7. China

China / Oil / Climate


"Searching for Oil: China's Oil Initiatives in the Middle East"

British China-Climate patron.


China

The US and China, the two biggest GHG emitters must form the core of a global climate agreement. This requires two changes: (1) the US must drop its demand for a "declining cap" on Chinese emissions, and (2) US and China must make use of the common interest in oil security.

Energy security and climate stability

These can easily run into conflict, but with they can also work together and can create powerful allies. 

Potential conflicts: Some policies increase energy security but harm the climate. These are not the best policies for energy security, and they should be avoided.

  • Using coal to produce ethanol or "liquid coal" 
  • Offshore drilling
  • production of oil from oil shale or tar sands
Alignments: These more powerful policies increase energy security and help the climate.
  • Measures that cause oil conservation (e.g., taxes & fuel-efficiency standards)
  • Ultra-green biofuels (see Global rebound)
  • An international consumers' cartel
Confusions: These cause people to see conflicts that don't exist.
  • Believing that using domestic biofuel protects us from global oil-price shocks
  • Believing that offshore oil will be used domestically an significantly lower gas prices
Back to China

By 2030, China is predicted to be importing 80 percent of its oil, and it is acutely aware of this problem. Already its must urgent energy policy by far is its attempts to lock in future suppliers of oil. Although this could be seen as antagonistic to climate policy, the problems caused by China's oil addiction would be greatly alleviated by a strong global climate policy.

Of course the same holds for the United States. This means that, not only are energy-security and climate policy largely aligned, but that the United States and China have a strong common interest in an effective climate policy. And this common interest has a more immediate payoff than climate policy.

Every model of global climate policy that addresses its impact on world oil prices finds that climate policy reduces the world price of oil. Although this lower price will encourage the use of oil outside of an oil-climate agreement, it occurs only because climate policy lowers oil consumption.

Why "global" matters for oil policy

If the US conserves oil, it reduces the world oil price, which helps China. If China conserves oil, it helps the US. A lower world oil price is a global public good just like a better climate. This is way both energy-security and climate policies are so difficult, but it means that China and the US need each other's help on oil, just as they do on climate. Given the tension between the two on climate policy, this alignment of interests should not be overlooked.

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