China Eye October 2015 Issue 8 by China Energy Fund Committee

China Energy Fund Committee (CEFC) is a non-governmental, non-profit civil society organization. It also serves as a high-end strategic think tank engaged in energy strategy research, energy and public diplomacy, as well as global energy cooperation and cultural exchanges. CEFC is dedicated to fostering international dialogue and understanding of cultural values, regional cooperation, energy security, and issues relating to China’s emerging place in the world. We aim to promote international cooperation and mutual respect through public diplomacy. We believe an enhanced understanding of one another’s historic legacy and cultural values would lead to a more accurate interpretation of our respective actions. The Committee is supported by a special private grant fully sponsored by China Energy Fund Co., Ltd. The Committee is an NGO with Special Consultative Status, the United Nations Economic and Social Council (UN ECOSOC). Registered in Hong Kong, the Committee obtains tax exemption under Section 88 of the Inland Revenue Ordinance as a charitable organization. Also registered in Virginia, the United States, the Committee obtains tax exemption under Section 501(c)(3) of the Internal Revenue Code as a public charity.

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Appeal for Support China Energy Fund Committee (CEFC) is a not-for-profit civil society organization and a public charity under Sec. 501(c)(3) of the Internal Revenue Code of the USA. It relies on contributions entirely from the public, individuals, groups and foundations. With your financial support, we are able to deliver research programs, launch cultural exchanges, lectures and briefings led by international specialists, enabling us to fulfill our mission to promote international understanding, cooperation, and mutual respect through public diplomacy. CEFC is also registered as a tax-exempt non-governmental organization in Hong Kong. All contributions are tax deductible to the full extent allowed by law. For more information about CEFC activities, please contact JohnTsang@chinaenergyfund.org. We appreciate gifts of any amount. Please make your check payable to China Energy Fund Committee (USA) INC. and mail it to our office which is located at 1100 Wilson Blvd, Suite 2500, Arlington, VA 22209. Please also provide us with your name and mailing address, so that a tax deductible receipt may be sent to you. Thank you for your generous support!

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Editorial Board (編輯委員會) Chairman: YE Jianming (葉簡明) Vice Chairman: CHAN Chau To (陳秋途) Member: HO Chi Ping Patrick (何志平) Member: LO Cheung On (路祥安) Member: ZHANG Ya (張雅) Editor-in-Chief (主編) HO Chi Ping Patrick (何志平) Deputy Editor (副主編) LO Cheung On (路祥安) Executive Editor (執行編輯) ZHANG Ya (張雅) Editorial Assistants (編輯助理) Daniyal NASIR (黎庭耀)

LEE Ching Hang Koch (李政恆)

David Wen RICCARDI-ZHU (朱為文)

--------------------------------Published by China Energy Fund Committee 34/F, Convention Plaza Office Tower, 1 Harbour Road, Wanchai, Hong Kong , China Visit our website at www.cefc-ngo.co --------------------------------For enquiries of distribution in the United States, Please contact CEFC U.S. Office 25/F, 1100 Wilson Boulevard, Arlington, VA 22209, U.S. --------------------------------Editor’s Note The authors whose original contributions were written in Chinese have given their permission for the articles to be translated into English, although not necessarily having vetted the English translation. -------------------------------All rights reserved. No part of this publication may be reproduced in any form or by any means without the written permission of the publisher. ISSN 2311-2506 CHINA EYE‧Issue 8

Editor’s Note

A New Paradigm for Peace and Development: China’s One Belt, One Road Initiative (和平發展新範式：中國倡議的「一帶一路」) This year is of landmark significance for both China and the world. The world will celebrate the 70th anniversary of the founding of the UN and work towards a post-2015 development agenda. China will continue building the Silk Road Economic Belt and the 21st Century Maritime Silk Road, known also as the “One Belt, One Road” initiative. Peace and development are the themes of our times. The world is experiencing profound and complex challenges, including the rise of radicalization and violent extremism, identity-based conflict, and cultural and religious tension. Countering these challenges has called for the use of a wide range of approaches to promote tolerance and reconciliation, respect for cultural diversity and freedom of belief, thought and expression. We need a new paradigm for development to overcome the zero-sum mentalities, and to generate collective, inclusive approaches that are built on trust, dialogue and collaboration among countries. In this context, China’s “Belt and Road” initiative is not only a vision of tolerance and reconciliation among civilizations in Asia, Europe and Africa, but also a part of the global effort to promote peace and development through international cooperation under the post-2015 development agenda. This is why CEFC decided to host a third session of “A China Story”, titled “From Diversity and Tolerance to a Community of Common Destiny: The One Belt and One Road Initiative and a New Model of International Cooperation”.

“One Belt, One Road” – A New Model of Connectivity One year ago, Chinese President Xi Jinping introduced his strategic conception of the “One Belt, One Road” initiative. The initiative involves constructing an economic and cultural corridor along the ancient Silk Road, and is a grand vision of peace, development, and cooperation. Its goal is the realization of win-win outcomes.

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The initiative aims to create the most productive economic corridor in the world, directly benefiting a population of 4.4 billion people – or 63 percent of the global population. The principal participants will be developing economies, together accounting for a collective GDP of 2.1 trillion U.S. dollars – 29 percent of the world’s wealth. Since the initiative was first proposed in 2013, it has been enthusiastically received both at home and abroad. More than 60 states have responded positively to the initiative. Nearly all the major states around the world have agreed to or applied to join the Asian Infrastructure Investment Bank (AIIB), which will finance and facilitate infrastructure construction for Asian countries. The $40 billion Silk Road Fund will also soon start its investments. The initiative aims to promote connectivity of the continents and seas. It is expected, in the coming years, that roads and railways will be built, sea lanes and flight paths will be opened, and oil pipelines and electric grids will be connected. It is a new model of connectivity among peoples. Connectivity, however, is “not merely about building roads and bridges or making linear connection of different places on surface. More importantly, it should be a three-dimensional combination of infrastructure, institutions and people-to-people exchanges and a five-way, multifaceted progress in policy communication, infrastructure connectivity, trade link, capital flow, and understanding among peoples”. China’s initiative has the potential to achieve this, and more.

People-to-People – The Heart of the New Silk Roads The most central element is, perhaps, “people”. Why is this new initiative for regional cooperation named the “Belt” and “Road” instead of the “Group” or “Plan” – like the G7 and the Marshall Plan? The answer is “people”. The new initiative is not just a government-to-government (G2G) platform, but also one for people-to-people (P2P) exchanges. While the process is underpinned by government bodies, the materialization of this grand vision revolves around people. After all, even with the ancient Silk Roads, it was the many ordinary people across the continent that actually connected the East and the West through their interactions, exchanges and trade.

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Good Will - The Spirit of the New Silk Roads The second characteristic of this new model of connectivity is “good will”. This initiative is open to all countries and peoples interested in being connected for mutual development, regardless of their form of government, cultural and religious backgrounds, or geographic location. It is meant to be inclusive: no one is left out, and no one takes second place. “Common development” was once the “super-glue” which bonded different countries along the ancient Silk Roads together, and “equal footage” is what made this “win-win” situation possible. Christians, Muslims, Buddhists – black, white, and yellow peoples – benefited equally from trade and exchange along the Silk Roads. The new initiative should not be construed as China’s ambition to become a regional hegemon, but as China’s “reaching out”: an offering of friendship and peace. More accurately, it is also about China’s “bringing in”: motivated by good will, China is inviting peoples and countries along the Silk Roads to build a community of shared interest and common destiny. We all have different pasts, but we also have a common future to face, a common destiny to share.

Unlimited Potential – The Vision of the New Silk Roads The “One Belt, One Road” initiative is expected to bring about shared economic, cultural and social prosperity. But unlike other regional cooperation projects which have a fixed policy agenda and set mechanisms, the “One Belt, One Road” initiative is a grand vision, providing ample and infinite room for creative solutions and possibilities. It is more ambitious and farsighted, and at the same time more flexible, accommodating and adaptable to new conditions and challenges, than the ancient Silk Roads. It provides an overarching theme and umbrella under which all sorts of possibilities of cooperation can be made possible.

