China\u2019s new central position in the power structure of the international system and its increasingly assertive actions \u2013a reflection of its greater self-confidence in global affairs\u2013 keeps its political and economic rivals on the watch for any moves that might alter the strategic competition being waged in different arenas and areas of international relations. Their caution turns into suspicion whenever China\u2019s actions affect the US, its main strategic competitor.<\/p>\n\n\n\n
The energy sphere is no exception to this rule. Since 2009, China has been the world\u2019s largest energy consumer, which has had geopolitical repercussions that have not been without tensions. The energy issue is inextricably linked to other cross-cutting issues that condition and are conditioned by it, even if explicit reference is not always made to them: China\u2019s economic growth, its rivalry with the US and the impact on the environment. And from the intersection between energy and the environment arises the great paradox: China is both the world\u2019s largest producer and consumer of coal (a highly polluting source of energy) and at the same time the largest producer and the largest market for renewable energies and technologies associated with them [1]<\/a>1 \u2014 Ball, J. (2020) “The climate of chinese checks: Easing global warning by greening chinese infraestructure investment”. New York: Brookings Institution. Available online.\n<\/span><\/span>.<\/p>\n\n\n\n As a result of its growth as a manufacturer, China\u2019s energy demand has increased exponentially, which has caused major transformations in the world energy markets. In the first place, China has been occupying key positions in the Middle East, Africa and Latin America, while the US, having achieved self-sufficiency in oil, has been withdrawing from all these areas. In this respect, China\u2019s movements on the energy map have altered the geopolitical order, the game of alliances and relations of interdependence. In the Middle East, for example, China\u2019s relations have extended beyond the commercial sphere and Chinese and Arab companies are jointly involved in industrial projects in the sector. Secondly, the exploration of new oil and gas fields has heightened territorial tensions in areas such as the East China Sea (Sino-Japanese conflict over the Diaoyu \/ Senkaku Islands) and the South China Sea (conflict over the Spratly and Paracel archipelagos between China and the other neighbouring countries). The latter conflict is also associated with the control of the sea lanes through which Asian energy imports from the Persian Gulf transit. In the third place, more recently, China\u2019s energy power has extended to the field of renewable energies, adding a new element of friction to the strategic competition: China competes with the world\u2019s largest companies (it is currently the country with the highest number of patents in the renewables sector, with 30% compared to 18% for the US and 14% for the EU and Japan) [2]<\/a>2 \u2014 IRENA (2019) “A New World. The Geopolitics of the Energy Transformation”, IRENA: Abu Dabi. Available online.\n<\/span><\/span>; its market exceeds that of the EU as a whole and doubles the renewable power of the US.<\/p>\n\n\n\n Some examples of the progressive and feared rise of Chinese energy power include the fact that Chinese companies have carved out a niche for themselves by building photovoltaic installations in remote areas of Africa or wind farms in Latin America; that China is working together with Russia to develop wind energy in the Arctic and to build nuclear power plants in Tianwan and Xudabao and, on its own, in Pakistan; and that large Chinese business groups are \u201ccolonising\u201d the global energy market by acquiring engineering companies in the sector.<\/p>\n\n\n\n From the intersection between energy and the environment arises the great paradox: China is both the world\u2019s largest producer and consumer of coal and, at the same time, the largest producer of renewable energies and technologies associated with them<\/p><\/blockquote>\n<\/div>\n\n\n\n But in addition to being an energy powerhouse, China is the global energy finance giant. In 2017, the investments of its two public banks (China Development Bank and China Export-Import Bank) equalled the sum of those of all Western-led multilateral banks. Its investments in renewable energy, however, are a very small part of the total, as most of China\u2019s energy investments are still in fossil fuels, for obvious reasons: China finances countries with developing economies whose growth-focused governments do not prioritise renewable energy [3]<\/a>3 \u2014 Liu, C. and Urpelainen, J. (2021) “Why the United States should compete with China on global clean energy finance”, New York: Brookings Institution. Available online.\n<\/span><\/span>. Nevertheless, it is noteworthy that China is one of the world leaders in the technologies for manufacturing solar panels, wind turbines and electric batteries, and its weight in the overall production in this sector has contributed to lower prices.<\/p>\n<\/div>\n<\/div>\n\n\n\n Since the 1990s, but with greater intensity since the beginning of the 21st century, China has been immersed in a process of energy transition that has led it to reorient its energy policy, currently aimed at a triple goal: guaranteeing its energy security, improving its energy efficiency and evolving towards the sustainability of its energy system.