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Sep 11, 2023 351 likes •653 views

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

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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 David Roland-

  • Holst

Holst UC Berkeley UC Berkeley

dwrh@berkeley.edu dwrh@berkeley.edu 1 February 2006 1 February 2006

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He & Roland He & Roland-

  • Holst

Holst 2 2 1 1 February February 2006 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.

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He & Roland He & Roland-

  • Holst

Holst 3 3 1 1 February February 2006 2006

AOD (Unitless)

Source: Y. Kaufman: 2001, NASA-GSFC

Aerosol Optical Depth : April 2001

NASA-TERRA Satellite; MODI S I nst

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He & Roland He & Roland-

  • Holst

Holst 4 4 1 1 February February 2006 2006

Source: Novakov, Ramanathan, Hansen, .. Sathaye, GRL, 2002

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He & Roland He & Roland-

  • Holst

Holst 5 5 1 1 February February 2006 2006

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?

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SLIDE 6

He & Roland He & Roland-

  • Holst

Holst 6 6 1 1 February February 2006 2006

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

  • verwhelming demand shifts in recent

years, driven mainly by final consumption and completion of the process of modernization.

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He & Roland He & Roland-

  • Holst

Holst 7 7 1 1 February February 2006 2006

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

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He & Roland He & Roland-

  • Holst

Holst 8 8 1 1 February February 2006 2006

Chinese Steel: An Optimistic View Chinese Steel: An Optimistic View

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He & Roland He & Roland-

  • Holst

Holst 9 9 1 1 February February 2006 2006

Chinese Steel: Reality Chinese Steel: Reality – – Now below average, Now below average, 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

Steel Production Oil 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 Annual Kilograms Per Capita

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He & Roland He & Roland-

  • Holst

Holst 10 10 1 1 February February 2006 2006 Per Capita Steel and Energy (Chinese levels = 100)

100 200 300 400 500 600 700 800 900 1000 China Korea Japan France United States Countries Normalized Quantity Steel Oil

Mountain Hill

Industrialization may be energy- intensive, but affluence is much more so.

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He & Roland He & Roland-

  • Holst

Holst 11 11 1 1 February February 2006 2006

China: The Worlds 3 China: The Worlds 3rd

rd Largest Car Market by 2010

Largest Car Market by 2010

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He & Roland He & Roland-

  • Holst

Holst 12 12 1 1 February February 2006 2006

Demographics of Vehicle Demand Demographics of Vehicle Demand

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He & Roland He & Roland-

  • Holst

Holst 13 13 1 1 February February 2006 2006

Coal Coal at at the the Foundaton Foundaton, , Oil Oil at at the the Margin Margin: : Energy Energy Composition by Type Composition by Type

  • A. Energy preduction structure

20000 40000 60000 80000 100000 120000 140000 160000 1 9 7 8 1 9 8 5 1 9 9 1 9 9 2 1 9 9 4 1 9 9 6 1 9 9 8 2 2 2

Year Ton of equivalent coal

  • B. Total energy consumption

20000 40000 60000 80000 100000 120000 140000 160000 1 9 7 8 1 9 8 5 1 9 9 1 9 9 2 1 9 9 4 1 9 9 6 1 9 9 8 2 2 2

Year

Ton of equivalent coal hydropow er natural gas crude oil coal

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He & Roland He & Roland-

  • Holst

Holst 14 14 1 1 February February 2006 2006

Tipping Tipping the Trade Balance: the Trade Balance: Energy Energy Demand Demand and and Supply Supply Composition Composition

  • 30000
  • 20000
  • 10000

10000 20000 30000 1980 1986 1988 1990 1992 1994 1996 1998 2000 Year MTEC

total export total import total consumption total production

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He & Roland He & Roland-

  • Holst

Holst 15 15 1 1 February February 2006 2006

Macro Macro Efficiency Efficiency Determinants Determinants

500 1000 1500 2000 2500 1 9 7 8 1 9 8 1 9 8 2 1 9 8 4 1 9 8 6 1 9 8 8 1 9 9 1 9 9 2 1 9 9 4 1 9 9 6 1 9 9 8 2 2 2

Year Per capita energy consumption and production (kg equivalent oil/person) GDPPC and industrial GDPPC (1995 USD) Per capita SO2 emission (g/person)

Energy production Energy consumption GDPPC industrial GDPPC SO2 emission

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He & Roland He & Roland-

  • Holst

Holst 16 16 1 1 February February 2006 2006

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

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He & Roland He & Roland-

  • Holst

Holst 17 17 1 1 February February 2006 2006

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.

