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What The BP Energy Review Tells Us About China’s Economy

June 11, 2016
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By Paul Homewood 


Yesterday I looked at global energy trends as reported by BP for 2015. Now to take a closer look at what has been going on in China.


The first, and certainly most important, point to note is that total energy consumption has barely grown year on year. The increase of 1.5% is the smallest since the 1990s.




It is clear that there has been a very significant slowdown in Chinese economic growth in the last year or so. Whether the official GDP figures are reliable is debatable. But what we do know is that crude steel production has declined in China between 2014 and 2015. The World Steel Association report a drop from 822 to 803 million tonnes.

Previously, steel output had doubled between 2005 and 2012.

What this means is lower consumption of coal in the iron making process, and reduced demand for electricity as well.

But it does not end there. Reduced consumption of steel down the manufacturing chain also means lower energy consumption there. For instance, it is almost certain that there has been a decline in construction activity, and infrastructure generally. Not only would that lower energy usage, it would also affect cement production, itself a source of CO2.


Fossil fuels still unsurprisingly dominate energy consumption. In contrast, wind and solar contribute less than 2%:






The biggest changes year on year have been a drop of 29 Mtoe in coal consumption, offset by an increase of 41 Mtoe in oil and gas. The drop in coal consumption is a  fall of 1.5% since 2014.

The share of wind/solar has increased from 1.4% to 1.7%. Put another way, if this rate of increase continues, wind and solar might be supplying 10% of China’s energy by 2043!





Since 2005, fossil fuels have accounted for most of the increase in energy consumption:





Finally, the little issue of CO2. First, it must be pointed out that BP only report on CO2 emissions from “combustion related activities”, exclude other GHG and LULUCF. Therefore they are not to official national emissions data.

Nevertheless, they do give an indication.

However, this year they have changed their methodology, to bring their emission factors into line with IPCC guidelines:





The IPCC guidelines have country specific net calorific values. In China, for instance, this allows for the fact that their “dirty” coal has less calorific value, and therefore emits less CO2 per tonne when burnt.

The result is that China’s historic emissions have been adjusted downwards in the latest BP review:




However, each succeeding year has been adjusted down by an increasing amount. Put another way, BP are now saying that CO2 emissions did not increase quite as fast as they originally thought.

While the logic may be correct, these changes do introduce an element of uncertainty into trends. According to BP, emissions fell by 0.1% last year. However, given the margin of error, we have no idea whether they have really gone up or down.

What is clear is that if the Chinese economy continues to stagnate, so will its emissions.



BP Energy Review 2016

One Comment
  1. Adam Gallon permalink
    June 12, 2016 8:43 am

    It’s economy maybe stagnating, but they’re still building massive numbers of high rise flats. Every city we’ve been in, over the past 12 days, has an insane number of half-built tower blocks and the many completed new ones have few occupants.
    They’re building a lot, but the concept of maintenance appears to be alien.

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