Academic Bulletin
Book Seminar: China’s Energy Security and Global Governance
By Bui Quoc Khai and Teguh Ganesha
On October 25, the TIU Global Dialogue Committee held a thoughtful session with Dr. Kaho Yu on his latest book, titled China’s Energy Security in the Twenty-First Century: The Role of Global Governance and Climate Change, covering his work from the last 10 years on his PhD thesis around the intricacies of China’s energy security policies and how they interact with its climate policies, as well as its actions on the international sphere.
In his book, Dr. Yu uses a definition of energy security provided by the United Nations Development Programme: ‘the availability of energy at all times in various forms, in sufficient quantities, and at affordable prices.’ As a country of 1,4 billion people – around 17% of the world population – China’s energy needs are immense, with the International Energy Agency recording an energy consumption of 8,259.1 Terawatt hours in 2021. That year, this high energy consumption coupled with rising coal prices after China banned purchases of Australian coal resulted in power rationing across 20 provinces in China, hitting homes and factories alike – highlighting the importance of energy security for the country.
It should be noted that, according to Dr. Yu, China could supply its own energy with its domestic coal supplies should it wish – however, this would unnecessarily increase energy prices and, according to Dr. Yu, runs counter to its current strategy of energy interdependence with other countries. More importantly, Dr. Yu believes that the option is only possible if China completely abandons its sustainability policies and goes against their policies on climate change and the use of renewable energy.
This relation between energy use and climate change is highlighted by Dr. Yu as a global problem that requires a global solution – but of course, some countries are not willing to work together, and thus States need to approach international organizations like the United Nations to work by consensus. China has promised its support for what Dr. Yu terms as ‘the international energy and climate agenda,’ taking on a more prominent role in global energy governance – however, as Dr. Yu seeks to answer, to what extent would China align with the order existing in global energy governance? How would China reshape global governance with its international energy cooperations? What does it mean for global energy transition, for other governments, and broader geopolitics?
In Dr. Yu’s opinion, there has been a paradigm shift in Chinese energy policy since the mid-2000s from traditional realist geopolitical concerns to a greater focus on cooperation and global governance. Such a shift, he argues, was brought about by the rapidly changing global conditions, most notably the potential for conflict in the Middle East and the Malacca Strait, concerns over supply-chain security, and financial integration of China into the global market. In order to better understand the influence of these broad-base changes on China’s diplomatic goals, Dr. Yu examined three case studies in particular: regional bilateral cooperation, the Belt and Road Initiative (BRI), and international organisations.
Initially, China was focused on cultivating regional ties with Central Asia, Africa, and the European Union to diversify their energy input, support expanding trade and investment, and cooperate in the development of green technology. However, due to diverging interests and lack of formal legal frameworks, especially in Europe, the degree of energy cooperation remained less than satisfactory. Still, its approach to Central Asia can be considered as its strongest in its search for regional ties, mainly thanks to the Central Asia-China Pipeline – an important piece of infrastructure linking the countries together.
This investment into energy infrastructure is consistent with China’s wider policies under the BRI, which seeks to integrate various countries with China in various fields, including trade and energy. Geopolitics aside, China’s ambitious drive to revive its ancient silk road and increase trade required investments into infrastructure to support the burgeoning volume of goods coming its way. As Dr. Yu states, this meant a need to develop energy infrastructure like gas or oil pipelines and electricity transmission lines within countries covered by the BRI to move energy across borders. Alongside this was the need for actual energy production to support ports, roads, and other infrastructure of the BRI, mainly with ‘green infrastructure’ projects like solar panels or wind turbines.
According to Dr. Yu, this multinational infrastructure development caused the need for multinational standards and platforms – with China utilizing the Asia Infrastructure Investment Bank as a key policy instrument, whilst also merging existing international organizations like the Shanghai Cooperation Organization under the wider umbrella of the BRI. Dr. Yu believes that this results in an institutionalisation of energy cooperation with a new set of principles and management culture, with a broad membership and stronger legitimacy and agenda setting power on the international scene. However, as Dr. Yu notes, these developments are still in the beginning stages, and time will tell whether China’s multilateral efforts will truly bear fruit.
Finally, China’s stance towards international organisations has been drastically different as well. Due to scepticism of these organisations’ Western leaders, desire to avoid imposed responsibilities, and attachment to their own development path, China has largely eschewed membership in existing groups in favour of direct bilateral negotiation or creation of their own organisations. China’s difficulty to align itself with existing international organizations stems from three reasons, according to Dr. Yu. Firstly, China’s current energy management regime is fragmented, with various companies, ministries, and other government bodies having overlapping jurisdictions and responsibilities but varyingly different goals. Second, there is a gap of understanding of global energy governance between China and the West, where there is a lack of consensus on the potentially controversial pace and goals of energy transition set by Western entities. Third, there is an absence of major energy crises which could drive policy changes.
Prompt action from the West will be necessary as, recently, China has increasingly asserted its own independence and global leadership in matters of energy security. Firstly, China is breaking away from the traditional Western model of multilateral funding to set up its own rival financial system. This move has been interpreted as positive development by the many countries interested in the offer of an exit option from Western-led banks, if only to put greater pressure on the latter. Secondly, Beijing has increased its overseas investment in both new and existing ventures to ensure greater vertical security for its global supply chain – expressed in a policy of asymmetric interdependency and greater integration into the production process, instead of being limited to buying energy. Finally, the expansion of energy infrastructure across national borders has necessitated the setting of new international standards, a task which the Chinese government, arguably the only country capable of doing so in Asia, has vigorously undertaken.