Missing Energy Perspectives

by Vaclav Smil, Ph.D.

Editors’
Note: As part of China’s strategy to sustain economic growth, CYJV
concludes that the Three Gorges Project is China’s best option for
alleviating electricity shortages in urban industrial centres as far
away as Shanghai, 1100 kilometres downstream of the Three Gorges
region. Vaclav Smil presents several key perspectives missing from
CYJV’s justification of the Three Gorges Project which explain not only
why the project is a poor investment in China’s energy future but also
that environmentally and economically sound alternatives exist.

For
more than two generations, Chinese and foreign perceptions of the need
for the gargantuan Three Gorges Dam have remained surprisingly limited.
“It is as if 50 years of technical and financial exploration left
little time or energy for more thoughtful consideration of the wider
implications for China’s society and economy…questions…tend to be
formulated in terms that constrain fruitful discourse on interrelated
physical, social, and ecological aspects.”¹ The CYJV study is simply the latest narrowly focused contribution to the seemingly interminable debate over the project.

China’s Need for Electricity

All
justifications of the Three Gorges Project, including the CYJV study,
assume that China needs sustained and substantial increases in
electricity generation for a central grid network. They anticipate that
the average annual demand for electricity will grow by 8 percent until
the year 2000 (doubling in less than 9 years), and by 5 percent during
the first decade of the new century (doubling in 14 years). For the
areas to be supplied by the Three Gorges Project – Central China, East
China, and Eastern Sichuan – demand is expected to increase from 20.6
gigawatts (GW) in 1985 to about 70 GW by the year 2000 and to just over
120 GW in 2010.*

Annual electricity generation growth rates from 7
to 10 percent have been common in countries at comparable stages of
economic development; indeed, these high growth rates prevailed even in
many richer nations until the early 1970s. In the regions which would
be supplied by the Three Gorges Project, the availability of
electricity on a per capita basis is only one-sixth to one-quarter that
of other developing countries such as Brazil or Mexico, and merely 1 to
2 percent of average per capita energy consumption in Canada or the
United States, respectively.² China’s national newspaper,
the People’s Daily,** reported in the late 1980s that China was short
30 terawatt-hours of electricity, equivalent to roughly 40 percent of
the expected annual average output from the Three Gorges Project.

At first sight, there appears to be nothing
questionable about these figures and they seem to provide the obvious
rationale for going ahead with the dam: China is in great need of
electricity. But a very different perspective unfolds by looking
closely at how and where electricity is currently used. The U.S. Office
of Technology Assessment reports that it is the orientation of China’s
industry and its inefficient use of energy which are to blame for
energy shortages, rather than a lack of energy supply.³

China’s
heavy industries, such as iron and steel manufacturing, and chemical
processing, consume about 65 percent of the country’s electricity
supply. In 1987, China’s steel industry consumed roughly two times more
electricity to produce one tonne of steel than western and Japanese
steel producers. Similarly, for the production of sulphuric acid (a
basic compound for many chemical processes), and ammonia (used to
synthesize urea, China’s leading nitrogen fertilizer), Chinese plants
consume anywhere from three to six times the amount of electricity used
in western countries.⁴ Combined with China’s generally low
efficiencies for fuel combustion and electricity generation, this makes
China one of the world’s most energy-intensive economies.

China consumes seven times as much energy as
Japan to produce one unit of gross national product (GNP).* Even
compared to other poor, populous nations such as India, Indonesia, and
Brazil, China’s heavy industry accounts for over half of the country’s
GNP,** which is an inordinately high share.⁵

China’s
orientation towards heavy industry means that most of the country’s
energy is being wasted. The bulk of China’s heavy industry and
technology are of the 1950s vintage and are under the control of
cumbersome government bureaucracies. As a result, they are inadequately
maintained and operated, and since more than nine-tenths of all
electricity is sold by the state at artificially low prices, there is
little incentive to upgrade systems and improve their performance. The
Three Gorges Project, which is intended to provide more
state-subsidized electricity to the inefficient industrial sector,
would not eliminate China’s energy shortages, but would perpetuate
existing wasteful practices.

Because so much energy is currently wasted in
China, the immediate potential for improving and expanding energy
services, without building new generating plants (coal, nuclear,
hydro), is vast. In fact, the electricity now required by the Chinese
economy – 80 percent of which is devoured by the industrial sector –
could be delivered using just 60 percent of the country’s existing
hydroelectric generating capacity. This amounts to electricity savings
of 270 terawatt-hours or nearly four times the output at Three Gorges.
Another, more conservative estimate of improvements in industrial
energy efficiency over two decades – the time which would be required
to put the Three Gorges Project into full operation – amounts to an
annual saving of at least 70 terawatt-hours, or the equivalent expected
annual output from the Three Gorges Project which could be used
elsewhere.

Rather than building the Three Gorges Project, a
gradual shift in China’s industrial structure and a widespread
improvement in energy use is achievable by a combination of
off-the-shelf technologies, improved system management and price
reforms. Critics of the Three Gorges Project within China agree that,
in an overwhelming number of instances, these changes would be less
capital intensive than building new generating plants. Such a strategy
would have the added advantage of providing more employment and
improving the competitiveness of China’s industries without creating
costly environmental impacts, such as those anticipated at Three Gorges.⁶
In fact, an increasing number of energy experts agree that economic
prosperity increases with the greater availability of useful energy
services rather than with the greater supply of fuels and electricity
used wastefully.

