September 11, 2014, by editor
China’s Twin Quests for Energy Security and Low-carbon Transition
Written by Guy C.K. Leung.
Another round of the UN climate conference will be held in New York on 23 September, and it is a good time to review the energy governance of the world’s biggest carbon emitter, and its implication for global climate change.
China faces an “energy dilemma” as it seeks to ensure continuity of energy supplies while managing to reduce the country’s reliance on coal, which is domestically abundant. Both targets seem to contradict each other, but they are in fact aligned in a broader strategic context. The Communist Party of China (CPC), the single ruling party, has a “social contract” with the people it governs: as long as it can keep the people happy, employed and proud in a nationalistic sense, it does not need to share its power with them.
Despite some ups and downs, the economic reforms introduced in the late 1970s led to rapid economic growth, which has put China onto the great power rank; however, China is still, essentially, a developing country. Asked by George W. Bush what would keep him up at night, Hu Jintao said that his biggest concern was creating 25 million new jobs a year. Although China overtook Japan and became the world’s second largest economy in 2010, the regime realises that it is still vital for the country to maintain economic growth, create enough jobs for the graduates and rural migrant workers every year, and continue to increase the personal incomes of its citizens. Failure to achieve these goals unsettles the already fragile social stability: in 2012, China ranked the 101st in terms of Human Development Index (HDI), falling behind numerous developing countries, such as Columbia (91st), Bosnia and Herzegovina (81st), Venezuela (71st), Mexico (61st) and Uruguay (51st).
Development requires uninterrupted supplies of energy. The Preface section of China’s Energy Policy 2012, also known as the “energy white paper”, unequivocally states the importance of energy that “thriving energy industry provides a guarantee for the country to reduce poverty, improve the people’s livelihood and maintain long-term, steady and rapid economic development”. China overtook the US to be the world’s largest energy consumer in 2010. Between 1978 and 2010, the country’s energy demand has grown by almost 7 times (British energy consumption levels were 53 percent of China’s in 1978 but only 9 percent in 2010). In 2013, China accounted for almost a quarter of the global energy demand. Energy security, undoubtedly, is central to Beijing’s strategic mentality.
What is more relevant here is the composition of China’s energy consumption. Over the last three decades, China’s energy transition has been moving towards a lower carbon economy: less coal and oil, more gas and a lot more renewables. But the transformation is gradual rather dramatic. In 2013, coal, the dirtiest form of energy, still accounted for 67% in China’s fuel mix (compared to 18% in the UK and 20% in the USA). The low(er)-carbon fuels, including gas, non-hydro renewable and nuclear energies, remain relatively marginal in the energy structure.
Given the carbon-intensive fuel mix, China has notoriously become the largest carbon emitter since 2007. But in wake of increasing vulnerability of China’s energy security thanks to climbing oil and gas imports, there had been some advocates that China should tap into domestic coal and lower its addiction to foreign oil as well as dependence on sea-lane it couldn’t defend from US intervention.
Fortunately, such a narrow interpretation of energy security has never won the hearts of the Chinese leaders, who intuitively understand that, to them, the ultimate goals of energy security are to fulfil the social contract and maintain the political legitimacy of the regime. In other words, if measures of energy security would lead to environmental degradation to the extent that it would trigger social unrest and invite global moral condemn, they defeat the purpose of energy security.
Plagued by simmering summers, choking smog and unsettling blackouts, Chinese government and citizens taste the unintended consequences of unsustainable development in a physical way. Chinese leaders now trust that renewable energies, nuclear power and natural gas provide opportunities to address urban air pollution, lower its carbon footprint and improve national energy efficiency with a view to developing a more sustainable energy system.
The current 12th Five Year Plan (2011-2015) has stated or reiterated four interrelated targets that need to be met by 2015: to reduce the energy intensity of the economy by 16%; to increase non-fossil fuel energy (i.e. renewable and nuclear energies) to 11.4% of total energy consumed; among fossil fuels, to increase the share of natural gas (a lower carbon energy that half the carbon’s carbon emissions) from 4% to 8.6%; and to cut the carbon intensity by 17%. It is likely that all of these targets will be met, and China’s carbon emission will be growing more slowly. But it is still growing, offsetting the climate efforts by other countries.
A more radical socio-technical regime change is needed and would involve transitions not only in the energy technologies but also in the institutional and organisational forms of society. This socio-technical transition involves, for example, creating a mechanism that prices the external cost of coal consumption, introducing “smarter” spatial planning in urban and transport development, re-orientating the mode of economic development, and finding new ways to motivate local governments to engage in low carbon development more actively and creatively.
Guy C.K. Leung is Post-doctoral Fellow, Geopolitics of Energy Project, Belfer Centre for Science and International Affairs, Harvard University and Visiting Fellow, China Centre, Oxford University