Part 2 - US vs. China: The Energy Landscape
Stanford H.
Striving to Improve 1% Daily | Innovation & Disruption Enthusiast | Bias for Action | A-Typical MBA | Amateur Futurist
The Energy Landscape
Historically, superpowers in the world went to extreme lengths to ensure they secured enough energy[i] that was essential to compete in the international system and the main source of energy was (and still is) from fossil fuels—such as oil, gas and coal. Today, earth and its many populations are running towards an unsustainable future with issues related to climate change. And those issues are the result of the extreme use of fossil fuels—which are depleting; we only have enough oil reserves to last for 50 more years.[ii]
Since fossil fuel sources are diminishing and demands for energy are increasing (Figure 1), powerful nations, China and the United States in particular, are competing to guarantee alternative energy sources to ensure their stronghold. With more and more countries investing in technologies and shifting from the reliance on fossil fuels to renewable energy, it has become apparent that the world is now passionate for renewable energy. Additionally, some countries are progressing faster than others because racing to be the top renewable energy provider is a necessity. The categories of renewable energy currently available can be divided into six types: Water (hydropower and hydrokinetic), Wind, Solar (power and hot water), Biomass (biofuel and biopower), and Geothermal (power and heating).[iii] Their impacts on the world’s environment, economy, consumption, and climate are the main drivers for the development and investment in renewable energy.
Renewable energy is derived from natural resources that restore themselves at a rate that is equal or faster than the rate at which they are consumed.[iv] They are inexhaustible and come in a variety of forms such as sunlight, wind, rain, tides, waves, biomass and thermal energy that are stored naturally in the Earth. They are available everywhere and what is even more important, is that they cause little climate or environmental damage. For countries like China, that heavily rely on import of energy sources to meet their energy needs, developing renewable energy technologies that could potentially provide the independence from fossil fuels remains critical. In the mid- to late-2000s, high oil prices, a rapid increase in energy needs (the largest contributor to the global growth of energy consumption for 8 consecutive years[v]), lower domestic yield of energy resources, and lower diversity of trading partners led to a severe energy supply crisis in China, highlighting China’s energy security concerns, which has been the motivator for China to continue investing in improving both technologies and infrastructure.
In addition, renewable energy provides environmental advantages (Figure 3) which have been globally appreciated for decades, as well as socio-economic benefits that have only been explored recently as renewable energy technologies have become more accessible and affordable (Figure 2).
The renewable energy industry also creates a large number of jobs around the globe each year. In 2019, 11.5 million people were directly or indirectly employed in the renewable energy sector - an increase of 0.5 million jobs compared to 11 million in 2018[vi] (Figure 4). This number has been growing, mostly driven by rising investments to develop replenishable alternative energy sources without harming the environment and/or climate.
More and more countries manufacture, trade, and install renewable energy technologies, and this trend, in fact, was the result of improved technologies, diversification of supply chains, supportive government policies,[vii] thus leading to lowered costs. Meanwhile, it is expected that labour productivity will grow in importance over time as renewable energy industries grow to be more mature, gain higher economies of scale, steer through their learning curves better, and implement more automated processes; fewer people will be required and the employment rate may be stabilized.[viii]
Moreover, the ultimate causes of air pollution and, therefore, of a large proportion of the non-communicable disease burden, are the energy sources that currently drive our transport, electricity generation, industry and food production systems.[ix] Air and water pollution with their negative consequences—for example, breathing problems, neurological damage, heart attacks, cancer, premature death and a host of other serious health issues—has become a critical issue to many countries as the world still significantly relies on fossil fuels and continues burning more of them each day. According to a Harvard University study, the life cycle costs and public health effects of coal were estimated at approximately $74.6 billion every year; equivalent to 4.36 cents per kilowatt-hour of electricity produced—that is about one-third of the average electricity rate for a typical U.S. household.[x] Lawrence Berkeley National Laboratory (LBNL) researchers estimated that renewables provided $5.2 billion worth of health benefits through the improved air quality with a result in global climate benefits of $2.2 billion.[xi]
