Energy Efficiency Indicators: China v Nigeria

 

1.      Introduction

Measuring the energy efficiency indicator of any given nation is very important because it aids the understanding of how the country can be able to source energy required to power its economy, and how it can effectively as well as efficiently utilize these energy sources in order to reduce cost associated with poor utilization. As Patterson (1996) noted, there are at least four types of energy efficiency indicators that can be used to measure how energy is efficiently utilized and they are:

1.      Thermodynamic indicator

2.      Physical-thermodynamic indicator,

3.      Economic-thermodynamic indicator

4.      Economic indicator (Patterson 1996; Ang and Zhang 2000).

Past researchers (such as Sun, 1998); Sun and Ang, 2000; Worrell et al., 1997) have identified Physical-thermodynamic indicator and Economic-thermodynamic indicator. Thus, these two popular measures will be adopted in this research.

2.      Two geographical regions with high growth of energy demand

With the increased level of competition, and high rise in economic power of developing nations, it is easy to identify two countries with such feature and the countries utilized for this study are:

1.      China (Asia)

2.      Nigeria (Africa)

 

 

 

3.      An analysis of the energy sources in the identified countries

3.1.Energy sources in China

China’s spectacular economic growth has fuelled its energy demand and projects are that such demand (together with the economic growth) will continue to grow up to 2020 (World Bank, 1997). In projection, it is expected that China’s energy consumption will reach 98.3 quadrillion Btu by 2020 and this represents a tremendous growth from its 18 quadrillion Btu experienced in 1980 (IEO, 19999). Majority of China’s energy are sourced from coal, with crude, gas, natural gas, hydrocarbon, and other energy sources representing their major alternatives.

3.2. Energy sources in Nigeria

A summary of Nigeria’s major sources of energy was presented by Sambo (2008) to include hydropower (electricity), crude oil (petroleum and gas), and renewable energy. As the 7^th largest OPEC oil producer, Nigeria has vast oil and gas deposit in the country as well as untapped coal reserves (especially in Enugu State).

4.      Energy efficiency indicator

4.1. China – Internal supply vs importation

Domestic resources will not be able to meet the increasing demand for energy in China especially with oil and pas. Although China is relatively reach in energy resources on the absolute bases, the country is actually endowed poorly on the per capital basis. Majority of its energy will be provided by its vast coal reserves into the foreseeable future but long-term equilibrium of supply and demand is highly questionable.

The energy supply situation in China is precarious because the data released by governments are suspected to be over exaggerated in order to attract international investments, while data released by energy companies are suspected to be lowly stated in order to enhance their negotiation with the Chinese government (BP, 1998).

In summary, Nicolas (1997) noted that besides coal, China is highly dependent on importation for other energy sources in order to meet its local demands for energy. However, the country is advancing its coal production system in order to enhance overall output and utilize coals more efficiently. The overall objective is to reduce dependence on importation on energy into the country and improve its energy system in the process.

4.2. Nigeria – Internal supply vs importation

At present, Nigeria doesn’t import any energy. Its local production does meet and exceed its local demand. It is a major exporter of energy into Asia, Europe, America and African continents (Sambo, 2008). As a major OPEC producer, it has vast crude resources to maintain equilibrium between local demand and supply.

However, the electricity system (as a source of energy) is somewhat dilapidated. This increases Nigeria’s local demand for oil and gas (as a source of energy), which will have a rebound economic effect on its economy as it will be export less in order to meet local demand. In the long-run, this can have grievous economic disadvantages to the country. Increased innovation of energy sources also pose a great threat to exportation of energy and economic stability of a Nigerian economy that is built around energy exports.

5.      Conclusion

From the above analysis, it is clear that Nigeria unlike China has higher potential to meet its local demands for energy with local production of energy. However, both economies are directly linked to energy and stability in energy demand and supply will affect stability of both economy. In the case, of China, increase in energy price will bring about higher economic pressure due to its high dependence on energy importation and decline in energy demand will also bring about economic pressure on the Nigerian economy due to its high dependence on energy exportation.

6.      References

Ang, B.W., and Zhang, F.Q., (2000). A survey of index decomposition analysis in energy and environmental studies. Energy 25, 1149–1176.

British Petroleum Company (1998). BP Statistical Review of World Energy, London, p. 4.

International Energy Outlook (IEO99) (1999). “United States Energy Information Administration, “China: An Energy Sector Overview,” Washington, DC: Government Printing Office, p. 141.

Nicolas, B. (1997). “The Oil Industry in China since the Reforms of the Open Door Policy,” China Perspectives, No. 9, p. 24.

Patterson, M.G., (1996). What is energy efficiency? Concepts, indicators and methodological issues. Energy Policy 24 (5), 377–390.

Sambo, A. S., (2008). Paper presented at the “National Workshop on the Participation of State Governments in the Power Sector: Matching Supply with Demand”, 29 July 2008, Ladi Kwali Hall, Sheraton Hotel and Towers, Abuja.

Sun, J.W., (1998). Changes in energy consumption and energy intensity: a complete decomposition model. Energy Economics 20, 85–100.

Sun, J.W., and Ang, B.W., (2000). Some properties of an exact energy decomposition model. Energy 25, 1177–1188.

World Bank, China 2020 (1997). Development Challenges in the New Century, Washington, DC, p. 21.

Worrell, E., Price, L., Martin, N., Farla, J., and Schaeffer, R., (1997). Energy intensity in the iron and steel industry: a comparison of physical and economic indicators'. Energy Policy 25 (7–9), 727–774.