China's Sovereign Wealth Fund Investments in overseas energy: The energy security perspective

Sovereign Wealth Funds (SWFs) are state-owned investment funds that invest in real and financial assets. Since the global financial crisis in 2008, SWFs' investments have resulted in national security concerns of host countries because SWFs continue to expand rapidly and have become increasingly active in real-time strategic transactions. Given this background, China, which has the biggest SWF in the world, is facing severe challenges of energy resources shortages while its plan is to accomplish social and economic development goals. Energy security is a key driving force of the energy investment policy of China's SWFs. This makes the SWF investments more complicated and more politically sensitive. The combination of sovereign rights and the strategic importance of energy also makes geopolitics more complicated and brings more uncertainty to SWF investments. This article explores the relationship between energy security and energy investments of China's SWFs. It is recognised that the energy investment of SWFs must follow a sustainable path to coordinate energy security, economic growth, return on investment and national security concerns. Government policymakers are urged to balance the financial and political returns on SWFs against potential negative effects. The conclusion presents insights for policymakers, energy scholars and SWF researchers.     

China’s energy security: The perspective of energy users

The article explores the energy security concerns faced by China from the point of view of energy users working in government, university, civil society and business sectors. The authors first derive a set of seven hypotheses related to Chinese energy security drawn from a review of the recent academic literature. We then explain each of these seven hypotheses, relating to (1) security of energy supply, (2) geopolitics, (3) climate change, (4) decentralization, (5) energy efficiency, (6) research and innovation of new energy technologies, and (7) self sufficiency and trade. Lastly, the article tests these hypotheses through a survey distributed in English and Mandarin completed by 312 Chinese participants. The conclusion presents insights for policymakers and energy scholars.     

China's energy security,the Malacca dilemma and responses

China's rapid economic growth has led to a huge increase in oil imports. This has raised great concern regarding its energy security because China depends on a single chokepoint, the Strait of Malacca, with nearly three-quarters of its oil imports flowing through the Strait. Given its strategic importance to China and China's little sway on the waterway, this viewpoint focuses mainly on China's concerns about and efforts at both demand and supply sides towards energy security, in particular regarding the Malacca dilemma, and puts potential Arctic oil and gas into that context.     

Energy supply security and geopolitics: A European perspective

The security of energy supply to the EU is examined in the context of two storylines. Markets and Institutions exemplifies an economically and politically integrated, multilateral world with effective institutions and markets. Regions and Empires involves a world broken up in rival political and economic blocks, competing for resources and markets via political, economic and military power. It is shown that these storylines have a significant impact on the development of the energy market, on the way in which energy supply may be secured and on the effect and applicability of the several types of instruments available. The current EU is geared towards enlargement and a deepening of economic integration, based on the tenets of the post-1945 multilateral world system. The present world tends towards Regions and Empires and suggests that the EU may have to reorient its energy security policy. Energy policy must become an integral part of EU external trade and foreign relations and security policy. The EU should develop its own strategy, actively investing in dialogues with producer countries in the Persian Gulf and Africa and with Russia. Sustainable prosperity and governance in these regions will support EU energy security.     

Shaping China's energy security: The impact of domestic reforms

This paper is a subsequent study of China's energy security situation which concludes that China's energy security has not improved over 30 years of economic reform. The objective of the study is to explore qualitatively why the energy security situation has not improved. To answer the ‘why’ question, the study opens up a new perspective by analyzing the relationship between energy security and energy policies from the macroeconomic reform perspective. This study discusses major reforms that took place over 30 years. It is found that China's macroeconomic reform has restricted the formation of China's energy policies and determined its energy security situation. In essence, China's energy policies are only a reaction to the macroeconomic measures. In other words, China's energy policies are not originally intended to improve energy security, but passive reactions to China's macroeconomic reform. This explains why China did not improve its energy security situation despite 30 years of reform.     

Viability of hydrogen pathways that enhance energy security: A comparison of China and Denmark

Abstract

When designed and built properly, hydrogen energy systems can enhance energy security through technological diversification and minimizing dependence on foreign imports of energy fuels. However, hydrogen can be produced from different feedstocks according to separate pathways, and these different pathways create particular consequences on a nation's overall energy security. The objective of this study is to investigate the superiorities and inferiorities of hydrogen pathways from the perspective of China and Denmark, and to determine which pathways best contribute to national energy security objectives. The results are useful for stakeholders and energy analysts so that they can correctly plan and research the most socially optimal portfolio of hydrogen technologies.     