With renewable energy, the amount of harm done by the pollution and the wasted resources could be minimized to the maximum degree since the sources of energy are naturally replenished. Wind, solar, and hydropower generate little or zero air pollution, while other renewable energy technologies, including biomass and geothermal systems, emit air pollutants at far lower rates than most of conventional fuels.[xii] Water savings from the transition to renewables could also result in the remarkable cumulative savings—an important consideration for arid states/areas. Wind and solar systems (Figure 5) require zero water to operate and therefore do not waste our limited water resources; nor do they strain water supplies by competing with agriculture, drinking water, or other important needs of water. Biomass and geothermal energy plants, on the other hand, may require a certain amount of water for cooling just like any conventional energy plants. Hydroelectric power plants can possibly disrupt river ecosystems both upstream and downstream from the dam.[xiii] However, according to the National Renewable Energy Laboratory (NREL), the total water consumption and withdrawal would decrease significantly in the future through the use of renewables.[xiv]
In most energy systems that fully rely on fossil fuels, it is challenging to find local independence in either energy generation or distribution. This plays a critical role in times of crisis such as natural disasters or any external shocks that may impact the infrastructure of supply chains to meet the energy demand within the area of the crisis. However, with renewable energy, some being more deployable in a modular fashion, providing electricity to people in need without developing the complicated, time-consuming infrastructure could be done more efficiently. Furthermore, although almost 9 out of 10 people now have access to electricity around the world,[xv] there still are parts of the world where the electricity is underserved or unavailable. According to the United Nations (UN)’s sustainable development goals, there are 789 million people around the world—548 million people in sub Saharan African alone—that lack access to the modern electricity services [and] will require increased efforts.[xvi] Therefore, as technology costs and governmental policies become increasingly more supportive to create the access to renewable energy, diversifying the power supply to reduce reliance on imported fossil fuels could enable the current electricity solutions to reach both urban and rural areas more effectively with less restrictions to the locations of the residence. More stable and accessible energy can fundamentally create more economic opportunity and activities benefiting a nation.
With all those literal benefits of renewable energy in mind, countries have been competing to stay ahead with technologies of this rising industry to ensure their energy security for the long run. Especially as climate change becomes more severe in its effects with the use of fossil fuels to produce energy for electricity and transportation being the world’s biggest source of greenhouse gas emissions,[xvii] major economies which use the majority of the energy worldwide have come to realize that developing low carbon energies to fight climate change is imperative; hence, the renewable energy industry is most likely to see the acceleration in both development and investment. The overwhelming majority of worldwide clean energy investment occurs in the Group of 20, the world’s largest economies, such as China, the United States, the European Union, Japan, India, and Brazil; together, the G-20 accounted for more than 90 percent of global clean energy investment over the past decade.[xviii]
So far, by the amount of electricity generated, China and the U.S. are leading the renewable energy pack, followed by Brazil, Canada, and India[xix] although the numbers for the top countries, except for Canada, are highly skewed by the population. In percentage terms, China consumed 11.4% (the equivalent of 349.2 million tons of oil) of its primary energy from renewable energy while the United States gets only 6.3% (approximately 143 million tons) of its mix from sources, solar and wind mostly.[xx] On a per capita basis, however, major economies leading the world in renewables are Norway, Canada, Sweden, Brazil and Austria—they all generate about 30% or more of their primary energy from renewables[xxi] (SRC: The Clean Energy Race). Among those leading countries in the renewables, China and the U.S. are the most frequently mentioned names that significantly influence domestic economies of other countries[xxii] (Figure 7, Figure 8) and therefore, this paper will further examine the importance of renewable energy to the economic stance of these two superpower countries in the global system.
In Part 3, we break things down into 5 smaller sections where we'll dive into:
3a) The Clean Energy Race between China and the United States
3b) Energy is Fundamental to Economic Prosperity and Influence
3c) Diversification of a Nation's Energy Matrix for National Independence
3d) Developing Nation's Lower Barriers to Renewal Energy Transition
3e) Incorporating Renewable Energy as a Strategy and Race for Adaptation
I hope that each additive part will provide the reader additional insights as to why there is a diverging energy strategy between the US and China.
Let's begin with Part 3a - The Clean Energy Race
Stanford is a technology entrepreneur and an amateur futurist very much interested in how technology can be used to better humanity. Continuous learning has always been a life long passion. Besides keeping a close pulse on the phenomenon of digital transformation and innovation happening all around us, he's often found thinking about what's coming around the next corner in the technology innovation landscape.
