Andrew B. Kennedy

Crawford SeminarMay 25, 2010

China’s New Energy Security Debate

1. What is energy security?

2. China’s traditional view

3. New perspectives

4. Implications

Overview

What is Energy Security?

Traditional western view

• IEA’s World Energy Outlook 2007:

“Energy security, broadly defined, means adequate, affordable, and reliable supplies of energy.”

• Typically focused on external dependence (oil imports)

• Frequently has a realpolitik flavor

References to “Energy Security”in The People’s Daily

China’s Traditional View

Similar to traditional western view

• Andrews-Speed et al. (2002), Downs (2004, 2006)

• The problem is growing external dependence

• Preoccupation with oil

• Realpolitik outlook

China’s Import Dependence: Oil and Gas

China’s Traditional View

Supply-side solutions

• “Stand on the domestic”

• Support national oil companies “going out”

• Long-term supply contracts

• Pipelines

• Strategic petroleum reserve

• Naval development and the “string of pearls”

So what’s new?

New Perspectives (1)

Analysts rethinking how to approach external dependence

• Criticism of oil companies

• Criticism of pipeline projects

• Criticism of naval ambitions

• Confidence in international markets and institutions

Is the Chinese government convinced?

• Still wary of international markets

• Limits to engagement with IEA

• But there is concern about the oil companies

New Perspectives (1)

There’s also a more basic challenge to the traditional view

• External dependence is not the problem

• Domestic dysfunction is the problem

– Runaway demand

– Unreliable power supply

– Environmental costs

New Perspectives (2)

China’s Primary Energy Consumption

China’s Energy Supply by Source

Again, is the government convinced?

• Hu Jintao’s “new energy security concept”

• Domestic energy intensity targets

• Energy governance reforms

• An unfinished agenda

New Perspectives (2)

Implications

China’s debate is changing – and this deserves support

• Encourage multilateral approach to external dependence

• Encourage focus on domestic problems

• How to do it?

Implications

Encourage multilateral approach to external dependence

• The IEA needs China if it is to remain relevant

• OECD membership problem?

• China’s hesitation

• Prospects for change

Implications

Encourage focus on domestic problems

• A difficult challenge

• Weak institutions

• External support for domestic reform

• And set a better example!

Thank You

Additional Slides

China’s Traditional View

Maritime transport and strategic passageways for energy resources have already become lifelines for the development of the national economy and society. Particularly for oil and other key strategic supplies, our dependence on sea transport is very great, and ensuring the security of strategic seaways is extremely important. We must fully recognize the actual requirements of protecting our country’s developmental interests at sea, fully recognize the security threats our country faces at sea, and fully recognize the special status and utility of our navy in preparing for military conflict…

- Yao Wenhuai, Deputy Political Commissar, PLAN, 2007

Compared with the problem of ensuring adequate supply,

the environmental challenges that come from energy consumption are

much more difficult to solve, and the domestic and international pressure

they generate is much greater, and they deserve greater attention.

- Zhao Hongtu, September 2007

Electric power security is the most important energy security problem.

- Zhu Chengzhang, May 2008

New Perspectives (2)

Fossil Fuel CO2 Emissions (1980 - 2030)

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0.5

1

1.5

2

2.5

3

3.5

4

1980 1984 1988 1992 1996 2000 2004 2008 2012 2016 2020 2024 2028

Sources: Oak Ridge National Laboratory; DOE Energy Information Administration.

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Primary Energy Consumption:China vs US