INSIGHT: Study urges US to follow China’s fossil energy policy

09 December 2010 17:21  [Source: ICIS news]

By Joe Kamalick

Senate report says US should follow China in fossil fuel developmentWASHINGTON (ICIS)--A new US Senate report challenges claims that China is surging ahead of the US through clean energy development, warning instead that the Beijing government is accelerating economic growth with increasing consumption of oil, natural gas, coal, nuclear and hydroelectric power.

A report issued this week by the minority staff of the Senate Environment Committee contends that “China is winning the global economic race by embracing the reality that fossil fuels, along with nuclear power, will remain the dominant energy sources for the foreseeable future”.

Senator James Inhofe of Oklahoma, the ranking Republican on the Environment Committee, said the report, “The Real Story Behind China’s Energy Policy”, should serve as a wake-up call for US policymakers.

“We can’t sit back and let our abundant resources sit idly in the ground while China rapidly develops its own, and those of other countries, and grows apace,” Inhofe said.

The report comes a week after the administration of President Barack Obama announced a new moratorium on US offshore drilling. That announcement has come under heavy fire from US energy, petrochemical and general business leaders who charge that US development of much-needed offshore oil and gas resources could be effectively shut down for as long as seven years.

Citing media reports that the US is “losing the clean energy race” to China, Inhofe warned that the US “can’t be lulled into thinking that China is launching a green energy revolution”.

“The reality, which policymakers here must understand, is that it is much bigger than that,” Inhofe said, adding: “China is launching a global energy revolution, the basic make up of which entails consuming coal on a grand scale and purchasing vast quantities of oil, gas and uranium the world over, including from dangerous, anti-American regimes.”

He said that Chinese leaders recognise that wind and solar power can contribute to energy security, “but when considered against the backdrop of China’s fossil fuel use they are, as in the US, a sideshow”.

Although China is a major producer of wind and solar energy components, Inhofe said the report shows that “regardless of its wind and solar production, China is predominantly relying on coal, oil and natural gas along with hydro and nuclear power to fuel its economy”.

“Non-hydro renewables, despite considerable Beijing government support, make up less than 1% of China’s energy portfolio - a fact that won’t change for at least the next two decades,” Inhofe said.

The committee’s minority staff report noted that China is both the largest producer and consumer of coal in the world, using more coal than the US, Europe and Japan combined.

China could account for 50% of global coal demand by 2035, the report contends.

The Middle Kingdom is the world’s second-largest oil consumer, behind the US, and the world’s fourth-largest oil producer.

However, despite its own increasing domestic production of oil, China imports more than 52% of its oil supply, and by 2020 could be dependent on foreign sources for up to 65% of its crude needs, the report says.

The US also relies on other nations for about 52% of its oil supply, a dependence that is expected to increase over the next decade.

Recognising the threat to its economy and sovereignty by its growing dependence on foreign oil, China is investing in - and locking in access to - oil development projects around the world. 

Among others, China is investing in and drilling for oil and natural gas in Cuba, Iran, Iraq, Myanmar (formerly Burma), Kazakhstan, Nigeria, Venezuela and Argentina.

China is drilling for oil in Cuban territorial waters just 50 miles off the coast of Florida - an area that is closed to US energy development along with most other US offshore regions.

Beijing is pursuing natural gas resources with equal fervour, the report said, noting that China will become the top natural gas consuming nation in the Asia Pacific region by 2015, overtaking Japan.

China plans to quadruple its nuclear power capacity within ten years, the report said.

And while the Beijing government has spurred solar and wind power projects, it has recently begun to cut subsidies to those high-cost ventures in favour of hydroelectric development. 

The nation’s renewable energy goals will be met almost entirely with nuclear and hydro expansions, the committee report says.

Fossil fuels and nuclear power “will be the engines of growth, and those that possess them, and use them responsibly, will lead the world in technological innovation and economic might”, the study says.

“Policymakers in the US must also embrace this reality - and resist the temptation that government mandates, taxes and regulations are the pathway to America’s economic resurgence,” the report concluded.

The Senate Environment Committee minority report comes in the wake of a study issued last month by the US Congressional Research Service (CRS) showing that the US holds the world’s largest reserves of fossil fuel resources, including oil, natural gas and coal.

That CRS analysis showed that US fossil fuel reserves are 250% higher than those of Saudi Arabia and some 270% more than China’s hydrocarbon resources.

“Coal, oil, natural gas, nuclear, hydropower, as well as solar, wind and geothermal - let’s develop them all, and let’s innovate and deploy,” Inhofe said in releasing the committee report.

“With communist China on the rise, we can’t afford any other course,” he said.

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Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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