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The openness of the “Belt and Road” initiative means that there are also many questions that have yet to be answered. Some of the more significant questions are: • How can matching points of economic interest and cooperation opportunities along the “Belt and Road” be identified? • What measures should be taken to promote regional trade and economic cooperation? • What bottlenecks and weaknesses constrain interconnection? • What are the challenges to infrastructure development? • What sort of roadmaps and institutions should be established to secure common investment, construction, operation and sharing? • What areas are important to foster cultural exchanges and mutual understanding between peoples? • Is there any new developmental model which can cope with challenges posed by climate change and other environmental problems? It will not be easy to answer these questions, and finding answers will take time. Nevertheless, discussion can establish the groundwork for understanding the many implications, significances, and possibilities of this grand vision of “One Belt, One Road”.

Editor-in-Chief Dr. HO Chi Ping Patrick (何志平) Deputy Chairman and Secretary General China Energy Fund Committee

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contents Editor’s Note A New Paradigm for Peace and Development: China’s One Belt, One Road Initiative

(和平發展新範式：中國倡議的「一帶一路」)

HO Chi Ping Patrick (何志平)

The “One Belt, One Road” Initiative Following the Principle of Wide Consultation, Joint Contribution and Shared Benefits in Promoting the “Belt and Road” Initiative

(共商、共建、共享──「一帶一路」建設原則)

WANG Xuexian (王學賢)

The “Belt and Road” Initiative and the Post-2015 Development Agenda

(「一帶一路」與2015年后發展議程)

KUTESA, Sam Kahamba

Revamping the Eurasian Energy Landscape under the “Belt and Road” Initiative

(以「一帶一路」轉換歐亞能源格局)

SHI Ze (石澤)

China Pakistan Economic Corridor

(中國－巴基斯坦經濟走廊)

AHMED, Gulfaraz

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Energy Security Addressing the Challenges in Asia Today

(亞洲現今面臨的挑戰)

McFARLANE, Robert

Russian-Chinese Cooperation as a Factor Contributing to Global Energy Security

(中俄合作促進全球能源安全)

SHAFRANIK, Yury

Forging an Inclusive Regional Energy Platform for Energy Cooperation

(建立包容地區能源機制推動能源合作)

HO Chi Ping Patrick (何志平)

The “Energy Pivot to Asia” - Enhancing Energy Security in the Asia-Pacific

(「能源重返亞洲」──提升亞太能源安全)

LUFT, Gal

Recent Developments on Indonesia’s Energy Security: The Challenges & Opportunities Ahead

(印尼能源安全發展近況：未來的挑戰與機遇)

I Gusti Nyoman Wiratmaja

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The New Energy Landscape Opening the Transportation Fuel Market to Competition

(運輸燃料市場引入競爭)

KORIN, Anne

The Future of Coal in China

(煤在中國的未來)

JONES, Ayaka (錢文華)

The Road Towards Clean Coal

(邁向清潔煤炭之路)

ZENG Xingqiu (曾興球)

The Effect of the US Shale Oil Revolution on Global Oil and Gas Production

(美國頁岩油革命對全球油氣生產的影響)

SUN Xiansheng (孫賢勝)

The Implications of Falling Oil Prices

(油價下跌的牽連)

KOYAMA, Ken

Working Together: A Solutions Based Approach to Climate Change Mitigation (合作謀求緩和氣候變化的方法)

LIU Qiang (劉強)

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Following the Principle of Wide Consultation, Joint Contribution and Shared Benefits in Promoting the Belt and Road Initiative WANG Xuexian (王學賢)

The “One Belt, One Road” Initiative Following the Principle of Wide Consultation, Joint Contribution and Shared Benefits in Promoting the “Belt and Road” Initiative (共商、共建、共享──「一帶一路」建設原則) WANG Xuexian (王學賢) The “Belt and Road” Initiative and the Post-2015 Development Agenda (「一帶一路」與2015年后發展議程) KUTESA, Sam Kahamba Revamping the Eurasian Energy Landscape under the “Belt and Road” Initiative (以「一帶一路」轉換歐亞能源格局) SHI Ze (石澤) China Pakistan Economic Corridor (中國－巴基斯坦經濟走廊) AHMED, Gulfaraz

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Following the Principle of Wide Consultation, Joint Contribution and Shared Benefits in Promoting the Belt and Road Initiative WANG Xuexian (王學賢)

Following the Principle of Wide Consultation, Joint Contribution and Shared Benefits in Promoting the Belt and Road Initiative (共商、共建、共用──「一帶一路」建設原則) WANG Xuexian (王學賢) Former Deputy Permanent Representative and Ambassador, Chinese Permanent Mission to the United Nations

n 28 March, 2015, President Xi Jinping made a keynote speech titled “Towards a Community of Common Destiny and a New Future for Asia” at the opening ceremony of the Boao Forum for Asia Annual Conference. He emphasized that the Silk Road Economic Belt and the 21st Century Maritime Silk Road should be jointly built through consultation to meet the interests of all. The Belt and Road Initiative is open and inclusive, not exclusive; it is a symphony comprising all countries along the routes, not a solo for China itself; it represents real work that can be seen and felt, not empty rhetoric. President Xi’s speech greatly resonated with the audience, who are convinced that the Belt and Road Initiative demonstrates the great wisdom and vision of China’s diplomacy and offers a new concept and idea for international cooperation. Today, I would like to share with you three points concerning wide consultation, joint contribution and shared benefits. First, wide consultation, joint contribution and shared benefits constitute the principle and feature of the Belt and Road Initiative. Wide consultation means that we will

get better results by putting heads together, accommodating the interests and concerns of all parties and pooling their wisdom and useful ideas. Business will be conducted through consultation among all countries along the routes throughout the whole process from planning and initiating to advancing and harvesting. The process will tolerate no monopoly or coercion of whatever form, nor will it be ruled by one voice or dictated by a patriarch. It has been a long time since China started the designing of and consultation about the Belt and Road Initiative. The foundation of the Belt and Road Initiative was laid by a number of regional and small-scale multilateral cooperations, professional institutions and the principles of China’s neighborhood diplomacy, namely, affinity, sincerity, mutual benefit and inclusiveness. The initiatives of the Silk Road Economic Belt and the 21st Century Maritime Silk Road were separately put forward in Kazakhstan and Indonesia as a result of consultation with the host countries. Immediately after the proposition, China had consultations with the countries along the routes at multiple levels with the direct participation of Chinese leaders. Frequent diplomatic dialogues were carried out, and actions were taken by ministries, people’s congresses, political

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Following the Principle of Wide Consultation, Joint Contribution and Shared Benefits in Promoting the Belt and Road Initiative WANG Xuexian (王學賢)

WANG Xuexian at “A China Story (III) Forum on The One Belt and One Road Initiative and A New Model of International Cooperation – From Diversity, Tolerance to a Community of Common Destiny”

consultative conferences, localities and think tanks. It has been only over one year since the proposition of the Belt and Road Initiative, but countries along the routes now understand it well, with suspicion and general remarks giving way to support and total devotion. China has no secret other than having all parties participate in the consultation. On 28 March, China formally announced the Vision and Action on Jointly Building Silk Road Economic Belt and 21st Century Maritime Silk Road, which can be viewed as both the first government white paper concerning the Belt and Road Initiative and an international version of China’s plan for the Belt and Road Initiative. In the process of drawing up, planning and issuing the Vision and Action, China solicited suggestions and advice from all countries along the Belt and Road through bilateral or multilateral channels, and adopted quite a few constructive ones, including emphasizing openness, focusing on cultural cooperation

and ecological and environmental protection, working for early outcomes, breaking the bottleneck of investment and financing and encouraging the innovation of enterprises among others. Through consultation, China and Russia decided to promote the connecting of the Silk Road Economic Belt and the TransSiberian Railway, and China, Kazakhstan, Egypt, Indonesia and other relevant countries started international cooperation on production capacity. Joint contribution means that we will jointly participate in the process and give full play to the strength and potential of each country to form a new advantage of cooperation. As an old saying goes, the flames rise high when everybody adds wood to the bonfire. “Joint contribution” does not mean that every country along the Belt and Road makes the same contribution or does the same thing, because countries differ from each other in national conditions and strengths. Instead, it requires

