Energy may transform US-China ties

Updated: 2013-04-17 11:07

By Joseph Boris in Washington (China Daily)

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Energy may transform US-China ties

California Governor Jerry Brown (center), and his wife Anne Brown (right), accompanied by Wang Chuanfu (left), founder and chairman of Chinese automaker BYD Co, in an electric bus at the headquarters of the Chinese company in Shenzhen on Tuesday. China and the US have decided to establish a working group to cope with climate change. Vincent Yu / AP

The world's top two energy users, China and the United States, face an array of challenges in securing future supplies of what fuels their economies, and while conflicts over resources are possible, so is strategic cooperation.

That was the view expressed by experts from both countries at a Washington panel discussion on Tuesday that addressed long-term shared interests, which now include an agreement to tackle climate change.

"It was a statement that, two years ago, no one could have imagined," former US presidential adviser Kenneth Lieberthal said of Saturday's announcement in Beijing, following a visit by Secretary of State John Kerry, that the US and China would form a Climate Change Working Group.

The communiqu issued after Kerry met with Chinese leaders said "increasing dangers presented by climate change measured against the inadequacy of the global response require a more focused and urgent initiative". The two sides agreed to "begin immediately to determine and finalize ways" to advance cooperation in technology, research, conservation, and alternative and renewable energy.

"This was forward-looking, it was detailed, it was scientifically sound. It raises the climate-change issue to ministerial-level consideration and an ongoing process," said Lieberthal, an Asian-affairs expert who served on the National Security Council during Bill Clinton's presidency. He was speaking at the Brookings Institution, where he is now a senior fellow specializing in China studies.

Another panelist, Zhang Guobao, a former director of China's National Energy Administration, pointed out that his country and the US are also the world's biggest energy producers and that cross-border deals in the industry are becoming more common - in oil and gas as well as renewable sources such as solar and wind power.

"If we cooperate, our two countries will win; if we have conflicts in the energy sector, then we're going to lose," Zhang said at the Brookings forum, which was co-sponsored by Chinese media company Caixin.

Their respective quests to find and sustain new supplies mean China and the US will occasionally compete for energy, though in a way that can be managed on the world market, the experts agreed.

Any conflict, at least for the foreseeable future, is unlikely due to the countries' divergent energy trends: China, which from 2000 to 2011 accounted for over half of the world's energy-consumption growth, is increasingly reliant on oil imports, forcing it into unfamiliar geopolitical areas. In the US, a boom in production of natural gas is expected to make the country independent of petroleum imports this decade.

"The energy revolution in the US is having impacts of a truly strategic nature, especially on US-China relations," Lieberthal said. "Neither side, I think, at this point has fully thought these through, and neither side has effectively engaged on them, although we have begun the conversation on both the Middle East and on shale gas and climate change.

"These energy issues are now at the center of the major areas in which the US and China can elevate their cooperation," the scholar said, recalling Chinese leaders' recent emphasis on establishing a new type of major-power relationship.

A key to the US natural-gas boom and impending freedom from imports is in shale - underground rock formations that a drilling method known as hydraulic fracturing, or "fracking", can now extract much of the country's vast, once-untouchable reserves.

Companies in China have tentatively explored for shale gas in their own country, which is estimated to have the biggest deposits on the planet. But complex geology and a lack of access to proper technology and expertise have held back the industry, which in any case wouldn't be profitable for years due to China's massive use of coal - about 70 percent of all of its electricity.

Changes in its energy profile have caused the US, which ended its war in Iraq last year, to begin disengaging from the Middle East at a time when Egypt, Syria and other countries in the region are undergoing historic changes. China's thirst for energy, meanwhile, has drawn it to the Middle East.

"China is becoming involved because of its investments in a way that it has not been involved before," Lieberthal said. The US, he said, will remain involved in the region, but not with as strong and direct interests as it has had for decades.

Although China is now the world's No 1 emitter of carbon dioxide, one of the greenhouse gases scientists attribute to climate change, Zhang said the portion of coal in the country's energy mix has started to shrink slightly in recent years as use of renewable sources such as hydropower, wind and solar increase. He also said China's dependence on foreign sources of energy is "quite low" compared to that of the US.

The energy expert agreed with Lieberthal's view that the continued US military presence in the Middle East will remain in place for at least a decade.

"We really don't need to send our naval fleet to protect our sea lanes - I think that's still got a long, long way to go. Why don't the Americans do the job for now?" Zhang said with a laugh, which the audience reciprocated.