New energy dominance: America versus China

Background

In 2003, primary energy consumption in China was 49 exajoules (EJ), the second largest, accounting for over 12 percent of total global primary energy consumption. Energy consumption in the US of just over 96 EJ, accounting for about 24 percent of the global total, making it the largest consumer. In 2023, China was the largest energy consumer with a consumption of over 170 EJ, accounting for over 27 percent of global total, followed by the US with a consumption of 94 EJ, accounting for over 15 percent of global consumption. The peak primary energy consumption of 95.4 EJ, recorded in 2022, in US which was roughly half of China’s primary energy consumption in 2023. China’s future choices in new energy (renewable energy) consumption and production will influence the energy consumption choices of the rest of the world in the future, but its geopolitical implications may be weaker than what popular narratives suggest.

Source: Statistical Review of World Energy

China’s energy profile: 2003 to 2023

In 2003, coal consumption of 33.48 EJ accounted for about 68 percent of China’s primary energy consumption, while oil consumption of 11.52 EJ accounted for 23 percent, and natural gas consumption of 1.23 EJ accounted for about 2.5 percent of total consumption. Overall, fossil fuels accounted for about 94 percent of China’s commercial energy basket, with nuclear and hydropower accounting for the remaining 6 percent. The contribution of renewable energy (RE) was negligible. Two decades later, the share of coal in China’s primary energy consumption had fallen to about 54 percent, though coal consumption had tripled to 91.94 EJ, and the share oil consumption had fallen to 19 percent, while oil consumption had doubled to about 23.7 EJ. In the same period, consumption of natural gas had increased eleven-fold to 14.57 EJ, and its share in China’s primary energy basket more than quadrupled to about 8.5 percent. The share of nuclear energy more than tripled to over 2.2 percent, with a consumption of 3.9 EJ, and the share of RE increased from almost nothing to over 9 percent, with a consumption of 16.13 EJ, which was higher than the share of hydropower at 6.7 percent, representing a consumption of 11.46 EJ. Overall, the share of fossil fuels in China’s primary energy basket has fallen to about 82 percent in 2023.

Source: Statistical Review of World Energy

In 2023, China was the largest emitter of carbon dioxide (CO₂), with energy related CO₂ alone amounting to over 11 billion tonnes (BT), that was about 32 percent of global total compared to 4.6 BT by the US, the second-largest that accounted for about 13 percent of global total. This is despite the fact that China’s installed capacity of RE is an order of magnitude higher than most major economies across the world.

New energy consumption and capacity

In 2023, RE consumption in China was 27.6 EJ, the largest globally, accounting for over 30 percent of global RE consumption. The European Union (EU) consumption was the second largest at 17.83 EJ, accounting for 19.8 percent of global total, and the US consumption of 10.99 EJ was the third largest, accounting for over 12.2 percent of global total. China’s power generation from RE, including hydro at 2894 terawatt-hour (TWh), was the largest in the world in 2023, accounting for over 32 percent of global total, while renewable power generation excluding hydro topped the list with the generation of 1668 TWh, accounting for 35.1 percent of global total in 2023.  Generation of 885.9 TWh from wind accounted for over 35.6 percent of global total generation from wind in 2023, and generation of 584.2 TWh from solar accounted for 35.6 percent of global total in 2023. Installed capacity for solar and wind in China are more intimidating.  In 2023, installed capacity of 441.895 GW of solar and 609.921 GW of wind energy accounted for about 43 percent of global total of each. To put this in perspective, India’s total installed capacity (fossil fuel plus non-fossil fuel based) for power generation was 446.189 GW in June 2024.  According to the global energy monitor (GEM), 180 gigawatt (GW) of utility scale solar and 159 GW of wind power capacity is under construction in China.  The combined capacity of 339 GW under construction is twice the capacity being installed in the rest of the World combined. If solar and wind capacity in the pre-construction and planned stages are included the total could exceed 1200 GW by 2030, fulfilling the EU call for tripling RE capacity by 2030.

Source: Statistical Review of World Energy

Issues for thought

While aggregate quantitative figures for energy consumption by China are overwhelming, individual energy consumption figures, which are a proxy for economic status and quality of life, are underwhelming.  In 2023, China’s per person energy consumption of 119.8 gigajoule (GJ) was lower than the Organisation of Economic Cooperation and Development (OECD) average of 166 GJ and lower than most countries with comparable climatic conditions in South East Asia such as Japan (141 GJ), Singapore (577 GJ) and South Korea (240 GJ).  China is trying to close the gap between quantity and quality of energy consumption by pushing for continued economic growth at a time when the demographic dividend is declining sharply.  In this context, returns to China’s investment in new energy technologies may be limited.

This contrasts with the time when the US became the dominant energy consumer. After the Second world war, the US population was predominantly young and the economy was going through post-war economic boom.  Oil and natural gas production and consumption in US, as a share of global total when it was the dominant player, was higher than the share of production and consumption of new energy by China today. For example, in 1965, oil consumption in the US accounted for over 37 percent of global total, and most of the oil was domestically produced.  Though the trade position of the US shifted from that of the largest net exporter of oil to that of the largest net importer in 1947, the US continued to produce more than one-half of the world's crude oil through the 1950s and 60s, which contributed to US energy security. Post-war availability of imported oil at nearly half the price of domestic supplies contributed to economic growth and introduced a foreign policy dimension in energy policy that gave the US unprecedented power over oil producers. In the early 1960s, the US accounted for over 65 percent of natural gas consumption, most of which was domestically produced. The domestic availability of cheap natural gas spurred industrial production and at the same time dramatically increased energy security.

In contrast, China’s dominance of the new energy value chain is driven by State policy and public funds rather than by natural resource endowment. The resource endowment that was behind the US dominance of energy production and consumption in the past could not be replicated, but China’s state led industrial policy that is behind its dominance of new energy sectors can be replicated, as illustrated by industrial policies being adopted in the US and the EU.

The geopolitical implications of China’s dominance over new energy technologies are likely to be far weaker than what dominant Western narratives suggest. On the other hand, China’s production of new energy technologies is likely to promote adoption of new energy technologies in countries that cannot afford industrial policies on the same scale as China, the US and the EU. Overall, the production of public goods (affordable new energy technologies) by China may far exceed its presumed production of public ‘bads’.

Source: Statistical Review of World Energy

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Lydia Powell is a Distinguished Fellow at the Observer Research Foundation.

Akhilesh Sati is a Program Manager at the Observer Research Foundation.

Vinod Kumar Tomar is a Assistant Manager at the Observer Research Foundation.

• Energy
• America
• China
• India
• ASEAN
• China
• economic relations
• India
• Indo-Pacific
• Moon Jae-in
• New Southern Policy
• South Korea
• strategic relations
• trade partnerships

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