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Following the Principle of Wide Consultation, Joint Contribution and Shared Benefits in Promoting the Belt and Road Initiative WANG Xuexian (王學賢)

every country to do their part and give full play to their strength. Agreements to jointly build the Belt and Road have been signed by China and relevant countries, a number of infrastructure projects of transport and pipelines as well as cooperation on industrial parks have progressed smoothly, and many free trade area agreements have seen breakthroughs, all demonstrating the fruits of joint contribution. Shared benefits means that we will carry out win-win cooperation with mutual benefits, seek the convergence of shared interests and work to secure the greatest common interests possible. While enlarging the pie of common interests, relevant countries should distribute it in a fair and justifiable manner. As a stakeholder of the Belt and Road Initiative along with all relevant countries, China naturally will try to win and safeguard its legitimate interests, but it will not refuse to share, nor will it take a bigger piece of the pie. The Belt and Road Initiative reflects the vision of inclusive development. It aims to deliver the benefit of cooperation to countries along the routes, to the international community, and in particular, to the general public. President Xi Jinping proposed that to enhance connectivity, people should be put first. “Opinions of the general public should be solicited, their income should be raised, and issues concerning their daily life including electricity, drinking water, health care, education, employment and internet accessing should be addressed with every effort.” The care for the general public is embodied in the Belt and Road Initiative. China has conducted cooperation on port projects with Greece, Sri Lanka, Pakistan, Myanmar and other countries, which facilitates China’s ocean shipping, and more importantly, creates huge job and business opportunities and helps increase tax revenue for our partners, with local residents sharing the largest part of benefit. Wide consultation, joint contribution and shared benefits reinforce each other. Wide consultation is the starting point and basis, joint contribution is the core and means, while shared benefits is the goal and driving power.

To achieve wide consultation, joint contribution and shared benefits, China proposed a new approach, and that is connectivity. It includes connectivity of strategies and policies of China and other countries along the Belt and Road, the matching of projects and enterprises, and the connectivity of cooperation mechanisms and our hearts. Connectivity is not about one party accepting the plan made by another or one party following the rules set by another. Instead, it requires us to seek for the convergence of shared interests, make joint plans and advance cooperation projects on the basis of respecting each other’s plans. Second, wide consultation, joint contribution and shared benefits is a positive exploration of an international cooperation and global governance model, and it will add positive energy to world peace and development. In the course of history, various systems, including the Westphalian System and the Vienna System developed by Europe, the colonial system imposed on Asian, African and Latin American countries by Europe and the US, and the bipolar system established after the Second World War, are not democratic and countries under these systems are not equal. These systems could not solve the contradictions between efficiency and fairness, openness and stability, and diversified development and centralized leadership. After the Second World War, “military alliances”, “group politics” and “family theory” emerged. Some people preach theories such as “hegemonic stability”, “responsibility to protect” and “peace under the rule of the West.” However, these theories create more problems than they solve. Practice proves that hegemonism, power politics and unilateralism, instead of safeguarding peace, become the source of wars.

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Following the Principle of Wide Consultation, Joint Contribution and Shared Benefits in Promoting the Belt and Road Initiative WANG Xuexian (王學賢)

There are various theories and practices when it comes to regional cooperation. One stresses major power domination or majority decision, advocating forceful promotion and concerted action through the model of formulating treaties and transferring sovereignty. Another favors “a small horse drawing a big carriage”, calling for consensus through consultation, voluntarism, progressiveness and accommodation of the comfort levels of relevant parties and opting for informal consultation and non-institutionalized cooperation models. The principle of wide consultation, joint contribution and shared benefits, in keeping with the trend towards economic globalization, a multi-polar world and greater democracy in international relations, is well-positioned to address the following prominent issues in global governance and regional cooperation. First, the issue of equality. All participating countries along the routes are equal in both political and legal status regardless of size, strength and contribution. All our countries, big and small, are participants, contributors and beneficiaries of the Belt and Road Initiative and shall respect each other and stand ready to play a key role. All the countries are cooperation partners, not competitors. And there is no such thing as a relationship between leaders and followers. No country can boss others around or force others to do things against their will. Second, the issue of openness. The Belt and Road Initiative, inheriting the ancient Silk Road, takes the Eurasia Continent and the adjacent seas as its geographical pivots and intergovernmental cooperation its main channel. However, the cooperation partners cover more than the ancient Silk Road and the Eurasia Continent and the sphere of cooperation goes beyond the central-government-level. Local governments, financial institutions, transnational corporations, international organizations, non-governmental organizations and friends from all continents are more than welcome to join in this initiative. Third, the issue of compatibility. Existing multilateral regimes and free trade arrangements

across Eurasia, though numerous, have shown a tendency towards fragmentation due to a lack of coordination. The Belt and Road breaks inter-continental and sub-regional barriers as it cuts across Asia, Europe and Africa, linking the East Asia economic circle with that of Europe, and it takes the South Pacific as the natural extension of the Maritime Silk Road. It sets up a bridge between countries in the east and west, in the south and north, countries with different types of civilization. It is conducive to strengthening coordination of the various cooperation mechanisms to bring about a new regional cooperation framework of a wider scope, higher level and greater standard. Fourth, the issue of promoting welfare for all. The world is in no shortage of programs, plans or initiatives. But more often than not, they serve the interests of a particular country or a group of countries. In proposing the Belt and Road Initiative, China has clearly defined it as an overall layout for our internal comprehensive opening-up and external cooperation. Meanwhile, China has also stressed that this initiative is a public product for the international community, which serves the interests of both the Chinese people and all mankind and aligns China’s new type of industrialization with Africa. This demonstrates that China is shouldering its obligations and making its contribution to the international community. China also proposed establishing the Asia Infrastructure Investment Bank, the Silk Road Fund, the BRICS Development Bank, the China-Eurasia Economic Cooperation Fund and the China-ASEAN Investment Cooperation Fund, on which it has made leading investment, producing a demonstration effect. When armed conflict broke out in Yemen, Chinese navy vessels helped to evacuate both Chinese and foreign citizens of more than ten countries to safety. When Maldive was suffering a water shortage, China dispatched planes and vessels to its immediate rescue. Through its own actions, China has practiced the principle of pursuing shared interests while upholding justice. It adheres to its principles, values its friendship

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Following the Principle of Wide Consultation, Joint Contribution and Shared Benefits in Promoting the Belt and Road Initiative WANG Xuexian (王學賢)

and attaches great importance to moral justice, always putting justice before interests and always holding high the banner of justice while pursuing shared interests. Third, wide consultation, joint contribution and shared benefits will enrich the content of our major-country diplomacy with Chinese characteristics. The principle of wide consultation, joint contribution and shared benefits is deeply rooted in our fine traditions which teach us to share weal and woe, pull together in times of trouble, treat neighbors with sincerity, benevolence and kindness, win support by virtue, consider others in one’s own place and achieve success by helping others. Such a principle gives expression to China’s unique characteristics and vision and stands very much in contrast with the western political philosophy that is based on the law of the jungle and the belief that winner takes all. The principle of wide consultation, joint contribution and shared benefits, which underpins our national endeavor to promote mutually beneficial and win-win state-tostate relations, is consistent with President Xi Jinping’s proposition to build an open global economy and promote mutual learning among civilizations. It also conforms to the Silk Road spirit featuring peaceful cooperation, openness, inclusiveness, mutual learning, mutual benefit and win-win results. As pointed out by President Xi Jinping,“ Those who share the same ideal and follow the same path can be partners”, and “those who seek common ground while shelving differences can also be partners.” Such remarks give expression to the vision of broad-minded Chinese statesmen as well as the political wisdom of the East. The regional peace and development will take on a new look, so long as countries along the routes work together in coordination, seek harmony but not uniformity, engage in dialogues instead

of confrontation and foster partnerships rather than alliances. This principle of wide consultation, joint contribution and shared benefits also addresses some of the major concerns regarding the Belt and Road Initiative. Is this initiative a Chinese version of the Marshall Plan? Does China attempt to reinstate the tributary system? Is it targeted at the Asia-Pacific rebalancing and the TPP put forward by the US and thus possible to trigger a geo-strategic war? Or is it viable or sustainable economically? The Belt and Road Initiative differs from the Marshall Plan in fundamental ways. It is a grand vision and action plan guiding countries along the routes to achieve openness and cooperation, as opposed to the Plan which, formulated during the Cold War rivalry, leveraged on donor-recipient relations and served as a geopolitical tool at countries’ disposal. There have never been any political strings attached to China’s assistance to countries along the routes. Our cooperation in production capacity is based on both our own strengths and the market, following the guidance of government promotion with the enterprises playing a key role in business operations. The Belt and Road Initiative inherits and brings new dimensions to the Ancient Silk Road. It not only facilitates business and people-to-people and cultural exchanges, but also leads to greater mutual respect, mutual trust and win-win cooperation. As pointed out by President Xi Jinping,“Being a big country means shouldering greater responsibilities for regional and world peace and development, as opposed to seeking greater monopoly over regional and world affairs.” The Belt and Road Initiative does not in the least attempt to reinstate the tributary system. Quite the contrary, it follows the trend towards globalization and a more multi-polar world. As an Asian initiative for regional countries to enhance development, the initiative maintains the rights of individual countries to choose their own suitable development path and to decide on their foreign policies independently. It is

