United States
Energy Information Administration


October 1999

China: Environmental Issues

China's transition to a market economy, which has been proceeding for 2 decades, has resulted in a rate of economic growth that places China among the world's five fastest growing economies. While economic growth has increased incomes and improved health indicators, as well as reduced overall poverty levels, growth has not been totally controlled. Environmental pollution from coal combustion is damaging human health, air and water quality, agriculture and ultimately the economy.

New laws establishing comprehensive regulations have begun to curb this environmental damage. On the national level, policies are formulated by the State Environmental Protection Administration (SEPA) and approved by the State Council. The role of SEPA is to disseminate national environmental policy and regulations, collect data and provide technological advice on both national and international environmental issues. In 1992, China was one of the first nations to act on the agenda raised at the Rio Conference, including the issuance of ten strategic policies for development and the environment. In 1994, the State Council approved China Agenda 21, a White Paper addressing population, environment and development. The government further addressed environmental problems in 1996, announcing a nationwide campaign to close highly polluting township and village enterprises (TVE's).

Despite government efforts, however, concentrations of most pollutants remain high. According to Xie Zhenhua, the head of SEPA, the environmental situation in China remains severe. While water quality in the Yangtze, Huai and Pearl Rivers has improved since 1997 and there has been an overall reduction of sulfur dioxide, smoke and dust levels, air and water pollution remain two of China's greatest environmental challenges.

Air pollution
A report released in 1998 by the World Health Organization (WHO) noted that of the ten most polluted cities in the world, seven can be found in China. Sulfur dioxide and soot caused by coal combustion are two major air pollutants, resulting in the formation of acid rain, which now falls on about 30% of China's total land area. Statistics indicate that, as a result of industrial production, 21 million tons of sulfur dioxide are emitted into the atmosphere each year, in addition to 14 million tons of smoke-filled dust and another 13 million tons of powder-like particulates. Industrial boilers and furnaces consume almost half of China's coal and are the largest single point sources of urban air pollution.

In an effort to reduce air pollution in Beijing, the municipal government is ordering city vehicles to convert to liquefied petroleum gas and natural gas. In early 1999, officials vowed that by 2000, the capital's 3,600 buses and 14,000 taxis will run on these alternate fuels and that 49 gas stations will offer the two kinds of clean vehicle fuels.

In other attempts to reduce air pollution, China's national legislature is considering drastic changes to the Law on the Prevention and Control of Air Pollution, which was revised just three years ago. Suggested amendments include banning the discharge of air pollutants above a certain level, imposing heavy fines for violators of the law, and replacing coal combustion with clean energy resources such as "renewables" and natural gas. On a regional level, China, South Korea and Japan have agreed to launch a five-year project to control transboundary air pollutants.

Energy Use and Carbon Emissions

Outside of Japan, energy consumption in East Asia is dominated by one sector in one country- the industrial sector in China. China's energy consumption accounts for approximately 63% of East Asia's (excluding Japan) total energy consumption. In relation to the world, China accounted for 9.6% of world energy consumption in 1997. By 2020, however, projections indicate that China will be responsible for approximately 16.1% of world energy consumption.

Of the 36.6 quadrillion Btu of total primary energy consumed in China in 1997, 71.3% was from coal consumption, approximately 21% from oil consumption, 5% from hydro and 2% from natural gas. A majority (62%) of the fuel combusted is consumed in the industrial sector, 28% is consumed in the residential sector, and approximately 5% each in the commercial and transportation sectors (1996). The largest percentage increase in Chinese energy use from 1990 to 1996 was seen in the residential sector, with energy consumption increasing by 138%. The largest absolute increase in energy consumption, however, was, by far, in the industrial sector. Within this sector, industrial boilers consume about one-third of China's coal, while industrial motors consume more than 60% of total electricity. Controlling emissions from coal-fired industrial boilers is a top priority in China's efforts to reduce air pollution.

With 13.2% of the world's energy-related carbon emissions, China is the second largest emitter of carbon dioxide after the United States. China's contribution to world carbon emissions is expected to increase in coming years, with some estimates suggesting China's emissions may exceed those of the United States by 2020. China's industrial sector is, by far, the largest source of China's carbon emissions, producing 76% of all emissions. Carbon mitigation strategies focus on technologies to reduce emissions from industrial boilers and motors. Other mitigation efforts emphasize improving Chinese vehicles. Estimates suggest that transportation sector energy consumption could grow by nearly 7% per year as the government pledges major investments in the country's transportation infrastructure. If this growth is not accompanied by improvements in vehicular standards and a replacement of outdated technology, carbon emissions from the transportation sector will grow significantly.

Overall, total Chinese energy-related carbon emissions have increased 104% since 1980, when the government began implementing energy conservation laws. One study attempting to determine the causes of this increase concluded that China's decrease in energy intensity since 1980 has not been sufficient to counterbalance the large increase in emissions due to economic and population growth. Increased demands for fuel have encouraged China to accelerate the development of cleaner fuels such as natural gas and coalbed methane. Current efforts by China to offset coal consumption include the development of natural gas and coalbed methane infrastructure, increasing the number of combined heat and power plants, adding approximately 3,000 megawatts (MW) of hydropower annually, and developing renewable energy resources such as wind and photovoltaics for electricity generation.