<\/p>\n\n\n\n Energy insecurity has been a burden that the Chinese economy has been eager to shed ever since the exponential growth of its energy production boosted its energy demand and turned it from an energy exporter to an energy importer in 1993. China has been trying for years to achieve hydrocarbon self-sufficiency and secure energy supplies at reasonable prices. A large part of its expansionary strategy in the world has been motivated by energy insecurity and the associated need to diversify its sources of supply. Thus, while until 2000 its oil supplies came mainly from the Persian Gulf, from 2001 onwards oil supplies from Africa and Latin America became increasingly important. China\u2019s investment and trade strategy conquered markets. But, just as important, if not more so, was that it guaranteed access to energy resources. Another pillar of China\u2019s energy transition has been the construction of connecting infrastructures.<\/p>\n\n\n\n The Belt and Road Initiative, launched in 2013, aimed at linking East Asia with Europe through an extensive network of highways, sea lanes and railways, gas pipelines and border crossings that includes the creation of 15 special economic zones, seeks, in general terms, to expand its political and economic influence worldwide, promote the international use of the renminbi and help guarantee China\u2019s energy security. On the one hand, it aims to counterbalance the American \u201cpivot to Asia\u201d strategy politically and economically by increasing Chinese investment opportunities, conquering new markets, strengthening economic growth and boosting domestic consumption. On the other hand, it aims to secure long-term energy supplies from Central Asia and the Middle East through routes that cannot be disrupted by the US military [4]<\/a>4 \u2014 Chatzky, A. and McBride, J. (2020) “China\u2019s Massive Belt and Road Initiative”, New York: Council on Foreign Relations. Available online.\n<\/span><\/span>. It thus serves the threefold objective of gaining geopolitical space, consolidating its new growth model and ensuring energy security.<\/p>\n\n\n\n Energy efficiency is another outstanding task on which the Chinese authorities have focused their attention over the past decade. Between 2010 and 2019, China has made great efforts to improve the efficiency of its energy system. The International Energy Agency estimates that without these improvements its energy consumption would have been 25% higher. Efficiency is being achieved through policies to reform consumption and curb unreasonable energy use through national water-saving plans, improving the resource pricing mechanism and promoting waste separation. Consumption reduction is also partly due to the country\u2019s transition towards a service economy and towards high-end, smart and green production [5]<\/a>5 \u2014 “Aspectos destacados del comunicado de la quinta sesi\u00f3n plenaria del XIX Comit\u00e9 Central del PCCh”. Observatorio de la Pol\u00edtica China, October 30, 2020. Available online (in Spanish).\n<\/span><\/span>.<\/p>\n\n\n\n PBut perhaps China\u2019s biggest energy challenge was, and still is, to reduce pollution and move towards sustainable energy systems. China, as mentioned above, is the world\u2019s largest energy consumer (22% of global consumption in 2018) and has traditionally been a major consumer of highly polluting fossil fuels (in 2018 it was responsible for 29% of carbon emissions). Despite the fact that the weight of coal in overall Chinese energy consumption fell from 68.5% in 2012 to 57.7% in 2018, even today, one out of every four tonnes of coal used in the world is burned to produce electricity in China, which remains the world\u2019s largest producer (3.97 billion tonnes in 2019) [6]<\/a>6 \u2014 Zhang, F. (2020) “China ahead of the schedule in non-fossil fuel goal-white paper”, Singapore: ICIS. Available online.\n<\/span><\/span>. Paradoxically, in just a few years China has also become a leading player in renewable energies [7]<\/a>7 \u2014 Amin, A. (2019) “Renewable Energy: Will China Be the Superpower?”, Newsweek, June 24, 2019. IRENA, op. cit.\u00a0Available online.\n<\/span><\/span>.<\/p>\n\n\n\n China is now the largest exporter and installer of solar panels, wind turbines and electric vehicles. In 2016, for the first time, its investment in renewable energy was higher than its investment in gas and oil. In 2017, its investments accounted for 45% of global investment in renewable energy. China is estimated to overtake the EU in photovoltaic installations by 2021. It is gradually becoming one of the leaders of the so-called \u201cnew energy era\u201d that will reduce the influence of fossil fuel exporters and, with it, will outline new geographies of energy trade in which connectivity (networks and network infrastructures) will take the centre stage away from the current major maritime energy transport routes (mainly the Straits of Hormuz and Malacca). In 2019, China had already surpassed the target of achieving 15% of its energy from renewable sources by 2020. Now, the goal is to reach 20% by 2030.<\/p>\n\n\n\n China is now the largest exporter and installer of solar panels, wind turbines and electric vehicles. In 2016, for the first time, its investment in renewable energy was higher than its investment in gas and oil<\/p><\/blockquote>\n<\/div>\n\n\n\n The energy transition will surely create winners and losers and, therefore, tensions between renewable and traditional energy industries at home [8]<\/a>8 \u2014 In China, the traditional energy lobby is controlled by the Government while the new energy lobby is driven by private companies set up over the past decade. Ball, J. op. cit. \n<\/span><\/span>, as well as between producer and exporting countries. By positioning itself well in the world of renewables, China would gain greater energy security and, therefore, greater freedom in defining its strategic priorities. In this context, the US is wary of China\u2019s \u201cwin-win\u201d formula, and many voices from across the US political spectrum are critical of China\u2019s paradoxical situation as a leader in renewables and, at the same time, a major polluter. However, it should be remembered that, nonetheless, China is the country that is contributing most to the decarbonisation of our planet.