With China’s economy currently growing by almost nine per cent and industrial production running at around 16 per cent, it continues to be hungry for resources such as oil. So just how exactly the energy crisis will unfold will depend heavily on China’s action -- or inaction.

“I think on energy demand you just have to look at the roads in China and -- maybe it was the stimulus policy -- to go from eight million cars to 12 million cars from 2008 to 2009 tells you that China is going to play a very important role in oil demand. And a lot of their policies have been saying how do we deal with that, because as the incomes go up, you start to get people buying a lot more cars and that's what's happening,” says Daniel Yergin, chairman of the IHS Cambridge Energy Research Associates.

India, he adds, is the other key player though its oil demand is only about a third of China's. “India is a number of years behind China in terms of motorisation. Of course India also hasn't invested in infrastructure and road infrastructure in the way China has and that will be a constraint there. We call them emerging markets; maybe we'll have to find a new term for those countries, but they will be the drivers of growth in oil demand in the years ahead.”

“China is so central to this (energy) problem and so important that you can use them as the example for everything,” adds Professor Bill Hogan, Research Director of the Harvard Electricity Policy Group. “China is doing major investment in developing nuclear power, in wind power and in solar technologies. It’s developing new transport systems and building a new coal plant every week. So it's both the good and the bad, just because of the scale of China.”

The signs are good though. A recent report, ‘Responsible Competitiveness in China 2009: Seizing the Low Carbon Opportunity for Green Development’ presented at the EU-China Business Summit in Nanjing, found that China is indeed developing a distinctive low carbon and responsible pathway.

“(This report) shows that Chinese businesses have made significant progress in responsible competitiveness since our last benchmark in 2007,” says Alex McGillivray, head of AccountAbility’s global Responsible Competitiveness programme, which co-authored the report. “This is especially true in the key areas of responsible competitiveness such as governance, energy efficiency, human resources, supply chain management, and the uptake and stewardship of voluntary standards and reporting.”

Yergin is also optimistic: “I think China's viewpoint has evolved a lot (in recent years) ... Focusing on climate change also means a focus on the issues that have a daily impact on people's lives in China in terms of pollution, and that's also the emphasis on energy efficiency ... The speech of President Hu Jintao (to reduce its carbon intensity “by a notable margin” by 2020) at the UN, I think, was a pretty clear message.”

“But I think that the Chinese are also at this point saying ‘we're not going to subscribe to binding targets; we're going to find our own way,’” he adds, saying that coal in particular is going to be part of the energy agenda between the US and China because of the abundant amount of coal that China currently uses.

Hogan, in fact, says he has a “hard time seeing a future without coal generation”, simply because “there’s so much coal.”

“So there's no solution without China. There's no solution without the United States. There's no solution to this problem without India and Brazil. We have to get everybody involved in this.”

Daniel Yergin and Bill Hogan took part in Singapore International Energy Week which was held in mid-November.

First published: December 4, 2009

Last updated: December 21, 2009

KC 12/09