The Food–Energy–Water Nexus: An Integrated Approach to Understanding China’s Resource Challenges
In this post, originally published in Harvard Asia Quarterly. I draw the connections among food, water and energy systems in China and make the case for the urgent need for more integrated approaches to resource management.
China’s rapidly growing economy is very quickly testing the limits of its resource constraints. While China is home to a quarter of the world’s population, it is endowed with disproportionately less arable land, oil and water.
Such natural resources are vital to any nation’s ability to be self-sufficient, but China’s predicament is especially dire not only because of its large population, but also its rapid urbanization and climate change, both of which will exert more intensive demands on food, energy and water supply. Yet, other than recognizing that water is essential for agriculture, the discussion of each resource constraint is often conducted in isolation, without paying heed to the inter-linkages of food, energy and water systems.
The Example of the Yangtze River
China’s Yangtze River (pictured right) is the third longest in the world and stretches over 6,000 kilometers from the Qinghai Plateau in the west towards the East China Sea at Shanghai. Throughout China’s history, it has played a central role culturally, socially, and economically. It is the unofficial dividing line between China’s north and south, flows through deep gorges in Yunnan Province that have been designated as a UNESCO World Heritage Site, and serves as the lifeblood upon which much of China’s agricultural and industrial activity has depended on to the present day. All told, the Yangtze River system produces 40 percent of the nation’s grain, a third of its cotton, 48 percent of its freshwater fish and 40 percent of its total industrial output value.
The Yangtze has now become a victim of its own success. With China’s rapid economic industrialization over the past three decades, the Yangtze has evolved from a source of life and prosperity to a symptom of the limits of China’s unabated economic pursuits. It has become a depository for 60 percent of the country’s pollution, making it the single largest source of pollution in the Pacific Ocean. The Yangtze is also home to two massive and highly controversial hydraulic projects—the Three Gorges Dam, the world’s largest hydro-electric power facility, and the South-North Water Diversification (SNWD) project (see map illustration below), an unprecedented, multi-decade effort to channel water from the water-rich south to the arid north—each a symptom of a larger ill. The former project points to China’s struggles to maintain energy security and desire to use cleaner sources of energy in a carbon-constrained world, while the latter points to its sheer desperation to address a gross imbalance in the distribution and use of water resources across the Chinese sub-continent.
Neither project comes on the cheap; the Three Gorges Dam bore a price tag of US$30 billion and the SNWD project is projected to cost twice that. Both projects have caused, or will continue to cause, the dislocation of hundreds of thousands of citizens and the significant alteration of landscapes, including the destruction of arable land. Needless to say, both projects have required, or will require, massive inputs of concrete, steel and energy. Together, Three Gorges and SNWD point to a fragile interrelationship between energy, water and food. Beyond the Yangtze, the “food–water–energy trilemma” represents a looming and complex threat to China’s economic stability and national security.
Watergy
Climate change now stands front and center of energy and environmental agendas around the world. In virtually every case, Read the full story
Green Hops: Cold Snap, Renewables Boost, Water Woes
A news round up of energy and environment news in China over the past 4 weeks or so, sans analysis.
Avalanche
Northern China was swept with a harsh cold snap that over northern China over the weekend. Beijing, for its part, experienced its largest snowfall in six decades, a lowest temperatures in four decades (at minus 16 degrees Centigrade!!!). The cold surge has created an unwelcome spike in energy demand at a time where energy demand is already taking on an upward trend as the national economy shows signs of recovering lost ground. The heavy snow has also disrupted food transportation logistics, creating a squeeze in vegetable supply in urban centers and upward pressure on food prices. The only consolation out of this white mess is that Beijing meteorological authorities have publicly acknowledged that climate change may be the cause of such extreme weather events, providing further testimony that the Chinese bureaucracy really “gets it” when it comes to the urgency of the climate issue.
