Posts tagged “China”
On Wednesday in Beijing, President Obama and his Chinese counterpart Xi Jinping announced a series of agreements at a surprisingly fruitful APEC summit. The US and China came to agreements on issues as diverse as military relations, trade, investment, visas, and a range of other issues. Certainly, the Chinese are not acting like they’re dealing with a U.S. President hobbling into a lame-duck period.
The biggest agreement, however, comes in the area where President Obama still has a great amount of power, both domestically and internationally, to take action: climate change. This is also an area where action by the Chinese government both has meaning for a domestic constituency and among the international community. While observers had expected some sort of deal on climate change, the scope and ambition of the deal were a surprise. Last year, I had written that “U.S. – China Agreement on Climate Shows Promise” – and with this announcement, we see that the promise is on its way to bearing fruit.
Of course, we can only judge the effectiveness of any deal on climate change over a long horizon. This deal does appear, though, to put both the US and China – and the rest of the world with them – on a track to beginning to actually meet the challenges of climate change.
The Terms of the Agreement: Ambition on Both Sides
Under the deal, the United States will cut emissions 26 to 28 percent below 2005 levels by 2025, while China agrees that its emissions will hit a peak and begin declining by 2030 at the latest, while also increasing its share of non-fossil energy to 20 percent in that same period. The White House claims its emissions cuts can be met “under existing law” (so, no need for Congressional action) and China, meanwhile, will deploy up to 1,000 gigawatts (a terawatt) of new nuclear, wind, solar and other zero-emissions generation to meet its goal. The targets are there, and so are the means.
China’s Production of Synthetic Natural Gas Has Global Implications
In its latest Medium-Term Coal Market Report the International Energy Agency (IEA) forecasts a slowing of coal demand growth but no retreat in its global use. That won’t surprise energy realists, but the item I wasn’t expecting was the reference in the IEA press release to growing efforts in China to convert coal into liquid fuels and especially synthetic natural gas (SNG).
It’s not hard to imagine China’s planners viewing SNG as a promising avenue for addressing the severe local air pollution in that country’s major cities, but the resulting increase in CO2 emissions could be substantial. It could also affect the economics of natural gas projects around the Pacific Rim.
A Solution for China’s Smog?
Air quality in China’s cities has fallen to levels not seen in developed countries for many decades. There’s even a smartphone app to help residents and visitors avoid the worst exposures. Much of this pollution, in the form of oxides of sulfur and nitrogen and particulate matter, is the result of coal combustion in power plants. Although China is adding wind and solar power capacity at a rapid clip, after years of exporting most of their solar panel output, the scale of the country’s coal use doesn’t lend itself to easy or quick substitution by these renewables.
Resources, Routes, and Boundaries
The Arctic is considered the last frontier in energy exploration and development. The region catches headlines from time to time — an international maritime boundary dispute between Russia and Norway, the 2007 planting of a Russian flag under the North Pole, and lately, the effect of melting sea ice. The latest Intergovernmental Panel (IPCC) report on climate change will expose how the oceans are literally taking the heat, compared to the atmosphere. This bodes ill for the Arctic, as warming oceans melt sea ice. The U.S.’s Arctic policy, articulated earlier this year by President Obama, is to advance national security, pursue responsible Arctic stewardship and strengthen international cooperation.
Arctic States, and members of the Arctic Council, with land masses contiguous to the Arctic Ocean, are Canada, Denmark, Norway, Russia and the U.S. These countries have the right, up to 200 nautical miles, to claim an exclusive economic zone which allows them exclusive jurisdiction over the natural resources, both in the water column and in the seabed. And, these States will be able to claim additional continental shelf jurisdiction beyond 200 miles. The current international legal framework for which these claims are made, resides under the United Nations Convention on the Law of the Sea (UNCLOS). Iceland, Finland and Sweden have land above the Arctic Circle, and are part of the Arctic Council. Recently twelve countries were given observer status, including China, India, the U.K., Germany, and other large EU states.
The Energy Information Administration (EIA) recently released its International Energy Outlook 2013 (IEO2013). While the EIA doesn’t have a sterling track record for predictions, many organizations make decisions at least partially based on EIA projections. Therefore the organization’s forecasts are worth reviewing.
Of particular interest to me were the agency’s forecasts about China’s energy demand. Over the past decade, China has become the world’s largest energy consumer, as well as the world’s largest emitter of carbon dioxide. Chinese coal consumption is up 157 percent since 2002, and they now consume over 50 percent of the world’s coal. Their oil consumption rose by 5 million barrels per day (bpd) in the past 10 years, to nearly double the level of 2002.
But according to the EIA, we haven’t seen anything yet:
This is the 5th installment in a series that examines data from the recently released 2013 BP Statistical Review of World Energy. Next week’s installment will be on carbon dioxide emissions, and that will wrap up the series.
The previous posts were:
- Renewable Energy Status Update 2013
- Hydropower and Geothermal Status Update 2013
- The State of Oil According to BP
- The US is the Gassiest Country
Today’s post delves into the global coal picture. The highlights are:
- Global coal consumption reached an all-time high in 2012
- China continues to dominate the global supply and demand picture in coal
- Outside of China, coal consumption has been on the decline
- The US has recently had the largest declines in coal consumption of any country in the world
- Many European countries have experienced strong percentage gains in their coal consumption
Over the past three weeks, there have been numerous headlines insinuating that a freefall in oil prices is underway. Last week I read that the various causes were a slowdown in China’s economy, OPEC’s decision not to cut production, and America’s growing oil production. Based on the headlines, one might suspect that we were right in the middle of a major bear market for oil.
