The level of urbanization is an important benchmark for an economy in transit from poverty to middle income. During the process of urbanization in developed countries, the agriculture-based economy was gradually transformed to an industry-dominated structure and per capita energy consumption and energy intensity rose in tandem. After urbanization was completed and the tertiary industry became the main economic pillar, energy intensity declined correspondingly and per capita energy demand entered a stable stage with relatively low growth.
In 2007, China's GDP accounted for 6 percent of the global total while its steel consumption reached 30 percent and cement about 55 percent. From 2003 to 2008, China's energy consumption experienced near double-digit growth given the rapid development of energy-intensive industries and the acceleration of urbanization. The key to energy sustainability is dealing with the growth of energy demand brought about by urbanization.
According to research by the Center of China Energy Economic Research at Xiamen University, China - given there are no major catastrophes - will enter the stage of urbanization of middle-income countries by 2020. A good understanding of energy consumption growth and rigid demand at this stage is imperative for formulating an effective energy policy and strategy.
China's urbanization rate in 2008 was 46 percent, far below the 61 percent in middle-income countries and 78 percent in wealthy countries. Rapid growth promotes urbanization process, which, in turn, will raise overall energy demand. By 2020, there will be an estimated 300 million people (equal to the US population) in China moving to cities.
The energy consumption of urban residents is around 3.5 to 4 times that of the rural population. China's fast urbanization would propel the construction of large-scale urban infrastructure and housing, which needs huge quantities of steel and cement that can only be produced at home, because no other country can afford supplying so much raw material. Therefore, the demand for energy-intensive industries of China's urbanization is rigid even taking into consideration the potential improvement of energy usage efficiency through technological progress.
First, more urban population need more housing, transportation, medical services, urban greening and so forth. The construction, operation and maintenance of this urban infrastructure would need more energy.
Second, the change of lifestyles will lead to the transformation of the energy consumption structure. Compared with traditional energy, including coal and wood, urban residents with increased income prefer clean and convenient electric power. Urban traffic development and the ever-increasing private vehicles will necessitate more consumption of fossil fuels and electric power. In 2009, China's automotive output topped 10 million units. Higher purchasing power stimulates the sales of more household appliances, which means more per capita energy consumption. Producing those appliances will further raise energy consumption of manufacturing.
Similar to developed countries, China's ongoing urbanization is characterized by high energy consumption and high carbon emissions. The difference is that China's urbanization is confronted with a series of global challenges of climate change, food security and energy scarcity and so on. Though impacted by the global financial crisis, China's economy will maintain a relatively high growth rate, given China's unfinished process of urbanization and industrialization and the Chinese government's capacity for macro-economic regulation and control.
Dealing with energy and environmental issues, it is impossible to slow down urbanization but China can take urbanization as an opportunity for low-carbon development. Energy consumption will exhibit different characteristics under different economic growth patterns and energy and environmental policies. By formulating and implementing positive energy policies in the process of urbanization, energy efficiency can be improved and the energy structure becomes cleaner.
As a development path, the core of low-carbon growth is the improvement of energy utilization and the transformation of the energy structure, which would enable more clean energy to be used more effectively and cut green house gas emissions as much as possible.
Establishing a low-carbon economic development model in a "low-carbon city" would reduce emissions. The features of a "low-carbon city" include: Focusing planning and design "low-carbon city" on low emissions and high energy efficiency in the process of urbanization; balancing economic growth, employment growth and low-carbon development through a change in the industrial structure and development mold transition; building an ecological city and popularizing techniques of energy conservation and emission reduction through policy stimulus and financial support in not only metropolitan cities but also emerging second- or third-tier cities where there is a greater opportunity to induce change.
In the wake of the global financial crisis and economic slowdown, it is important to stimulate growth by promoting green industries. The central government has resolved to push forward industrial upgrading and integration, efficiency improvement and sustainable development; local governments should seek new growth engines and develop "low-carbon cities" in line with the demands of industrial restructuring.
The author is director of the China Center for Energy Economics Research at Xiamen University.
(China Daily 11/30/2009 page4)