China’s rapid economic growth has been matched by an enormous rise in the country’s energy usage. Finding cost-effective supplies to power the country’s next wave of economic growth—while mitigating the environmental impact of the country’s growing energy consumption—will be China’s greatest challenge in the years ahead.
The country is already the world’s largest energy user, having surpassed the U.S. in 2010. Its consumption is expected to continue to soar, growing at a rate nine times that of the U.S. and the European Union through 2020, according to the International Energy Agency. (See Exhibit 1.) By 2030, the IEA projects, China will account for nearly a quarter of the world’s energy demand, consuming 60 percent more energy than the U.S. and twice as much as the EU.
Satisfying this voracious appetite for energy will be a massive task for the Chinese government. The job is made proportionately more difficult by the many considerations—such as the environment, domestic retail energy prices, domestic industry, and China’s standing in the global community—that the government must weigh as it formulates policy. Every choice the government makes will have sizable effects on stakeholders—and entail major tradeoffs.
What are the possible courses of evolution for China’s energy landscape? This report, the first in a series1 Notes: 1 In future reports in this series, BCG will more closely examine the respective roles that gas, renewable energy, and oil will play in China’s ongoing energy evolution. 1 Notes: 1 In future reports in this series, BCG will more closely examine the respective roles that gas, renewable energy, and oil will play in China’s ongoing energy evolution. on China’s energy future by The Boston Consulting Group, explores the question by examining development prospects for the country’s power (that is, electricity generation) sector through the year 2030. We consider three development scenarios: base case, slow shift, and clean world. The scenarios represent three potential outcomes of the country’s efforts to meet its power needs while simultaneously pursuing an overarching and vastly challenging objective: reducing China’s heavy reliance on coal in favor of cleaner, more diversified, more sustainable generation.