Greening China’s Grid

“China’s Great Green Grid”
Laurence Brahm

PacNet 71A
Center for Strategic and International Studies

November 14, 2012

I have been a longtime follower of Beijing-based attorney and author (and now, apparently, political economist) Laurence Brahm. Over the years, the longtime China hand has been a source of some thoughtful thinking on how to approach the challenges of China. He’s also invested in a couple of decent restaurants in the capital.

True to form, in a recent paper for the Pacific Forum CSIS, Brahm calls for China to dump coal for renewable energy. Dismissing the issues with wind and solar as “merely simple or technological issues that can be addressed through finance and investment,” Brahm calls on China’s leaders to shove the politically powerful coal interests aside and embrace (and finance) a wholesale shift to renewables.

Admirable goals, indeed. Unfortunately, the problems with the proposals as laid out in his paper are substantial. Brahm offers scant evidence that the political will exists in Beijing (or, more important, in the provinces) to sideline powerful coal interests, nor does he hint at what might incite such a will. Are the technical challenges constraining solar and wind really just a matter of money, or are there brutal problems of basic science, politics, and weather that will not easily yield even to the biggest of all checkbooks? What does that massive SOE, China Grid, think about all of this?

And the really big elephant in the room: can conservation, solar, and wind ever satisfy China’s demand, and what would it take in terms of changes in lifestyle and expectations for that to happen?

Admittedly, it is a little unfair to ask a political economist, even one with the credentials of Mr. Brahm, to address all of these issues in under a thousand words. Yet somehow I feel the author would have been better off listing the barriers to a green grid and a pathway around or through them rather than suggesting that money and a good five-year plan was the answer.

Dead Dinosaurs and Asian Geopolitics

“Oil and Gas for Asia: Geopolitical Implications of Asia’s Rising Demand
Philip Andrews-Speed, Mikkal E. Herberg, et. al.
The National Bureau of Asian Research
September 2012

Though it seems obvious now, the first inkling I had that Asia’s future – and the world’s – would be determined largely by the region’s thirst for fossil fuels was when I read Thomas P.M. Barnett’s excellent The Pentagon’s New Map in 2004. Barnett noted that one of the four major forces that would shape the world of the future was the growing demand for energy coming out of Asia, and how that positioning Asia in potential conflict with both the U.S. and the E.U. as competitors for those resources.

In Oil and Gas for Asia, the NBR offers six essays that dive into the details of how that demand in Asia is intensifying. Naturally the authors cover the matter of the region’s role in (or effect on) global energy security and the entire issue of China’s relationship with Iran, two areas that have come to global attention.

Intriguingly, they also examine the effect that Japan is having on the global market of LNG after the Fukushima melt-downs all but put Japan out of the nuclear energy business, and the question of whether investments by national oil companies (think China National Offshore Oil Corporation, Sinopec, and PetroChina) actually enhance energy security at home. They then wrap up the analysis with policy recommendations for U.S. leaders.

There is a lot written about China and energy, much of it driven by petrodollars in an effort to create a policy environment in the U.S. that is favorable to greater development of oil resources within the Western hemisphere. China is an effective boogeyman to drive the development of deep-water drilling, hydrofracking, and tar sands. This study, however, is notable in its focus not on specific policy goals but in describing how the world’s most populous region is changing the rules for all of us.

Making Peace with China on Clean Energy

Sustaining U.S.-China Cooperation in Clean Energy
Merritt T. Cooke

Woodrow Wilson International Center for Scholars
Kissinger Institute on China and the United States

China’s efforts to develop a clean energy industry have captured headlines and political attention in the United States, creating an impression that somehow China is far ahead of the U.S. in the creation of a post-carbon energy economy.  There is some validity to that concern, but at the same time China is finding that many of its policies to drive the growth its solar and wind industries are hitting some severe bumps. Overcapacity and price wars have led to hard times among equipment manufacturers in China, and the country is starting to face the challenges of dependency on energy sources that are at the mercy of the weather and the elements.

As the U.S. government’s efforts to support selected alternative energy manufacturers, it appears that both countries are finding the way forward to be more complex than just throwing money at the problem. As such, the timing is perfect for a book like Mr. Cooke’s. Finding the way difficult to navigate separately, perhaps the time is right to start working together.

Cooke gives us the beginnings of a pathway to working together. This is not a time to be giddy or unrealistic – China has proven its readiness to purloin innovations that belong to others, and each country knows that by working together they are also working with a future rival. Merritt seems to understand these issues, and by keeping his work focused on the enterprise rather than national policy level, offers practical advice for going forward.

