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China’s energy use challenges Australian exports

China‘s energy use outlook challenges Australian exports, according to a report by the Reserve Bank of Australia (RBA).

For starters, global carbon emissions have increased dramatically in the last 150 years. The main driver of this increase has been the increase in global energy use.

Thus, in the last 50 years, the world’s energy supply has more than doubled and, in recent years, the proportion generated by fossil fuels, the main source of carbon emissions, has represented around 80%.

As parties to the Paris Agreement on climate change, the governments of China, Japan and South Korea have announced targets to substantially reduce carbon emissions in the coming decades.

These economies are Australia’s top three exporting partners for goods and are destinations for around two-thirds of Australia‘s fossil fuel exports.

As a result, your efforts to reduce carbon emissions will be a significant determinant of Australia’s export prospects. China, Japan and South Korea together are responsible for around a quarter of the world’s fossil fuel consumption.

China’s energy

Fossil fuels (including oil, coal and natural gas) dominate the energy mix of these countries, providing more than 85% of the energy supplied in these countries in 2018, far more than in the rest of the world.

China is the largest carbon emitter of the three countries, due to its large population and energy mix.

According to the RBA, coal accounted for about 60% of China’s energy use in 2018, much more than in Japan and South Korea (where oil is the main fossil fuel) and the rest of the world (where the main fossil fuel is natural gas).

China is a major coal consumer given the country’s abundant coal reserves, while Japan and Korea, with minimal domestic energy reserves, have relied more on oil.

Energy development

In general, the use of coal produces substantially more carbon emissions than oil or natural gas for the energy it generates. This means that China’s energy mix, in particular, is very carbon intensive; The ratio of carbon dioxide emitted to energy supplied in China was about a quarter higher than the world average in 2018.

China is also the world’s largest energy consuming country, responsible for around a fifth of the world’s total consumption.

The RBA reports that this is primarily a function of China’s population, which is also the largest in the world.

Adjusted for population size, China’s per capita energy use is broadly comparable to other East Asian economies, including South Korea, when they had a similar level of GDP per capita.


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