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Following the Principle of Wide Consultation, Joint Contribution and Shared Benefits in Promoting the Belt and Road Initiative WANG Xuexian (王學賢)

committed to realizing cooperative security and regional rejuvenation. Instead of targeting other countries or their strategies, the Initiative seeks to live in peace with other major mechanisms and initiatives. China welcomes constructive engagement of major countries in Asian-Pacific affairs and respects the legitimate rights and interests of countries in the region. The ongoing efforts by China and the US to build a new type of majorcountry relations give priority to the AsiaPacific region and the Initiative could be a new topic for bilateral discussion on cooperation. The Initiative is aimed at promoting economic and cultural cooperation, excluding matters regarding territorial and maritime disputes. To build the Road and Belt will do nothing but enhance common interests and mutual trust, thus fostering favorable conditions for resolving disputes. The Initiative is an important contribution to the post-crisis economic growth. The largescale, diversified connectivity programs will help increase interdependence of countries along the routes, enhance the balance between supply and demand and improve utilization of funds so as to move the countries along the routes up in the global chains of supply, industry and value. All countries, when conducting economic cooperation programs along the routes, must observe laws and regulations of the host country and the international rules, maintain operation standards at a high level and put in place risk assessment and prevention measures. Related enterprises should fulfill their due corporate social responsibilities and help to preserve the local ecological environment. Such an initiative is not only appealing politically and diplomatically, but also viable and sustainable economically. The Belt and Road Initiative is poised to become the common cause of China and countries along the routes. It is our hope and belief that countries along the routes will display greater resolve in face of difficulties, explore new areas and patterns for cooperation and draw up a timetable and road map so as

to harvest early fruits and further expand the Initiative as we move forward. We will work together to build a community of shared interests, destiny and responsibility based on political mutual trust, economic integration and cultural inclusiveness.

* This article is excerpted from the author’s speech at “A China Story (III) Forum on The One Belt and One Road Initiative and A New Model of International Cooperation – From Diversity, Tolerance to a Community of Common Destiny” held by the China Energy Fund Committee on April 20, 2015, at the United Nations Headquarters, New York, United States.

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The “Belt and Road” Initiative and the Post-2015 Development Agenda KUTESA, Sam Kahamba

The “Belt and Road” Initiative and the Post-2015 Development Agenda (「一帶一路」與2015年後發展議程) KUTESA, Sam Kahamba President of the 69th session of the United Nations General Assembly

t is a pleasure to attend the annual conference of “A China Story” that will look at the incredible story of China, one of the world’s fastest growing economies and its contribution to international peace and development. 2015 is a remarkable year and an important milestone for the United Nations. It marks the 70th anniversary of the founding of the United Nations. The General Assembly will hold a number activities to commemorate the anniversary. This year, the UN is focusing on the three major development processes: first, the formulation of the post-2015 development agenda; second, the financing for development conference in Addis Ababa this July; and the third, the negotiation on a new agreement on climate change in Paris in December this year. I look forward to China’s continued active participation and support on these issues. I have received positive feedback from various Chinese leaders that I have met in recent times. During my visit to Beijing last year, I was assured by Premier Li Keqiang that China will firmly support ongoing efforts in the UN General Assembly to formulate a new development agenda that is transformative and inclusive in bringing tangible benefits to ordinary people, particularly in developing countries. Furthermore, when I met Foreign Minister Wang Yi this February at the UN, he reaffirmed that China would actively participate in these processes. I welcome China’s commitment and

continued support to the on-going work of the United Nations. In the last 20 years, China has played a crucial role in advancing South-South cooperation with its vast economic potential. I commend China for providing long-term support and assistance to developing countries and also the role it plays in the maintenance of international peace and security. Recently, I was happy to learn that through land and maritime interconnection, China’s “One Belt and One Road” initiative aims at integrating Eurasia’s economic development and also interconnectivity and cooperation with Africa. It is my hope that this initiative will facilitate practical economic cooperation and development of all countries along the routes, most of which are developing countries. Coming from the developing world and Africa in particular, I can say that China’s “Belt and Road” initiative and Africa’s development strategy in the 21st Century share the same vision of strengthening integration through infrastructure development and increasing trade. This initiative is an important reminder to us all that successful development of each one of our countries is linked to the economic growth of others. Combining the two strategies therefore will create opportunities and momentum for the realization of the new global development agenda beyond 2015. It also presents a new approach for South-South cooperation. It is significant that this initiative also aims at facilitating people-to-people exchanges.

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The “Belt and Road” Initiative and the Post-2015 Development Agenda KUTESA, Sam Kahamba

KUTESA, Sam Kahamba at “A China Story (III) Forum on The One Belt and One Road Initiative and A New Model of International Cooperation – From Diversity, Tolerance to a Community of Common Destiny”

In March, President Xi Jinping highlighted the importance of inclusiveness and mutual learning among civilizations at the Boao Forum for Asia. His message resonates well with the ongoing work in the 69th session of the General Assembly. In late April, in conjunction with the Secretary-General of the United Nations and the United Nations Alliance of Civilizations, I convened a High-Level General Assembly Thematic Debate on “Promoting Tolerance and Reconciliation: Fostering Peaceful, Inclusive Societies and Countering Violent Extremism”. The main objective of the high-level thematic debate is to provide an opportunity for Member States and faith leaders, along with other stakeholders, to share experiences and address key issues and challenges relating to the promotion of tolerance and reconciliation with the aim of fostering peaceful and inclusive societies and countering violent extremism. I am happy that Dr. Patrick Ho of the China Energy Fund Committee has taken part in this

high-level thematic debate to share with us the practical strategies to foster peaceful, inclusive societies from the civil society perspective.

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Revamping the Eurasian Energy Landscape under the “Belt and Road” Initiative SHI Ze (石澤)

Revamping the Eurasian Energy Landscape under the “Belt and Road” Initiative (以「一帶一路」轉換歐亞能源格局) SHI Ze (石澤) Director, Center for International Energy Strategy, China Institute of International Studies

his article discusses the “One Belt, One Road” (OBOR) initiative from three aspects: conceptual innovation, what OBOR has to offer to the world, and energy cooperation along the Belt and Road. In terms of conceptual innovation, OBOR can be interpreted from the following aspects. Firstly, the “One Belt, One Road” initiative announced by the Chinese leader recently is an extension of China’s strategies of “bringing in” and “going out”. Secondly, OBOR brings new opportunities for China in terms of managing relations with neighboring as well as other foreign countries. Thirdly, China advocates the concept of shared development based on mutual benefit and win-win cooperation in an effort to mitigate unbalanced growth. Lastly, the Chinese government is focused on multilateral instead of bilateral interests in regional cooperation. In terms of modes of cooperation, because the majority of countries along the Belt and Road are less developed, the OBOR strategy bears the characteristics of “South-South Cooperation”. As such, the EU model and the ASEAN model are not suitable for development along the Belt and Road. What OBOR advocates is multifaceted, transregional and transnational cooperation. It is therefore difficult to directly adopt existing modes of economic cooperation under the OBOR initiative. Innovative solutions will be required that take into account the actual

circumstances levels of economic development in countries along the Belt and Road. What is also important are the areas of cooperation and innovation in this regard. With better connectivity, information flows, the flow of human capital, and the flow of goods and services can be facilitated, which lays a solid foundation for economic cooperation. The Chinese government does not actively seek multilateral economic cooperation, but instead seeks to demonstrate the benefits of such cooperation trough high-quality bilateral cooperation projects to encourage other countries to get involved. “City Unions” and “Trade Unions” along the route of the “One Belt and One Road” are good examples for collaboration and make it possible for the OBOR project to achieve synergy. Next, what exactly does China hope to contribute to the world through developing the “Belt and Road”? OBOR is viewed by certain media as a new, Chinese version of the Marshall Plan. Within Russia there is a saying that China’s OBOR initiative threatens Russia’s Eurasian energy domain. However, the US’ Marshall Plan embodies an array of unequal prerequisites, under which countries in receipt of aid are clearly subordinated to those offering assistance. The Eurasian Economic Union (EEU) put forward by Russia emphasizes politics, economic and military affairs, whereas the “One Belt, One