China is a non-Annex I country under the United Nations Framework Convention on Climate Change, meaning it has not agreed to binding emissions reductions in the Kyoto Protocol. China's domestic greenhouse activities are based on "no-regrets" strategies in energy efficiency and conservation, clean energy supply and reforestation. In other words, policies are enacted to cut energy costs and reduce local pollution, while having the auxiliary benefit of reducing emissions.

Energy and Carbon Intensity

Unlike other developing countries such as India, South Korea and Brazil, both the amount of energy and carbon consumed per dollar of GDP have decreased dramatically in China over the past two decades. With average annual GDP growth rates around 10% and energy consumption growth rates averaging 5% (with growth in electricity consumption even higher, at approximately 8% annually), China has dispelled a commonly held notion that economic growth and energy consumption are necessarily coupled. This reduction in energy intensity is in large part a result of efforts by the Chinese government to conserve energy. Since the early 1980's the government has enacted approximately 30 energy conservation laws. China's Energy Conservation Law entered into force on January 1, 1998. Further efforts by the government to increase overall energy efficiency include the reduction of coal and petroleum subsidies. Coal subsidies have been significantly reduced from 61% in 1984 to 37% in 1990 and 29% in 1995. Petroleum subsidies fell from 55% in 1990 to 2% in 1995. At the same time, the government has promoted a shift towards less energy intensive services and higher value-added products, as well as encouraged the import of energy intensive products.

Per Capita Energy Consumption

While China ranks second in the world behind the United States in total energy consumption and carbon emissions, its per capita energy consumption and carbon emissions are much lower than the world average. In 1997, the United States had a per capita energy consumption of 351.9 million Btu, greater than 5 times the world's per capita energy consumption and nearly 12 times China's per capita use. If China exhibited the same per capita energy consumption as the United States in 1997, China would have consumed approximately 436 quadrillion Btu, more than the entire world combined. Per capita carbon emissions closely followed energy consumption, with the United States emitting 5.6 metric tons of carbon per person, the world on average 1.1 metric tons, and China 0.7 metric tons of carbon per person. With a growing economy and increasing living standards, however, per capita energy use and carbon emissions are continously rising. It is important to emphasize that while per capita energy use is relatively low, overall Chinese consumption of energy and subsequent carbon emissions are substantial, due to the country's large population and heavy use of coal.

Renewable Energy
After coal, renewables account for the second largest share of China's electricity generation market, having a 17% overall share in 1996. With assistance from the United Nations and the United States, China hopes to embark on a multi-million dollar renewable energy strategy to combat pollution. China plans, for instance, to launch a $25 million program to fund the development of wind and solar projects in rural areas. Wind resources are concentrated in the northern and western regions of China, as well as along the coast, and are suitable for both rural village electrification and large-scale, grid-connected electricity production. The highest wind potential in China lies along the coast and the offshore islands, in or near many of the major population centers. The next highest wind potential region covers Inner Mongolia and the northern Gansu Province, both of which are home to numerous villages with no access to electrification.

Current utilization of solar energy includes small-scale uses, such as household consumption, television relays and communications. The percentage of solar energy consumption is, however, increasing steadily. Specifically, the number of solar kitchen ranges is steadily climbing, a significant fact when one considers that air pollution caused by indoor coal burning not only adversely effects the natural environment, but also is detrimental to human health.

While solar and wind energy provide significant renewable energy potential, China's growth in renewables will also be strongly influenced by the additional capacity associated with completion of the 18.2-gigawatt Three Gorges Dam project around 2009. Although the Three Gorges Dam is seen as both an important source of energy for China's growing electricity consumption needs and a means of taming the Yangtze River, notorious for its disastrous floods, the dam also could prove to be an environmental disaster. Thus far, few attempts have been made to address concerns regarding the accumulation of toxic materials and other pollutants from industrial sites that will be inundated after construction of the dam.

By 2020, the share of nuclear power used for electricity generation is expected to increase to 4% from the less than 1% consumed currently. This increase will, in part, be facilitated by the recently removed export barriers to Chinese purchases of reactors from U.S. manufacturers. In addition, companies from France, Japan, the United States, and the United Kingdom are currently planning or carrying out nuclear power construction projects in China.

China Entering the 21st Century
There are many factors influencing future energy consumption and the corresponding carbon emissions, including population growth, economic development, industrial structure changes, technological progress and a shift in the energy mix. China is a developing country in its industrialization stage. With economic development, population growth and higher living standards, the amount of primary energy consumed will inevitably increase in the future, as will the subsequent carbon emissions. These absolute increases will occur despite continued technological improvements and reductions in energy intensity.

One of China's main priorities as it enters the 21st century is developing environmental technologies to solve the major environmental challenges it is currently facing and will face in the future. These efforts are focused on technologies that will treat wastewater, prevent air pollution and improve environmental monitoring systems. There are a number of policies that the State Environmental Protection Administration is considering. Some of these policies include:

        ·Adopting "polluter pays" principle, allowing for accumulation of funds for pollution abatement.
        ·Ensuring that fees charged on pollutants are higher than abatement costs.  Existing laws, which are not strongly enforced, impose only small fines on pollutant emissions exceeding the legal limit.
        ·Formulating a tax structure beneficial to environmental protection.
        ·Granting preferential loans and subsidies to enterprises that construct and operate pollution treatment facilities or that produce environmentally friendly products.