Energy

McKinsey: ‘Curbing the growth of global energy demand’

A recent article from The McKinsey Quarterly, the business journal of the management consulting firm McKinsey & Company, recommends ways to cut the growth in worldwide energy demand. “The key is a concerted global effort to boost energy productivity,” the report says, and China, especially, plays a “crucial role” in that effort.

• Curbing the growth of global energy demand
  Web exclusive, July 2007

Here are some key points about China’s involvement in improving energy productivity:

• CHINA LEADING IN THE COMMERCIAL SECTOR: Most of the current energy demand in the commerical sector–i.e. office and retail buildings, hotels and restaurants, etc.–comes from the developing world. However, according to McKinsey, 75 percent of the growth expected in commercial-sector energy demand by 2020 will come from the developing world—and 48 percent of that high demand will be from China.

• IMPLEMENTING ENERGY-EFFICIENT TECHNOLOGY: China has already proved itself to be an attractive place for new capital development. During its time of surging growth, China should implement “best-practice energy-efficient technologies in all new Chinese industrial-production capacity” to potentially cut global energy demand in 2020 by 13 QBTUs, which is 10 percent of the global energy productivity opportunities.

• COOLING DOWN: Likewise, McKinsey estimates that China could save eight QBTUs by 2020, or 6 percent of the global energy productivity opportunity, by introducing “world-class insulation standards and energy-efficient heating and cooling packages in new residential construction.”

• INFLUENCING THE WORLD ECONOMY: McKinsey estimates that China’s power sector alone will generate 16 percent of the global growth in energy demand from 2003 to 2020, which means it is very important whether or not the country meets this demand by maintaining current efficiency levels or by developing new, high-efficiency plants. “Although addressing such issues will be difficult,” the report says, “we believe that measures to improve energy productivity can actually help China’s economy. In fact, given the country’s relatively low labor costs in building, these opportunities may well have higher returns there than the 10 percent or so we have observed elsewhere. Moreover, China could be a considerable source of innovation as it develops and tests new energy-efficient devices for use in markets around the world.”

[tags]China, energy, McKinsey, energy productivity[/tags]

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