Jul 4, 2013

The Peak Oil Crisis: China at a Turning Point

 Tom Whipple: This spring, I spent three weeks traveling around China and needless to say I, along with every other visitor, was impressed by the economic progress the Chinese have made in the years since the Cultural Revolution. Tens of millions have been moved from rural villages into megacities of gleaming skyscrapers, apartments, modern subways, and traffic jams of sleek, late model cars. The jams have become so bad that China's major cities have had to implement restrictions on driving and on new car registrations.

There are of course downsides to this marvel which many believe will propel China into number one position in terms of economic and political power within a decade or two. On many days, the air in major Chinese cities is approaching lethality. Most rivers are cesspools, tap water is undrinkable, dangerous metals are building up in agricultural soil and starting to make their way into the food chain and to top it all off nobody really gets to vote for leaders or on policy. The Chinese Communist Party rules with its own version of the "social contract" – shut up about "democracy, human rights, justice," and all that western claptrap; let us rule as we see fit; and in return we are delivering world-beating economic growth so that someday you will all be rich.

In recent months, however, there has been increasing evidence that the good times may be in danger. One simply cannot grow an economy at circa 10 percent a year while ignoring the environment. Last winter air pollution in the major cities occasionally reached nearly 15 times the acceptable level. It is likely that thousands with respiratory problems died, but in China one does not talk about things like that.
 
The redeeming side of air pollution is that it affects rich and the poor, the powerful and the powerless alike so that in recent months China's new leadership vowed to take action against pollution after years of neglect in the name of economic growth. Remember that the US started passing clean air legislation in 1955 and got really serious with the EPA 43 years ago
 
China's pollution problem is rather simple; they now burn half the world's coal – some 4.3 billion tons a year and 10 million barrels of oil a day. To cut pollution they have to cut coal consumption and at least put some controls on motor fuels, but to grow their economy at the targeted 7.5 percent a year, they almost certainly will have to increase coal consumption. Hydro, nuclear, and other renewables take too long to build or produce too little electricity. Something has got to go – breathable air or rapid economic growth.

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