How will changing patterns in global energy consumption affect US security and the effectiveness of its military? Today, the Strategic Studies Institute profiles these patterns – including developments in China, India and elsewhere – in order to assess how the US might respond.
By Editor: John Deni for Strategic Studies Institute of the US Army War College (SSI)
This is an excerpt from New Realities: Energy Security in the 2010s and Implications for the US Military
China’s Burgeoning Demand and its Quest for Resources
Michal Meidan
China’s energy profile is changing rapidly. After years of breakneck economic growth and ravenous appetite for natural resources, the Chinese government has committed to putting China on a more sustainable development path. Beijing has introduced energy efficiency goals and policy measures aimed at reducing China’s carbon footprint by increasing the share of non-fossil fuels to 15 percent of the Chinese energy mix by 2020 and raising the share of gas in the country’s energy mix from roughly 5 percent in 2010 to roughly 12 percent in 2020.
But even though renewable energy and nuclear technology will gradually offset demand for coal, China’s continued dependence on oil and rising demand for gas—that it will be incapable of supplying wholly from domestic sources—will sustain a high dependence on imported resources. With China’s domestic oil production stagnating, the International Energy Agency (IEA) expects its import dependence ratio to reach 80 percent in 2030. Beijing has over the past two decades made efforts to diversify its sources of imported oil, but it has only managed to tinker at the margins with its heavy reliance on the Middle East and Africa. China remains dependent on six countries for over half of its oil supplies: Saudi Arabia, Angola, Iran, Russia, Oman, and Sudan. And as demand for imported oil and gas will continue to grow, supply security will remain a prominent feature of China’s energy strategy and its foreign policy calculus.
China’s reluctance to rely solely on imports has led to heavy investments overseas in oil and gas resources, ranging from Sudan to Canada, through Iran and Iraq. Government support for these investments has benefitted China’s commercial actors that have sought to become globally competitive energy producers and traders. Yet this has done little to enhance the country’s supply security: Chinese traders behave according to market dictates for the most part and sell the resources they produce to the highest bidder. Aware of the numerous vulnerabilities it is exposed to, Beijing is trying to diversify not only its supply sources but also its supply routes. While the military has been promoting the need to secure maritime transportation as a means to build its naval capacity, Chinese decision makers have also sought to build cross border pipelines through Myanmar, Central Asia, and Russia in a bid to reduce oil flows through the Straits of Malacca. For all its attempts to purchase assets, “lock in” resources, reduce reliance on maritime transports, and secure sea lanes of transportation, no strategy – as Beijing and its companies are learning – is infallible. The reality remains that much of the oil and gas that is vital to China’s economic growth will continue to be produced in volatile countries, traded on international markets, and flow through sea lanes that ultimately pass through the Straits of Malacca.
The sum of these diversification efforts is a growing global footprint. Yet China has neither the intention nor the capacity to safeguard its interests worldwide. Moreover, China is not ready to assume the United States’ role as provider of public goods such as freedom of navigation in international waters, or to secure the stability of producer countries. Beijing’s preference therefore will remain to free-ride on indirect U.S. security guarantees. With the limits of this preference becoming increasingly palpable, China will begin to experiment with a model of reluctant and narrowlyfocused participation in third countries. This presages an era of rising coordination, but also friction, with the United States.
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