Rare Earths: Stop the Dependency

English: These rare-earth oxides are used as t...

Rare-earth oxides. Clockwise from top center: praseodymium, cerium, lanthanum, neodymium, samarium, and gadolinium. Category:lanthanides (Photo credit: Wikipedia)

“Rising Tensions Over China’s Monopoly on Rare Earths?”
Jane Nakano

East-West Center
May 9, 2012

I remember when I was growing up in Southern California how my father, who had little interest in world events normally would wax passionate about what we then called Zaire, or the ex-Belgian Congo. Dad’s foundry specialized in high-value investment castings made from an alloy of cobalt and nickel. Cobalt, critical to the defense and medical industries, was sourced primarily from Zaire. No cobalt, no business.

Strategic materials and their vulnerability have been an issue for the nations of the Earth for at least the past century. The Japanese, arguably went to war not just for oil but for scrap iron and bauxite (the latter used to make aluminum.) Historical perspective is of little comfort when the material on which your business, your industry, or your country’s future depends is now controlled by someone who may not like you very much. Such is the case today with rare earths.

In a well-argued paper, Jane Nakano warns Japan and the United States not to depend on a WTO ruling to help loosen China’s tightening grip on its supply of rare earths. If nothing else, she notes, the time spent waiting for a ruling would be better spent searching for alternative sources and preparing for the inevitable increase in rare earth prices.

China, the Arctic, and the Future of a Frontier

 

HMS Tireless, North Pole 2004

HMS Tireless, North Pole 2004 (Photo credit: Wikipedia)

Arctic Opening: Opportunity and Risk in the High North
Charles Emmerson and Glada Lahn
Chatham House  and Lloyd’s
April 2012

For a long time, issues with regards to sovereignty over the Arctic have been the province of Russia, Northern European Nations, the United States, and Canada. No more. As the polar ice cap recedes, opening up new shipping routes, making resources more accessible, and threatening to change the distribution of global population, Asia – and specifically China – is trying to claim the Arctic as a “global” territory, not just one to be shared by nations bordering on the Arctic Sea.

There is some precedent for such an approach, specifically the way interests have divided up Antarctica. But the situation with the North Pole is different for enough qualitative reasons: it involves the seabed rather than land; the issue arises in the face of a shift in global power and demand for resources; and there were never any major world powers plopped on the edge of Antarctica. The opening of the Arctic is liable to be problematic.

In this report, two British institutions reknowned for their insights on international affairs combine to weigh in on the Arctic question. The report is comprehensive but makes a potentially dry subject highly readable, and in the process leaves one with a deep sense of urgency. Questions need to be answered now, or even more of the Arctic environment will be lost to international indecision.

China is in the midst of a push to be allowed observer status on the Arctic Commission, a matter to be decided in 2013. The authors appear to believe that China will be admitted as an observer, and once that happens they can be depended upon to push for full membership. At that point, a set of priorities divorced completely from environmental stewardship will likely dominate the forum.

Regardless of your stance on climate change, the world must begin mitigating the effects of what appears to be an unstoppable process of climatic warming. Dealing with the Arctic will be one of those issues that depends most on global cooperation. How we go from here will determine whether the Arctic will become a preserve, a gold mine, or a battlefield. Emmerson and Lahn do us all a great service by giving us a road map to start that discussion.

Managing China’s Carbon

Carbon Management in China: The Effects of Decentralization and Privatization

This paper is Professor Steven Lewis’ discussion of whether China’s carbon management should be vested in the hands of  a single centralized body, or whether it should continue the current trend of privatization.

China Gropes for Energy Security

China’s Energy Security: Prospects, Challenges, and Opportunities – Jian Zhang – Brookings Institution.

Former Brookings Visiting Fellow Zhang Jian believes that the biggest obstacle between China and its energy security is Beijing’s implicit belief that energy security is a domestic policy question. Zhang disagrees, pointing out that when you are on track to import 60-70% of your petroleum from abroad by 2015, it is time for a rethink.

As a major consumer of a high-demand global resource in an integrated world, Zhang suggests, China can no longer approach energy security on a unilateral basis. Doing so not only puts China and other nations of the world on a collision course, it also threatens a rift in the government.

Zhang is right, of course, but I suspect his imprecations will fall upon unhearing ears. China s not yet at the point where it is ready to trust other countries to have a say in its energy future, and you could make an argument that it should not have to. The challenge is how the world will deal with a China that will be increasingly assertive – if not aggressive – about acquiring the petroleum that it needs.

In truth, this makes China’s energy security our problem as well as China’s. If you approach it from that angle, Zhang’s book is especially valuable.