China power appetite 'wasteful'

China is building too many power stations, the IEA says

China has overtaken Japan as the world's second-largest electricity consumer and could take the top slot from the US, an energy think tank says.

The Paris-based International Energy Agency says that the demand for Chinese goods in the West is creating ever greater power needs in China.

China must face up to the implications of this growth and try to tackle both pollution and waste, the IEA says.

The IEA highlights reform of the power sector as a necessary move.

Polluted cities

"China is wasting too much energy and is a major polluter," the IEA says in a new report.

China relies on oil and coal to power its economic growth, but burning fossil fuels is creating an urban smog problem.

Reforming power generation is fraught with difficulties as any price increase could affect the price of goods sold to the West. The IEA praises China for the reforms it has already implemented, including separating electricity generation from transmission and establishing an independent regulator.

But it warns that despite these steps, there are still too many power plants being built, with China adding as much power generation capacity every two years as the total in France or Canada.

Global implications

The IEA points to competitive power markets as the best way to control soaring energy consumption.

Coal is still king in the Chinese power industry, and despite being a high-pollution source of energy it is mined domestically and any switch away from it could increase global prices.

A shift towards cleaner energy might have an impact on the world economy, with Chinese exports costing more.

"China competes with the US in its demand for energy and pushes up the price of energy," said Roger Nightingale of Millennium Global Investments.

The IEA - set up as a result of the 1970s oil crises - acts as an energy policy adviser for the governments of its 26 member nations and beyond.