Renewables
The Standing Committee of the National People’s Congress has approved an amendment to the Renewable Energy Law of 2006 that clarifies rules, already in existence in the original 2006 law, that require grid companies to purchase all the power produced by renewable energy generators. Power enterprises refusing to buy power produced by renewable energy generators would be fined up to an amount double that of the economic loss of the renewable energy company. The amended law also clarifies how renewable energy projects will be financed by requiring the government to set up a special fund to be managed by the State Council for renewable energy research, financing of rural clean energy projects, building of independent power systems in remote areas and islands, and building of information networks to exploit renewable energy. A good Chinese piece that elaborates on the nuances of the amendments can be found here. The full text of the amended renewable energy law in Chinese is available here.
The National Development and Reform Commission (NDRC) has released a detailed list of renewable energy projects receiving government subsidies in the first half of 2009.
China has climbed up the wind installation rankings one position surpassing Spain. After adding about 8 GW of installed capacity in 2009, its approximately 20 GW now ranks it third in the world (Chinese only) behind the United States and Germany. Read the full story
Radio Interview on China balancing both shades of Green
I was on Worldfocus radio last night with Rashid Kang of Greenpeace China for a general discussion moderated by Martin Savidge on China’s ambitions to green its economy (the other shade of green). Listen here:
Rashid and I explored the following issues:
- how China is greening rapidly and developing many alternative energy programs — from the world’s most efficient coal power plants to vast wind power fields and solar water heating technology
- implications of China’s growing automobile market
- why nuclear power could be the wrong alternative energy solution for China
- how food security affects China’s alternative energy strategy
- what is potentially, as I called it, “the holy grail of renewables” — energy storage
- and, why there are no climate change skeptics in China, but why China can’t go green overnight
Lesson to budding radio interviewees…always be cognizant of Read the full story
Green Hops: Energy Law & Plan, Big 5 Subsidized, Installed Wind Doubles
Today’s Green Hops, focusing on energy supply, is a continuation
of yesterday’s.
Two important macro-policy documents are in the works. CELB reports that the comprehensive Energy Law may be passed in 2010 (though this Chinese clipping suggests it may be as early as this year), and that the 12th Five-Year Plan for Energy (2011-2015) is in draft mode. Nuclear, wind and hydro seem to bet the alternative energy sources of choice. This alternative energy review by China Daily, in its “Mixed Energy Forecast” seems to similarly suggest the short shrift given to solar. How unimaginative. I’m sure the solar industry would have something to say about that. In fact, it has (see solar section below).
Before turning to the knitty-gritty of the green and brown energy news developments over the past weeks, I would like to highlight a sage piece of advice from CELB, that recognizes that China is still in many ways, but especially economic development, very much a “Rule by Plan” rather than “Rule of Law” society: Read the full story
Watergy: China's Looming National Security Crisis
China is not going to solve its energy problem if it does not solve is water problem (see previous post on “China’s Water Torture“). It is as simple as that.
The fact is, the exploitation of just about every energy resource (including renewables, but especially fossil fuel) requires water. Conversely, the purification of water for drinking requires energy, and some purification methods, such as desalination, require a lot of it.
Click to enlarge. Source: “Energy Demands on Water Resources” a December 2006 report by the Sandia National Labs to the U.S. Congress on the interdependency of water and energy that remains the definitive report on the topic.
In energy resource and water scarce China, the energy-water nexus, or watergy, is a twin threat. Power production in China has to compete with agriculture, industries, and environmental flows for an already scarce resource. China relies heavily on coal for electricity, is pushing hydro power and nuclear as major alternative sources of energy. Coal-to-liquids (CTL or coal liquefaction) has also been cited as a way to reduce China’s dependence on oil imports. According to the Pacific Institute, there have been Read the full story
JUCCCE Clean Energy Forum--Closing Summary
The following is the complete transcript, modified and supplemented for completeness and readability, of 
the closing speech that the author of this blog (pictured below) delivered on November 11 at the JUCCCE Clean Energy Forum in Beijing.
We are at war. A world war. But unlike World War I or II, this is not a war about military tanks, but it’s a war about gas tanks. This is not a war about military strength, it’s a war about political strength, and innovation. This is not a war about conquering territories, its about conquering our addiction to fossil fuels. And unlike the first two wars, we are all fighting from the same side. We are engaged in a global energy and climate war. We have essentially, through our reckless consumption of the earth’s natural resources, provoked an unanticipated response in the world’s climatic system. We have essentially pitted Mother Nature against Mother Nature, and we are all caught in the middle.
