Globalization and Energy Demands in Term Paper

S. pp). For more than ten years, Chinese officials have stated that production from Chinese firms investing overseas is more secure than imports purchased on the international market (U.S. pp). In order to secure more reliable access, Chinese firms are being directed to invest in projects in the Caspian region, Russia, the Middle East and South America (U.S. pp).

The National Intelligence Council's report also states that Europe's energy needs will probably not grow to the same extent as those of the developing world, partly because of Europe's expected lower economic growth and more efficient use of energy (U.S. pp). Europe's increasing preference for natural gas, combined with depleting reserves in the North Sea, will provide an added boost to political efforts that are already under way to strengthen ties with Russia and North Africa, since gas requires a higher level of political commitment by both sides in designing and constructing the necessary infrastructure (U.S. pp). According to a study by the European Commission, the Union's share of energy from foreign sources is predicted to rise from about half in 2000 to two-thirds by 2020 (U.S. pp). Due to environmental concerns and the phasing out of much of the EU's nuclear energy capacity, gas use will rapidly increase (U.S. pp). Deliveries from the Yamal-Europe pipeline and the Blue Stream pipeline will increase Russia's gas sales to the EU and Turkey by more than forty percent over 2000 levels in the first decade of the twenty-first century (U.S. pp). As a result, Russia's share of total European demand will rise from twenty-seven percent in 2000 to thirty-one percent in 2010 (U.S. pp). Moreover, as the largest energy supplier outside of OPEC, Russia will be well positioned to marshal its oil and gas reserves to support domestic and foreign policy objectives (U.S. pp). Algeria, which has the world's eighth largest gas reserves, is also seeking to increase its exports to Europe by fifty percent by the end of the decade (U.S. pp).

On June 07, 2005, Mikkal E. Herberg, Director of the National Bureau of Asian Research Committee appeared before the Senate Foreign Relations Subcommittee on East Asian and Pacific Affairs (Herberg pp). According to Herberg, the issues emanating from China's growing energy needs are so important that NBR is organizing a conference for September 2005 in Washington, D.C. entitled, "China's Search for Energy Security and Implications for the U.S." (Herberg pp). Top energy and geopolitical experts will discuss a wide range of issues, including the outlook for China's energy needs and energy imports, and its emerging and active energy security strategy (Herberg pp). Energy has become a central factor in shaping China's global geopolitical and diplomatic architecture in key oil and gas exporting countries and regions, such as the Persian Gulf, Central Asia, Russia, Africa, and more recently, the Western Hemisphere (Herberg pp). At present, energy nationalism is on the rise in Asia with ominous implications for Asia's future, as energy and strategic relations become increasingly intertwined (Herberg pp). China is the second largest energy consumer in the world, after the United States, and this booming energy demand growth is a reflection of its rapid economic and trade growth, urbanization, population growth and rising per-capita incomes (Herberg pp).

Other areas of Asia are also experiencing a period of extraordinary energy demand growth due to rapid economic growth and industrialization (Herberg pp).

The main difference between China and the rest of Asia is the sheer scale of China's energy demand due to the size of its economy and population, as well as the peculiarities of its domestic energy supply base (Herberg pp). This rapid demand growth is can be seen across the fuel spectrum including oil, natural gas, electricity, coal, nuclear and hydroelectric resources (Herberg pp).

Large domestic supplies of coal have dominated China's domestic energy use and continues to account for two-thirds of total energy consumption, however, rapid economic growth has accelerated oil demand growth and China's decision to expand the use of natural gas will boost future gas consumption (Herberg pp). Although China has been Asia's largest oil producer since the mid-1960's, oil demand is rapidly outrunning the country's domestic oil resources, resulting in rising oil imports (Herberg pp). China is now the third largest oil imported behind the United States and Japan, importing more than forty percent of its total oil needs (Herberg pp). According to the International Energy Agency, China's oil imports will rise more than five-fold by 2030, accounting for eighty percent of its total oil needs (Herberg pp). China, as the rest of Asia, will become heavily dependent on the Persian Gulf for future supplies, and will increasingly have to transit a series of maritime chockpoints (Herberg pp). The East-West Center forecasts that within the next ten years, seventy percent of China's oil imports will come from the Middle East (Herberg pp).

The demand for electricity has also accelerated in recent years, forcing China's government to seek fuels to generate more electricity, leading China to rely heavily on its largest domestic energy resource, coal (Herberg pp). China is the largest producer and consumer of coal in the world and coal accounts for over eighty percent of electricity generation and accounts for two-thirds of China's total energy use (Herberg pp). Coal consumption is expected to double by 2025 with alarming environmental and health implications, as the country will account for one-quarter of the world's CO2 emissions (Herberg pp). Moreover, it is expected that China will become a net importer of coal within the next ten years (Herberg pp).

This boom in electricity demand is also driving plans for the largest single country nuclear power building program in the world, as China plans to build two large nuclear plants per year over the next twenty years (Herberg pp). Extensive hydroelectric development is also planned, and policies are being developed to accelerate the use of renewables, such as solar and wind, however, these will make only a small dent in the electricity demand curve even under the most optimistic of forecasts (Herberg pp).

All of this raises a range of serious environmental and health concerns not only for China, but for the region and the United States (Herberg pp). Acid rain from China's coal burning is already a major problem in Northeast Asia and is causing diplomatic tensions with Japan and South Korea (Herberg pp). Moreover, there is evidence of mercury from China's coal burning being drafted by the jet-stream all the way to North America (Herberg pp). Rising coal consumption along with booming oil consumption will make China the largest source of carbon dioxide emissions globally which raises serious concerns about the effectiveness of any global effort to deal with controlling carbon emissions (Herberg pp).

Martha Caldwell Harris reports in "The Globalization of Energy Markets," that in this era of globalization, one nation's choices will affect the calculus of neighbors (Harris pp). When China courted Saudi Arabia with promises of assured imports, Japan was "rocked with the loss of the Arabian oil concession" (Harris pp). Asia's growing dependence on Middle East oil imports will create new imperatives to strengthen relationships with suppliers (Harris pp). Harris believes that new technologies can help address the environmental problems that are certain to grow more serious and the world population increases to nine billion in the coming decades (Harris pp). Fossil fuel use is the major cause of environmental problems, especially in developing nations where local and regional pollution is growing, and despite promises of hybrid cars and distributed energy generation, such as small turbines and decentralized power generation, market signals have not supported early commercialization (Harris pp).

Seeing global warming as a major threat, Japanese energy experts believe that as it becomes more apparent, there will be negative impacts on energy security (Harris pp). Their perceptions of energy security reflect a broader definition of risk and a greater focus on the Asian region, however even in Europe, there is renewed concern about energy security (Harris pp). According to recent forecasts, the overall import dependence of the European Union will rise to seventy percent for natural gas, eighty percent for coal, and ninety percent for oil by the year 2020 (Harris pp). Imports of Russian gas cold reach as much as forty-five percent of the EU's total, and as energy demands in the developing world rises to surpass the demand of the Organization for Economic Cooperation and Development during this time frame, the EU share of global energy demand will shrink to roughly ten percent (Harris pp).

Also of major concern is the fact that the shallow Straits of Malacca and the sea-lanes between the Middle East and Asia will become more congested with tankers and other ships carrying fuel and commodities (Harris pp). Ninety percent of Japan's oil imports and the majority of South Korea's and Taiwan's oil imports flow through these waters (Harris pp). In…