China Urged To Change Energy Policies

Oct. 12, 2006: Sunrise over the Tazhong Oilfield in the Taklamakan desert in China's northwest Xinjiang Uyghur Autonomous Region. Photo: AFP/Frederic J. Brown

Western experts are urging China to make basic changes in its energy policies as their impact on world markets and the environment continue to grow.

On Nov. 7, the Paris-based International Energy Agency (IEA) issued its annual World Energy Outlook report, highlighting concerns about worldwide consumption.

The IEA predicts global energy demand will grow 53 percent from 2004-2030, with China alone accounting for 30 percent of growth.

World oil demand is expected to rise by 41 percent, with China responsible for more than one-fourth of the increase. World coal use could climb 60 percent, with China’s share rising from 36 to 46 percent.

The oil industry runs on numbers. People love to have the numbers regarding production and consumption but [China is] not particularly transparent at all.

This increase in energy consumption will have drastic effects on the environment, according to the IEA.

Bigger demand predicted

The study forecasts that carbon-dioxide emissions related to global warming will jump 55 percent during the 25-year period due to energy use, with China accounting for 39 percent of the rise.

The IEA study closely coincides with reports that China has begun filling the first facilities of its new strategic oil reserve.

The newly constructed storage tanks in four locations around the country are meant to give China a cushion in case of an emergency or an interruption of imports.

Unlike Western countries, China has kept its plans for filling the reserves largely secret, leaving the world oil market to guess when China is buying more oil and what effect on prices this will have.

In an interview with Radio Free Asia, Robert Ebel—former chairman and now senior adviser to the energy program at the Washington-based Center for Strategic and International Studies—said China must be “more transparent, particularly in the oil industry.”

“The oil industry runs on numbers,” Ebel said. “People love to have the numbers regarding production and consumption but [China is] not particularly transparent at all.”

Ebel said that the West has supported China’s efforts to build its reserve, but that leaving the world market in the dark about plans for the stockpile may lead to costly miscalculations, even if those reserves are still relatively small.

Philip Andrews-Speed, head of the University of Dundee’s Center for Energy, Petroleum, and Mineral Law and Policy in Edinburgh, Scotland, said that China’s lack of transparency is characteristic of its government.

It also reflects a concern that the “China factor” does affect world prices, Andrews-Speed said.

“There may be two things behind China’s secrecy. One is its conventional secrecy, and two, the fear that if it tells the market exactly what it’s doing, the market may react to push up the price even higher than it is at the moment.”

Chinese reports have attempted to downplay the impact of rising oil imports by stressing that the country meets over 90 percent of its needs with domestic energy sources, thanks largely to its reliance on coal.

But Robert Ebel said that the environmental effects of untreated coal burning make this a costly alternative.

“They need tremendous amounts of coal to generate electricity, because they often run short in the summertime on generating capacity. They’re building new generating plants, but they’re always playing catch-up.”

'An awful lot of coal'

“I think they’re going to produce about 2.2 billion tons of coal this year. That’s an awful lot of coal to burn,” Ebel said.

Philip Andrews-Speed said that China’s growing share of global damage to the environment due to energy demand cannot be minimized.

“I think any optimism that was there in the late 1990s—from the point of view of coal use, energy use, and emissions in China—has now evaporated and has actually turned into stark concern.”

Much of the problem is due to expansionist economic policies and excessive investment which China’s government is now trying to curb, though the effort has so far had only mixed results, Andrews-Speed said.

“If you go back to 2002, [there] was a deliberate effort to promote construction and heavy industry that underpinned this expansion of energy use. And once they tried to rein it in, they found it very difficult.”

Original reporting by Michael Lelyveld. Edited for the Web by Richard Finney.


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