Another energy-saving strategy would be to expand
light industries, such as food processing, textile manufacturing and
consumer electronics, which would require only one-quarter the amount
of energy used by heavy industry⁷ to produce an equivalent
value of industrial output. If light industries increased their share
of total industrial output by just 7 percent, 30 terawatt-hours of
electricity could be saved each year, or about 40 percent of the
expected annual output at Three Gorges.*

China’s Hydroelectricity

China
is endowed with the world’s largest untapped hydropower potential and
therefore hydroelectricity will undoubtedly play a major role in the
nation’s future electricity supplies. Detailed surveys completed in the
early 1980s by China’s Ministry of Water Resources and Electric Power
show that it would be technically feasible to build 11,103 hydro dams**
with a total capacity equivalent to 27 times the planned output from
the Three Gorges Project. The Yangtze’s tributaries alone could
potentially support 4440 hydroelectric stations with a total installed
capacity six times that of the Three Gorges Project.

Since less than 10 percent of this capacity has
been tapped, China is in a position to decide prudently – on the basis
of social, environmental and economic factors – whether or not to build
large dams at all, or small dams.***

Sichuan province, the region which would have to
bear most of the burden of resettlement, has about one-quarter of
China’s total hydropower potential, and could build a series of 1 to 3
GW power plants instead of the Three Gorges Project. These dams could
be built on upper, less densely populated reaches of Yangtze
tributaries, in less than half the time required to build the Three
Gorges Project, with less social and environmental impacts. The
province, and hence the country, would benefit from the new supply much
more rapidly, and could rely, to a greater extent, on domestic
engineering capability.

Most importantly, the development of hydropower
should be undertaken only if the project poses no long-term
environmental risks on a scale that is commensurate with the country’s
technical and investment capabilities, and only if the project meets
the electricity needs of China’s predominantly rural population.

Rural Energy Crisis

The
Three Gorges Project is part of China’s energy policy which stresses
large centralized energy supply projects for electricity generation.
Such investments neglect the basic energy needs of nearly
three-quarters of China’s population living in villages and small
towns. Almost half of the rural population is without electricity;
roughly half of rural households experience severe shortages of biomass
fuel (straw, wood, shrubs, and grasses) for everyday cooking.*

To date, widespread construction of small
hydrostations has been the most successful means of expanding China’s
rural electricity supply since most of these locales could never be
linked to centralized electrical grids from giant dams, such as the
proposed Three Gorges Project, because of high cost or difficult
access. More than 70,000 rural stations with a total capacity of nearly
10 GW have been installed. More than three-quarters of China’s 2,133
counties have small hydrostations and about one-third of these counties
rely on them for most of their electricity.

Although experience has proven that small-scale
hydro is not without technical and environmental problems – such as
poor design and sizing, unreliable equipment, and excessive
sedimentation – these problems are much more easily managed than
problems arising from giant projects.

Plant Size

Since the
early 1970s all the leading Western economies have come to recognize
the perils of large dams. Even in Canada, such giant projects as Phase
II of the James Bay Project face increasing opposition because of their
inordinate demand for capital and skills, and their almost invariably
negative environmental impacts. Above all, they are inherently
inflexible: once the project is built, its high cost would render it
too expensive not to operate, even when its negative impacts warrant
mothballing the project.

Simplistic assessments of the Three Gorges
Project as an energy supply option – detached from judging the economic
merit of generating more state-subsidized electricity to supply the
horribly inefficient industrial sector – may show economic benefits
because they fail to account for the long-term impacts ranging from
reservoir sedimentation to coastal erosion. Such impacts were
anticipated at other large-scale dam projects inside and outside of
China, and were judged to be acceptable and manageable in view of the
huge benefits expected – but became intractable burdens just a few
years or a decade after the dams were built.*

Conclusion

The most
effective means of providing energy services for China’s modernization
has been obscured by the grandiose ambitions of dam builders in China,
Canada, and elsewhere. A rigorous appraisal of alternatives would
reveal that a better energy strategy lies in avoiding the inestimable
cost of environmental degradation associated with large dams, in less
reliance on heavy industry, and in the vigorous promotion of efficiency
improvements and conservation measures through technical innovation and
price reforms.

To complement these efforts, the development of
China’s hydropower should be undertaken only on a scale commensurate
with the country’s technical and investment capabilities, without the
worrisome long-term environmental risks such as those posed by the
Three Gorges Project, and in accordance with the needs of its
predominantly rural population.

Sources and Further Commentary

*1 megawatt (MW) = 103 kilowatts
1 gigawatt (GW) = 106 kilowatts
1 terawatt (TW) = 109 kilowatts

**Remrinribao (People’s Daily) is the official newspaper of the Chinese Communist Party.

*Assuming the official exchange rate. If the
exchange rate were adjusted according to purchasing power parity,
China’s energy consumption per unit of GNP would only be three times as
much as Japan. In 1987, Japan’s GNP was $1,760 billion and China’s $350
billion; their energy use was 380 and 580 million tonnes of oil
equivalent, respectively.

**Total industrial output accounts for 52 percent of the country’s GNP.

*Assuming all other factors remained equal.

**This figure includes dams with relatively small
plants of 500 kilowatt capacity to giant plants with several gigawatt
capacity.

***Megaprojects worldwide are known for their huge
cost overruns and construction delays. CYJV uses Canadian experiences
to estimate what the Three Gorges Project costs would be twenty years
from now.

*The World Resources Institute reports that
expanding biomass resources is essential for meeting basic energy needs
in rural areas. Promoting the efficient use of biomass fuels would also
help reduce deforestation, desertification and soil erosion.
Modernization of bioenergy would not only help China reduce its
reliance on coal but would also generate employment and stimulate
domestic technological development.

*For example, rapid sedimentation in the Sanmenxia
Dam reservoir on the Yellow River forced a costly reconstruction and
downgrading of the dam’s original capacity. Also, the reduced sediment
load in the Nile, due to construction of the Aswan Dam, has caused
millions of dollars’ worth of downstream channel and coastline
degradation.

Continue to Chapter 10

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Chapter 8