Report: U.S. Needs Coherent Policy on Asia-Pacific Energy Matters

Total primary energy consumption in China could grow
from 916 million tons of oil equivalent (mtoe) in 1995 to 1,405 mtoe to 1,774
mtoe by the year 2010 and 1,762 mtoe to 2,691 mtoe by 2020. While the bulk of
China’s energy demand will continue to come from industrial activities for the
foreseeable future, the transportation sector is beginning to represent an
increasing share of total energy use. In fact, at a per capita Gross Domestic
Product (GDP) growth rate of 5 percent, energy demand in the transportation
sector is projected to triple by 2015, fueling a sharp increase in oil and
petroleum product use.

The implication of China’s shift to a world energy
importer are significant. During the next 10 to 20 years, China will have to
participate in international energy trade on a substantial and sustained basis,
form energy supply and transportation alliances, and make security and
environmental choices about fulfilling its burgeoning energy needs. These
alliances and trade and policy options will be constrained by the unwieldy
organization of China’s oil and gas industry and by the aged and inefficient
refining and distribution infrastructure that exists in China today.

China sees itself both as an emerging gas market and a
land bridge for regional gas distribution. A natural gas-oriented energy
strategy could provide incentive to China to give serious consideration on how
to improve relations with neighboring countries. But in order for joint energy
linkages and large-scale, cross-border energy projects to succeed, distrust
surrounding China’s long-term geopolitical goals will have to be
overcome.

Subgroups of social groups, special interests and civil
society are providing a rich texture to China’s relations with the United
States. In the longer run, these underlying layers will have a deep influence on
the development of U.S.-China relations.

China should make development of natural gas resources
a key priority of its national energy policy. The United States should encourage
and assist China in enhancing its natural gas industry as a means to diversify
away from heavy reliance on coal. The U.S. Department of Energy should be
supported strongly in its efforts to provide information and assistance about
natural gas market regulation, operation and development. Western government and
nongovernment agency support and trade credits should be provided to energy
companies that invest in major gas infrastructure projects in China.

“U.S. policy-making toward China should be coordinated at a
high level,” Jaffe states in the executive summary of the research
report.

“Negotiations on wide-ranging issues, such as trade, energy,
environment, weapons proliferation, security, geopolitics, Asian regional issues
and academic and research exchanges should be guided by a broader, more
consistent and comprehensive set of goals and guidelines developed and
communicated effectively through inter-agency working groups. In this fashion,
the United States could develop as clear and consistent dealings as possible
with China’s leadership at many levels of its government and private business,” Jaffe said.

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List of research papers follows.

“China and Long-Range Asian Energy Security: An Analysis of the
Political, Economic and Technological Factors Shaping Asian Energy
Markets”

April 1999

Research Papers

“First Things First: Development and Global Warming”

by
Michael Warby; editor, Institute of Public Affairs Review; Peter Hartley;
Professor, Department of Economics, Rice University; Ken Medlock; Department of
Economics, Rice University

“Emerging Technology in the Energy Industry and its Impact on
Supply, Security, Markets and the Environment”

by Amy Jaffe; senior energy
analyst, James A. Baker III Institute for Public Policy, Rice
University

“Chinese Foreign Policy in the Twenty-First Century: Insights
from the Two-Good Theory”

by T. Clifton Morgan, professor, Department of
Political Science, Rice University, and Glenn Palmer, professor, Department of
Political Science, Texas A&M University

“Privatizing China’s State-Owned Oil Companies”

by Steven W.
Lewis; Department of Political Science and director, Transnational China
Project, James A. Baker III Institute for Public Policy, Rice
University

“Post-Cold War Perspectives on Sino-American Relations and the
New China Threat”

by Joe Barnes; research fellow, James A. Baker III
Institute for Public Policy, Rice University

“Accounting for the Environment Factors: Implications for OECD
and Asian Growth and Composition of Energy Demand”

by Byung Mok Jeon;
Department of Economics, Rice University, and Robin C. Sickles; professor,
Department of Economics, Rice University

“The Gas Dragon’s Rise: Chinese Natural Gas Strategy and Import
Patterns”

by Xiaojie Xu; research fellow, The Petroleum Strategic
Studies

“Energy and Conflict in Contemporary Asia”

by Fred von der
Mehden; Albert Thomas Professor of Political Science Emeritus, Department of
Political Science, Rice University

“China’s Growing Energy Dependence: The Costs and Policy
Implications of Supply Alternatives”

by Amy Myers Jaffe, senior energy
analyst, Baker Institute, Rice University, and Ronald Soligo, professor,
Department of Economics, Rice University

“The Composition and Growth in Energy Demand in China”

by
Ronald Soligo, professor, Department of Economics, Rice University, and Kenneth
Medlock, Department of Economics, Rice University

“China’s Military Posture and the New Economic
Geopolitics”

by Evan Feigenbaum, fellow, Belfer Center for Science and
International Affairs, John F. Kennedy School of Government, Harvard
University

“A Seminar Paper: Social, Cultural and Religious Factors
Influencing China’s Energy Supply”