World Energy Outlook 2007

Industry has long been the largest final user of energy and in recent years its
share has gone back up to levels seen a decade ago, reaching 42% of total final
consumption in 2005. The rapid growth of industrial energy use has depressed
the shares of other sectors. The residential sector is the next-largest, at 30%.
Vigorous growth of transport demand – from a relatively small base – has
raised its share from 5% in 1980 to 11% in 2005. The commercial sector, even
though its share has increased, accounts for only 4% of final demand, the same
as agriculture.
Until the 1960s, when China began exploiting its first large domestic oilfields,
the country relied almost entirely on biomass and coal for the needs of its
mainly rural population and its expanding industrial sector. Rising oil and coal
output, like other material and financial resources, was assigned to industry, to
the detriment of other sectors. By the late 1970s, China was producing almost
twenty times as much commercial energy as it had in the years after the
founding of the People’s Republic three decades earlier. Yet two in five rural
households still had no access to electricity and many homes remained
unheated in winter – partly a result of policy restricting winter heating to
northern districts. The launch of major economic reforms at the end of the
1970s led to a renewed surge in investment in energy-supply infrastructure,
including a major expansion of power-generation capacity and the
electrification of almost every community and household in China.
China is playing an increasingly important role in world energy markets. In the
first six months of 2007, even as it remained a major coal exporter, China was
a net importer, mainly of steam coal – to meet only a small share of domestic
demand but amounting to a big addition to demand for internationally traded
steam coal. China started to import natural gas in liquefied form in 2006 and
volumes are set to rise gradually in the coming years as new import capacity is
added. A net oil exporter until the early 1990s, China is now the world’s thirdlargest
oil importer behind the United States and Japan, though it is the sixthlargest
oil producer. Of its 7.1 mb/d of oil consumption in 2006, 3.5 mb/d, or
close to half, was imported. Its participation in oil and gas trade is set to grow
significantly.
China’s per-capita energy use remains less than 30% of the average of OECD
countries, but it is higher than in most other developing regions because of the
importance of heavy industry (Figure 8.2). Rising household incomes have also
pushed up energy use in buildings (in line with housing space per person) and
transport. The urban construction boom that has resulted in large part from
rural-urban migration has been accompanied by a switch from solid fuel
(biomass and coal) heating to coal-based district heating. In some areas, there
has been a further move away from district heating to direct use of natural gas
and oil for central heating, and electricity for air conditioning.
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Chapter 8 – Overview of the Energy Sector 265