So what now?
We need a serious restructuring of the way we organize our energy system, implement new rules and policies, and adopt new ways of using energy. We need to, as Rob Watson says, change transform “ego-nomics” into “eco-nomics,” and we do this by appropriate adapting human laws to the immutable laws of nature.
So how do we get there? How do we achieve the innovation to meet the energy-climate challenge? We need an smart and well informed mix of regulatory and market mechanisms. There is no single silver bullet, but I believe that over the past two days of discourse, we have collectively started forming a framework for the array of solutions, a full complement of many green bullets to get the green revolution under way. I see three themes emerging from our discussions: Read the full story
Green Hops: Walmart, Geely, Smart Grid
Climate Social Responsibility. At its firs global supply-chain summit in Beijing, Walmart, the world’s largest retailer, launched an ambitious program dubbed the “Global Sourcing Responsibility Initiative” that will require its Chinese suppliers (which may number up to 20,000 according to China Daily) to abide to potentially costly energy efficiency targets, to be verified by third party audits, among other environmental and social goals. The program will be expanded worldwide by 2011.
A new report by the Carbon Disclosure Project suggests that major Chinese companies lag far behind their foreign counterparts in carbon-risk awareness and carbon reporting. But China Mobile (the world’s biggest wireless operator with 420 million subscribers), Broad Air Conditioning (the world’s leading manufacturer of low-energy air-conditioning units) and Suntech (the world’s third largest solar energy company) are not among these companies as they have just joined the Climate Group’s global climate coalition. As members to this coalition, the three companies will make ambitious emissions reduction commitments beyond what is currently required by law. China Mobile, for instance, has set itself the target of reducing its energy intensity by 40%, double the national target, reports The Guardian.
Auto & Transportation. Geely, China’s first independent auto maker, is looking to follow BYD Auto’s footsteps to export its electric vehicles (EV) technology. Read the full story
Green Hops: BYD Auto, Algae, Green Bricks
BYD Auto/ Warren Buffet Update. Seems like the investment of Warren Buffet’s MidAmerican Energy Holdings in Shezhen-based BYD Auto is not just a bet on electric vehicles, but also on the collaboration between MidAmerican and BYD to develop “rapid charge batteries” for electrical grid systems to serve as energy storage for renewable but intermittent power such as wind and solar, revealed MidAmerican’s chairman, David Sokal, at a press conference earlier this week in Hong Kong. (I have argued before in my solar blog how grid-tied energy storage solutions are the key to a clean electricity revolution.) Elsewhere, it appears more definitive that BYD’s entry into the Israeli market will be facilitated by Clal Industries and Investments, a unit of conglomerate IDB Development. Clal will start importing BYD’s electric vehicles into Israel next year. Such developments have apparently caught the eyes of Portland’s city officials, who are trying to woo BYD to start make America’s greenest city its North American hub.
Post-Olympic Traffic Measures Draw Mixed Reactions. As smog re-envelopes Beijing, the capital is reinstating a modified set of traffic measures to curb the growth of auto emissions that will, among other things, ban corporate and private cars from taking to the roads one day per week depending on their license plate number. Xinhua reports mixed reception to the measures, with some contemplating purchasing a second car, and others more astutely observing that “to ban should not be the ultimate way to ease Beijing’s traffic woes… Read the full story
China Clean Energy: Biodiesel Done Right
In the wake of the looming food crisis, biofuels are becoming more and more suspect as a sustainable long term substitute for oil, and in fact, are viewed as one of the chief culprits in the soaring prices of corn, soybean and other agricultural commodities that are feedstock to biofuels production. The diverted demand of such agro commodities to biofuel production has so interfered with agro production for food that the Chinese government enacted a ban on the production of grain-based biofuels.
