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22 | 4TH - 10TH SEPTEMBER 2015 | UTILITY WEEK Markets & Trading Country profile C hina is the most populated country in the world and boasts the fastest-grow- ing economy to go with it. Even though it has seen successive stock market tremors over the past fortnight (see box, facing page), the economic miracle overseen by the coun- try's communist masters has transformed the country, and has also turned China into the world's largest consumer and generator of energy. According to the figures from the Herit- age Foundation and the American Enterprise Institute, since 2005 China has invested more globally in energy than in any other sector, almost $400 billion (see graph). This figure covers contracts to help secure energy sup- plies for a population of 1.4 billion people, but also large stakes in energy utilities and fossil fuel mining companies. James Brodie, a manager at the China- Britain Business Council, says the UK and China energy markets are "incomparable", both in terms of scale and diversity. China's market is not only huge, but is heavily reliant on coal. In 2013, coal accounted for 65 per cent of the country's electricity generation, so an increase in demand for coal that year of 2.6 per cent equated to an additional 93 million tonnes being burnt. To put this in context, in 1983 in the UK, the year before the miners' strike when coal was a major generation fuel source, the country's entire mining industry produced 119 million tonnes. However, although China is reliant on coal, arguably yesterday's fuel, its ultra- supercritical coal-fired technology is by no means backward. Indeed, Brodie says it is "leading the world". Ultra-supercritical power plants operate at temperatures and pressures above the crit- ical point of water. This is where there is no difference between water in its gas and liq- uid states, a condition that results in higher efficiencies (above 45 per cent), so such plants require less coal per megawatt-hour, produce fewer emissions at lower cost. Yet even though these ultra-supercritical plants emit 11 per cent less carbon dioxide than conventional plant for the same output, pressure is mounting for China to go much further on emissions. According to research from Berkeley Earth, air pollution in China results in around 1.6 million premature deaths a year, well over 4,000 a day. China, then, urgently needs to fast-track its decarbonisation agenda, and aer years of prioritising economic growth, it has Changing China The Chinese and UK energy markets are vastly different in scale and diversity of supply, but there are mutual lessons to be learnt about skills and technologies. Lois Vallely reports. recently made high level strategic plans to do so. In the first half of this year, coal con- sumption has plunged by more than 8 per cent and carbon emissions by 5 per cent. Analysis by Greenpeace suggests that this carbon reduction could be equal to the UK's entire emissions over same period. Adding to the picture of a new and more sustainable China, Brodie points out that, in terms of installed renewable capacity, the country is number one in the world for solar and onshore wind. The UK, meanwhile, clings firmly to its claims of leadership in offshore wind where it has both higher installed capacity and bet- ter technologies than China. "That's mostly thanks to the skills we've got from the oil and gas industry, which has given us more deep water technology," Bro- die says. "We've been able to move up that technology curve much faster than some other industries." According to data from Renewable UK, the UK has just over 5GW installed offshore wind capacity and, with ten years more experience there's plenty of opportunity for UK firms to offer services and skills to the Chinese mar- ket. Indeed in 2013, then-energy secretary Ed Davey signed a memorandum of understand- CHINA OVERSEAS INVESTMENT, 2005-PRESENT TOP CHINA OVERSEAS DESTINATIONS, 2005-PRESENT CHINA INSTALLED CAPACITY BY SOURCE, 2013 (%) Investments and contracts (US$bn) Investments and contracts (US$bn) Energy Transport Metals Property Finance Agriculture Technology Other US Australia Canada Brazil Indonesia UK Kazakhstan Russian Federation Nigeria Saudi Arabia Pakistan Venezuela 0 50 100 150 200 250 300 350 400 0 10 20 30 40 50 60 70 80 Coal 65% 18 18 20 21 21 24 24 31 31 39 61 72 Large hydro 15% Clean energy 14% Natural gas 3% Nuclear 1% Oil and diesel 1% Other 1% Wind 6% Small hydro 6% Solar 1% Biomass and waste 1% Source: Heritage Foundations/American Enterprise Institute Source: Heritage Foundations/American Enterprise Institute Source: Bloomberg New Energy Finance 30 27 32 41 86 125 135 396