China’s Energy Profligacy

It’s incredible what you see if you keep your eyes open. This AP story about Chinese electricity prices popped up on my screen today, courtesy of Yahoo!

The article begins:

“China raised electricity rates for businesses and industries Friday, part of a long-term effort to adjust prices to reflect costs and promote energy saving as the country struggles to meet soaring demand.

The 5.7 percent increase was the first rate-hike since July 2008, when electricity tariffs for nonresidential use rose 5 percent. Residential electricity rates have remained stable since a 1 percent hike in July 2006, but a residential rate increase is planned for early next year, China’s main planning agency said in a notice late Thursday.”

So far, so good.

The story even goes on to report that:

“Rates for residential users will be adjusted to charge more to heavy users, while keeping the costs for those who consume little more or less unchanged.”

Amazing what an all-powerful state can do! And sensible, I suppose, if you’re into social engineering.

But there’s a kicker:

“Friday’s hike raises the tariff for industrial and commercial customers to 0.522 yuan (3.4 U.S. cents) per kilowatt hour. That compares with rates averaging about 10.4 U.S. cents in the U.S. and 12 U.S. cents in Japan, according to figures from the U.S. International Energy Agency.”

So let’s see… An American company could have its widgets manufactured in China and exported to the US (or anywhere else for that matter) and, denominating everything in dollars, save nearly 70% (67.3% to be more precise) on electricity costs alone!

AP goes on to report that:

“China’s power consumption [presumably “power” is synonymous with “electricity” here] rose nearly 16 percent in October from a year earlier, to 313.4 billion kilowatt hours, the fifth straight month of increases as the economy recovered from a slowdown early this year.

Earlier this week, Shanghai and other major cities reported brief shortages of power and natural gas due to surging demand due to dropping temperatures.

The government is on a long-term campaign to reduce energy waste, especially by industries. While cost-conscious families tend to skimp on electricity use, overall China uses four times as much energy as the U.S. per dollar of economic output, and more than 11 times that used in Japan.” [my stress]

I included the first couple of paragraphs for other interest – 313.4 billion kilowatt hours (why, oh why can’t journos use units in a sensible fashion? – what next? “million MWh”?) is 313.4TWh, i.e. about 10 times the UK’s electricity consumption (around 400TWh/yr, according to the source I used in a previous post).

I wrote yesterday that:

“…let’s suppose France succeeds in reducing oil consumption. What else might they buy? If they buy manufactures, the ’embedded carbon’ in each $1bn worth will very likely be higher than in $1bn worth of oil! Why? Because manufactures require energy which will likely come from cheap indigenous (or Australian) coal, in China, say. Oil has a scarcity value because it is so useful. $1bn worth of oil might therefore contain less carbon than $1bn worth of manufactures!”

I remember thinking I should tone this down. I can’t remember exactly what I changed – I guess I put the “might” in the last sentence – but I obviously missed a “very likely”. Now, though, I’m beginning to wonder if I shouldn’t have been more committal!