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Revamping the Eurasian Energy Landscape under the “Belt and Road” Initiative SHI Ze (石澤)

SHI Ze at “A China Story (III) Forum on The One Belt and One Road Initiative and A New Model of International Cooperation – From Diversity, Tolerance to a Community of Common Destiny”

Road” championed by China focuses largely on economic development. Geographically speaking, the OBOR is far more extensive compared to the EEU. Conceptually, China’s OBOR advocates common development. But China is merely an advocator of the initiative and does not play a dominating role. It does not set prerequisites and there is no subordination among countries. Over the past decades, the rate globalization has accelerated, brining changes to the world’s political and economic landscape. One of these changes is the collective rise of the emerging economies. Ever since the financial crisis in the US, many countries are concerned over the pitfalls of modernization. Many believe globalization is a double-edged sword, brining benefits but also challenges to national development. We now see a growing disjunction between developed countries and emerging economies and increasing polarization. Economic growth in developed

countries now contributes less to the economic development of emerging economies. Under such circumstances, the “One Belt, One Road” initiative serves as a booster of globalization. China wishes to demonstrate that it is not alone in its resistance against the wave of antiglobalization, and it hopes to re-strengthen the historical and cultural ties among countries. Incorporating dozens of countries, the “One Belt and One road” initiative will be able to facilitate trade and cultural exchanges, pushing forward the globalization process. The two ends of “One Belt and One Road” region are, respectively, an economically vibrant Asia, and a relatively developed European continent. What lies between are countries that hold enormous potential for development, but are currently less developed. If the “One Belt and One Road” initiative is advanced successfully, a new economic belt will be formed that far exceeds the Eurozone or any other economic area in existence today in terms of population,

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Revamping the Eurasian Energy Landscape under the “Belt and Road” Initiative SHI Ze (石澤)

economic output, capital flows and development potential. OBOR is also beneficial for safeguarding world peace. The experiences of the European region have taught us that closer economic cooperation does in fact foster long-term political stability and development. Relationships among nations along the Belt and Road are complex, each with their own religious and cultural values. There are growing traditional as well as non-traditional security threats emerging in the region. Intelligence sharing and constructing a sustainable regional safety mechanism represents an urgent task for countries along the route. Such an initiative proposed by China represents a gesture of goodwill, a message to the world that China pursues common development. OBOR is a way of developing new modes of global governance. It is a grand conception aimed at raising the level of development of the entire Eurasian region and fostering closer economic ties. Therefore, advancing the OBOR initiative will not only promote connectivity among countries along the route but also advance, in particular, energy cooperation. As the initiative advances, transport and logistics, infrastructure, financing and other areas will be improved, which in turn will serve to drastically push forward energy cooperation along the Belt and Road. Along the Belt and Road there are energy consuming nations (including China and India), energy producing countries (such as Central and West Asian countries and Russia), as well as transit countries. Among these, the economies of many countries are heavily reliant on the export of energy and resources, the proceeds from which are used for development in other sectors. Therefore, if development in the energy and resource sector slows, social and economic development on the whole will be impeded. This is why many countries along the Belt and Road base their development strategy on energy and resource cooperation. This is a strategy that complements China’s economic development. Cooperation between China and

countries along the route in this realm allows countries to fully exploit their geographical advantages, generating spillover effects along this economic belt. Furthermore, it is expected that energy industrial parks, energy development and energy processing centers will be established along the Belt and Road. Energy development in countries along the route bears a distinctive characteristic – most are resource exporters and their capacity for mass production and processing is limited. With the development of energy technologies and transport routes, and with strengthened energy cooperation among countries along the Belt and Road, it is expected that more enterprises such as chemical processing plants, oil refineries and other facilities will appear in the OBOR region. Once the energy development and processing capacities of these counties is comprehensively improved, and as energy enterprises in the region become more vertically integrated, their production structures will also be reformed. Today’s energy landscape, including supply and demand, trade, finance, technology and equipment etc., differs significantly from that of the 70s and 80s, which was dominated by competition for resources. Today, competition is over markets, and many developed countries still dominate the energy landscape. Energy consuming countries such as China and India are still marginalized, and their status and role in the energy sector is yet to be redefined. Energy distribution on the Eurasian continent is demarcated by the Ural Mountains. To the East of the Mountains (including Russia, Central Asia and even South Asia) are mostly energy producing countries; whereas to the West are mainly energy supplying countries. Development of the OBOR can help to revamp the Eurasian energy landscape that has for many years been skewed towards the West, balancing out interregional development. With the expansion of markets, the status and discursive power of the Asia-Pacific market, in particular, will be significantly enhanced. OBOR will help facilitate more

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Revamping the Eurasian Energy Landscape under the “Belt and Road” Initiative SHI Ze (石澤)

balanced land-based and maritime transport development, reducing the current overreliance on maritime transport. For China and many Central Asian countries, 70% to 80% of energy imports pass through the Strait of Malacca. In the future, however, with the development of the OBOR transport corridor and the northern Russian route, the Eurasian continent will have more transport options. Land-based transport of energy will become more diverse, more rational, and more secure. In countries along the Belt and Road, as China advances with its establishment of stabilizing systems for Asian currencies as well as financing and credit systems for investment purposes, more and more countries will inevitably start using their local currency for settlement. Last but not least, in managing relations with great powers, China insists on openness and inclusiveness. Its doors are open to all nations and China welcomes the participation of all countries in the OBOR initiative. In terms of advancing the initiative, China and other powers share many common interests. There are numerous avenues of cooperation in terms of safeguarding the stability of: energy, Central Asia and the Middle East, transportation routes, and market prices. The development of the one “Belt and Road”, therefore, will provide excellent opportunities for advancing cooperation between China and other powers.

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China Pakistan Economic Corridor AHMED, Gulfaraz

China Pakistan Economic Corridor (中國－巴基斯坦經濟走廊) AHMED, Gulfaraz Former Secretary of Petroleum & Natural Resources, Pakistan

aller than the tallest mountain and deeper than the deepest sea is how President Xi Ginping epitomized the friendship between China and Pakistan when he addressed Pakistan Parliament on May 20, 2015 during his first visit to what he described as a brother’s home. To fathom this friendship we need to start from the very birth of Pakistan in 1947 and of China in 1949. The two neighbors share a common border over the roof top of the world along the lofty Karakoram and Himalayan mountain chains. The friendship is strung by the umbilical cord of the Interstate Karakoram Highway that connects the two lands at Khunjrab Pass at about 15000 feet altitude. The Highway is a testimony to the ingenuity, resolution pluck and gumption against Himalayan-size challenges and is rightly dubbed as the 8th Wonder of the World. Superlatives are what describe the ever deepening and multifaceted relations between the two countries. Both countries share a common string of colonial past and their intrinsic struggle for independence. Pakistan was among the first countries to recognize Peoples Republic of China on May 21, 1951, soon after Chairman Mao won the War of Liberation in 1949. Respecting the neutrality and respect for each other both countries settled the border issues amicably in 1963 to look ahead and cement their relations. President Xi described the legacy of the bedrock relations beautifully in his article written about a week before his scheduled arrival in Islamabad, “When I was young, I heard many touching stories about Pakistan and the friendship

