In both countries, fossil fuels continue to dominate energy production. Renewable energy offers the potential to decrease this dependence, but, except for hydropower and wood, has not yet been heavily exploited in either country.1 Due in large part to its abundance in both countries, coal has played an important role in electricity production and industrial processes, and its combustion has been a major source of air pollution. Coal has been and will continue to be primarily used for power production in the United States and China, but it can also be used to create gaseous and liquid fuels, as well as other feed stocks, and may play a larger role, depending on prices, as an alternative to natural gas and petroleum. Therefore, a primary challenge for both countries is to seek ways to utilize their coal resources in an environmentally acceptable manner. Petroleum accounts for nearly 40 percent of the U.S. primary energy consumption, mostly for liquid fuels in the transportation sector. China’s energy consumption is still dominated by industry (70 percent) and is supplied by coal (69 percent), but petroleum demand has increased rapidly in recent years in tandem with the burgeoning transportation sector (Figure S-1).
Neither country has sufficient domestic petroleum reserves to satisfy current demand; in a business as usual scenario, both countries will be increasingly dependent upon imports. Natural gas has played an important role in the United States, primarily due to environmental concerns; but limited supplies and higher prices have led to renewed interest in coal-fired power plant development. In China, natural gas is not used widely, though China does possess large reserves of natural gas and of coalbed methane (CBM) and is taking steps to develop these energy sources. For both countries, future natural gas consumption will likely rely on advances in liquefied natural gas technologies and trade. Finally, nuclear power, which is the second largest source of electricity in the United States, has been receiving renewed interest, owing to higher energy prices and concerns over CO2 emissions. However, it is still unclear whether or not this sector will expand in the United States, and it still constitutes a small portion of total power production in China.
Energy forecasting has proved challenging in both countries, owing to limited data and inaccurate projections of available resources and consumption. Energy consumption and projection data are also used as the basis for creating emission inventories used in air quality management. Energy security is a primary concern for both countries, and projected increases in fuel imports (notably petroleum) are a primary driver for the United States and China to pursue energy efficiency improvements and fuel substitution strategies. Energy prices have an important impact on decisions regarding fuel consumption. Rising natural gas prices in the United States have led to renewed interest in coal-fired capacity; and, in China,