China uses more energy than any other country. The scale of Chinese consumption of electricity and oil dwarfs any other nation’s besides the U.S. giving trends in China far reaching implications for global energy markets.
In oil markets, the expected slowdown of Chinese economic growth has contributed to oil prices to half their 2014 levels. Even now, China’s demand for imported oil is seen as major factor in if and how prices recover.
So far, oil output from China has slid this year as the country’s producers shut fields too expensive to operate at current prices. According to Bloomberg News, even China’s largest oil companies have struggled under low prices: PetroChina Co., the country’s biggest oil and gas producer, barely broke even in the the first half of 2016 and Cnooc Ltd., its biggest offshore explorer, posted a first half loss as low crude prices forced it to write down assets. Overall, China’s crude production from January to October fell 6.7% from a year ago, according to data from the National Bureau of Statistics.
China currently uses about 47% of the world supply of coal, but health and environmental concerns have lead the Chinese government to consider supporting alternative fuels.
Seeking to boost the share of natural gas in its energy mix to 10% by 2020, the Chinese government has pushed favorable policies for the fuel including an adjustment of pipeline fees next year to stimulate use. China National Petroleum Corp., the country’s biggest oil producer, also plans to separate its pipeline and natural gas sales units, as reported by the state-owned China Daily.
In clean energy, China has encouraged a boom in wind turbine production, though it is now struggling to upgrade power grids needed to carry it to users. As a result of construction outpacing infrastructure, roughly one-fifth of wind power currently goes undistributed and the country’s energy authority in November was forced to slashed wind and solar targets through 2020 in response.
In its newly issued five-year plan for power, China’s government targets total installed solar capacity of 110 GW by 2020, down from earlier guidance by officials of 150. On wind, the government now aims for 210 GW of installed capacity, down from 250.
Meanwhile, a slowing economy is reducing the amount of electricity that people will ultimately need. The growth in electricity demand has already dropped from double-digits in recent years to less than 3% in the first half of 2016.