Conceptualizing and measuring energy security: A synthesized approach

This article provides a synthesized, workable framework for analyzing national energy security policies and performance. Drawn from research interviews, survey results, a focused workshop, and an extensive literature review, this article proposes that energy security ought to be comprised of five dimensions related to availability, affordability, technology development, sustainability, and regulation. We then break these five dimensions down into 20 components related to security of supply and production, dependency, and diversification for availability; price stability, access and equity, decentralization, and low prices for affordability; innovation and research, safety and reliability, resilience, energy efficiency, and investment for technology development; land use, water, climate change, and air pollution for sustainability; and governance, trade, competition, and knowledge for sound regulation. Further still, our synthesis lists 320 simple indicators and 52 complex indicators that policymakers and scholars can use to analyze, measure, track, and compare national performance on energy security. The article concludes by offering implications for energy policy more broadly.     

Renewable corn-ethanol and energy security

Though corn-ethanol is promoted as renewable, models of the production process assume fossil fuel inputs. Moreover, ethanol is promoted as a means of increasing energy security, but there is little discussion of the dependability of its supply. This study investigates the sensibility of promoting corn-ethanol as an automobile fuel, assuming a fully renewable production process. We then use historical data to estimate the supply risk of ethanol relative to imported petroleum. We find that devoting 100% of US corn to ethanol would displace 3.5% of gasoline consumption and the annual supply of the ethanol would be inherently more risky than that of imported oil. Finally, because large temperature increases can simultaneously increase fuel demand and the cost of growing corn, the supply responses of ethanol producers to temperature-induced demand shocks would likely be weaker than those of gasoline producers.     

Terrorist targeting and energy security

Sudden, short-term disruptions seriously endangering energy security can be triggered by a variety of events—among them attacks by terrorists. This study investigates terrorist attack practices against energy infrastructures and discusses how we may understand them. Our results indicate that attacks against energy infrastructures are comparatively few. Also, we find no strong connection between the ideologies of various terrorist groups and their proclivity to attack. In addition, the highly disproportionate number of attacks in a handful of countries highlights the strong geographic concentration of attacks. To explain these findings, we analyze terrorist targeting incentives including intimidation levels, symbolism, attack feasibility, and concerns for stakeholders. We argue that terrorists in general have comparatively few incentives to attack energy supply infrastructures based on our assessment of these factors. Moreover, higher levels of terrorist incidents in states more prone to internal violent conflict may suggest stronger incentives to attack energy infrastructures. When outlining energy security policies, the low frequency of worldwide attacks coupled with the high concentration of attacks in certain unstable countries should be taken into consideration. Energy importing countries could benefit from developing strategies to increase stability in key energy supply and/or transit countries facing risks of internal instability.     

Indicators of energy security in industrialised countries

Energy security has become a popular catch phrase, both in the scientific arena as well as in the political discussion. Yet, in general the applied concepts of energy security are rather vague. This paper sheds some light on concepts and indicators of energy security. First, we conceptually discuss the issue of energy supply security and explain why it is not to handle by one science alone and what economics may contribute in order to structure the topic. After providing a brief survey of existing attempts to define or measure energy security we suggest an additional dimension along which indicators of energy security may be classified: ex-post and ex-ante indicators. Finally, we illustrate our concept on the basis of several simplified indicators. While ex-post indicators are mostly based on price developments, ex-ante indicators are to a greater extent aimed at illustrating potential problems. Our illustration suggests that it is worthwhile to take into account the market structure along with the political stability of exporting countries.     

