China’s fears about imported oil

From China Daily

From China Daily

One of our favourite counter-intuitive ideas on this blog is that China’s massive and growing appetite for fossil fuels might end up being a good thing for the environment, as it could drive big efforts on renewables, electric vehicles, and even energy efficiency.

The rationale is that China takes forward planning much more seriously than many large economies; so unlike other countries that are simply ambling towards some kind of climate/security/supply (choose your favourite) crisis, China will put significant effort into energy alternatives. Of course, the buying up of long-term fossil fuel supply deals with various countries around the world doesn’t necessarily support that.

And if the local press is anything to go on, anxiety over energy security is indeed pretty high in China at the moment.

First, China Daily last week ran a story titled ‘Oil imports hit alarming levels in China: Study‘. Figures from the General Administration of Customs (which we can’t find in English, unfortunately) reportedly showed oil imports exceeding 50 per cent in 2009, and would reach 65 per cent by 2020.

Two academics quoted in the report said this should indeed precipitate a push into renewables and efficiency, but the only official quoted in the story was more focused on domestic fossil fuel production:

“This year we will control the amount of imported oil and accelerate the exploration of domestic oil and natural gas,” Zhang Hongtao, chief geologist with the Ministry of Land and Resources, told China Daily yesterday.

Due to the country’s fast economic development, increased oil imports will continue for a long time and stepping up the exploration and development of natural gas as substitute energy is very urgent, he said.

But yes, we did note his role and department, so perhaps he doesn’t represent the broader energy strategy. And a subsequent story published yesterday pointed out that some analysts believe domestic production will peak around 2020, while others think that point has already passed:

The country’s oil imports in 2010 are expected to grow five percent from a year earlier, and the proportion of imported oil consumed may further rise to 54 percent this year, said Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University.

“Domestic production is already at its peak,” he said. “Although domestic companies have accelerated their overseas expansion, the resources they already gain are still limited.”

Another story this month pointed to the growing risk from attacks on pipelines.

So how bad is China’s relative energy security risk?

Well it’s worse than most G20 nations, according to this ranking from Maplecroft:

Maplecroft

Source: Maplecroft

Related links:

Oil imports hit alarming level in China: Study (ChinaDaily)
China depending on more imported oil
(ChinaDaily)
China renewable energy use 8.3 per cent of total in 2009 – official (Reuters)

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