Greening China?

By Robert Hickson 24/09/2013

After posting yesterday’s energy forecasting blog two pertinent articles on China popped up in my e-mail.

The first noted that China’s Ministry of Environmental Protection appears to be taking a tougher line against some of the country’s biggest oil companies. Two have been banned from building new refineries and expanding existing ones because they have failed to meet environmental protection standards. It’s unclear how long the ban will be in effect for, but the companies appear to be moving to address some of the problems.

Whether pressure will also come to bear on the Ministry to back off is also uncertain. The political power of these and other large national companies has been strong. If the Ministry is not hindered it would be another signal that the Chinese government is revising its economic growth and environmental priorities to some extent.

The second is that Citi Bank is forecasting China’s demand for coal will peak by 2020 [Pdf]. Based on my previous post, we’ll have to take that with a large pinch of salt. But Citi Bank notes that several drivers lead them to this conclusion:

(1) reduction of air pollution;

(2) structural downward shifts in China’s GDP growth and energy intensity;

(3) robust growth of China’s renewables and nuclear capacity, along with increased availability of natural gas;

(4) efficiency improvements in coal power plants and energy demand.

With a rapidly growing middle class and greater confidence in challenging state and central government, it can be predicted that environmental and health concerns will rise up the Chinese political agenda.

These articles both reinforce the hypothesis that the global energy space is volatile, and hence very difficult to accurately forecast energy supply and  demand.