China's ongoing energy efficiency drive: Origins,progress and prospects

In 2004 China's government launched a vigorous programme to reverse the trend of rising national energy intensity and to reduce intensity by 20% over the period 2006–2010. The aim of this paper is to examine this programme in the context of nearly 30 years of measures to enhance energy efficiency in China, and thus to evaluate the likelihood that today's policies will yield improvements over a longer period. The country achieved a sustained decline of energy intensity in the period 1980–2001 but this trend was reversed in 2002. This reversal arose from a shift in the structure of the economy to more energy-intensive industries and from a decline in the rate of technical innovation. The measures taken since 2003 have been directed principally at energy-intensive industries, but have also addressed other sectors of the economy. Though the energy intensity target for the year 2010 may be achieved, greater efforts will be needed to address a number of constraints which include: the reluctance to use economic and financial instruments; the dependency of energy policy on industrial and social policies; the nature of political decision-making and of public administration; a shortage of skills; and social attitudes to energy.     

Interactions between energy security and climate change: A focus on developing countries

We briefly consider the tensions between climate change and energy security policy imperatives, and highlight some concepts that may bring additional clarity to decision-making at the nexus of the two areas. We focus on developing countries and use the case of the Medupi supercritical coal plant in South Africa. The justification for the plant's construction stemmed from an Integrated Resource Planning process informed by South Africa's national utility. Often, as in the case of South Africa, there are tensions not easily captured in quantitative algorithms between, inter alia, a lack of access to electricity by millions of people (and associated welfare losses) and greenhouse gas emissions from electricity generation. It is difficult to identify any formal processes that have prioritised climate change considerations over those of energy access. Thus, it becomes imperative to have a clear understanding of the consequences of this reality when considering power system expansion. We find that the processes often employed do not provide an entirely satisfactory precedent for future planning analyses, and the justifications do not adequately reflect the complexity of the decision space. Finally, we highlight some options by which these tools might be enhanced in areas including explicit and formal consideration of risk.     

Global energy security and the implications for the EU

The following article will analyse the global and geopolitical dimensions of the future international energy security and its implications for Europe and the EU-27. In this context, I will discuss to which extent the EU's newly proclaimed “Energy Action Plan” of the EU Spring summit of 2007 and its declared common energy (foreign) policy are a sufficient strategy to cope with the new global and geopolitical challenges. The article concludes the following: (1) The interlinkage between globally designed traditional energy security concepts – that rely just on economic factors and “market-strategies” – and domestic as well as regional political stability demands new thinking with regard to both energy supply security and foreign and security policies. (2) Although after the Russian–Ukrainian gas conflict in January 2006, energy security has forced its way up the European energy and foreign policy agendas, the EU-27 member states have largely failed to forge a coherent European energy security and energy foreign policy strategy after their Spring summit of 2007 because its declared political solidarity has been still lacking. But the 2nd Strategic Energy Review of November 2008 has recommended new initiatives to overcome this lack by promoting concrete infrastructure and other projects for enhancing Europe's supply security and its political solidarity as part of a common energy (foreign) policy. If the EU is able to implement the March 2007 and November 2008 decisions, the EU oil and gas demand will drastically reduce and freeze at current levels. In this case, Putin's energy policies by using Russia's energy resources and pipeline monopolies as a political instrument to enforce its economic and geopolitical interests will be proved as self-defeating in Russia's long-term strategic interests. It will reduce Gazprom's gas exports to a much smaller EU gas market than originally forecasted as the result of a deliberate EU policy of decreasing its overall gas demand and by diversifying its gas imports.     

Conceptualising energy security and making explicit its polysemic nature

Twenty-first century access to energy sources depends on a complex system of global markets, vast cross-border infrastructure networks, a small group of primary energy suppliers, and interdependencies with financial markets and technology. This is the context in which energy security has risen high on the policy agenda of governments around the world and the term ‘energy security’ has quietly slipped into the energy lexicon. The limited discourse about the nature of the term or its underlying assumptions has been totally eclipsed by an almost overwhelming focus on securing supplies of primary energy sources and geopolitics. An examination of explicit and inferred definitions finds that the concept of energy security is inherently slippery because it is polysemic in nature, capable of holding multiple dimensions and taking on different specificities depending on the country (or continent), timeframe or energy source to which it is applied. This ‘slipperiness’ poses analytical, prediction and policy difficulties but if explicitly recognised through definitional clarity, new levels of understanding will enrich the policy debate to deal with obstacles impacting on the constantly evolving nature of energy security.     