China Clean Energy or CCC (OTCBB: CCGY), a producer of biodiesel (which is the focus of this post) and specialty chemicals (green chemistry is a ripe topic for a future post!) based in the city of Fuqing in the southeastern province of Fujian, seeks to produce biofuels in a smarter way. Embracing the concepts of “waste-equals-food“, “cradle-to-cradle”, and the “circular economy”, CCC is collecting waste vegetable oil, specifically cottonseed and rapeseed oil and turning them into biodiesel. These feedstock are much more inexpensive than their non-waste versions (i.e. raw cottonseed and rapeseed) because they are not perceived as useful inputs.
Gary Zhao, the CFO of CCC, explained how waste rapeseed oil is used in an exclusive interview with The Green Leap Forward:
Rapeseed oil is typically produced by pressing the fibers of the rapeseed. After the rapeseed has been pressed, there is still some oil left in the residual fibers that are typically discarded In fact some 10% of the oil is still left and it is rich in fatty acid. Through a chemical process, we are able to extract this remaining oil and convert it to biodiesel. As for the leftover fibers, that can further process it to be used as boiler fuel or animal feed.
By using “waste” feedstock instead of raw grains, CCC is able to indirectly continue to use waste grain feedstock which is otherwise prohibited and at much reduced prices as the raw grains (see story on soaring grain prices here), but more importantly, harness a previously untapped source of energy that would otherwise be discarded as waste.
CCC currently has a biodiesel production capacity of 11,000 tons per year, but it has just received US$15 million in financing for a significant expansion that will bring production to 100,000 tons per year by the beginning of 2009. CCC’s biodiesel market is distinctively local in nature. Zhao explained: “Unlike the US or Europe, there is no mandate for biofuel production in China, so the costs of transporting the fuel over long distances do not make [economic] sense.”
Transportation doesn’t make ecological sense either. In fact, one of the biggest criticisms of biodiesel (and other biofuels) is whether the net energy balance of biodiesel is positive or not. In other words, critics have charged that the amount of energy produced by biodiesel is less than, or barely exceeds the amount of energy needed to make biodiesel (including an accounting of the energy needed to harvest the grain through mechanized farm tools and transportation of such grain at various stages of its production cycle).
Biofuel production has also been heavily criticised for diverting away valuable food resources. Such criticisms target the conventional raw grain-based mechanized harvesting biofuel production seen in the US or Europe. The CCC process is distinctive for relying on non-food fuel sources and by focusing on local markets, both in terms of it supply of feedstock and its biodiesel end-customers, thereby substantially reducing energy needs and improving the energy payoff of its products.
Using waste as inputs also contributes to a dramatic improvement in the economics of biofuels production. One of the key insights (see #3 in link) gained by an venture capitalist, Michael Butler of Cascadia Capital, is that:
Waste or waste byproducts are the most sensible alternative-fuel inputs: There’s far less pricing pressure associated with sludge or algae versus corn as long as proven technologies are harnessed. And we’ve also seen that efficiencies soar off the charts if the right waste products are used as feedstock.
Perhaps, then it should come as no surprise that CCC is already operating profitably after only a two years of being in the biodiesel game.
CCC’s medium to long term plans to build biodiesel processing plants in Xinjiang and Hebei are again driven by its business model of “localization”; those two provinces happen to be the top producers of cottonseed in China. Being close to the source of cottonseed leavings will limit transportation and energy needs and also create new markets for its products outside of Fujian.
Zhao thoughtfully addressed concerns of limited availability of feedstock. Taking waste vegetable oil as an example, he explained:
The average Chinese consumes 16 kg/year of vegetable oil. That is roughly 20 million tons/year for all of China. If only 10% of such “ditch” [waste] oil can be recycled, we are looking at an availability of 2 million tons/year. Right now, we only produce 11,000 tons/year of biodiesel.
Zhao pointed out further that CCC entertains the possibility of diversifying further to other waste feedstock, thereby increasing its potential supply base.
“China is already the world’s largest importer of grain based products,” Zhao accounted, “and as the standard of living of China increases, consumption of pork, beef and chicken will increase… all these animals require grain.”
“We will never use food-based feedstock. We don’t believe in it.”
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