Why China is an energy consumption hog

chart_us_china_production.top.gif By Steve Hargreaves, senior writer


NEW YORK (CNNMoney.com) -- Over the next 15 years China is expected to build the equivalent of New York City -- 10 times over.

That's a lot of concrete and steel, and it goes a long way to explaining why the country is using so much energy.

Roads, bridges, rail lines, skyscrapers and factories take tons of concrete, steel, chemicals and glass.

"They are building massive amounts of infrastructure," said Lynn Price, a scientist in the China Energy Group at Lawrence Berkeley National Laboratory, a U.S. Department of Energy research lab. "It takes incredible amounts of these energy-intensive commodities."

Earlier this year, the International Energy Agency said China surpassed the United States to become the world's largest consumer of energy. The news was somewhat surprising.

While China does have four times as many people, its economy is only a third the size. So where is all that energy going?

Statistics from the DOE show it is China's industrial production, not its 1.3 billion people, that is using all this fuel. Sure, the Chinese are driving more cars and using more electricity but that's a drop in the bucket, relatively speaking.

China's industrial sector accounts for over 70% of its total energy consumption. Meanwhile, the U.S. industrial sector accounts for just 33% of its energy consumption.

The efficiency gap

Yet the sheer volume of heavy industrial activity isn't the only thing accounting for China's massive energy appetite.

China's factories, especially its steel plants, are often less efficient than their counterparts in the developed world.

Broad comparisons are difficult, and China's numerous factories built in the last 10 or 15 years are often just as efficient as anything built in the West or Japan.

But when it comes to steel, the Chinese use a different technology than that used in the United States, the result of having to use more iron ore and less recycled steel in the manufacturing process.

"China's facilities are still less efficient than those of the U.S.," said Michael Renner, a researcher at Worldwatch, an environmental research outfit. "The government has been trying to close and phase out the least efficient ones."

The phase out has sometimes been ham-handed.

Reports this summer indicated government officials simply cut off power to inefficient factories in an attempt to meet an energy reduction pledge. In some cases, the the power outages extended into residential areas.

"We didn't think that was the right way to do it," said Mona Yew, a Beijing-based efficiency expert at the Natural Resources Defense Council.

Yew did give the Chinese government credit for recently enacting a variety of incentives to encourage efficiency, including tax breaks for companies that specialize in energy management and nationwide efficiency targets, something the United States does not have.

Chinese officials have even indicated they may enact a nationwide cap-and- trade program -- an ambitious plan to cut energy use and promote renewables that recently failed to pass the U.S. Congress.

"They've gotten past the awareness stage," said Yew. "Actually having the ability to do it is the next step."  To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed3.82%3.84%
15 yr fixed2.96%2.94%
5/1 ARM3.25%3.31%
30 yr refi3.82%3.85%
15 yr refi3.02%3.02%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 17,416.85 225.48 1.31%
Nasdaq 4,683.41 45.41 0.98%
S&P 500 2,021.25 19.09 0.95%
Treasuries 1.75 0.03 1.57%
Data as of 12:23am ET
Company Price Change % Change
Apple Inc 118.90 3.59 3.11%
Bank of America Corp... 15.43 0.23 1.51%
Yahoo! Inc 43.73 -2.73 -5.88%
Microsoft Corp 42.01 0.82 1.99%
Facebook Inc 78.00 1.76 2.31%
Data as of Jan 29

Sections

Shake Shack is a huge success in New York. But will the 'fine casual' burger and fries joint be a big hit with investors too? It looks like Wall Street has worked up its appetite for the Shake Shack IPO. More

The Wednesday announcement that Don Thompson will retire as CEO of McDonald's leaves just two black CEOs in the elite Dow 30. More

Google reported a quarterly profit on Thursday that rose from a year ago, but the company fell short of Wall Street's expectations. More

On demand delivery startup WunWun is expecting its order volume to double by the time they close up shop on Monday. All thanks to a blizzard. More

The IRS said it has carried out thousands of audits of offshore schemes and pursued criminal charges that have resulted in "billions of dollars in criminal fines and restitutions." And it won't stop there. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2015 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2015. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2015 and/or its affiliates.