Energy efficiency in China

Although its per capita energy consumption is still only one half of the world average, China is already the second largest energy consumer in the world. In the 1970s, China's energy efficiency was very low, sharing the negative characteristics in this respect of both developing countries and centrally planned economies. Since then, great progress has been made, with a decline of energy intensity of GDP of about 5.4 % per year between 1980 and 1997, due both to improvement in energy efficiency and, in a greater proportion, to shifts in the composition of GDP. The elasticity of energy to GDP is now lower than 0.5. The presence in China of abundant, low-cost coal resources, although favourable to economic development, inhibits efforts to improve energy efficiency. In China, smaller plants (in particular in township and village enterprises) perform worse than larger-scale plants, and are nowadays often being shut down. However, highly efficient technologies for small-scale production are available in industrialised countries and deserve to be explored. Combined production of heat and power is already widespread in China, especially for urban space heating; however, its efficiency is much lower than it could be with modern plants having a higher electricity to heat ratio and serving more particularly the industrial sector. Great improvements in energy performance are expected for new buildings, both commercial and residential. Institutional and other non-technical issues are also being addressed; economic instruments based on market forces are the most effective. Much remains to be done to bring China to the level of the most energy-efficient countries, but China has unique opportunities to become a world leader in the efficient use of energy, because both of the rapidly expanding economy and of the flexibility inherent in the low level of existing energy infrastructure.