becoming almost surreal. 2. Composition effects – shifting patterns of supply and demand around the surface of the envelope. Things will get much worse before they get better. 3. Technological change – efficiency gains, bending the envelope. Here is the only unequivocally good news, driven mainly by coal use/distribution constraints and technology transfer. He & Roland- -Holst Holst 23 23 He & Roland 1 February February 2006 2006 1
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