05.2.06 | 13:28 By Joel Bainerman The million-barrel question energy experts are asking is, how will China meet its spiraling demand for energy in the decades to come. And, how can China be helped to fulfill its energy needs without polluting the world.
And, how will the decisions of the Chinese government affect the global supply of energy? What geopolitical ramifications will these choices have?
According to a Rand Corporation report, by 2020 China will import 60% of its oil supply and 30% of its natural gas. Energy consumption in China is projected to grow by 4.3% through the end of this decade. Broken down by fuel, current renewable power usage constitutes only 3%, compared to 64.5% for coal, 24.5% for oil and 3.1% for natural gas.
The largest future growth in terms of fuel shares in the future is expected to be natural gas due largely to environmental concerns. The largest increase in absolute terms is likely to be coal.
Battle of the titans over the Middle East
To deal with the challenge of securing enough energy sources to fuel its growing economy, China has created a powerful new agency to oversee the country's energy security amid booming demand for power and surging oil imports. The National Development and Reform Commission is in the midst of preparations for a State Energy Office. The State Energy Office will oversee an energy industry with assets of more than $1.2 trillion.
In the long run, there may not be a place for both China and the U.S. in the world's oil market. The amount of available energy sources from hydrocarbons will not be able to sustain the needs of both superpowers.
If these two large energy consumers clash over the issue of access to world energy resources, it will force China to be more and more involved in the Middle East, and eventually the two superpowers will face each other on the battlefield. The prize would be access to Middle East oil.
According to energy expert Dr. Gal Luft, founder of the Institute for the Analysis of Global Security in Washington, China should do everything it can to avoid making the mistakes the U.S. has made: it invested too much money in oil infrastructure.
"China is in a relatively good position, because it's not over-invested in oil," says Dr. Gal. "It's still making its first steps into industrialization, and it can leap-frog oil and move directly to the next sources of energy, instead of becoming dependent like the United States."
Helping China meet her energy needs
Another major issue is what other countries can do to help China convert a significant portion of its energy needs to renewable sources.
It is in the U.S. interest to share its advances in green energy technology with China, argues Tom Mast, author of Over a Barrel: A Simple Guide to the Oil Shortage. Otherwise, China may continue to build giant coal-fired power plants that pollute the world.
"I'm in favor of nuclear power for China, but most of the oil is used for transportation, not for power generation," Dr Luft points out. "The only way you can use nuclear power for transportation is if you move into electric vehicles and use electricity generated from nuclear power for the cars. I think that for China electric cars would be a very good solution, if they could get people to use electric cars and re-charge their cars overnight, when there is a low demand for electricity, then they will not have to increase capacity; they can use existing capacity; and it also will clean the air."
Dr. Gal points out that 80% of China is rural agricultural communities that produce rice. They produce a lot of agricultural waste - biomass - and they burn it. They burn the rice husks in the fields and that creates pollution.
"With today's technology you can convert that biomass into fuel, and this fuel can run in cars that are called "flexible fuel cars. They are cars that can run on any mixture of gasoline and alcohol. "
Destroying the world
Another source of future energy stocks in China is coal which China has an abundance of. China can use coal to produce methanol, to produce next-generation fuels from its coal.
"There are a lot things China can do based on its domestic resources, so it doesn't have to import as much oil," claims Dr. Gal. "That requires an understanding that if they go down this path of buying more and more oil, that will bring a catastrophe to the world. China needs to invest heavily in these types of alternative energy sources to provide for its future needs.
"I think in principle you have to look at what you can produce at home before you go and buy from other countries," he points out. "The important thing to remember is there are more ways of moving people from one place to another, and you don't want to be in the situation that the entire society relies on one fuel?
He says the most important strategy for emerging large energy producers like China is to create choice, and the way to energy security is to create choice. To create choice, more fuels and technologies to produce those fuels need to be brought into the market.
He adds: "It is in the interests of the US and the rest of the energy-consuming world to provide China with the technology to develop alternative energy in order to avoid an all out war between the world's superpowers for control over whatever traditional sources of energy supplies remain on the planet."
Joel Bainerman is the publisher of The Other Side, a multi-lingual, electronic newsmagazine: www.theotherside.org.uk.
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