Climate Change and Energy Security: The Case of China

1
Climate Change and Energy SecurityThe Case of
China

• Philip Andrews-Speed
• Centre for Energy, Petroleum and Mineral Law and
  Policy,
• University of Dundee

2
Outline

• Chinas approach to energy security policy
• Chinas approach to climate change within energy
  policy
• Engagement with the EU
• Outlook for Chinas adoption of international or
  EU norms

3
1. Chinas approach to energy security policy
4
Key features of energy security policy approach

• Security of supply is top priority in energy
  policy
• Social equity an important consideration
• Self-reliance and State control
• Maximise domestic production of energy
• Recently has energy conservation become a
  priority
• Commercialisation of energy SOEs,
• Administrative rather than market measures

5
Key features of energy security policy approach

• Energy sector is stranded between the plan and
  the market
• Periodic loss of control over sector
• Discontinuities in pricing
• Behaviour of energy companies
• Periodic energy shortages
• Fragmented policy making
• Serious regulatory deficiencies
• Inconsistent economic incentives

6
Key elements of oil strategy

• Overseas
• Diversify imports
• Maximise crude imports cf product imports
• Long-term contracts/relationships
• Overseas investment production
• Overland import (pipe/rail)
• Overseas refining/inward investment

• Domestic
• Maximise production
• Maximise refining
• Build pipelines
• Ports/shipping
• Build storage
• Vehicle efficiency
• Coal to liquids, biofuels
• BUT
• End-user pricing
• Transport policy

7
The domestic debates

• Economic growth vs energy efficiency
• Administrative vs market approaches (domestic)
• Attitudes to international markets
• The value of overseas investment
• The conduct of overseas investment
• The role of energy in Chinas peaceful rise

8
International engagement

• The new National Energy Agency is charged with
  coordinating international cooperation
• International organisations
• World Bank
• IEA (and OECD) non member
• Energy Charter Treaty non signatory
• World Energy Forum
• Regional ASEAN (3), APEC, SCO

9
2. Chinas approach to climate change within
energy policy
10
Position until late 2006

• In simple terms
• Climate change is a serious problem
• But
• Problem caused by The West
• The West should take the lead in cutting
  emissions
• China (and other developing countries) will focus
  on economic growth
• Therefore
• China would participate in discussions research
• But would make no binding commitments
• Climate change was low on government agenda

11
From 2006 a change of attitude

• Two drivers
• China labelled No.1 emitter of greenhouse gases
• Progressive realisation that there may be a
  convergence between energy efficiency policy and
  climate change policy
• China National Climate Change Program, 2007
• More easily engaged in dialogue
• Green GDP

12
But policy tensions remain

• Domestic
• Economic growth vs climate change
• Local vs central government
• Lack of capacity/skills
• Recent economic stimulus package
• International
• The West bears the main responsibility
• Access to technology

13
3. Engagement with EU
14
Engagement with EU

• Shared interests
• Security of energy supply AND
• Environment (including climate change)
• Energy efficiency
• New and renewable energy
• Complementarities
• EU
• Has technology, skills,
• Needs CERs and markets for technology
• China
• needs technology and skills
• can provide CERS and markets for technologies

15
Engagement with EU

• Longstanding cooperation with Ministry of Science
  Technology
• Mainly technology, though some policy
• Action Plan on Clean Coal
• Action Plan on Industrial Cooperation in Energy
  Efficiency and Renewable Energies
• Strategic Dialogue on Energy and Transport
• EU-China Energy and Environment Programme
• Also nuclear energy

16
Engagement with EU

• EU-China energy-environment cooperation
• Types Policy, Technology, Capacity building
• Fields
• Energy efficiency
• Renewable energy
• Natural gas
• Biofuels
• Hydrogen energy and fuel cells
• Carbon capture and storage
• Clean Development Mechanism
• And its successor?

17
4. Outlook for Chinas adoption of international
or EU norms
18
Adoption of international or EU norms

• Fundamental problem
• International norms in a state of flux
• Problems with market approaches
• Difficulties in driving through climate change
  policies
• Tensions between security of supply and climate
  change policies
• Tensions between domestic and international
  energy policies
• Difficult to claim that EU has the answers (for
  China or anywhere!)

19
Adoption of international norms

• China energy and climate policies
• Likely to be driven mainly be domestic priorities
• Certain international considerations and events
  may trigger changes
• EU influence probably greatest in
• Technology transfer (removing barriers)
• Capacity building
• Benchmarks and standards
• Funding (targeted)
• China reduce barriers to trade investment