Energy conservation in China 2 comments

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In recent years, power shortages in China during the hot summer season and the cold winter season have become an annual phenomenon, due to massive use of air conditioners in the former and heating appliances during the latter. They can hardly be considered one-time occurences, and are indicative of China's huge demand for power.

Indeed, China is now the world's second largest consumer of energy, after the United States. As its economy continues to grow and development progresses further inland, the trend can only point upwards with regard to its energy needs. The Chinese government has been quick in recognising this potential bottleneck and has been active in securing new supplies of oil (for power generation) and even looking to buy into foreign oil assets.

It is to their credit that they recognise not only does the supply issue need to be tackled, but demand must also be managed. It is well-known that one of the main reasons for the country's high energy consumption, besides its red-hot economy, is that it is extremely inefficient in using energy. There is tremendous wastage and the problem is not helped by heavy government subsidies on various petroleum products. The papers today reported renewed efforts to cut down on power consumption through "green buildings" which cut down electricity consumption by use of various electronic sensors to detect and switch off unnecessary appliances, and the government plans to introduce these designs across government departments, one of the greatest culprits in energy wastage. This move will not only cut down power consumption of the buildings but will also have the important long-term effect of educating people about the importance of energy conservation.

We only have to look to Europe for the model of such a "green" society. Over there, they stress not only energy conservation, but also renewable energy sources, recycling, environmental air and noise pollution control, and now even environmentally-friendly "green manufacturing". As China becomes increasingly plugged into the world through such organisations as the WTO and various free-trade agreements, it will have further incentive to adopt more stringent environmental standards. And coming back to the issue of supply, don't forget the rising price of oil as an additional driving force for change in the way energy demand is managed.

There are no really strong China energy conservation plays of a sufficient scale right now on the SGX but one might want to watch this development of this trend in the future and see which firms might look to take advantage of it. One possibility might be construction/property development firms that have such "green building" capabilities looking to spread their wings abroad.