Bloomberg News quotes Sinopec Chairman Fu Chengyu’s prediction on a “little-reported” March 23 conference call that fuel sales will become a non-core activity in as little as a decade, when gasoline sales will peak. That runs counter to the Western consensus, which holds that China’s fuel consumption will anchor world demand growth for the indefinite future. “In the future, fuels will become a non-core business of Sinopec,” the Sinopec chairman reportedly said. “Petroleum or oil and gas will continue to be a major energy source in the future, but they won’t be the only source, more emphasis will be put on our new energy and alternative energies.”
“From 2010 to 2040, transportation energy needs in OECD32 countries are projected to fall about 10 percent while in the rest of the world these needs are expected to double. China and India will together account for about half of the global increase,” Bloomberg quotes a December report by Exxon Mobil. But the Western oil companies haven’t taken into account a planned shift to nuclear and solar energy along with clean coal, in response to pollution as well as energy security concerns. China offers big incentives for solar energy. As new technology brings the cost of solar power closer to that of conventional sources, China can ramp up solar production much faster than Western analysts have anticipated. Residential solar costs already are cheaper than grid power in many markets, Deutsche Bank analysts wrote in March, predicting that solar will be at grid parity in most of the world by 2017. Chinese planners are considering an enormous commitment to solar to replace fossil fuel consumption.
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Categories: Asia Unhedged