By Chris Pedersen:
From a population perspective, China and India are massive. China (1.36 billion) and India (1.26 billion) combine to represent about 37 percent of the planet’s population. In the last 25 years, both countries have experienced growth and modernization in a variety of ways, but in the last 15 years, China has grown at a speed and proportion rivaled by few. A key to China’s growth has been access to energy.
During the early stages of industrialization, there is a high correlation between GDP growth and energy consumption. Figure 1 below shows China’s and India’s GDP growth and energy consumption. In the early 2000s, China’s energy consumption grew at a similar pace as its GDP.
Figure 1 China & India GDP and Energy Consumption. Source: The World Bank, BP Statistical Review
As quickly as China, and to a lesser degree India, has increased its energy consumption in the past 25 years, both countries consume much less energy on a per capita basis than other industrialized countries. Figure 2 highlights the amount of energy used on a per capita basis in China, India, and the United States.
Figure 2 Energy Use. Source: The World Bank
China consumes much more energy than India for a variety of reasons.
To start, nearly all of China is connected to the grid, allowing most of its citizen’s access to electricity produced by central power stations. More significant, however, is the energy required for China to produce commodities for global consumption. China produces half of the world’s steel and 57 percent of the world’s cement.
Bill Gates recently noted that China used more cement in the last three years than the U.S. used in the entire 20th century. These demands have required China to produce much more energy. Figure 4 explains details the rapid increase of energy production around the beginning of the 21st century.
Figure 3 China & India Energy Production. Source: The World Bank
It is unclear what future energy demand will look like and which fuel sources will supply the energy needed for future growth. Although the BP Energy Outlook predicts that electricity growth will outpace transportation fuels, Figure 4 highlights the stark difference in the amount of cars on the road in China, India, and the United States. As both countries continue to develop and its citizens become wealthier, car purchases will increase.
Figure 4 Passenger Cars per 1,000 people in China, India, & United States. Source: The World Bank
Looking ahead, China will continue to produce the majority of its electricity through coal. Coal has been the backbone of China’s growth and is forecasted to produce the majority of the nation’s electricity in the foreseeable future. If India doesn’t want to relive the 2012 blackouts that left 650 million without power for days, it might want to take a closer look at China’s energy development and better identify how to bring reliable and affordable electricity to the grid.
This piece is cross-posted from OilPrice.com with permission.