China’s Energy Security Fears Slow Climate Drive – Analysis

By Michael Lelyveld

China’s growing concerns over energy security and potential conflicts with the United States may be slowing its efforts to fight climate change, experts and recent reports say.

After more than a decade of rising reliance on imported oil and gas, China’s government has been reluctant to acknowledge the country’s energy security risks.

In a report to the National People’s Congress (NPC) last May, the government’s top planning agency pledged to “ensure energy security” for the first time.

The National Development and Reform Commission (NDRC) promised to “improve our contingency plans in response to major changes in supply and demand at home and abroad.”

In its 2021 version of the plan delivered to the NPC on March 5, the NDRC upgraded the terms of its response incrementally.

“We will promote the development of energy transportation routes. strengthen our energy reserve capacity, and improve transportation services. We will refine energy contingency plans, improve our risk and emergency response capabilities, and strengthen energy security and resilience,” the NDRC said.

The agency promised to “boost oil and gas exploration and development” and “systematically increase our ability to ensure the supply of coal.”

Behind the broad language is a growing concern over China’s vulnerability and “the need for higher oil and gas output as security risks rise along essential maritime trade routes,” the South China Morning Post said.

The paper cited stronger terms in the draft 14th Five-Year Plan for 2021-2025.

“The core demand for oil and gas should rely on self sufficiency. We should maintain the stable production of crude oil and natural gas and increase output,” it said.

But given China’s domestic resources and difficult geology, self-sufficiency in oil and gas is likely to prove unattainable.

Edward Chow, senior fellow for energy security and climate change at the Center for Strategic and International Studies in Washington, said the new plan is unlikely to lessen China’s over-dependence on foreign energy any more than the previous plan did.

“Unless there is a breakthrough in domestic production of oil and gas on the scale of the American shale revolution, domestic supply will not keep pace even with modest growth in demand,” said Chow.

While China’s oil imports climbed 7.3 percent last year, domestic production edged up only 1.6 percent, the National Bureau of Statistics (NBS) reported.

China’s dependence on foreign oil reached 50 percent for the first time in 2008. By last year, it had grown to over 73 percent.

Domestic gas production did somewhat better last year as output rose 9.8 percent while imports increased 5.3 percent.

But as China’s demand for cleaner fuels has grown along with the economy over the past decade, its reliance on foreign gas has followed much the same path as oil, reaching over 42 percent last year.

Politics

China’s energy security concerns appear to be driven more by political tensions than import proportions.

The geopolitical landscape has made energy security a “more worrying and urgent problem,” said Ma Jun, director of the Institute for Public and Environmental Affairs in Beijing, as quoted by the Morning Post.

“Perhaps the government is more alarmed as it sees a more hostile external environment,” Chow said.

Two days of high-level talks between U.S. and Chinese officials in Anchorage, Alaska did little to lessen bilateral tensions or Beijing’s concerns.

After the close of talks on March 19, U.S. Secretary of State Antony J. Blinken said that “we certainly know and knew going in that there are a number of areas where we are fundamentally at odds, … And it’s no surprise that when we raised those issues clearly and directly, we got a defensive response.”

At his press conference on Thursday, President Joseph R. Biden was asked about U.S. relations with China and possible responses to trade conflicts and rights abuses.

Biden said he had made clear to President Xi Jinping “that we’re not looking for confrontation, although we know there will be steep, steep competition.”

The United States is consulting with allies on a range of differences with China, Biden said.

“And so we’re going to make it clear that in order to deal with these things, we are going to hold China accountable … whether it relates to the South China Sea … or their agreement made on Taiwan, or a whole range of other things,” he said.

“China has an overall goal … to become the leading country in the world,” said Biden. “That’s not going to happen on my watch,” he said.

China’s fears of international pressure could have troubling consequences for energy security and global warming as the country raises reliance on its most plentiful domestic energy resource by burning more coal.

Coal consumption rose 0.6 percent last year to 4.04 billion metric tons, Reuters reported, even though coal’s share of China’s total energy supply fell to 56.8 percent.

Coal production increased 0.9 percent last year after jumping 4.2 percent in 2019, according to NBS data.

The China National Coal Association (CNCA) said the stage is set for another rise in consumption this year.

“Central government has said it will continue to implement a proactive fiscal policy and a prudent monetary policy, and meanwhile offer the necessary supports for economic recovery … That would push up coal demand in 2021,” CNCA said in a statement.

Five-year target

The government has broken with past practice by omitting a five-year target for gross domestic product in its latest plan. It has also set no cap on energy consumption, leaving it free to steer economic recovery without constraints on energy use.

The CNCA said that “annual coal consumption will be kept to around 4.2 billion tons at the end of 2025,” the official Xinhua News agency reported.

Some reports interpreted the statement as forecasting consumption growth of 6 percent during the five-year plan period.

“But Beijing’s push to secure coal, oil and natural gas supplies will be hard to square with its aggressive climate targets,” the Morning Post said.

In the days after the annual legislative sessions, Xi called for incorporating his 2030 target for peak carbon emissions and net-zero neutrality by 2060 into “the overall layout of building an ecological civilization,” Xinhua reported.

Addressing a meeting of the Central Committee for Financial and Economic Affairs, Xi urged “perseverance in achieving the goals,” Xinhua said.

One day later, the Ministry of Industry and Information Technology announced a series of measures to improve energy efficiency and upgrade the industrial sector with new electrical equipment.

But it remains unclear how the calls for reform will be reconciled with the projections of higher energy use and coal consumption over the next five years.

On balance, China’s plans have set a course for increases in carbon emissions when it should be cutting.

“Without the energy consumption control target, there’s even less in this five-year plan to constrain emissions growth than in the previous ones,” wrote lead analyst Lauri Myllyvirta in a posting at the Center for Research on Energy and Clean Air.

“As a result, there’s no guarantee that emissions growth will slow down, let alone stop, by 2025,” said Myllyvirta.

“Overall, the picture is one of very gradual progress in aligning China’s energy and emissions trends with the target of achieving carbon neutrality by 2060,” he said.

In the six months since Xi’s announcement of climate goals, China has yet to clear a path toward achieving them.

Instead, the new five-year plan and its heightened concern with energy security has highlighted opposing forces at work.

“The long-term solution does not lie in subsidizing uneconomic domestic oil and gas production or prolonging the use of polluting domestic coal, but by investing in energy transition away from fossil fuels,” Chow said.

“The scale of Chinese efforts in this regard is impressive. However, this will take time to achieve meaningful results, just as it does for the rest of the world,” said Chow.

“In the short to medium term, China’s energy import vulnerability will remain a major concern for its government,” he said.