References:
[i] B. Butler Steeves, H. Ricardo Ouriques; Contexto Internacional. (2016, May/Aug). Energy Security: China and the United States and the Divergence in Renewable Energy. Contexto Internacional, 38(2), 20. Retrieved October 8, 2020, from https://www.scielo.br/pdf/cint/v38n2/0102-8529-cint-38-02-00643.pdf
[ii] Worldometer. World Oil Statistics. Retrieved Oct. 16, 2020 from https://www.worldometers.info/oil
[iii] C2ES. Renewable Energy. Retrieved Oct 19, 2020 from https://www.c2es.org/content/renewable-energy/
[iv] Natural Resources Canada. Renewable Energy Facts (2020, Oct 06). from https://www.nrcan.gc.ca/science-data/data-analysis/energy-data-analysis/energy-facts/renewable-energy-facts/20069
[v] BP. Statistical Review 2019: China’s energy market in 2018. from https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/pdfs/energy-economics/statistical-review/bp-stats-review-2019-china-insights.pdf
[vi] IRENA. Renewable Energy and Jobs (2020, Sep). from https://www.irena.org/publications/2020/Sep/Renewable-Energy-and-Jobs-Annual-Review-2020
[vii] IRENA. Global Renewable Energy Transformation (2018). from https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2018/Apr/IRENA_Report_GET_2018.pdf
[viii] IRENA. Renewable Energy and Jobs (2019, Jun). from https://www.irena.org/publications/2019/Jun/Renewable-Energy-and-Jobs-Annual-Review-2019
[ix] Diarmid Campbell-Lendrum a & Annette Prüss-Ustün (2018, Dec 19). Climate change, air pollution, and noncommunicable diseases. World Health Organization(WHO). from https://www.who.int/bulletin/volumes/97/2/18-224295/en/
[x] Center for Health and the Global Environment. Mining coal, mounting costs: the life cycle consequences of coal (2011, Jan). Harvard Medical School. from https://chge.hsph.harvard.edu/files/chge/files/MiningCoalMountingCosts.pdf
[xi] Noah Long Kevin Steinberger (2016, Jul). NRDC. from https://www.nrdc.org/experts/noah-long/renewable-energy-key-fighting-climate-change
[xii] NREL. Estimating Renewable Energy Economic Potential in the United States: Methodology and Initial Results (2016, Aug). from https://www.nrel.gov/docs/fy15osti/64503.pdf
[xiii] Foundation for water and energy education. How a Hydroelectric Project Can Affect a River. Retrieved Oct 18 from https://fwee.org/environment/how-a-hydroelectric-project-can-affect-a-river/how-a-hydro-project-affects-a-river-print/
[xiv] Jordan Macknick, Robin Newmark, Garvin Heath, and KC Hallett (2011, Mar). A Review of Operational Water Consumption and Withdrawal Factors for Electricity Generating Technologies. NREL. from https://www.nrel.gov/docs/fy11osti/50900.pdf
[xv] United Nations. Goal 7 affordable and clean energy. Retrieved Oct 19 from https://unstats.un.org/sdgs/report/2019/goal-07
[xvi] United Nations (2016, Jul). Affordable and clean energy: why it matters. from https://www.un.org/sustainabledevelopment/wp-content/uploads/2016/08/7_Why-It-Matters-2020.pdf
[xvii] Lynn Doan, Brian Eckhouse, Christopher Cannon and Hannah Recht (2019, Sep). Bloomberg. from https://www.bloomberg.com/graphics/2019-can-renewable-energy-power-the-world/
[xviii] PEW Charitable Trust (2015, May). Power Shifts - Emerging Clean Energy Market. from https://www.pewtrusts.org/-/media/assets/2015/05/emerging-markets-report_web.pdf
[xix] IRENA. Country Rankings. Retrieved Oct 19, 2020 from https://www.irena.org/Statistics/View-Data-by-Topic/Capacity-and-Generation/Country-Rankings
[xx] Jeff Desjardins (2017, Dec). The World Economic Forums. from https://www.weforum.org/agenda/2017/12/this-infographic-visualises-the-clean-energy-race
[xxi] Jeff Desjardins (2017, Dec). The World Economic Forums. from https://www.weforum.org/agenda/2017/12/this-infographic-visualises-the-clean-energy-race
[xxii] Laura Silver, Kat Devlin and Christine Huang (2019, Dec). Pew Research Center from https://www.pewresearch.org/global/2019/12/05/views-of-the-balance-of-power-between-u-s-and-china-2019/