Page 1 of 2 China: Energy superpower
By Michael T Klare
If you want to know which way the global wind is blowing (or the sun shining or
the coal burning), watch China. That's the news for our energy future and for
the future of great-power politics on planet Earth. Washington is already
watching - with anxiety.
Rarely has a simple press interview said more about the global power shifts
taking place in our world. On July 20, the chief economist of the International
Energy Agency (IEA), Fatih Birol, told the Wall Street Journal that China had
overtaken the United States to become the world's number one energy consumer.
One can read this development in many ways: as evidence of China's continuing
industrial prowess, of the lingering recession in the United States, of the
growing popularity of automobiles in China, even of America's superior energy
efficiency as compared to that
of China. All of these observations are valid, but all miss the main point: by
becoming the world's leading energy consumer, China will also become an ever
more dominant international actor and so set the pace in shaping our global
future.
Because energy is tied to so many aspects of the global economy, and because
doubts are growing about the future availability of oil and other vital fuels,
the decisions China makes regarding its energy portfolio will have far-reaching
consequences. As the leading player in the global energy market, China will
significantly determine not only the prices we will be paying for critical
fuels but also the type of energy systems we will come to rely on.
More importantly, China's decisions on energy preferences will largely
determine whether China and the United States can avoid becoming embroiled in a
global struggle over imported oil and whether the world will escape
catastrophic climate change.
How to rise to global preeminence
You can't really appreciate the significance of China's new-found energy
prominence if you don't first grasp the role of energy in America's rise to
global preeminence.
That the northeastern region of the young United States was richly endowed with
waterpower and coal deposits was critical to the country's early
industrialization as well as to the North's eventual victory in the Civil War.
It was the discovery of oil in western Pennsylvania in 1859, however, that
would turn the US into the decisive actor on the global stage. Oil extraction
and exports fueled American prosperity in the early twentieth century - a time
when the country was the planet's leading producer - while nurturing the rise
of its giant corporations.
It should never be forgotten that the world's first great transnational
corporation - John D Rockefeller's Standard Oil Company - was founded on the
exploitation and export of American petroleum. Anti-trust legislation would
break up Standard Oil in 1911, but two of its largest descendants, Standard Oil
of New York and Standard Oil of New Jersey, were later fused into what is now
the world's wealthiest publicly traded enterprise, ExxonMobil. Another
descendant, Standard Oil of California, became Chevron - today, the
third-richest American corporation.
Oil also played a key role in the rise of the United States as the world's
preeminent military power. This country supplied most of the oil consumed by
Allied forces in both World War I and World War II. Among the great powers of
the time, the US alone was self-sufficient in oil, which meant it could deploy
massive armies to Europe and Asia and overpower the well-equipped (but
oil-starved) German and Japanese militaries. Few realize this today, but for
the architects of America's victory in World War II, including president
Franklin D Roosevelt, it was the nation's superior endowment of petroleum, not
the atom bomb, that proved decisive.
Having created an economy and military establishment based on oil, American
leaders were compelled to employ ever-more costly and desperate measures to
ensure that both always had an adequate supply of energy. After World War II,
with domestic reserves already beginning to shrink, a succession of presidents
fashioned a global strategy based on ensuring American access to overseas
petroleum.
As a start, Saudi Arabia and the other Persian Gulf kingdoms were chosen to
serve as overseas "filling stations" for US refiners and military forces.
American oil companies, especially the descendants of Standard Oil, were aided
and abetted in establishing a major presence in these countries. To a
considerable extent, in fact, the great postwar strategic pronouncements - the
Truman Doctrine, the Eisenhower Doctrine, the Nixon Doctrine, and especially
the Carter Doctrine - were all tied to the protection of these "filling
stations".
Today, too, oil plays a critical role in Washington's global plans and actions.
The Department of State, for example, still maintains an elaborate, costly, and
deeply entrenched military capability in the Persian Gulf to ensure the
"safety" and "security" of oil exports from the region. It has also extended
its military reach to such key oil-producing regions as the Caspian Sea basin
and western Africa. The need to retain friendly ties and military relationships
with key suppliers like Kuwait, Nigeria, and Saudi Arabia continues to dominate
US foreign policy. Similarly, in a warming world, a growing American interest
in the melting Arctic is being propelled by a desire to exploit the polar
region's untapped hydrocarbon reserves.
Planet coal?
The fact that China has now overtaken the United States as the world's leading
energy consumer is bound to radically alter its global policies, just as energy
predominance once did America's. No doubt this will, in turn, alter the course
of Sino-American relations, not to speak of world affairs. With the American
experience in mind, what can we expect from China?
As a start, no one reading newspaper business pages could have any doubt that
Chinese leaders view energy as a - possibly the - major concern of the country
and have been devoting substantial resources and planning to the procurement of
adequate future supplies. In addressing this task, those leaders face two
fundamental challenges: securing sufficient energy to meet ever-rising demand
and deciding which fuels to rely on in satisfying these requirements. How China
responds to these challenges will have striking implications on the global
stage.
According to the most recent projections from the US Department of Energy
(DoE), Chinese energy consumption will grow by 133% between 2007 and 2035 -
from, that is, 78 quadrillion to 182 quadrillion British thermal units (BTUs).
Think about it this way: the 104 quadrillion BTUs that China will somehow have
to add to its energy supply over the next quarter-century equals the total
energy consumption of Europe and the Middle East in 2007. Finding and funneling
so much oil, natural gas, and other fuels to China is undoubtedly going to be
the single greatest economic and industrial challenge facing Beijing - and in
that challenge lays the possibility of real friction and conflict.
Although most of the country's energy funds are still expended domestically,
what it spends on imported fuels (oil, coal, natural gas, and uranium) and
energy equipment (oil refineries, power plants, and nuclear reactors) will
significantly determine the global price of these items - a role that, until
now, has been largely filled by the United States. More important, however,
will be the decisions China makes about the types of energy it will come to
rely on.
If Chinese leaders were to follow their natural inclinations, they would
undoubtedly avoid relying on imported fuels altogether, given how vulnerable
foreign-energy dependence can make a country to overseas supply disruptions or,
in China's case, a possible US naval blockade (in the event, say, of a
prolonged conflict over Taiwan). Li Junfeng, a senior Chinese energy official,
was recently quoted as saying, "Energy supply should be where you can plant
your foot on it" - that is, from domestic sources.
China does possess one kind of fuel in abundance: coal. According to the most
recent DoE projections, coal will make up an estimated 62% of China's net
energy supply in 2035, only slightly less than at present. A heavy reliance on
coal, however, will exacerbate the country's environmental problems, dragging
down its economy as health-care costs mount. In addition, thanks to coal, China
is now the world's leading emitter of climate-altering carbon dioxide.
According to the DoE, China's share of global carbon-dioxide emissions will
jump from 19.6% in 2005, when it barely trailed the US at 21.1%, to 31.4% in
2035, when it will tower over all other countries in net emissions.
As long as Beijing refuses to significantly reduce its reliance on coal, ignore
its rhetoric on global-warming negotiations. It simply won't be able to take
truly meaningful steps to address climate change. In this way, too, it will
alter the face of the planet.
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