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He & Roland He & Roland-

  • Holst

Holst 18 18 1 1 February February 2006 2006

Sectoral Output Composition Sectoral Output Composition

0% 20% 40% 60% 80% 100% Percentage 1997 2000 2003 2006 2009 2012 2015 2018 2021 2024 Year Service Construction Manufacture Agriculture

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He & Roland He & Roland-

  • Holst

Holst 19 19 1 1 February February 2006 2006

Inverted Inverted Kuznets Kuznets Curve Curve? ? Real GDP and SO2 Emission Trends Real GDP and SO2 Emission Trends

1000 2000 3000 4000 5000 6000 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025

Year Real GDP (10^9 USD) SO2 emission (10^4 Tons)

2 4 6 8 10 12 SO2 emission intensity (kg/1000USD)

SO2 Real GDP SO2 intensity

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He & Roland He & Roland-

  • Holst

Holst 20 20 1 1 February February 2006 2006

CO2 as the CO2 as the Hidden Hidden Dragon: Dragon: Final Final Consumption Consumption Trends Trends

0% 20% 40% 60% 80% 100% Percentage 1997 2000 2003 2006 2009 2012 2015 2018 2021 2024 Year Service Construcution Manufacture Agriculture

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He & Roland He & Roland-

  • Holst

Holst 21 21 1 1 February February 2006 2006

Ills Ills of Affluence

  • f Affluence

1 2 3 4 5 6 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 Year Emission intensity (Kg/1000 USD) Agriculture Manufacture Construction Service

Mfg reverses course because of electricity production. Services are about transportation.

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He & Roland He & Roland-

  • Holst

Holst 22 22 1 1 February February 2006 2006

Real Sources Of Emission Real Sources Of Emission Intensity Intensity

50 100 150 200 250 Year C o a l in te n s ity (T C E /m illo n U S D )

50 100 150 200 250 300 1 9 9 7 2 2 3 2 6 2 9 2 1 2 2 1 5 2 1 8 2 2 1 2 2 4

Ye a r

Petrol and coke intensity (TCE/millon USD) Agriculture Manufacture Construction Service

20 40 60 80 100 120 140 160 180 1997 2001 2005 2009 2013 2017 2021 2025

Year

O il in te n s ity (T C E /m illo n U S D )

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He & Roland He & Roland-

  • Holst

Holst 23 23 1 1 February February 2006 2006

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.

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He & Roland He & Roland-

  • Holst

Holst 24 24 1 1 February February 2006 2006

Divisia Divisia Decomposition Decomposition Results Results

  • SO2 emission variation during 1997-2025.

Scale effect 5000 10000 15000 20000 25000 a g r i c u l t u r e M a n u f a c t u r i n g C

  • n

s t r u c t i

  • n

S e r v i c e s Composition effect

  • 5000

5000 10000 15000 20000 25000 a g r i c u l t u r e M a n u f a c t u r i n g C

  • n

s t r u c t i

  • n

S e r v i c e s Technique effect

  • 15000
  • 10000
  • 5000

5000 10000 15000 20000 25000

1997-2003 2003-2015 2015-2025

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He & Roland He & Roland-

  • Holst

Holst 25 25 1 1 February February 2006 2006

SO2 emission changes for some manufactures

Composition effect

  • 200

200 600 1000 1400 1800 2200 Oil Petrol and coke Electricity Textiles W earing apparel Leather products

  • Chem. Prod

Other mineral prods Ferrous metals Motor vehicles Other trans. equips Electronic equipment Other mach & equip. Land transport Sea transport Air transport Sectors

17094 5751 3303

Divisia Divisia Decomposition Decomposition

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He & Roland He & Roland-

  • Holst

Holst 26 26 1 1 February February 2006 2006

Crude Crude Oil Oil Absorption Trends Absorption Trends

100 200 300 400 500 600

1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025

Year Oil consumption and import (10^6 USD)

10 20 30 40 50 60 70 80 ratio of import (percentage)

  • il import

total oil consumption import ratio in total consumption

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He & Roland He & Roland-

  • Holst

Holst 27 27 1 1 February February 2006 2006

Conclusions Conclusions

China’s economy has attained levels of growth and modernization that seemed beyond imagining only a generation ago. Along with its many successes in improving material living standards, however, have come new risks to sustainability and environmental quality.

  • Without more effective emission control policies, China’s economic

growth will give rise to very significant SO2 emission problems, especially in the period of 2015-2025.

  • After a period of industrialization, structural transformation induces

rapid expansions of energy-intensive final demand, mainly private electricity, heating, and transport services.

  • To meet the needs of a consumer society, SO2 emissions shift from

the other manufacturing and service sectors into intermediate energy generation (electricity generation and petrol and coke sectors), and petroleum refining.

  • Coal will be significantly replaced by relatively cleaner intermediate

energy sources such as electricity, oil products and natural gas in manufacturing.

  • Higher crude oil price may slow or even reverse this trend.
  • Even these pessimistic results understate the the problem, since final

consumption emissions are not even considered.

  • What is to be done? A very good question.
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He & Roland He & Roland-

  • Holst

Holst 28 28 1 1 February February 2006 2006

Quo Quo Vadis Vadis? ?