Analysis on China's Future Energy Mix and Oil / Gas Demand Under Low-Carbon Energy Constraints (II)    

By Zhang Kang, Exploration and Production Research Institute, Sinopec Corp.

(continued page 8, issue 36, 2009)

3. Oil, gas and coal demand to remain high amid low-carbon energy effort

I. Oil and gas demand to rise significantly

From energy conservation to low-carbon and strengthened low-carbon scenarios, the same-year oil demand shows declines in sequence. Take as an example for 2020, if oil demand were 100% under the energy-conservation scenario, it would be 71.3% for low-carbon and 68.6% for strengthened low-carbon. For gas, it would be 100%, 101.3% and 99.7% respectively, with demand in low-carbon scenario even higher than that in energy conservation. After 2020, out of proportion in overall energy mix, oil demand declines in the three scenarios in sequence, while that of gas rises.
   In the low-carbon scenario, oil demand growth rate would be 4.9%, 3.0%, 1.5% and 0.7% for 2005-2010, 2010-2020, 2020-2035 and 2035-2050 respectively. It would be 14.3%, 8.9%, 3.3% and 2.2% for gas during the corresponding periods (Table 4). And total energy demand would rise 5.7%, 2.9%, 1.3% and 0.9% respectively. The annual growth rate for oil, gas and total energy demand would be 1.55%, 4.25% and 1.58% respectively during 2010-2050. The following can be concluded from the above figures: (1) The annual growth rates for oil during 2010-2020 and 2020-2035 would be larger than total energy demand; the situation would be in contrast for 2005-2010 and 2035-2050; oil growth would be close to but still a bit lower than total energy demand growth for 2010-2050. (2) Gas demand growth is quicker than oil and total energy in any period, as gas plays a key role in low-carbon energy and represents the fastest-growing fossil fuel.

II Reliance on imports remains high for oil and gas

Assuming an oil demand of 400 million tons in 2010, oil demand would rise to 541 million tons, 675 million tons and 744 million tons in 2020, 2035 and 2050 respectively under the low-carbon scenario, and 520 million tons, 644 million tons and 678 million tons in the strengthened low-carbon scenario. The median would be 530 million tons, 660 million tons and 710 million tons. And many have forecast China's oil production could reach 200 million tons in 2020 and maintain that level after. This means the nation's dependence rate on oil imports would be 61.5%, 69.7% and 71.8% in the three specific years. Obviously, the rates could be even higher should China's own output decline.
   Gas demand would be 217.3 billion m3, 356.8 billion m3 and 495.5 billion m3 respectively in 2020, 2035 and 2050 under the low-carbon scenario, and 219.6 billion m3, 343.3 billion m3 and 475.3 billion m3 under the strengthened low-carbon scenario. The median would be 219.0 billion m3, 350.0 billion m3 and 485.0 billion m3. China's gas output is estimated at 90 billion m3 in 2010, and 120 billion m3 in 2020. That would be at 200 billion m3 in 2035 and 250 billion m3 in 2050 (or 200 million tons and 250 million tons of oil equivalent) and remain stable after that. Based on these, the gas dependence rate on gas imports would be roughly 45%, 42% and 48% in 2020, 2035 and 2050. China's demand for oil and gas will keep rising even under the low-carbon energy limits.

Table 4 Annual growth for oil/gas demand during 2005-2050 under different scenarios
Type
Scenario
2005   2010   2005-2010    2020    2010-2020    2035    2020-2035  2050   2035-2050
　　　　　　　　growth %         growth %             growth %          growth %
oil/million tce
energy-conservation
316.1     413.3     5.5     758.7       6.3     986.4       1.8     1209.4      1.4
low carbon
316.1     401.8     4.9     541.1       3.0     675.1       1.5     744.4       0.7
strengthened low carbon
316.1     395.0     4.5     520.1       2.8     644.5       1.4     677.8       0.3
gas/0.1 billion m3    
energy-conservation
479.8     944.5     14.5     2173.9      8.7     3538.2      3.3     5000.0     2.3
low carbon
479.8     937.0     14.3    2196.4      8.9     3568.2      3.3     4955.0     2.2
strengthened low carbon
479.8     929.5     14.1    2166.4      8.8     3433.3      3.1     4752.6     2.2


III. Coal demand remains a top

The changes in coal demand under the different scenarios are wide. In the low-carbon scenario, coal demand is expected to rise 0.64% a year during 2007-2035, reaching 2.207 billion tce in 2035. The rate could be a negative 0.64% by 2050, which means coal demand in 2050 could be flat with that in 2010. Under the strengthened low carbon scenario, coal demand would rise 0.66% annually during 2007-2020, fell 0.4% annually during 2020-2035 and drop 1.75% during 2035-2050. In 2050, coal demand would be only 77.7% of 2007 level. Undoubtedly curbing coal demand will be the key measure to realize low carbon. Coal demand would peak at 2.207 billion tce in 2035 under low carbon and 2.010 tce in 2020 under strengthened low carbon scenario. That's about 3.1 billion tons and 2.81 billion tons of raw coal calculating under 1 tce converting to 1.4 tons of coal.
   Coal remains the top energy among all scenarios, occupying an over 50% share in both low carbon and strengthened low carbon scenarios before 2020. Coal would account for 45.6% and 36.0% of total energy in 2035 and 2050 under low carbon scenario, and 40.6% and 28.6% under strengthened low carbon scenario.

4. Low-carbon energy development needs energy saving and pollutant cut as well as technology

I. New energy a long way ahead while gradually accelerating

The growth of new energy consumption would be 24.8% and 26.0% yearly during 2007-2020 under the low-carbon and strengthened low-carbon scenarios, due part to its relatively smaller base. And as the total energy consumption also rises fast, the consumption proportion of new energy in total energy would only rise roughly 4.9% during the period. In the 15 years between 2035 and 2050, its proportion would rise by 6.5% and 6.7% in the two scenarios. This is due to both the accelerating development of new energy and the slowing growth for t