between our two countries. To name just a few, I learned that the Pakistani people were working hard to build their beautiful country, and that Pakistan opened an air corridor for China to reach out to the world and supported China in restoring its lawful seat in the United Nations. The stories have left me with a deep impression. I look forward to my upcoming state visit to Pakistan.” It is amazing that the President would find time to pour his heart out with very compassionate words and recalls from the memory lane. It was obvious that upon his arrival he would dwell in the hearts of over 200 million Pakistanis which he had already endeared by his outpouring of the goodwill he carried for them. Both countries have respected each other’s sovereign rights and are committed to noninterference in their internal affairs. Both support each other in their stands for the State of Jammu & Kashmir in favor of Pakistan, and Taiwan, Tibet and Xinjiang in favor of The PRC based on the internationally respected tenants of justice. The bilateral relations have continued to grow deeper in diplomatic, economic and military cooperation. Both countries are jointly manufacturing modern jet fighters and guided missile frigates. Greatly appreciating Chinese extraordinary strife to elevate the plight of over a billion of its people from the abyss of poverty, and colonially induced drug addiction, Pakistan supports Government of China’s stand on human rights considering the urgency of liberation from poverty as a precursor to broadening the protection for other human

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China Pakistan Economic Corridor AHMED, Gulfaraz

rights. The people of Pakistan recognize the intrinsic merit of the politico-social priorities of the Peoples Republic which are fast succeeding in elevating the quality of life of its people and generating the fastest economic growth in the world. The two friends have complete understanding and consider the new wave of religious extremism as a common threat to both and China backs and appreciates the determined fight by the valiant armed forces of Pakistan at a great cost in life, money, infrastructure and property. Pakistan clearly recognizes the potential threat it poses to the Southern regions of China and is a joint partner in this fight with them. The ties and commitment of the two countries are inclusive of benefits for all and not aimed at the exclusion of any country. It provides a radiant model for bilateral ties. No matter how deep, multifaceted and dynamic base of the existing friendship, it is now taking a quantum leap as part of the President Xi Ginpingâ&#x20AC;&#x2122;s grand vision of Eurasian Connectivity through One Block One Road. The President saw the signing of numerous agreements within the framework of China Pakistan Economic Corridor. CPEC would be the most crucial strategic land link between China and the Indian Ocean through the deepsea Pakistani port Gawadar. Gawadar port contract has already been awarded to China Overseas Port Holding Company (COPHC) for forty years for further development and operation. CPEC will connect Gawadar with Kashghar in Xinxiang Province in Southern China with about 3000 kilometer direct land route comprising all-weather motor way, rail road, oil and gas pipelines and optic fiber cable. The corridor will cross mountains where feasible and go under through tunnels where required China is the largest consumer as well importer of commercial energy in the world. Energy security has to be on top of its national priorities. It imports about 4 million barrels daily in oil and LNG from the countries in the Persian Gulf. After oil/LNG carrying ships

cross Gawadar deep-sea port, these travel nearly 12000 miles through Arabian Sea, Indian Ocean, 500 miles narrow, busy and insecure Strait of Malacca and then the disputed South China Sea taking over a month of shipping time involving high freight, insurance cost and evaporation losses. Some of cargoes travel thousands of kilometer westward on land by train/pipelines within China escalating greatly the end cost. Long shipping time, higher freight and losses, exposure in Malacca and South China Sea are elements of serious energy insecurity to the second largest economy. CPEC provides a dramatic option of a secure and direct land route from Gawadar to Kashghar of about 1700 miles length. It provides great flexibility to China to optimally distribute the imports by the existing marine route and the CPEC keeping the end destination in mind. As other regional connections through Burma, Bangladesh develop, China could have the choice of optimal routes for the oil/LNG coming from Africa in addition to the remaining shipment form the Mid-East. Gawadar is being developed into a free petroleum port; it will provide other strategic energy-related options to China. Some Chinese companies are already in line to set up large coastal refineries in Gawadar for catering to their own and export markets. The free petroleum deep-sea port will also strengthen global energy security by augmenting the capacity of the largest choke point of the Strait of Hormuz. Presently about 25 million barrels of oil/LNG travel daily through the Strait, which is projected to grow 4-5 % annually aggravating the congestion, travel time and costs involved. The major exporters of the Gulf oil/LNG could set up strategic storages at Gawadar and feed these by underwater pipelines for export by supertankers from Gawadar. These options promise a win-win arrangement for the energy exporters as well importers by by-passing the congested Strait. The corridor will open extraordinary economic growth opportunities to the people of Pakistan all along its route. There would be industrial zones/parks strung

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China Pakistan Economic Corridor AHMED, Gulfaraz

along offering manufacturing, importing and exporting facilities. This would create jobs and boost local commerce. The Government of Pakistan attaches the highest importance to the construction and completion of the project and has commenced work on multiple sections. The Pakistan Army is raising an appropriately equipped special force for its security during construction and operation. The Corridor will connect the 21st Century Silk Road on the Eurasian land mass with the 21st Century Marine Road to benefit not only the people of Eurasia, Central and South Asia but also to contribute significantly to the global trade and security.

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Addressing the Challenges in Asia Today McFARLANE, Robert

Energy Security Addressing the Challenges in Asia Today (亞洲現今面臨的挑戰) McFARLANE, Robert Russian-Chinese Cooperation as a Factor Contributing to Global Energy Security (中俄合作促進全球能源安全) SHAFRANIK, Yury Forging an Inclusive Regional Energy Platform for Energy Cooperation (建立包容地區能源機制推動能源合作) HO Chi Ping Patrick (何志平) The “Energy Pivot to Asia” - Enhancing Energy Security in the Asia-Pacific (「能源重返亞洲」──提升亞太能源安全) LUFT, Gal

Recent Developments on Indonesia’s Energy Security: The Challenges & Opportunities Ahead (印尼能源安全發展近況：未來的挑戰與機遇) I Gusti Nyoman Wiratmaja

CHINA EYE‧Issue 8

Addressing the Challenges in Asia Today McFARLANE, Robert

Addressing the Challenges in Asia Today (亞洲現今面臨的挑戰) McFARLANE, Robert Former United States National Security Advisor; Co-founder of the United States Energy Security Council

n the United States, I founded a think-tank, a council of former members of the cabinet from both our parties, to focus on issues emerging not only in our country but throughout the world that could pose problems, raise tensions, lead to conflict, unless dealt with properly. My council in the United States is supported in the analysis of these issues by a small thinktank called the Institute for the Analysis of Global Security. And at this think-tank, we try to look beyond today’s horizon, to identify bi-lateral or regional energy problems that are likely to emerge in the coming years, and to suggest ideas and policies that hold potential for defusing disagreements, lowering tensions, and working toward compromise solutions for the mutual benefit of the parties involved. I have devoted most of my adult life to national security affairs as national security advisor to President Reagan nearing the end of the Cold War. Today, as we examine areas throughout the world where disagreement over strategic issues, such as reliable access to affordable energy, hold the potential for getting out of control, we try to analyze the interests of the parties involved, and identify ways that would lower tensions and lead to compromise that would serve the interest of all the parties to the dispute. Today, as we gather here in Hong Kong, there are several such challenging issues before us here in Asia. To name just a few, there is the issue of the volatility of the price of oil, the abuse of Asian countries by suppliers

in the pricing of natural gas, unresolved claims regarding maritime territories and their local resources, and the security of sea lines of communication between Asia and suppliers of energy from the Middle East. It is a tribute to the vision of Dr. Patrick Ho and the goodwill of China Energy Fund Committee (CEFC), that it has organized this conference – Sino-US Colloquium (VII) – in an effort to exchange ideas and to work towards effective solutions to these very challenging problems. I look forward to continuing to work with all my colleagues and fellow panelists here today and in conferences that will be convened by CEFC in the months and years ahead, in the interest of finding effective approaches to the peaceful development of the region’s considerable resources for mutual benefit.

