China’s Future Oil Demand for Road Transportation

James CoanResearch Associate

Energy ForumBaker Institute for Public

PolicyRice University

October 11, 2011

Co-authors:

Ronald SoligoProfessor of Economics

Rice University

Kenneth B. Medlock III

James A. Baker, III, and Susan G. Baker Fellow in

Energy and Resource Economics

Rice University

• Projection of How Much an Average Light-duty Vehicle Will be Driven in China

• Projection of Road Freight (usually Medium/Heavy Truck) Oil Use in China

• Next steps Toward Projecting Total Road Transportation Oil Use

Overview of Presentation

Light Duty Vehicles: Vehicle Use Often Matters More than Light-Duty Vehicle

Stocks

Light-Duty Vehicle Stocks Per Capita

Light-Duty Vehicle Use Per Capita

Source: Millard-Ball, Adam and Lee Schipper. 2010. “Are We Reaching Peak Travel? Trends in Passenger Transport in Eight Industrialized Countries.” http://www.geog.mcgill.ca/faculty/millard-ball/Millard-Ball_Schipper_Peak_Travel_preprint.pdf.

50% 200%

• Vehicle stocks only account for 1/3 of the difference in vehicle use between U.S. and Japan.

Light Duty Vehicles: Vehicle Use Very Different in

Japan, Western Europe and North America

Light-Duty Vehicle Stocks Per Capita

Light-Duty Vehicle Use Per Capita

Canada

• Canada, Western Europe, and Japan have roughly the same number of light-duty vehicles/capita, but each vehicle is driven about twice as much in Canada and 50-75% more in Europe than in Japan.

Canada,Western Europe,Japan

Japan

~100%

Source: Millard-Ball, Adam and Lee Schipper. 2010. “Are We Reaching Peak Travel? Trends in Passenger Transport in Eight Industrialized Countries.” http://www.geog.mcgill.ca/faculty/millard-ball/Millard-Ball_Schipper_Peak_Travel_preprint.pdf.

Western Europe

By Comparing Density, China Seems More Like Western Europe or Japan than North America

Sources: Demographia. 2011. “Demographica World Urban Areas (World Agglomeations).” 7th Annual Edition. April. http://www.demographia.com/db-worldua.pdf. Angel, Shlomo et al. 2011. “Making Room for a Planet of Cities.” Lincoln Institute of Land Policy. https://www.lincolninst.edu/pubs/dl/1880_1195_Angel%20PFR%20final.pdf.

China in 2020: Density of between 4,770-5,850 people per km2

China in 2035: Density of between 3,420-4,870 people per km2

This analysis takes into account findings from Angel et al. (2011) that doubling GDP/capita leads to a density decline of 25-40%, while a doubling of the population size of a city increases density by 16-19%.

Comparing Rail Modal Share China Appears to be Headed on a Path More Like Western Europe than Japan

Sources: UK Department of Transport, Energy Data Modelling Center (Japan), China Statistical Yearbook, Penn World Tables

If Extensive Rail Investment Continues/Accelerates, China May be More Like Japan

Source: International Transport Forum. http://www.internationaltransportforum.org/statistics/index.html.

United Kingdom

Korea Germany China France Australia United States Canada Japan0

0.1

0.2

0.3

0.4

0.5

0.6

Average Rail Infrastructure Investment as Proportion of Land Transportation (Rail and Road) Investment,

+/- One SD, 1992-2009

Projecting How Much an Average Light-Duty Vehicle Will be Driven in China

Sources :UK Department of Transport, Energy Data Modelling Center (Japan)Note: This assumes GDP/capita of in 2005$ PPP, using Penn World Tables as baseline and growth projections from IEA

2020 (GDP ~$15,000 /

capita)

2035 (GDP ~$26,500 /

capita)If like Japan: <11,000 km/vehicle

If like the UK: <14,000 km/vehicle

If like Japan: <9,500 km/vehicle

If like the UK: <15,500 km/vehicle (est.)

2020

2035

At $15,000 GDP/capita, each vehicle was driven about 25-30 percent more in the UK than Japan, and this increased to 50-60 percent at $26,500/capita.

Moving Freight in China Could be a Significant Consumer of Oil

Source: Schipper, L., Scholl, L., Price, L.,1997 ENERGY USE AND CARBON EMISSIONS FROM FREIGHT IN 10 INDUSTRIALIZED COUNTRIES: AN ANALYSIS OF TRENDS FROM 1973 TO 1992; Kamakaté and Schipper 2009.

Trucking Freight Oil Intensity

Oil Use in 2020 (million b/d)

Oil Use in 2035 (million b/d)

Lowest (110,000 bbl/ trillion 2005$)

2.3 4.1

Middle (170,000 bbl/ trillion 2005$)

3.6 6.4

Highest (310,000 bbl/ trillion 2005$)

6.5 11.7

Relationship Between Freight Ton-Kms and Oil Use

Sources: L. Schipper, L. Scholl, and L. Price, “Energy Use and Carbon Emissions From Freight in 10 Industrialized Countries: An Analysis of Trends from 1973 TO 1992,” Transportation Research Part D: Transport and Environment 2, no. 1 (1997): 57-76. F. Kamakaté and L. Schipper, “Trends in Truck Freight Energy Use and Carbon Emissions in Selected OECD Countries from 1973 to 2005,” Energy Policy 37 (2009): 3743-51.

China Is Very Intensive in Terms of Freight Ton-Kms per Unit GDP, and Intensity May Increase Further

Sources: Eurostat, China Statistical Yearbook

China’s ton-kms per unit GDP is higher than any other country we’ve found, twice as high as the U.S. and four times higher than Western Europe.

Given the relationship between ton-kms and oil use, China should be using about 340,000 b/d per trillion GDP, twice the average .

Yet China’s oil use seems fairly average at this point close to 170,000 b/d. Chin

a 2009

Freight Ton-Kms per Dollar of GDP in Eastern European

Countries High but Still Lower than China

China2008

Factors Influencing Future Chinese Trucking Freight Ton-Kms

Factors That May Increase Freight Oil Use in the Future: • Current overloading of trucks may be controlled• Initiatives to move production toward western China • No clear push to regulate fuel efficiency in

medium/heavy trucks

Factors That May Restrict Freight Oil Use in the Future: • Chinese government has a very significant commitment

to rail (120,000 kms by 2015, up from about 86,000 kms in 2009)

• Possibly better logistics and reduced “empty miles”

Conclusions

• Both how light-duty vehicles are driven and oil use from trucking freight deserve our respect – they are sometimes overlooked compared with awe at the hundreds of millions of light-duty vehicles that will be on China’s roads, but they are very important for oil use.

• There is a large range of how light-duty vehicles are driven around the world; Chinese vehicles will likely be driven similar to vehicles in Japan/Western Europe.

• China has a very high level of freight ton-kms for its level of GDP, and even if use is average, oil use will still be 3.6 million b/d in 2020 and 6.4 million b/d in 2035.

Next Steps

In order to fully project oil use from road transportation, we will

• Estimate future vehicle stocks for China (using International Road Federation data with >100 countries)

• Conduct interviews on the future of freight in China

If you would like a copy of the presentation or have questions: jcoan@rice.edu

Light Duty Vehicles: Vehicle Use Per Vehicle Different in Japan, Western

Europe, and U.S./Canada

Source: International Energy Agency, Transport, Energy and CO2: Moving Toward Sustainability (Paris: International Energy Agency, 2009).

U.S., Canada

Japan

Major Western European Countries