Associate Director at Tyche Group
julian-galvin@tyche-group.com
"China's massive 4 trillion yuan (HK$4.55 trillion) stimulus package is designed to curb the economic slowdown and boost economic growth but not at the expense of the environment."
Power trip 11/05/2009
China's massive 4 trillion yuan (HK$4.55 trillion) stimulus package is designed to curb the economic slowdown and boost economic growth but not at the expense of the environment.
The Ministry of Environmental Protection in its 2007 annual report stated that all seven of China's major water systems are polluted and more than half of the 500 cities and counties monitored reported cases of acid rain.
In 2008, a report by the World Energy Council stated that China is a major carbon emitter, with about 19 percent of the global emissions of CO2 (carbon dioxide).
While preventing the already cooling economy from further sliding would be the top task of the government this year, Premier Wen Jiabao has said that China would continue its drive toward energy conservation, emissions reduction, and environmental protection.
Beijing is committed to energy conservation in three key areas: industry, transportation, and construction.
Planning is underway to speed up the construction of 10 key energy conservation projects.
These include the upgrading of coal-burning furnaces, green lighting, and energy conservation in government organizations.
In addition, plans to speed up the development of clean energy sources such as nuclear, wind and solar power have also been put in place.
Most of China's electricity is produced from fossil fuels: 80 percent comes from coal, 2 percent from oil, 1 percent from gas.
About 15 percent is derived from hydro power.
Electricity demand is growing twice as fast as the average annual economic growth rate of 8 percent.
Currently, there is an estimated 20 percent shortfall in supply, the Ministry of Electric Power estimates and millions of Chinese have no electricity at all.
To keep pace with economic growth, analysts estimate that China has to double its electric-generating capacity every decade.
Simply expanding the use of coal to meet demand is no longer an option.
Astonishingly, 40 percent of all railroad journeys in China are devoted to hauling more than 1 billion tonnes of coal every year.
China is the world's sixth-largest producer of petroleum and currently imports one-third of its oil.
As far back as the late 1970s, China decided to implement a program that would make it a world leader in nuclear energy technology.
Nuclear power accounts for less than 2 percent of the country's total energy output.
By comparison 78 percent of France's energy comes from nuclear plants. Currently, 11 nuclear power reactors are in commercial operation in the mainland.
China currently produces 2.3 percent of the world's nuclear energy, according to the World Nuclear Association – the tenth in the world in terms of nuclear power generation.
This is way behind Canada, France, Germany, Japan, South Korea, Russia, Sweden, Ukraine and the United States.
The United States is the current leader, producing over 30 percent of the world's total supply of nuclear energy.
But current expansion plans could put China on the top position in a few decades as it is expected to produce anywhere between 17 percent and 30 percent of the world's nuclear energy by 2060.
Although China has the 14th largest uranium reserves in the world (68,000 tonnes or 1.2 percent of world total) it is still far short of this commodity.
China currently produces roughly 840 tonnes of uranium per year, which meets just half of its domestic need. The balance is imported.
There are close to 5 million tonnes of naturally occurring Uranium Oxide (Triuranium Octaoxide – U3O8) known to be recoverable.
Australia has the most reserves at 1.24 million tonnes (22.7 percent of world total) followed by the United States with 342,000 tonnes or 6.3 percent of world total.
This commodity is required to produce reactor grade fissionable material.
In recent weeks, talk of China seeking large-scale investment in Australia's uranium mines has intensified.
Australia's first shipment of uranium to China occurred last November.
China recently granted Niger a US$95 million (HK$741 million) loan to boost a uranium-mining project that the two countries have in the West African State. The Niger government is a 33 percent joint venture partner with the China National Uranium Corporation in the Somina uranium mining operation.
It is due to come online by next year and have an annual output of about 700 tonnes. Niger supplies around 7.5 percent of global uranium output.
With production from world uranium mines only supplying 55 percent of the requirements of power utilities, mine production is supplemented mainly by ex-military material. So global mine production needs to expand significantly.
Uranium prices rose last week to US$44 per pound, advancing for a second straight week.
Last year the commodity climbed to a record US$138 a pound in June 2007, but by the middle of this month it had slumped to a 2009 low of US$40.50 a pound.
The world currently uses 67,000 tonnes of mined uranium a year, so it seems to be an under-valued commodity at present.
