powerplant.jpgThe International Energy Association warns that electricity is too cheap in China and its power system needs an urgent overhaul.

The
message is meant to be a wake-up call not just for China's energy
industry but also for western businesses who must encourage China to
adopt more innovative energy technologies.

The IEA calls for
sweeping change in China's electricity market because the current
situation is unsustainable. Too much electricity is wasted by consumers
and by networks, so too many power plants are being built to meet this
demand.

Every two years, China adds as much power generation
capacity as the total installed capacity in France or Canada. The
country is now the biggest electricity consumer in the world after the
US and its needs keep on growing.

What's worse, too much
pollution is being released into the atmosphere, particularly by
coal-fired plants that produce 70% of China's electricity.

In a report released yesterday, the IEA calls for prices to be increased so that they better reflect the cost of the resources used.

Now,
China apologists will argue that the IEA is overstepping the line.
After all, profligacy and waste are concepts normally associated with
the west.

On a per-capita basis, US electricity consumption is fifteen times greater than in China, while in Spain, electricity consumption keeps hitting new records due to greater use of air conditioning.

In addition, China has suffered severe power shortages for years, so there hardly seems a case for applying the brakes.

But
soaring demand from China's booming economy has already made it the
world's second largest power consumer and China's emissions of carbon
dioxide, the most common greenhouse gas, are rising at more than twice
the rate of the US.

Clearly, there has to be a better way. And China should be encouraged to find it, argues the IEA.

China
has the opportunity to leapfrog reformed systems elsewhere by
integrating energy efficiency and environmental goals into its
regulatory framework for competitive power markets.”

That may sound wishful thinking, but the country is moving in the right direction.

Since
China first embarked on an effort to gradually liberalise its power
sector, much progress has been made, says the IEA. Power generation has
been separated from transmission, and distribution systems improved.
Experiments with wholesale markets are getting off the ground and there
is now an independent regulator.

China should be congratulated
for these steps, says Claude Mandil, executive director of the IEA, but
“important challenges remain.”

One of the most urgent is to encourage the building of cleaner, more efficient plants.

Western
businesses and governments have invested heavily in clean energy
research. For example, the European Commission is backing a research
project called Near Zero Emission Power Generation.
But not many of these initiatives have trickled down to developing
nations like China, which continue to built power plants using
yesterday's “dirty” technologies.

China, nevertheless, seems
willing to adopt cleaner technologies, such as integrated gasification
combined-cycle (IGCC), although the track record for IGCC in the west
is not that promising, according to this article in the San Francisco Chronicle.

The
IEA says China could encourage its power companies to build cleaner
generating plants by imposing higher fees for pollution. The would
benefit western equipment giants like GE and Alstom, who offer
technologies like wet flue gas desulphurisation that can be
retro-fitted to existing plants.

But there are also smaller vendors that could reap rewards from a clean-up of China's energy business.

For example, US company Wahlco
has supplied China Light & Power with a flue gas conditioning
system to reduce the fly ash emitted by power plants burning
low-sulphur coal.

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