Wednesday, 12 December 2007

Politics of China's Energy Hunt

In a follow on from my previous post relating to China's increasing interest in Africa comes a Financial Times editorial that touches on many of the same issues that I raised in my introduction.

How Western multinationals and countries react is of political importance. China's defence is also valid - the US is not entirely guilt free when it comes to working with corrupt regimes.

Dark side of the hunt for energy [FT]

China's apparently insatiable thirst for energy to fuel its industrialising economy is having severe consequences for international security and the global environment. In both areas, Beijing needs to develop and then demonstrate a sense of responsibility to match its awe-inspiring demand for oil and electricity.

To secure supplies of oil since the country became a net importer 14 years ago, Chinese companies have scoured the globe and not hesitated to strike deals with unsavoury regimes such as the one in Sudan. This week, Gholam-Hossein Nozari, Iranian oil minister, announced a $2bn contract with China's Sinopec to help develop the Yadavaran oil field. Mr Nozari issued a pointed warning to other countries that hesitated to invest. "They will lose opportunities," he said.

The effect of China's indiscriminate dealmaking in energy is often to undermine concerted international efforts to make resourceexporting countries change their behaviour, whether the target is Iran's nuclear programme or suspected genocide in Sudan.

Another victim of China's energy demands is the global environment. So far this year, China has added 90 gigawatts of new electricity generating capacity, more than the entire installed capacity of the UK grid. Almost all the new capacity is in coal-fired power stations, which produce large amounts of carbon dioxide (a contributor to global warming) and other pollutants.

By any measure, China's overall production and use of electricity is grossly inefficient and its pollution controls are poor. Chinese leaders, however, are reluctant to accept that China must play a leading role in tackling climate change, the subject of the international talks now under way in Bali.

There is some logic to Beijing's defensiveness. The US buys much of its oil from corrupt states in Africa and human rights abusers in the Middle East, and US protectionism prevented CNOOC of China from buying the respectable oil company Unocal. It is also true that western countries have contributed most over time to the accumulation of carbon dioxide in the earth's atmosphere. Even so, the evil, folly or carelessness of others are no excuse for China to behave irresponsibly.

Fortunately, there are tentative signs that China is beginning to grasp the geopolitical and environmental implications of its energy needs. Beijing is investing heavily in renewable energy, for example, and has shut some of China's least efficient coal-fired power plants. But these are small steps towards the distant goal of becoming a responsible superpower.


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I think china is putting forward some corrupt regimes. But it is one itself.