Time:2013/4/11 

In the morning of April 8th 2013, an informal and academic discussion on “Sino-US Energy Security Cooperation” was held at the School of International Studies, Peking University. CISS hosted the event, which was initiated by the US Embassy in Beijing. Against the background of structural shifts in the global energy supply and demand dynamics made possible by the explosive growth of energy production in the United States, there arises the need for exchange of views about how both China and the United States approach their respective concerns about energy security and explore means to make energy security an issue area that enhances trust between the two countries. 

The discussion was chaired by Mr. Zha Daojiong, member of the academic board of CISS and professor of the School of International Studies, Peking University. The American participants were led by the Honorable Mr. Robert Hormats, Under Secretary of State for Economic Growth, Energy, and the Environment. The Chinese team included energy policy and energy security experts from the School of International Studies and the College of Engineering at Peking University, Energy Research Institute of the National Development and Reform Commission, the School of International Studies at Renmin University of China, the China University of Petroleum, and the China Institute of Contemporary International Relations. Over twenty senior graduate and PhD students from the School of International Studies, Peking University were invited to audit the discussion.

Mr. Hormats was invited to lead off the discussion. He noted that worldwide growth in demand for oil, gas and other forms of energy is going to see a rapid rise in emerging Asian countries, China and India in particular. The trans-Pacific region is overtaking the trans-Atlantic region to become the bulk of global energy trade. Energy production in the United States witnessed revolutionary growth in recent years, enhancing U.S. capacity as an energy exporter, especially in natural gas. The United States is committed to further increase production of domestic energy, conventional and unconventional, and develop new energy so as to reduce reliance on imported energy. In addition, the U.S. is interested in playing a greater role in the commercial production of shale gas and other forms of unconventional energy in China. Mr. Hormats sees such interest to be leading to ‘four wins’. One, with increased availability of natural gas, China gets to improve its environment through reducing air pollution, which in turn is conducive to global efforts at environmental protection. Two, through increased shale production, China gets to reduce its dependence on imported energy, while the United States stands to gain commercial interests through participation in that production. Three, when both the U.S. and China enhance their respective capacities of self-supply in energy, it is going to be conducive to allaying concerns about energy transportation security, including that about the sea lanes. Four, for the new administration of the Chinese government and the second Obama administration, enhanced cooperation in energy offers an opportunity for the start of positive interactions between the two sides. Mr. Hormats emphatically noted that energy is an issue area whereby China and the United States have far fewer differences than other ones, like intellectual property protection and cyber security. A real challenge at hand is how China further reforms its policies toward American and other foreign participation in the development of China’s energy resources, with shale gas being an outstanding case in point.

Professor Zha followed by observing that since the 1980s, the basic framework of U.S. energy policy towards China has been to play the role of an enabler to assist China’s effort to supply its own needs. That policy has made tremendously positive contributions to China’s energy development, in oil, gas, coal bed methane, and renewable energy, to name a few. Today, the United States is moving toward energy independence, while China has few options than becoming more reliant on imported energy. The contrast gives rise to multiple voices in China about future American policies towards China in the latter’s pursuit of energy security. As a component to enhance strategic trust between China and the United States, it will be a net positive gesture if the United States opts to treat China as a partner in energy trade. As a matter of fact, the Fujian ethylene joint venture project, a four-way partnership between Sinopec, ExxonMobil, Saudi Aramco, and Fujian province, commissioned in 2007, serves as a useful example for future vertical integration between American and Chinese energy companies. Expansion of the range of energy product trade between the United States and China from coal to liquefied natural gas (LNG) and oil is going to be useful for dissuading those voices in China that are anxious about future change in U.S. energy diplomacy. As a matter of fact, China’s necessity to make fast progress in reducing air pollution in energy consumption centers along its coastal regions is too obvious. This makes a strong case for governmental-level discussions leading to involvement of American and other foreign energy companies in pursuing vertical integration in China’s LNG import and distribution. Last but not least, for China to speed up adjustment of its policies to increase the level of involvement of American and other foreign investments in shale gas and other forms of energy production is also going to have a positive impact on realizing the twin goal of growth in China’s indigenous energy supply and progress in environmental protection.

In the free-flow discussions that followed, participants noted that realization of the goal of more comprehensive energy security cooperation between China and the United States does entail changes in the two countries’ respective energy policies domestic and diplomatic, and that both sides must make efforts to overcome domestic forces of opposition. Against this background, one contribution academics specializing in international politics and energy policy can make is to produce a comprehensive review of the past trajectories of interactions over energy development between China and the United States at both the governmental and industry levels. The purpose of doing so is to give fuller play to knowledge about industry and business interests and perspectives. Such knowledge can help concerned but less informed parties in both countries to get out of the simplified modes of arguing for “cooperation” versus “confrontation” in thinking about future interactions between China and the United States in approaching each other’s energy development. It will also be helpful for exploring feasible means of turning energy security as a cause mutual anxiety to one of mutual support. 

Upon the conclusion of the discussion, in spite of the short two-hour time span, participants from both sides acknowledged utility in expanding participants in the forums of Sino-American energy dialogues from technology experts, industry practitioners and government officials to include academic researchers. Both sides anticipate more dialogue activities that simultaneously involve government, business, and academic interests.