YERGIN: CHINA & US CAN SHARE

Insights from a Pulitzer-winning, if controversial, expert.

China and America need not be energy rivals
Daniel Yergin, May 20, 2007 (Financial Times)

WHO
Scholar and author Daniel Yergin of Cambridge Energy Research Associates, Henry Paulson, the US SecTreas, Wu Yi, China’s Vice-Premier

WHAT
The topic of energy, in US-Chinese Strategic Economic Dialogue, edition two, can be approached in a way that prevents it from creating a geostrategic rivalry and responds to the environmental challenges of global climate change.
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WHEN
The China-US dialogue takes place the week of May 21.

WHERE
The China-US dialogue takes place in Washington, D.C.

WHY
Yergin contends energy, unlike other topics in the US-China dialogue, can be an area of cooperation:
- China’s demand is increasing rapidly with its economic growth and it seeks to acquire and develop production assets around the world.
- Two key points. 1) China’s total production outside its borders is a fraction of that of just one of the supermajors. 2) Beijing’s need is to ensure sufficient energy to fuel economic growth needed for social stability and absorb almost 20m migrants a year into urban areas.
- The real risks are not from competition but would come if oil and gas get caught in larger foreign policy issues like Iran and Sudan. Dialogue can emphasise the very large common interests the two countries share as the world’s two largest petroleum consumers: The US imports 60% of its oil; China 50%. Together, they consume 35% of world energy. Both benefit from stable markets, open to trade and investment.
- China’s new strategic petroleum reserve can be planned.
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- Coal is another common interest, holders of the largest and second-largest coal reserves in the world, both generating the bulk of their electricity from it. Clean coal and carbon sequestration are vital to both.
- Another copmmon interest is demand. Beijing, looking to grow fourfold by 2020, puts conservation among its top priorities. For China, this sis driven by climate change and local and regional pollution.
- China and the US can agree to remove tariffs and barriers on trade and information exhange in efficiency and renewables technology.

QUOTES
Yergin: “With the way that policies and public opinion are going, that could mean building a permanent agenda out of a twice-yearly dialogue. The benefits would accrue to both countries and, at the same time, would be shared worldwide.”