Determinants of China's energy imports: An empirical analysis

Sustained economic growth in China has triggered a surge of energy imports, especially oil imports. This paper investigates the determinants of China's energy import demand by using cointegraiton and VECM techniques. The findings suggest that, in the long run, growth of industrial production and expansion of transport sectors affect China's oil imports, while domestic energy output has a substitution effect. Thus, as the Chinese economy industrializes and the automotive sector expands, China's oil imports are likely to increase. Though China's domestic oil production has a substitution effect on imports, its growth is limited due to scarce domestic reserve and high exploration costs. It is anticipated that China will be more dependent on overseas oil supply regardless of the world oil price.     

Measuring energy security: Trends in the diversification of oil and natural gas supplies

We present evidence on one facet of energy security in OECD economies—the extent of diversification in sources of oil and natural gas supplies. Viewed from the perspective of the energy-importing countries as a whole, there has not been much change in diversification in oil supplies over the last decade, but diversification in sources of natural gas supplies has increased steadily. We document the considerable cross-country heterogeneity in the extent of diversification. We also show how the extent of diversification changes if account is taken of the political risk attached to suppliers; the size of the importing country; and transportation risk.     

中国的石油安全令人堪忧

近年来,随着中东和北非石油出口国政局动荡、国际油价持续高位波动,石油安全的重要性日益突出。本文将石油安全分为石油供应安全和石油消费安全,建立了石油安全评价指标体系,对中国石油安全进行了定量评估,并与美国、欧盟、日本和印度等国的石油安全进行对比。研究结果表明:2011年中国石油安全的综合指数为57,而同期美国为80、欧盟为77、日本为72、印度为62;且在所选国家和地区中,无论是石油供应安全,还是石油消费安全,中国都处于末位。     

Evaluating energy security in the Asia pacific: Towards a more comprehensive approach

The energy security conundrum – how to equitably provide available, affordable, reliable, efficient, and environmentally benign energy services – is a technology and policy challenge, perhaps unlike any other. The recent article on an energy security in the Asia Pacific by Vlado Vivoda is an excellent starting point for how to best capture the unique energy security challenges facing the region. This article builds on Vivoda’s work, but also points out some shortcomings with his analysis.     

Analysis of China's energy utilization for 2007

China is the world's second-largest energy producer and consumer, so that it is very necessary to analyze China's energy situation for saving energy consumption and reducing GHG emission. Energy flow chart is taken as a useful tool for sorting out and displaying energy statistics data. Energy statistics data is the premise and foundation for analyzing energy situation. However, there exit many differences between China and foreign energy balance. Based on the international criterion of energy balance and some advices given by related experts, the author properly adjusts China's energy balance. And the purpose of this paper is to draft China's energy flow chart for 2007, which is used to study the characteristics of energy production and consumption in China. We find that: (1) coal is the main energy in China, which accounted for 73.2% of total energy supply in 2007; (2) thermal power accounted for 83.2% of the total electricity supply, and 78.43% thermal power was based on coal; (3) in 2007, the secondary industrial sector consumed about 69.93% of energy; (4) China's energy utilization efficiency was about 33.23% in 2007.     

Evaluating energy security in the Asia-Pacific region: A novel methodological approach

This paper establishes an ‘energy security assessment instrument’ based on a new and expanded conceptualisation of energy security. The instrument is a systematic interrogative tool for evaluating energy security of individual states or regions. It consists of eleven broad energy security dimensions associated with the current global energy system. These energy security dimensions take into account numerous quantitative and qualitative attributes of each country’s energy security and policy, and include both traditional energy security concerns and many new factors, such as environmental, socio-cultural and technological. Another dimension, largely absent from previous analyses, is the existence of, and the issues addressed in, energy security policy in each country. This instrument serves as an assessment system with which to evaluate energy security in the Asia-Pacific region. The existing studies on energy security in the Asia-Pacific region suffer from serious limitations. No study to date examines regional energy security policies by adopting a more comprehensive energy security definition as a starting point. Most studies also focus on a single country or issue. Even if they examine energy security in major regional economies, they lack critical comparative analysis. The instrument is valuable as it may be utilised to draw a comprehensive map of regional energy security situation, which can also include comparative analysis of energy security characteristics across the Asia-Pacific region. Ultimately, it may be utilised to set up a framework for improved regional energy cooperation with the aim of providing regional leaders with a blueprint for improving regional energy security and policy.