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61 the national bureau of asian research nbr special report #47 | november 2014 MIKKAL E. HERBERG is a Senior Lecturer in the Graduate School of International Relations and Pacific Studies at the University of California–San Diego and Research Director of the Energy Security Program at the National Bureau of Asian Research. He can be reached at . Forging a New Energy and Environmental Balance: Conclusions and Implications for the Asia-Pacific Mikkal E. Herberg 63 CONCLUSIONS AND IMPLICATIONS FOR THE ASIA-PACIFIC u HERBERG T he essays, discussion, and analysis that emerged from the National Bureau of Asian Research’s 2014 Energy Security Program provide rich insight into China’s many energy challenges and the domestic and regional impact of the country’s rising energy demand. China’s emergence as the world’s single largest energy consumer over the past two decades and the country’s phenomenal growth mean that these issues are now a question not just of how supply can meet demand but of what role China will play in the global arena as it adapts to its emerging role as an energy superpower. Growing reliance on imported oil and gas over the past two decades has catalyzed a far more active energy diplomacy that is accelerating China’s emergence as a global power. This trend has been further magnified by the environmental impact of China’s rising coal and oil consumption, which has led to an enormous increase in global carbon emissions and thrust China uncomfortably to the center of the global climate change debate. Altogether, Beijing’s energy choices and strategies reverberate through global energy markets, creating numerous geopolitical and environmental challenges. The analysis and discussion of the program converged around several major themes that will go a long way toward determining China’s future impacts on global energy and environmental outlooks. First, discussants overwhelmingly agreed that China is in the midst of a historic and extremely difficult domestic energy transition. The two-decade surge in consumption has become the source of new and more complex challenges for the country’s energy policy, energy infrastructure development, and environmental policy. In particular, both the authors of this report and the discussants at the June workshop noted that dramatically rising air pollution is forcing the leadership to move more decisively on addressing the negative environmental and public health consequences of the country’s clearly unsustainable energy mix. Beijing is simultaneously struggling to, on the one hand, slow the pace of economic growth in order to reduce the dominance of heavy, energy-intensive industries and, on the other hand, reduce the enormous amount of energy required to sustain the current model of economic growth. Hence, the sheer scale of China’s energy and environmental challenges is truly daunting. Beijing’s success in addressing these challenges will have significant implications not only for China but for the environmental, economic, and geostrategic outlook for Asia and the world. With the goal of addressing these concerns, China’s current government has continued or launched a number of major policy initiatives that aim to reshape the country’s energy portfolio. These initiatives include efforts to reduce energy intensity, reduce carbon emissions and air pollution, reform state-owned enterprises, and reform the pricing systems for energy products. As Philip Andrews-Speed’s insightful analysis aptly highlights, different energy policies in China emerge from different contexts that shape their potential for success or failure. As a result, some of China’s extant energy reforms are more likely to succeed, while others are more likely to fail based on expectations derived from past efforts. Participants at the June workshop concurred that overall progress is likely to be slow, with prospects for success varying tremendously across a range of key policy initiatives. For example, efforts to address energy-related air pollution in major Chinese cities have a reasonably good chance of near-term progress. Air pollution has become a major concern for the leadership, and a comprehensive program of reforms to limit coal use, slow the rapid expansion of motorization in large cities, and improve tailpipe emissions, among other measures, has strong support from the central government. On the other hand, progress on introducing carbon markets—another important government initiative—is likely to be slow due to the complexity of the issue, local opposition, and industry resistance. Reform of the monopoly 64 NBR SPECIAL REPORT u NOVEMBER 2014 power of state energy enterprises also seems likely to be very slow due to industry resistance and low leadership...


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