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Addressing the Challenges in Asia Today McFARLANE, Robert

McFARLANE, Robert at “Sino-US Colloquium (VII) Silk Road Energy Dialogue Asian Energy Security Cooperation: Challenges and opportunities”

* This article is excerpted from the author’s speech at “Sino-US Colloquium (VII) Silk Road Energy Dialogue Asian Energy Security Cooperation: Challenges and opportunities” held by the China Energy Fund Committee on January 24, 2015, at Hong Kong Convention and Exhibition Centre.

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Russian-Chinese Cooperation as a Factor Contributing to Global Energy Security SHAFRANIK, Yury

Russian-Chinese Cooperation as a Factor Contributing to Global Energy Security (中俄合作促進全球能源安全) SHAFRANIK, Yury Former Minister of Energy of Russia

ince mid-2014, the world has been experiencing a period of price volatility for hydrocarbons. This is a result of the prior years’ accumulated production capacities for oil, gas and coal, as well as the cyclical slowdown of the global economy. Political crises both within producer countries and in relations between countries along major hydrocarbon transport routes continue to exert a significant impact on stability of energy prices. In recent years, the “shale revolution” in the US and Canada and the shift of world energy consumption growth to the Asia-Pacific have caused a radical rebalancing of global oil and gas markets. A number of new industrial and financial centers of global importance have emerged in the Asia-Pacific. The region currently accounts for about 70% of global energy consumption, including more than 85% of the global demand for coal, 66% for oil and 55% for natural gas. In the first half of the twenty-first century a further significant growth in energy consumption is expected in the region, primarily in China, India and other Asia-Pacific countries. Given the population, size and scale of Asia-Pacific economies, we can foresee the impact of regional processes on global energy demand and energy prices. Global competition for access to energy resources – primarily oil, gas and coal – will increase.

These phenomena do not diminish the task of providing for sustainable global economic growth and the well-being of all humanity. A key element in solving this task is to ensure a reliable supply of energy resources to new areas of consumption, especially to the main driver of growth: China’s economy. I believe that in the new geopolitical conditions mutually beneficial energy cooperation remains the backbone of energy security, both for individual countries, regions, and the globe. A special responsibility for developing effective energy cooperation falls on global players such as China, the United States, the European Union, Russia, India, and Brazil. Of course, differences between countries – cultures, ideological positions – exist and will continue to exist. The task is to avoid deterioration of current problems to reduce conflict where possible, focusing instead on seeking development and prosperity. China – as major economic power and energy consumer – and Russia – a major energy producer – bear special responsibility for global energy security. Their contributions are bound to be significant. Fortunately, the leaders of these countries not only understand the value of joint efforts, but also aspire to a closer cooperation. Russia and China are currently constructing

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Russian-Chinese Cooperation as a Factor Contributing to Global Energy Security SHAFRANIK, Yury

SHAFRANIK, Yury

a new (“de-ideologized” according to officials of the two countries) partnership, where there is no leader and no follower (the so-called “senior” and “younger” brother), and where the basic principle is non-interference in the internal affairs of the other. This new partnership is not directed against third countries, it involves both governmental agencies and businesses (the private sector), and institutions of civil society. The basis of this partnership, as it is understood in Russia, and how, it is gathered, also understood in China – is coincidence of fundamental interests of the two countries. There is an understanding that the era of hegemony of individual countries and their alliances has finally receded into the past, and that development in the current world requires new thinking. Moreover, the countries are well aware that the formation of this new partnership is a long, complex and contradictory process that will demand further strengthening of peace and cooperation in both Eurasia and the rest of the

world. A strategic partnership is the best form of relations between Russia and China. It absorbs the experience and lessons of history, corresponds to their present level and status, and fully complies with the internal politics of the two countries. The existing format is fully accepted and supported by elites and peoples of Russia and China. The development of this new partnership will play an important part in the implementation of three major projects on the continent: the Eurasian Economic Union (EAEC), the Shanghai Cooperation Organization (SCO) and the Chinese “Economic Belt of the Great Silk Road” (or “New Silk Road”). As yet, these three projects are being developed in parallel, independently of each other, creating even a certain competition in transport, energy, trade and economic spheres. But already now one can see the script to create a structure of interaction where the SCO is to play a central (connecting) part as a “Eurasian

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Russian-Chinese Cooperation as a Factor Contributing to Global Energy Security SHAFRANIK, Yury

bridge” between the “New Silk Road” and the Eurasian Economic Union. Of course, there are still many unresolved issues. Moreover, we are well aware that Russian and Chinese visions of development of Eurasia in a number of aspects do not coincide. The “Eurasian compromise” between the two countries should be based on accommodating mutual interests while making mutual concessions on these aspects. The Russian Institute of Energy Strategy has explored some of these issues in depth. Maintaining global energy security is one of major systemic challenges of our time. Providing a reliable and uninterrupted supply of fuel and energy for consumers – in required amounts, with required quality and at reasonable prices – is the most important part of the energy policy and national security of leading states. Sharing this common understanding of energy security, Russians believe that one of its most important components is the balance of the interests of producers and consumers, as well as the interests of the transit countries. A reliable model of energy security can be based only upon principles of interdependence and interpenetration. For example, Russian companies could take part in the exploration and production projects in China’s waters (in the Bohai Bay, the East China and South China Seas), in gas distribution and other projects. In the early 1990s there was a growing understanding that the issue of energy security could not be solved by the efforts of only one state – even the largest of them. The solution to global energy security problems demands economic cooperation of many countries. In July of 2006, former President of the European Commission Jose Manuel Barroso said that “Energy security is a global problem that requires a global solution”. On April 13 of this year, Russian Energy Minister Alexander Novak echoed that sentiment. At a conference organized by the Discussion Club “Valdai”, held in Berlin, he stated that “on the agenda now is the issue of forming a new configuration of energy security, a new balance between the

interests of producers and consumers, ensuring fair distribution of risks and long-term stability of investment processes.”

* This article is excerpted from the author’s speech at “Global Forum on Energy Security 2015: Strengthening Energy Cooperation in the One Belt One Road Regions” jointly held by the China Energy Fund Committee, Chinese Academy of Social Sciences, United States Energy Security Council, and Institute for the Analysis of Global Security on June 15-16, 2015, at Beijing International Hotel.

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Forging an Inclusive Regional Energy Platform for Energy Cooperation HO Chi Ping Patrick (何志平)

Forging an Inclusive Regional Energy Platform for Energy Cooperation (建立包容地區能源機制推動能源合作) HO Chi Ping Patrick (何志平) Deputy Chairman and Secretary General, China Energy Fund Committee

Changing Energy Landscape in the Asia-Pacific Region

The focus and general situation of global energy security have changed dramatically in recent years. Both have been driven by the twin forces of rising Asian energy demand, the unexpected boom in North American production of shale gas, tight oil, and oil sands, and plummeting of oil prices and the petrodollar. These changes in the energy equation have delivered successive, heavy blows to some of the premises of Asian energy security. Facing such predicaments, the Asia-Pacific region should respond by assigning the highest priority in the region’s development agenda to forging a regional energy coordination mechanism. This mechanism should assure accessible, affordable and sustainable energy sources, and should highlight the regional aspiration to participate equally in agenda setting in the global order of energy security. Regional Efforts to Enhance Asia’s Energy Security The Asia-Pacific is steadily making progress towards cooperation on energy security. In conjunction with the International Energy Agency (IEA), the APEC process, and ASEAN led groupings such as the ASEAN+3 and the East Asia Summit (EAS),

have become progressively active in their technical collaboration, particularly in regard to emergency planning. The IEA was founded by members of the Organization for Economic Cooperation and Development (OECD) countries in the aftermath of the 1973 oil crisis. It is regarded as the world’s most comprehensive international energy-security arrangement, and serves to safeguard the energy interests of the developed economies in the West against OPEC. Over the past 40 years, the IEA has developed an energy strategy which has enabled the developed world to act as an engine for the global economy and to feature more prominently in the global political and economic landscape. However, China – the world’s top energy consumer today – and other emerging economies such as India, Russia, South Africa, Brazil and Indonesia, though invited to attend some of the emergency response exercises, have never been full members of the organization. This represents a critical gap in the reality of national, regional, and even global energy security. APEC is a regional economic forum established in 1989 to leverage the growing interdependence of the Asia-Pacific. The Energy Working Group (EWG) was formed the following year, and the Asia Pacific Energy Research Centre (APERC) was established in July 1996 to collect data and publish energy

