Steve Aplin, of Canadian Energy Issues, wrote an excellent piece titled Industrial strategy and cheap energy: why China is eating, and will keep eating, our lunch that captured my attention. He described how China is increasingly taking advantage of an enormous internal market to stimulate continued economic development that is lifting hundreds of millions of people out of poverty.
Because Chinese leaders recognize the importance of reliable, low-cost electricity and are encouraging a massive build out of their power grid, they are enabling a greater resilience in their economy. Instead of being massively dependent on exports, their manufacturers will be able to take advantage of the natural desire of people for labor saving devices like refrigerators and washing machines. As more people purchase those kinds of electricity consuming devices, there will be an ever increasing market for more electricity, fueling a continued boom in large machinery manufacturing.
That large internal market allows manufacturers the kind of scale that keeps driving competitive gains in both price and quality. As an amateur industrial historian, I see a pattern that is similar to the one that lifted my own father – and many of his generation – out of the rural poverty of hardscrabble farming and into the relative prosperity of American suburbia. I know that suburbs have a poor reputation in some venues, but there is a lot to be said for personal transportation, personal computers, washing machines and refrigerators – especially when compared to subsistence farming.
As Steve points out, that low cost electricity is being supplied by one of three sources – coal, hydro, and nuclear. Of the three, the source that has the most room for growth is nuclear. That is why China remains on a path that will give it something close to the same nuclear electricity capacity found in the US by 2020 and something close to the same nuclear electricity capacity currently existing in the entire world by 2050.
I strongly suspect that the Chinese path of nuclear energy development will follow a pattern that is more similar to its development of other industrial capacity. As Chinese engineers and technicians gain experience and knowledge, they will improve productivity and drive out cost increasing inefficiencies. Nuclear energy will become cheaper than coal and replace it in many situations. As that happens, the famously foul air in China will become ever more breathable.
I think it is terrific to see China moving on this path of economic development. However, like Steve, I am worried about what the result will be if western governments continue to pursue an opposite energy development strategy that strives for more expensive and less reliable energy where supply and demand are balanced by forcing people to use less.