How China will eat the World

and please ignore or correct any of my dodgy math. I was just wondering so I set my self a little challenge to look at the figures, of course there are caveats in that the subject of resources is complex and it seems most of the official figures are little more than guesses. So when will China eat the World?

Coal consumption- is somewhere between 3.7 and 4 billion tons in 2012- in 20 years China’s total consumption  will be 160 billion tons.

Chinese coal reserves are between 70- 90 billion tons so that would be gone well before 2033. With  Global reserves an optimistic 600 billion tons there is still plenty of the stuff in the ground- However most of the coal reserves are in the US and Russia – the US consumes 1 billion tons every year so it might want to keep a little back for itself and the 600 billion figure is not proven reserves- that is reserves that can and will be mined but all reserves. Alaska has billions of tons of coal but it is very unlikely it will be ever mined because of the energy costs of building and operating mines as well as ports and towns to support the workers in such an isolated place. Knowing how much of that 600 billion figure is actually usable is a mystery.

Unlike oil or gas where it possible to find new reserves the likelihood of new coal fields is very low. If the World [excluding China] had zero growth in coal extraction and a constant 3.5 billion ton extraction rate each year for 20 years then 70 billion tons needs to be subtracted from the 600,  add China’s 160 billion tons of extraction and that [= 230 – 600] amounts to = 370. If China grew 7% for another 10 years 210 billion tons of coal would be consumed and if the World remained at zero % growth in the same period  it would consume 35 billion tons. Which means that 600 billion ton figure could last 30 years if everyone else stop coal consumption growth- which they won’t.

Oil consumption- China is seeing not 7% growth in car sales but 15%-20%. Currently oil consumption is 9 million barrels a day – about 10% of world production [90 million barrels a day]. Oil figures are designed, it seems to confuse- being in barrels a day rather than tons a year- World consumption is 5 billion tons each year-  of which China’s share is 10% of 5,000,000,000 = 0.5 billion tons.

Motor car growth does not represent all oil consumption growth as about half goes into other aspects of the economy- so lets be reasonable and assume it will be 10% increase each year. In 20 years time China will have consumed 31 billion tons of the Worlds oil reserves.

Current world oil reserves 280 billion tons and if the rest of the world remained at zero % growth about 100 billion tons would be consumed and if we added China’s consumption that is half of all the remaining oil gone in 20 years. And if China’s growth continued it would consume nearly twice as much in the follow 10 years as it did in the previous 20- that’s another 50 billion tons.

However about a third of the total 280 billion tons of oil is Canadian and Venezuelan tar and heavy oils which is the difference between peanut butter pouring out of a jar verses the normal crude that comes out like milk- Canadian tarsands  will last simply because at double the  current rates of extraction =1 billion barrels per year, it will take over 150 years to extract.

China would consume half of all oil reserves in 30 years BUT only if everybody in the world sustained their consumption rates- and I don’t think India would be happy with that- and it came out of the ground in a uniformly growing amount. Oil is  not sitting in a warehouse allowing for instant supply on demand-  as fields decline so their output slows. For China to sustain it’s growth in oil consumption it also has to work out a way to defy physics.

Iron ore- Iron is everywhere and the Earth has a core of the stuff but economic iron ore is less common and with exponential growth of just 2% in world demand the rich sources of the ore would be gone in 64 years. China who is rapidly become the consumer of half of all global resources imports most of Australia’s iron ore which is expected to last 50 years.

Aluminium- there is currently over 130 years of reserves of bauxite [aluminium ore] at current rates of consumption Globally growth in consumption is 5% where as in China it 7%- and again the exponential rate of consumption means that for every ten years twice as much will be consumed bringing the 130 to 30 years at current rates of growth. China consumes 42% of global  aluminium with it to exceed 50% in the next 10 years.

Uranium- current consumption and reserves give about 60 years before new resources must be found. 60 years at current rates of consumption. China is increasing nuclear power by 5x times in 10 years and as there are limits to how much coal it can import within the coming couple of decades so that number can only increase. Power stations are not the same as cars- if power station construction growth is 20% it does not mean they will end up with thousands of nuclear plants in 50 years but if the current number of nuclear power station is doubled over 20 years that uranium supply is not going to last 60 years.

If in some la la land China could grow exponentially at 10% or even 7% each year then China would eat the world in about 30 years, sure some things like iron ore would be abundant but the coal to smelt it and the diesel to power the trucks that mine it would be long gone. Other countries have shown similar growth over similar number of years in history such as Britain and the Age of Coal or the US in the Age of Oil but in each case the finite resources were a lot less finite than they are now. China is hitting some real limits to growth now and these limits are not geographical but those of the Globe, unless it can start exploiting resources in asteroids and other parts of the Solar System thee is a very large wall looming- or cliff. All of this speculation ignores the growth expectations of the Indians or Russians or Brazilians [ and we cannot ignore the rest of the developing world either] or for that matter the growing populations with growing expectations in oil producing countries like Iran Iraq, Saudi etc.

A big caveat to the limits of growth are the ‘black swans’- things that we just don’t think about but should- like water. Nuclear power stations work reasonable well but they need lots of water, so it is possible with abundant uranium [or thorium] to keep the lights on unless there is a drought and the river diminishes no amount of fuel will allow it to run. Unbridled growth in China has brought extreme levels of pollution and at some point middle-class Chinese will demand change.

I don’t envy Chinese dictatorship- it has entered into a doomed arrangement where it offers wealth in exchange for freedom from its people- if the cars are not delivered, if the electricity fails and if the people cannot be bought with consumer goods then it will be the Chinese curse of ‘may you live in interesting times’.

So given these stark limitations what do you think will really happen?

 

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