<\/p>\n<\/div>\n<\/div>\n\n\n\n The major effects of the COVID-19 pandemic on all areas of international relations have also been felt in the energy market. The total shutdown of transport and the drastic decline in industrial activity have had a major impact on supply and demand. Overall, global energy demand fell by 5% in 2020 compared to 2019, mainly affecting coal and oil demand and consumption, which in turn led to a 7% drop in CO2 emissions [9]<\/a>9 \u2014 World Energy Outlook 2020. Paris: IEA.\n<\/span><\/span>. But the reduction in energy demand and the post-COVID-19 economic crisis has also had an effect on renewables: China remains the world leader in wind and solar energy production, but its growth is slower than in recent years, both in terms of the capacity of installations and in terms of the construction of new installations, due to a less generous subsidy policy [10]<\/a>10 \u2014 Wind and solar power accounted for 9% of all electricity generated by China in 2019, an increase of 1% from the previous year, but still lower than in 2015. At this stage, it is too early to determine whether this is merely a slowdown resulting from the post-COVID-19 economic slowdown or a reversal of the trend of recent years. However, the indications from the drafts of the 14th Five-Year Plan (2021\u20132025) for economic and social development, which was due to be approved in March 2021, are not very encouraging. In terms of discourse, China is not abandoning the energy transition: the 14th Plan includes environmental protection and the fight against climate change as one of the three main axes on which the economic and social development plan pivots. In this respect, the plan is a continuation of previous programmes and follows the guidelines laid out in Xi Jinping\u2019s speech to the UN General Assembly (September 2020): China aims to reach peak carbon emissions by 2020 and to achieve neutrality by 2060 [11]<\/a>11 \u2014 Andrea Rinc\u00f3n, “China se compromete en la ONU a alcanzar la neutralidad de carbono en 2060”. France|24, September 23, 2020. Available online (in Spanish).\n<\/span><\/span>. <\/p>\n\n\n\n However, references to energy policies suggest some contradictions between the market-oriented, long-term reform approaches and short-term administrative planning. The former continue to prioritise the development of renewable energy and propose opening up the sector to more actors, but the latter leave planning and target-setting in the hands of state officials, grid companies and incumbents. These contradictions between China\u2019s two energy lobbies may hold back change and encourage business-as-usual policies in China\u2019s energy markets. The 14th Plan echoes the anti-globalisation trend represented by countries that practice unilateralism and protectionism (a covert reference to the US). And, paradoxically, the world\u2019s largest Communist country presents itself as a more liberal country than the US, multilateralist promoters of capitalist liberalisation [12]<\/a>12 \u2014 King & Wood Mallessons (2021), “China\u2019s 14th Five-Year Plan: a blueprint for growth in complex times”, Lexology, February 9, 2021. Available online.\n<\/span><\/span>.<\/p>\n\n\n\n In this context of global contraction, the Plan lays out the other two main axes of the new pattern of growth: development sustained by domestic consumption to cope with the weakening of the international economic cycle, and technological self-sufficiency. The new pattern of development is based on the reorientation of production towards advanced industrial sectors (5G technology, Big Data, AI, internet of things, integrated circuits\u2026), new types of business (electric vehicles, e-commerce, payment systems\u2026) and new business models (Business to Consumer, Business to Business\u2026). In the Plan, security is presented as the prerequisite for development, and development as the guarantee of security. It could be inferred from this that the serious trade crisis with the US, coupled with the crisis resulting from the pandemic, seems to have once again prioritised security and relegated environmental protection.<\/p>\n\n\n\n Even so, China\u2019s response to the COVID-19-generated economic crisis so far has been substantially different from the response to the 2008 financial crisis, when the government poured four trillion renminbi into construction projects that boosted energy consumption. This time around, there have been no stimulus incentives for construction but, on the other hand, investment in high-carbon infrastructure continues on a massive scale and, in February 2020, Beijing eased restrictions on investment in coal-fired power, perhaps as a measure to counteract the effects of the post-pandemic economic downturn.<\/p>\n\n\n\nTransformations in China\u2019s energy landscape: security, sustainability, and efficiency<\/h5>\n\n\n\n
The effects of the pandemic on China\u2019s energy policy<\/h5>\n\n\n\n
\nHore, A. (2020), “Trends and Contradictions in China\u2019s Renewable Energy Policy”, New York: Columbia\/SIPA, Center on Global Energy Policy. Available online.\n<\/span><\/span>. In addition, since the pandemic, the government has approved the construction of new coal-fired power plants, and there has been a governmental silence on pollution levels and on the progress of climate change.<\/p>\n\n\n\n