#25 event report: Craving for Power: Energy and Security in China


April 30, 2013, Bridge Cafe (Wudaokou)

Speakers: Prof. Dr. Jørgen Delman, Department of Cross-Cultural and Regional Studies (TORS), Copenhagen University
and Mr. DENG Liangchun 邓梁春, Senior Programme Officer, Climate and Energy Programme, WWF China

Presentation from Prof. Dr. Jørgen Delman

Prof. Delman framed his speech as an attempt to discuss climate change vis-a-vis Chinese politics, and especially China’s international politics. The starting point when discussing China’s energy and climate change politics is the fact that China is a country lacking resources.

China is still a predominantly coal-based economy. This is literally visible as all major cities and especially Beijing are experiencing heavy pollution. Coal is major energy resource (68% of all energy in 2010 was from coal), and is followed by other traditional sources of energy such as oil which accounted to 19%, natural gas which accounted for 4.4%. All non fossil sources of energy combined were 8.6% of China’s resource use. This heavy dependence on fossil fuels has effects on environment.

When it comes to energy security in the international context, China’s stance is informed by its claim to the right to crave for power. This by itself poses a very important normative question. China consumes less than half of what the OECD countries use on average. These figures are even lower when broken down per capita. Therefore, China’s perspective is that it should have the right to aspire to spend as much energy as the OECD countries. This is also rooted in the logic that drives the debate in China and other areas on the right to pursue development.

China has noted an extremely high growth in terms of its share of energy consumption on a global level, as well as CO2 emission in the past two decades. China used to be exporter of oil until the late 1980s, and it was also exporting coal. However, due to the surge in energy use China has turned into a net importer. The outcome of this is that now China’s craving for energy resembles a challenge for the international energy system. China will continue to need ever more coal, gas and especially oil, which are all limited and increasingly costly resources; it also needs uranium for its nuclear sector, but uranium for now is not as concerning. This opens the question of balance and the prospects of other countries, especially the rapidly developing ones.

China’s energy strategy is multi pronged. For one, it will try to be self sufficient to the furthest possible extent. The main challenges for this are to secure cheap, adequate/stable supplies of resources, but also to pursue energy efficiency. Energy efficiency is pursued through investing in renewables, and devising low carbon economy, which also has a strong environmental consideration. Low carbon economy is a whole new model on paper, however it remains to be seen what happens in practice. Overall, China tries to building up its energy reserves that can last longer; it also aims to further diversify its reserves. It aims for long term supply contacts when it comes to energy import. It also invests in exploration and research and development of new resource bases.

A lot of these objectives are regulated with the Five Year plans and other policy measures on medium term. Special emphasis is put on reducing the need for energy, and fixing the unintended consequences regarding climate change. China has noted successful reduction of energy intensity of GDP compared to the rest of the world in the period 1999-2009, mostly due to investment in new technologies.

An important aspect of China’s energy security strategy is its foreign policy aspect. Since 1978, China embraced the role of important actor on the global energy market. This has become ever more important as it became a net importer of oil. A significant portion of its fossil fuels imports, in the first place gas, come through pipelines in neighboring countries, primarily Russia and Central Asia, as well as a new one from Myanmar to be opened soon. The pipelines themselves carry low to medium level risk. However, a higher risk is posed by the import of oil. By 2035 China will need to import more than 80% of its oil reserves from outside sources. Currently China imports oil from Iran, Angola, Russia, Oman, Brazil, Venezuela among others – however, they aim to diversify their suppliers, especially when it comes to areas that might experience potential political instabilities that can put the energy deals into jeopardy.

China’s strategy regarding its international procurement of oil is based on several priorities: building up strategic reserves, more trade and diversification away from politically unstable areas, pursuit of unconventional oil, crafting oil for credit/gas for credit arrangements, investing in foreign energy companies, extending the pipelines in its neighborhood, seek new resources in areas not previously targeted (Latin America and the Arctic). In this sense, politics and business join forces by offering attractive packets to partners and suppliers. Some of the issues are its oil transport chain and the questionable security around the Mallaca Strait, as well as the transport in a tense and militarized South China Sea and the East China Sea. Aside from political instabilities, there are threats from piracy at open sea, terrorism, blockades, as well as geopolitical tug-of-war primarily with the US.

In conclusion, Delman summed up the major challenges for China’s energy security strategy. First, it is shift towards a low carbon economy using non-fossil fuels. Second, there are the risks regarding fossil fuels, in the first place oil. In terms of international politics, there is an ongoing contention by the West, while all of that happens in an area very vaguely and loosely regulated. The main rules of energy politics are first-come-first-serve or best bidder gets the deal, and it seems that China learned those rules pretty quick. It is also a challenge to maintain low energy prices at home, which opens a conceptual gap (a state-controlled approach against market orientation).

Presentation from Mr. DENG Liangchun

Deng’s speech was focused on the role of renewable energy. He opened his discussion with an emphasis of China’s so called “national development mandate” – a norm established 3 decades ago by Deng Xiaoping, with 2050 serving as a benchmark. The “national development mandate” refers primarily to increasing the per capita GDP – and in this sense, there is still quite a long road ahead. The mandate for development informs the utmost governance priorities and overrides everything else.

