The world's new fuel guzzler

July 19, 2010 | By Janet Whitman, Financial Post | read source

China has surpassed the United States as the world's largest consumer of energy, marking the first time in a century America has been bumped from the top spot.

Reuters

NEW YORK -- China has surpassed the United States as the world's largest consumer of energy, marking the first time in a century America has been bumped from the top spot.

Just as surprising is how quickly China usurped the United States, said economist Fatih Birol, whose company, Paris-based International Energy Agency, is behind the findings. "Ten years ago, China was using half the energy the United States was using."

While U.S. demand for energy is expected to see slow growth, China is projected to account for 40% of overall growth in energy demand over the next two decades, Mr. Birol said in a phone interview. "This will have major implications for the global energy system, energy production and the environment."

Last year, China consumed 2.252-billion tons of energy, 4% more than the United States, which uses a mix of crude oil, nuclear, coal, natural gas and renewable sources such as hydropower.

Around 80% of that energy was generated by coal-burning electricity plants, one of the dirtiest forms of energy.

The United States still uses more energy on a per-capita basis. The average American uses five times as much energy each year as the average Chinese citizen.

And the United States remains, by far, the largest consumer of oil, gobbling up 19 million barrels of crude a day, far ahead of China’s No. 2 status with 9.2-million.

Mr. Birol said oil from Canada's controversial oil sands would likely be in high demand from both countries over the next several years. "It will be one of the key energy sources to meet that growth in oil demand," he said.

Canada exports about 70% of its oil production south of the border to the United States, making it the country's biggest outside source of oil at roughly 1.7-million barrels a day.

But Canada also has big pipeline plans in the works to ship to China.

The United States has seen demand for oil flatten out, zapped by the recession, the country's sluggish population growth and its attempts to be more energy-efficient.

Higher fuel-efficient standards for automobiles — the biggest use of oil in the United States — is expected to further curb the country's need for oil.

Over the past decade, the United States improved its energy efficiency around 2.5% a year, compared with 1.7% for China.

China hasn't been nearly as hard hit by the recession and the country is seeing strong growth in industry.

To keep up with its surging energy demand, China is likely to build as many power plants in the next 15 years as the United States did over 60 years, said Mr. Birol. "But the Chinese government is very keen to bring nuclear power and natural gas to the country. But even though the share of coal is going to decline, it will still be the dominant source."

With its heavy reliance on coal, China exceeded the United States a few years ago as the biggest emitter of greenhouse gases.