The Two Giants: Energy Policy in China and the United States

The Two Giants: Energy Policy in China and the United States

Energy System - China

China’s boom

• Average annual growth rate 2000-10: 10%

• From 1990 to 2009, moved from net exporter of oil to world’s second largest net importer

• World’s largest producer and consumer of coal –46% world’s coal consumption

Projected to be top importer by 2014

Electricity system - China

China - Coal

Economy size

• US 16 trillion• China 12 trillion and gaining

• Population– US: 316 million– China 1.4 billion

Oil, Coal consumption – US v China

coal• US 2012 – 0.9 billion short

tons (declining)

• China 2012 – 4.0 billion short tons (rising)

oil• US 2013 – 18.9 million bpd

• China 2013 – 10.7 million bpd

Renewable share in electricity – US v China

China 2012• Hydro –

– 22% capacity

• Other renewables– 6.2% capacity

US 2013• Hydro

– 6.6% energy– 7.4% capacity (summer 2012)

• Other renewables – 6.2% energy– 7.2% capacity (summer 2012)

Growing share of global GHGs

China still modest per capita

Gilley: Authoritarian vs. Democratic Environmentalism

• Authoritarian –concentrates authority in few executive agencies manned by capable and uncorrupt elites seeking to improve environmental outcomes

• Democratic--spreads authority over several levels and agencies of government, including representative legislatures, and that encourages direct public participation from a wide cross-section of society

Gilley: Authoritarian Environmentalism in China

• “Citizen participation is limited to learning and obeying state policies.” p. 291

“A Renewable Energy Law was completed in 2004 after fewer than nine months of drafting and then passed into law with no amendments by an unelected national legislature in 2005” p. 290

China – National Oil Companies

• China National Petroleum Corporation (CNPC) - leading upstream player in China– publicly-listed arm PetroChina,– together account for roughly 60 % domestic oil and 80%

natural gas output• China Petroleum and Chemical Corporation

(Sinopec)– downstream activities (refining and distribution)

• China National Offshore Oil Corporation (CNOOC): offshore oil exploration and production

China GHG policy

• Reduce emission intensity of GDP 40-45% by 2020 (over 2005 levels)

• At Durban , China agreed to negotiate a legally binding treaty (including the possibility of an absolute emission cap) by 2020

Does authoritarian work?

• Can produce a rapid response to problem

• But if fragmentation remains, can undermine implementation due to illegitimacy– Federalism issues

• Low social concern makes authoritarianism more necessary and more difficult

US Energy Policy

• US energy system• Institutions• Policy

US energy system 2012

US energy system

US energy system

US GHG emissions at 1996 levels

Further reading: Is US on track to meet 2020 climate goal?

Energy emissions – 2013 is 10% below 2005

US governance

• Federalism: gives extensive powers to 50 states

• Separation of powers– Congress• 2 equal chambers• House – 435 seat elected every 2 years• Senate – 2 seats per state elected every 6 years

– President – elected separately every 4 years– Courts

US governance: extraordinary majorities

• House: 50% +1• Senate: effective majority is 60%• Treaties: 2/3rd of Senate requires• President needs to sign laws passed by

Congress• If president vetos, 2/3rd of both houses can

overturn

US governance: extraordinary majorities

Congress and president same party: working majority is 60%

Congress and president different party: working majority is 67%

Note contrast to Canada, China

Party Balance in Congress - Obama

• 2009-10 House and Senate Democratic• 2011-2016 House Republican, Senate

Democratic• Current Senate: 46 D – 54 R• Current House: 188 D – 245 R

US energy policy history

• 1973 oil shock prompted– Creation of Department of Energy 1977– Strategic Petroleum Reserve– Corporate Average Fuel Economy Standards

• Every president developed a plan but little coherence

2013 Inaugural: We will respond to the threat of climate change, knowing that the failure to do so would betray our children and future generations.

The path towards sustainable energy sources will be long and sometimes difficult. But America cannot resist this transition, we must lead it. We cannot cede to other nations the technology that will power new jobs and new industries, we must claim its promise. That’s how we will maintain our economic vitality and our national treasure -- our forests and waterways, our crop lands and snow-capped peaks. That is how we will preserve our planet, commanded to our care by God. That’s what will lend meaning to the creed our fathers once declared.

Climate Legislation - federal

• 2009 – House passes Waxman-Markey– 17% reduction by 2020– Riddled with concessions

• 2010 Senate– Coalition building required giving everything away– Coalition of senators fell apart when initiative got framed as

“gas tax”– “on climate change, Obama grew timid and gave up, leaving

the dysfunctional Senate to figure out the issue on its own”• Personal impact

Obama agenda

• Try Congress first – cap and trade• Use administration action if that fails– Core focus on auto standards– Emerging focus on coal• Strong standards on new plants

– New coal plants essentially off the table

• Clean Power Plan: Proposed regulation for existing plants – 30% below 2005 levels by 2030– very controversial

Automobile efficiency standards

• 2001 – US cars and trucks averaged 24.7 m.p.g.

• 2011 --29.6 m.p.g. • New regs: up to 55 m.p.g. by 2025

• Feb 2014: announced intention for new heavy duty vehicle standards

Sustainable Energy Policy 36

State initiatives: renewables

• As of early 2014, 38 states have RPS or Alternative Energy Portfolio Standards; another six have voluntary standards (source)

• California most aggressive – 33% by 2020

State initiatives - GHG

• California leadership– 1990 levels by 2020 (30% reduction)– 80% below 1990 levels by 2050– Cap and trade program now in place

Reflections on Two Giants

• Global leaders in power, energy, emissions• 2/5 of global GHG emission• Different stages on carbon path• Chinese growth core driving force– emission intensity: >factor of 2 difference

• Starkly different political systems• If they cooperated, enormous change possible• Prospects for meaningful cooperation?

U.S.-China Joint Announcement on Climate Change and Clean Energy Cooperation

November 2014 US• New climate target 26-

28 percent below 2005 levels by 2025

China:• peak CO2 emissions

around 2030, with the intention to try to peak early

• increase the non-fossil fuel share of all energy to around 20 percent by 2030