By Xiong Guangkai
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The first few years of the 21st century have witnessed long queues
at petrol stations across the globe, while soaring prices in the
New York petroleum futures market remind us how grim the world
energy security situation is.
Increasingly strained relations between supply and demand, the
rising international oil price, strategic contentions focusing on
energy producing areas and environmental pollution caused by energy
consumption give us no cause for optimism, with the negative
effects of soaring oil prices already being felt by the global
economy.
The driving force of global economic growth resides in the
spiralling increase in energy consumption. "World Energy
Statistics, 2005," issued by energy giant BP, shows that the
average annual increase in global oil consumption over the past
decades hit 1.7 percent. According to the statement from the
International Energy Agency, daily global oil demand will grow by
50 percent by 2030, reaching 130 million barrels a day. That proves
that the shortage of energy supply will become increasingly
aggravated.
The sharp fluctuation in oil prices will threaten the stability
of the international energy market. Beginning from 2000, the price
of international crude oil entered a new upswing, recording a steep
climb on the basis of an average of US$28.5 per barrel. At one
point on August 29, 2005, the futures price of crude oil in the New
York market hit a historic new high of US$70.8 per barrel.
Thereafter, the oil price remained in a state of constant flux and
yet, for a long time, the price remained at around US$60 a
barrel.
Global warming and damage to the environment starting from the
1990s have gradually raised humankind's awareness of energy
consumption security and environmental protection. Statistics show
that 75 percent of global emissions of carbon dioxide comes from
the burning of oil, coal and charcoal.
As the world's second-largest energy producer and the
second-largest energy consumer, China has a stake in global energy
security.
China's total energy volume is by no means small, and yet its
per capita volume is fairly low, even below half the global
average. In recent years, economic growth in China has
progressively swelled its energy demand.
The Chinese Government is implementing a series of policies and
measures in a bid to solve the energy security issue, an issue
which has a strategic significance. Saving energy and slashing
energy consumption is regarded as a fundamental national policy.
The 11th Five Year Plan (2006-10) set out the goal of cutting the
consumption of energy per unit of GDP by a hefty 20 percent over
this period. The government work report delivered to the National
People's Congress this year has explicitly stipulated that the
consumption of energy per unit of GDP will ease by about 4 percent
while the GDP will grow at roughly 8 percent.
The country has put in place the strategy of developing multiple
sources of energy, while also developing alternative sources of
energy. The Mid- and Long-Term Development Plan for China's Energy
states clearly that the central task of ensuring energy supply in
China at present and in the coming period is to optimize its energy
structure by way of gearing up the work of tapping hydro-electric
power, stepping up nuclear-electric power construction and
encouraging the development of wind power, biological energy
sources and other renewable sources of energy. It is designed to
increase the proportion of renewable sources of energy in the
entire energy structure to around 15 percent by 2020 from the
current 7 percent.
China is both an energy consumer and an energy producer. Based
on statistics from the State Information Center, China's aggregate
lump sum energy consumption in 2004 stood at 1.97 billion tons of
standard coal, while the total lump sum energy production capacity
was 1.846 billion tons of standard coal, putting the degree of
China's self-sufficiency in energy at 93 percent, outstripping the
West's average level of 70 percent.
Per capita consumption indicates that the lump sum per capita
consumption of energy in China in 2004 stood at 1.08 tons of oil
equivalent, accounting for 66 percent of the global average of 1.63
tons of oil equivalent, 13.4 percent of the US figure of 8.02 tons
of oil equivalent, and 28.1 percent of the Japanese 3.82 tons of
oil equivalent.
China's oil consumption in 2004 when a sharp increase was
recorded, stood at 300 million tons, roughly 8 percent of the
aggregate global oil consumption; while US oil consumption was 938
million tons in the same year, accounting for 25 percent of global
aggregate oil consumption, outstripping China twice. In that year,
China's net oil imports were less than 149 million tons, about 6
percent of the global trade volume in oil; while US net oil imports
in the same year stood at 590 million tons, outstripping China
three times.
The above-mentioned facts, whether in terms of energy
self-sufficiency, per capita energy consumption, or oil
consumption, prove false the allegation that China poses a threat
to world energy security. The solution to the energy security issue
lies in cementing co-operation and in the joint efforts of all
countries.
Fossil fuel will remain the dominant fuel in terms of energy
consumption in the early half of this century, and yet demand for
oil will continue to soar. Energy experts in every nation are
generally of the view that one of the major reasons causing a
shortfall in oil surplus capacity in the world today resides
exactly in the under-investment in oil industry in every country in
recent years.
Feasible policies to increase energy supply and defuse the
strained situation of energy supply require all states to improve
their investment environment in order to ensure increased
investment and to boost investment in extracting, transporting and
processing energy.
The current global energy security system was established in the
1970s, consisting primarily of such multilateral organizations as
OPEC representing the interests of oil exporting countries, the
International Energy Agency representing the interests of developed
oil consumers, and the International Energy Forum.
The changing international situation has given rise to signs
that the oil security system established to deal with oil crises is
no longer able to address today's complex global energy security
situation. For instance, intricate political and economic factors
have contributed to the reality that Asia has to pay a higher price
for importing oil than European and American states.
Some developing countries are currently joining the club of
major energy importers, and for that matter, how to ensure the
energy security of developing countries in the context of the new
international trade structure has become a novel topic.
Despite the various rivalries in tapping and exploiting overseas
resources, the globe's energy-consuming nations, especially
developed countries and the up-and-coming consumers, share common
interests in upholding the stability of the international market,
tapping new energy, saving energy, and environmental protection. We
ought to further promote dialogue between the energy producing
states, the transporting countries and consumer nations, and
increase contacts and exchanges.
The author is chairman of China Institute for International
Strategic Studies.
(China Daily May 29, 2006)
