The tendency of power generation to be a cyclical boom–bust kind of business is not just confined to the market economies of the developed world. At the end of the 1990s China’s problem appeared to be, remarkably, oversupply of electricity. But now, lack of power, and its potential to slow China’s economic expansion, is high up the political agenda. Every month since mid 2002 it is estimated that power consumption in China has sustained a rolling annual average growth rate of 15%. 2002 saw the need to ration electricity in 12 of China’s 31 provinces but in 2003 there was rationing in 21. Contributing to these problems has been low rainfall, reducing the output of hydro plants, limitations on coal supply (partially due to the closure small mines) and rapid increase in demand, largely due to growth of energy intensive industries, notably the metals sector.

There is now a concerted effort to accelerate the building of new power plants. According to some estimates, a spectacular 90 GWe of new generating capacity was ordered in 2003. This is the kind of number we were seeing in the USA in 2000 and 2001, just before the bubble burst. In terms of installed capacity per head, of course, China, with a population of 1.3 billion and a current installed capacity of around 350 GW, is still well down the league table – compared with, say, Germany, with a population of 83 million and an installed capacity of about 115 GW – but it is getting there. One recent forecast suggested a quadrupling of GDP by 2020, with installed capacity rising to around 800-900 GW (ie comparable to the current installed capacity of the USA, which has a population of a mere 280 million).

Coal will remain the mainstay but thankfully there is a decisive shift to more efficient ways of using it. Supercritical technology is the norm for large pulverised coal plants – indeed China Power International has just signed a contract for seven 600 MWe units of this type – while in December Huaneng Power International, one of China’s largest IPPs, announced that it had obtained approval from the State Council for the country’s first ultrasupercritical coal plant, billed as a “new development phase” for China’s power industry. The first stage of this plant, Yuhuan, in the economically advanced but power-starved east China province of Zhejiang, will consist of two 1000 MW ultrasupercritical units. These also have the distinction of being China’s largest planned coal units to date.

Meanwhile, in Sichuan province the Baima 300 MWe demonstration circulating fluidised bed (CFB) boiler plant is under construction. This is a vehicle for the transfer of Alstom’s large-scale CFB technology to China.

Natural gas is set to play an increasing role, further contributing to reduced emissions. Beijing hopes to have substituted clean natural gas plants for old coal stations in time for the 2008 Olympics, while sales of natural gas supplied through the west–east multi-billion dollar pipeline have just started in Shanghai – a key milestone for the Chinese energy industry.

Recent months have also witnessed what appears to be a major reawakening of interest in greenhouse-gas-free nuclear power, currently playing a very modest role in the Chinese energy mix. A number of provinces are now giving serious consideration to construction of nuclear power plants and, according to the People’s Daily of 12 January, there is a national plan (drawn up by a body called the Development and Reform Commission) that calls for the approval of two 1000 MWe nuclear units per year for the next sixteen years, from 2004 onwards. This is miniscule when set against China’s overall power generation plans, but would constitute a huge programme by the standards of the order-starved nuclear industry. It all goes to show that there is nothing like a power shortage or two to energise a nuclear power plant building programme.

Could Kyoto damage your economic health?

Climate change is of course an issue clouded with uncertainty, but it is one area where there is a lot to be said for erring on the side of caution. And whatever the American, Russian and Australian governments might think, it is getting increasingly difficult to avoid the conclusion that the effects of human activity on climate change can probably already be seen and urgent and concerted action of the kind envisaged under the Kyoto Protocol is needed.

A paper published in Nature in early January (by C Thomas et al) estimated that over 25% of land plants and animals, over 1 million species, could become extinct as a result of climate change expected by 2050. Almost simultaneously (was this planned?) Science carried a trenchant piece by Sir David King, chief scientific advisor to the UK government, starting with the statement: “Climate change is real, and the causal link to increased greenhouse emissions is now well established.” Amongst the evidence cited: the ten hottest years on record have occurred since 1991; in the past century global temperatures have risen by about 0.6°C and sea levels by 20 cm; mountain ice caps are melting; arctic sea ice is thinning; and in Britain usage of the Thames flood protection barrier has increased from less than once a year in the 1980s to more than six times a year currently. His view is that “climate change is the most severe problem that we are facing today – more serious even than the threat of terrorism.”

He also believes that reducing carbon emissions may not have such a serious adverse impact on economies as some have argued. Calculations for the UK, for example, tend to agree with an Intergovernmental Panel on Climate Change study suggesting that stabilising atmospheric CO2 at 550 ppm would lead to an average GDP loss for developed countries of 1% (the current CO2 level is about 372 ppm, already 50% higher than pre-industrial levels).

Set against such a loss, of course, must be the huge potential costs associated with climate change effects.

Sir David thinks that “it’s a myth that reducing carbon emissions necessarily makes us poorer.” He points out that between 1990 and 2000, the UK economy grew by 30% but emissions intensity fell by 30% and emissions by 12%, while the Chinese economy grew by over 60% and emissions intensity also dropped.

Indeed, it could be argued that the need to address global warming opens up considerable economic opportunities, eg, through the sale and possession of more efficient power generation technology and emissions trading (which Europe will be pioneering in 2005).

To take a recent case, GE of the USA proudly reports that Canada’s commitment to Kyoto was a key factor in Hydro-Quebec’s selection of high-efficiency H technology for its Beauharnois combined cycle plant, the landmark first 60 Hz project involving the H gas turbine. It is therefore a little ironic that the USA (accounting for 20 % of the world’s emissions, but only 4% of the population) refuses to ratify the accord, principally on the grounds that it will damage its economic interests.