One key challenge for China’s energy security strategy is overcoming the dependency on coal. Coal is still regarded as number one energy source, which is indicated by the infamous 70% figure (previously cited by Delman). China does have a plan to decrease its coal usage, due to safety and environment issues.

Second, an important challenge is the geographic distribution of resources within China, which Deng sees as unfavorable. The resources are scattered on the north and the west of the country, while the main industries and the most populated areas are in the east. The transport and the development of infrastructure (such as electric power networks) are a major source of trouble for the authorities. Therefore, after the accession to the WTO, along with the spike in usage of energy, investment into infrastructure and linking the various parts of the country together increased as well. The third important challenge is the increasing imbalance between supply and demand. It is the fast economic growth and the growing (and more expenditure oriented) middle class that make things much more complicated. Fourth, there is low level of technology in terms of efficiency and emission control of greenhouse gas emission and other pollutants.

While there are national targets (some of them already met) in terms of dealing with these challenges, there are some structural problems of the centrally planned economy that prevail. Institutional problems are omnipresent, as there is lagging coordination between various actors/ministries. Constant reorganization, as seen is the latest government reshuffle and integration of the national energy administration supports this point. Moreover, there is little coordination with other ministries that have a role in this process, such as the one of land and resources (responsible for coal reserves, gas, oil); environmental protection (environmental aspect) and so on.

Another aspect of the issue is something that has been discussed very rarely, and that is the politics of energy. While there is one party, and a central regultion/plan, there are different forces driving the policy agenda. This depends largely on who has direct access to the Central Committee of CCP, its Politburo and the Politburo Standing Committee. The heads of big energy SEOs are better represented, which is not true of other actors who might have divergent agendas (such as the environment ones). Therefore, fossil fuel industries have significant political support, which is not good news for conservation orgs like WWF.

A particular concern for Deng are the great imbalances between supply and demand as well as short term supply and long term sustainability. In the time of financial crisis and its aftermath the Chinese government undertook drastic measures to boost economy, primarily through investment into infrastructure, which led to a even higher consumption. The government is trying to make an all-winning situation where everyone benefits and especially alleviate the life of the disenfrenchised, but the reality is that the richer get more from subsidies instead. At the same time, there is no difference in the charges for rural and urban areas, although the disparity in the wealth and development between the two is more than obvious.

The international implications of this are that other developing states, with growing energy demand follow the example of China. This results with growing competition in the energy market, and if the supply cannot be increased, it will be even more competitive. China seeks to find mechanisms to fit in the global governance framework, but its domestic policy dictates different pace.

Shortages of energy supply always happen. Often, in order to meet green standards, the government resorts to shutting down energy intensive industries, which has its own economic costs. In terms of the societal awareness, it is interesting to see how the middle class pay most attention to the problem of intensive energy use – but then the same middle class contributes a lot to the perpetuation of the problem.

The debate renewable energy is very lively in China. Internationally speaking there is the so called climate change mandate – the aim to reduce GHG emission, reduce the average temperature, and so on – this means some fossil fuels must remain untouched, which is posing a challenge to China. So that is why they need to invest in renewables.

However, nowadays is not the best time to advocate investment in renewables, as there was a recent case of bankruptcy (Suntech, China’s leading manufacturer of solar cells and panels). Annual subsidies for renewables are not as high as assumed, they focus too much on the supply side, and on the international market on the expense of domestic one. According to Deng, what is really needed for the top leadership is a full cost analysis, including the social perspective, compare every energy development options and then proceed with policy measures.


The first question concerned with the hypothesis of regime instability in Africa affecting energy (in)security. The question posed the dilemma of who is the source of such instability, and provided the examples of Western intervention being an obstacle to Chinese interests in the region. Delman argued that China might pursue of strategy of helping to stabilize regimes.

On the question of how China compares with other developing countries in terms of technology, Deng argued that while China has amazingly large production potential, its technological innovation level is not really advanced – it is still catching up, and needs time, effort and institutional reform to mobilize innovative capacities, also to reconcile with an alternate growth strategy.

Another question was posed regarding studies on how much resources are there left, and of data availability. The spekers argued that while there are numerous studies, even the best of them have limited scope, we surely will have more data in the future, and moreover, what is more costly today might be more accessible tomorrow When it comes to renewables – technical problems are not so important, but what we see from the German experience is that subsidies reduction as in Germany is an outcome of the EU crisis, and similar outcomes should be expected in China. External markets shutting down will inspire opposition from stubborn fossil fuel companies. The there is the question of incentives/subsidies. In China the problem is the lack of incentives of connecting companies with wind farms, as there are incentives only on supply side.

When it comes to the relationship between energy security and conflict scenarios, overall there is a strong preference for diplomatic efforts to military intervention. However, China is a new player in the energy field, while Westerners have been there for a while now, and that is why they have to deal with questionable players such as Iran – yet, soft power is not enough and they will need hard power too. China’s primary focus is its neighborhood, but here it cannot afford to lose the trust, so has to play a subtle game. With regards to Syria and all other warring areas we are yet to see what happens with (non)interventionism before making conclusions.