Just how far had the price of West Texas Intermediate (WTI) fallen? All the way to $92 a barrel. Keep in mind that WTI opened 2013 at $93.14 a barrel. Since then it has traded between $98/bbl and $87/bbl. (In my Five Energy Predictions for 2013, I predicted that the price of WTI would average less this year than last year, and that the Brent-WTI differential would narrow. To date both predictions have proven to be accurate). CONTINUE»
Introducing Markets and Routes
Greetings — I’m Jennifer Warren, the latest columnist for Energy Trends Insider.
My space involves financial aspects and economics of energy resources and markets. The areas of natural resources, the environment and sustainability are also of importance to me. Dissecting global trends that criss-cross these subject areas are fair game, when appropriate. Much of my prior work has a research-based orientation or underpinning, with the goal of delivering actionable insights or context for decision making.
An overall theme in my work is understanding how complex systems interact — with energy being a vast subject to analyze. And incidentally, energy producers and innovators surround me in Dallas. The many wind, natural gas and oil producers here have influenced my thinking, with my most trusted sources graciously spending countless hours of interview time with me.
But first, a little about how I got involved in energy.
In 2002, my work with an academic institution led to the creation of a faculty research website, where the finance department produced outsized amounts of research. My work in energy began then. I realized energy was the most global industry sector that existed, with players spanning from the most sophisticated to the true-grit entrepreneurs to the brilliant financial economists I had the privilege of interviewing. Here was a field that one could spend their lifetime exploring. Being exposed to cutting edge research has definitely given me the impetus and curiosity to apply this line of thinking to the world of energy.
Joint Statement on ‘Dangers’ of Climate Change
A few weeks ago, Secretary of State John Kerry went to Beijing to meet with the leadership of the Chinese government. This meeting was mostly noted in the press as an effort to defuse tensions in the ongoing crisis over North Korea – and clearly that was important; there has been a notable ratcheting down of tensions since then.
However, over the long term, there was an agreement that came out of the meeting that could be much more important to the world’s future stability and security – a joint U.S. – China Statement on Climate Change. It was so overlooked in the press, that I missed it for the last two weeks. The statement indicated that the U.S. and China recognize the “dangers presented by climate change” and that a “more focused and urgent initiative” is needed.
This statement is invariably true – and these two countries are in a position to have an impact. Together, China and the United States are the largest emitters of greenhouse gases in the world, with 29% and 16% of global emissions, respectively. Like Willie Sutton and the Banks, if you want to affect greenhouse gas emissions, start where the emissions actually are.
Mutual Concern About Present Day Impacts
Importantly, the statement notes that the reasons for each country’s mutual concerns about climate change come from the impacts that are already being seen. The statement lists ocean acidification, Arctic sea ice loss, and the “striking incidence of extreme weather events” as reasons for concern about climate. Climate change has moved from being a hypothetical worry in world politics (this will harm us) to an actual threat (this is harming us).
This agreement is important because it will catalyze action by each country at the national level, it will open up areas of cooperation between the two, and it could act as a signal to international negotiations, leading to an ambitious UN agreement.
Formally, the agreement will create a new Climate Change Working Group in the annual U.S. – China Strategic and Economic Dialogue (S&ED). The S&ED was the brainchild of then-Secretary of the Treasury Hank Paulson, with the first one taking place in September, 2006. Over the last six years, the S&EDs have successfully brought together the highest levels of both governments to meet and discuss important areas of the bilateral relationship. Mostly, however, the discussions have focused on economic and trade issues.
Creating a Climate Change Working Group will ensure that the highest levels of government are forced to deal with the problems of climate change.
Forcing Entrenched Bureaucracies to Collaborate
One of the key reasons why this agreement is important is not even the potential areas of cooperation between the countries – it is the action it will generate within each country’s government. In the United States government (I can’t speak with any familiarity about the Chinese government), it will force entrenched bureaucracies to deal with one another on climate and environmental issues. There is often a tendency in government for issues to become ‘stovepiped’ – and on climate, which is pegged as an environmental issue, but is actually a cross-cutting issue of energy, trade, economics, national security, and more, the stovepipes have not worked.
Western policymakers are becoming increasingly anxious about China’s foothold into Greenland, particularly its desire to produce the semi-autonomous island’s rare earth metals – the materials used in high-end electronics, from smart phones and smart bombs to clean energy technologies, including wind turbines and advanced batteries. But policymakers can rest assured that there is more to China’s foray into Greenland than meets the eye – and not as much cause for concern.
A Thawing Frontier
Greenland’s icy frontier is transforming before our eyes. Climate change is contributing to a hastened retreat of the island’s massive ice sheet and ushering in new opportunities for the 57,000 people living in the northern hinterlands.
The island’s extractive industries are poised to be the biggest winner, as the thawed ice reveals new deposits of raw materials, everything from iron ore to aluminum.
(Read More: Rocking the Boat in the Energy Rich South China Sea)
Rare earths are the big prize. The small town of Narsaq sits near one of the world’s largest deposits of rare earths. According to Greenland Minerals and Energy Ltd, one of the island’s leading mineral development companies, that deposit could contain about 10.3 million metric tons of rare earth metals, equivalent to about 10 percent of the known global reserves (which today total about 110 million metric tons, according to the U.S. Geological Survey).
Energy issues ranked among the top international headlines in 2012 – As we look ahead, what are the major energy trends that are likely to take shape and play out in international headlines in 2013?