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US, China failing to reach common ground on energy |
WASHINGTON: As the world’s top two oil guzzlers, the US and China should have lots in common when it comes to energy policy.
But US experts see a difference in how the two countries view energy security, one that could undermine economic cooperation as the global titans vie for limited oil supplies in the future.
“Most everybody’s in favour of energy security,” said Daniel Yergin, an energy expert at the Cambridge Energy Research Associates. “There’s just a wide difference on what does energy security mean.”
To US politicians, including President George W Bush, it means cutting US import dependence by promoting home-grown fuels like ethanol, and reducing the risk of price shocks by relying on a variety of sources and suppliers.
To Beijing, it means locking up secure supplies in multibillion dollar deals, such as the ones cut in recent years in Venezuela and Canada, US officials say.
More recently, China has sought closer economic ties with Saudi Arabia, which has shared an oil-for-security relationship with Washington for decades. It has also actively sought long-term supply guarantees with Saudi Arabia and other Middle East producers as it seeks oil to fuel future economic growth.
Karen Harbert, assistant secretary for policy and international affairs at the US Energy Department, said the US and China “still have a ways to go” in finding common ground.
“It is certainly clear at this point in time that we define energy security differently,” Harbert told Reuters in an interview.
“We define it as having a supply of reliable, affordable energy, and they define it as having secure access and owning access to that product,” Harbert said.
US officials have met frequently with Chinese counterparts to push initiatives in oil technology and efficiency, and emphasise their belief in the importance of allowing the market to set global energy prices.
And China’s rising oil use will be centre-stage when US officials including Energy Secretary Sam Bodman and Treasury Secretary Henry Paulson visit Beijing in December, when they will seek a common energy market vision.
For Harbert, China’s soaring demand for energy is not a concern in itself, but its willingness to overpay for crude oil and other resources is.
Because Chinese companies have direct access to government coffers, they can afford to outbid international majors and offer sweeteners like airline deals and arms contracts that private companies can’t produce, she said.
“What we are concerned about is ... (China’s) very aggressive pursuit of assets around the world, if they are willing to put aside market principles,” she said.
For William Overholt, director of the RAND Corp’s Center for Asia Pacific Policy, a prime driver behind China’s oil hunt has been its rising dependence on imports.
“The Chinese are new to importing oil and they’re terrified,” Overholt said. “Their response has been to buy as many oil companies ... around the world as possible.”
The US is the world’s biggest oil user, consuming about 20mn bpd. China uses about 6mn bpd.
But domestic oil demand in China, the world’s fourth-largest economy, is expected to rise by 6% this year, double the pace in 2005, compared with slightly negative US demand growth over the same period.
Global energy demand is expected to hit 118mn bpd by 2030 versus 85mn bpd in 2006, and the US, China and India will account for half of that growth, according to US government figures.
While Saudi Arabia will supply many of the extra barrels that China will consume in coming years, officials at its state-owned oil company seek to play down US worries.
“A barrel of our oil bound for Beijing or Bangalore frees up another produced elsewhere to be consumed in Baltimore,” Saudi Aramco senior vice president Khalid Al-Falih told a Washington conference in October.
US experts say Washington and Beijing have reached a fork in the road which could either lead to long-term co-operation or competition in the energy realm.
“The Chinese government is enormously preoccupied with energy security these days,” said Paul Saunders, executive director of the Nixon Center. “It’s one of those issues that has great potential to be either a big plus or a big minus in our relations with China.”
Kang Wu, a senior fellow at the East-West Center in Honolulu, which studies issues of common concern to Asia and the US, also saw upside and downside potential.
“On the positive side, both are consuming countries – you could do something there,” he said. “On the other hand they are also competitors for oil. You could potentially clash.”
But, he said US officials increasingly equate energy security and national security, which emphasises non-economic goals over trade and bilateral cooperation.
“National security often means national policy and nationalism,” he said. “There may be more competition than cooperation.” – Reuters
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