This is a link to the blog I commented on:
Wednesday, October 28, 2009
Thursday, October 22, 2009
China's Invisible Oil Hand
Over the past few months, China has been on a crusade like mission to secure resources across the world. And recently, the Wall Street Journal published that China now imports 8% more oil now form last year, but at the same time, removing subsidies on oil. Both the increase in imports and decrease in subsidies does not mean demand is higher, all it means is supply is increasing. So although subsidies are removed, prices can stay the same all attributed to the Chinese Government in the background buying more oil and manipulating the price per liter. As you can see from this chart from The Economist, prices in China are still higher than US prices which I might add, are affected by tax breaks given to American oil companies. And looking back to 2008, The Chinese held prices below that of the US, which "encouraged [Chinese] households and firms to guzzle more oil, pushing global prices higher."
Some benefits of this system is that it stabilizes growth and when oil prices in the market get too high, the government is able to make the price of oil more affordable to the average consumer.
The downside to this method is that artificiality dictating prices in such a large country greatly affects oil prices in other countries, as well as violating basic economic principals of free trade (but we won't get into that).
Do you think what China's manipulation of the oil price is beneficial to the growth of a country or do the downsides outweigh the benefits? Please comment.
More Wind = More Coal
The Chinese government has planned over 12.7 gigawatts of wind power to be built in the next six years alone. However, China now faces the problem of what to do when the wind doesn't blow. In order to have a secure flow of energy for the booming cites, an additional 9.2 gigawatts of coal energy is going to have to be produced.
This is ironic on multiple levels. China has been promoting itself as a proponent of green energy recently and to have nearly 75 percent of the wind power capacity needed to be backed up by coal, it gives the world the impression that China is not doing its homework on where to strategically place wind farms. Like I said in my previous post, almost 30 percent of China's wind power generated in 2008 wasn't connected to the grid! Having a surplus in some places and a shortage in others is the perfect example of why China's top-down approach to their green revolution is severely flawed.
Insights? Comments? Please share.
WSJ
http://online.wsj.com/article/SB125409730711245037.html
This is ironic on multiple levels. China has been promoting itself as a proponent of green energy recently and to have nearly 75 percent of the wind power capacity needed to be backed up by coal, it gives the world the impression that China is not doing its homework on where to strategically place wind farms. Like I said in my previous post, almost 30 percent of China's wind power generated in 2008 wasn't connected to the grid! Having a surplus in some places and a shortage in others is the perfect example of why China's top-down approach to their green revolution is severely flawed.
Insights? Comments? Please share.
WSJ
http://online.wsj.com/article/SB125409730711245037.html
Thursday, October 15, 2009
Wednesday, September 30, 2009
China's New Green Groove
The words on the pen that the business school gave us read: “KELLEY SCHOOL OF BUSINESS, INDIANA UNIVERSITY”. But those are not the most important words. If you look closely, on the pocket clip, there is a small yet familiar word, “CHINA”.
China is not only making our pens. They make things that are hundreds of times taller and generate 850 kilowatts a piece. The past eighteen months have been a whirlwind with global recession dominating the headlines daily. Jobs being lost and companies going under seem to be in the news every month. But to very few people’s notice, China has been building wind farms and solar panel plants backed by the Chinese government.
Why is China spending billions of dollars on this expensive industry when they have a basically unlimited supply of coal? It’s because their waterways are polluted, skies are smoggy, and they see an opportunity that has caught on throughout the whole country.
According to the Global Wind Energy Council (GWEC), China currently has around 12,000 megawatts of installed wind power and is scheduled to have 100,000 MW of installed wind power by 2020. The GWEC also states that China has been about doubling their installed power every year since 2005. However, according to the Wall Street Journal almost 30 percent of all wind power generated in China last year was wasted because it wasn’t connected to the grid. Although China’s wind energy efforts aren’t perfect, their ascension to one of the world’s largest wind producers is a testament to their commitment to energy security and reducing their environmental impact.
According to the New York Times, China has the world’s largest solar panel industry. The largest solar panel maker is exporting 95 percent of their panels. And according to Thomas Freedman, the largest solar power research facility is going to be built in Xian buy Applied Materials, one of the US’ biggest solar panel makers.
Every week a new coal plant is build in China. China is the largest polluter in the world and their energy infrastructure is not suited for the demand they are about to face. China knows all this and working non-stop to not only satiate their energy demand, but also become the leader in green energy in the world.
Sources:
China is not only making our pens. They make things that are hundreds of times taller and generate 850 kilowatts a piece. The past eighteen months have been a whirlwind with global recession dominating the headlines daily. Jobs being lost and companies going under seem to be in the news every month. But to very few people’s notice, China has been building wind farms and solar panel plants backed by the Chinese government.
Why is China spending billions of dollars on this expensive industry when they have a basically unlimited supply of coal? It’s because their waterways are polluted, skies are smoggy, and they see an opportunity that has caught on throughout the whole country.
According to the Global Wind Energy Council (GWEC), China currently has around 12,000 megawatts of installed wind power and is scheduled to have 100,000 MW of installed wind power by 2020. The GWEC also states that China has been about doubling their installed power every year since 2005. However, according to the Wall Street Journal almost 30 percent of all wind power generated in China last year was wasted because it wasn’t connected to the grid. Although China’s wind energy efforts aren’t perfect, their ascension to one of the world’s largest wind producers is a testament to their commitment to energy security and reducing their environmental impact.
According to the New York Times, China has the world’s largest solar panel industry. The largest solar panel maker is exporting 95 percent of their panels. And according to Thomas Freedman, the largest solar power research facility is going to be built in Xian buy Applied Materials, one of the US’ biggest solar panel makers.
Every week a new coal plant is build in China. China is the largest polluter in the world and their energy infrastructure is not suited for the demand they are about to face. China knows all this and working non-stop to not only satiate their energy demand, but also become the leader in green energy in the world.
Sources:
http://online.wsj.com/article/SB125409730711245037.html
http://www.nytimes.com/2009/07/14/business/energy-environment/14energy.html?_r=2&ref=global-home
http://www.gwec.net/index.php?id=125
http://www.nytimes.com/2009/09/27/opinion/27friedman.html
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