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Forging an Inclusive Regional Energy Platform for Energy Cooperation HO Chi Ping Patrick (何志平)

HO Chi Ping Patrick at “Sino-US Colloquium (VII) Silk Road Energy Dialogue Asian Energy Security Cooperation: Challenges and opportunities”

reports. Although APEC has the potential to play a leading role in Asian energy security, it has not yet taken the necessary steps to establish or implement any real focus of cooperation, such as an actual oil-sharing or stockpiling arrangement. ASEAN was established as a regional organization in 1967, and is considered to be one of the most successful regional experiments in the regional cooperation of the developing world. In recent years, the ASEAN groupings are active in participating in emergency preparedness training exercises. However, neither grouping has implemented any defined initiative of risk sharing and energy cooperation. Much political willingness has been pledged, but little has been put into action. While the existing regional forums and platforms have featured the enthusiasm of the member countries to move forward on energy cooperation, they have usually fallen short on the expectation of providing concrete

policy measures and coordinating regional energy cooperation. They have also failed to capture the role of the private sector and other stakeholders in bolstering initiatives on energy. This raises the question of the adequacy of the current platforms to coordinate regional energy issues at large. The European Experiences and the Asian Challenges In this regard, perhaps the experience of European integration over the last fifty years can provide some possible insights for the Asia-Pacific region. The establishment of the European Coal and Steel Community after World War II used energy as a unifying concept that led to the formation of the economic union, which later developed into the European Union. However, constructing collective energysecurity arrangements can be more complicated in Asia than in Europe.

CHINA EYE‧Issue 8

Forging an Inclusive Regional Energy Platform for Energy Cooperation HO Chi Ping Patrick (何志平)

First, unlike post-war Europe, Asia is less homogenous, having a mix of energy exporters and importers with varying resource endowments, economic disparities, and different national political systems. Second, as some scholar have noted, the region’s powers have increasingly embarked on a competitive approach that intensifies distrust, worsens maritime tensions, and aggravates key strategic rivalries. Finally, another reason Asia has not been as successful as Europe in reaching a collective energy agreement is the fact that there is no single overarching organization or institutional platform actively engaged in energy security planning, where all stakeholders can be brought into such cooperation, including contributions from the business, academic, and community sectors. All the supra-national platforms, including the APEC process and the ASEAN groupings, are state initiated. Discussions are often bogged down by geopolitical standoffs. The Role of Private Sector in Regional Cooperation The private sector can play a pivotal role in working with the public sector to promote regional cooperation and integration. The private sector can contribute it many ways; first, through trade and, second, through infrastructure investments that cut across boundaries and interlink the countries of the region. Governments should concentrate on ensuring an appropriate enabling environment for businesses to grow and thrive. Governments and business sectors must join hands to help make happen the necessary investments, which are often large and complex. Moreover, while territorial claims may intensify geopolitical rivalries, business cooperation tends to align geo-economic interests and induce strategic restraint over the sovereignties involved. For example, with regards to the South China Sea disputes, common interests include

regional peace and stability, as well as benefits accruing from common resource exploitation. This principle has been proposed by China a long time ago – first by the late Chinese leader Deng Xiaoping – to ensure the peaceful resolution of territorial disputes with China’s neighbors. In the 1990s, oil corporations from China, Vietnam and the Philippines signed an agreement for joint marine seismic exploration in the South China Sea, signaling a breakthrough for the principle of “shelving differences and seeking joint development”. Indeed, energy cooperation and joint development of natural resources in the region can serve as a means of mutual reassurance and a measure to defuse tensions in the East and South China Seas. This is a prime example where business cooperation arising from discussions of geo-economics can overcome the geopolitical hurdles. It is also high time now for policymakers, industry leaders, professional and academic experts, and NGOs in the region to work together and explore the possibilities of forging a new, more inclusive, more specific and more collaborative energy security strategy. A program to complement the existing and future energy cooperation mechanism is needed. Accordingly, the region should explore possibility of setting up an “Energy Development Fund” focused on investing in Asian energy infrastructure. The Proposal for an “Energy Development Fund” Energy infrastructure development in Asia, particularly in remote areas and landlocked countries, is seriously inadequate. According to the Asian Development Bank, the need for infrastructure investment in Asia is about US$800 billion annually for 2010-2020, of which a large portion will go to the energy sector. Without a concerted effort by regional governments and business stakeholders, the inadequacy of energy infrastructure will continue to hinder economic development, making many regional cooperation projects

CHINA EYE‧Issue 8

Forging an Inclusive Regional Energy Platform for Energy Cooperation HO Chi Ping Patrick (何志平)

very difficult, if not impossible, to implement. Against this backdrop, China has proposed several new finical institutions to boost connectivity across Asia. They are the socalled BRICS Bank, the Asian Infrastructure Investment Bank (AIIB) and the Silk Road Fund. The idea of setting up an “Energy Development Fund” carries forward the spirit of mutual trust, equality and mutual benefits, inclusiveness and mutual learning, and winwin cooperation. With active participation from foreign and regional investors, and state and private enterprises, this new platform can act as a complement to government initiatives and operates entirely according to market principles. The proposed fund, initiated by international and regional investors, together with the endorsement and support of region’s governments, can be instrumental in: 1. Promoting all-round energy cooperation at both official and civil levels in the region, with buy-in from stakeholders of all levels; 2. Coordinating trade with producers, acting as a clearing house for collective bargaining and cooperation on energy pricing; and organizing regional trading platforms and energy exchanges; 3. Establishing regional strategic energy (oil) reserves and a system of risk-sharing and distribution; 4. Integrating energy infrastructure within the region to achieve the integration of an Asian electric super-grid; 5. Establishing funding platforms for the development of unconventional energy sources and sharing the latest achievements of energy and renewable energy technology; 6. Serving as a common platform to align commercial interests to jointly develop the resources and energy potential in the region such as those of the East China Sea, and of the South China Sea.

2015: The Year That Geo-economics Trump Geopolitics 2014 was a year characterized by a return of harsh geopolitics. 2015 will be a year that geoeconomics trump geopolitics. When nations come together to do businesses, they become busy by making money, instead of wars. This year will be a year of landmark significance for both the world and China. The international community will commemorate the 70th anniversary of the end of WWII, and jointly adopt the post-2015 development agenda. Peace and development will become the two focal issues of the world this year. As President Xi himself has said, “We should be fully mindful of the complexity of the evolving international architecture, and we should also recognize that the growing trend toward a multi-polar world will not change… We should be fully alert to the grave nature of international tensions and struggle, but we also need to recognize that peace and development, the underlying trend of our times, will remain unchanged.” The China Energy Fund Committee will continue to work to turn challenges into opportunities, to build small gains into major accomplishments, and to promote international cooperation and mutual respect. This is essential to the sustainable growth and prosperity of our societies.

CHINA EYE‧Issue 8

The “Energy Pivot to Asia” - Enhancing Energy Security in the Asia-Pacific LUFT, Gal

The “Energy Pivot to Asia” Enhancing Energy Security in the Asia-Pacific (「能源重返亞洲」──提升亞太能源安全) LUFT, Gal Co-director of the Institute for the Analysis of Global Security; Senior Advisor to the United States Energy Security Council

he current global and regional situation offers many unique opportunities for the Asia-Pacific region. Non-governmental organizations are currently leading efforts to identify these opportunities and develop ways for the region to capitalize on them. Together with Dr. Ho, the Institute for the Analysis of Global Security has been promoting a vision: the “Energy Pivot to Asia”. The “Energy Pivot to Asia” is an alternative to President Obama’s “Pivot to Asia”, which is basically an increased U.S. military presence in Asia. President Obama’s vision risks creating new tensions in the Asia-Pacific, and maybe, down the road, even conflict. We think that there is a much better alternative: the United States’ should leverage its diplomatic and economic power for the benefit of the entire region. Specifically, it can accomplish this by embarking on initiatives that enhance energy security in the region. There are many potential initiatives, but one opportunity is right in front of our noses: creating a regional strategic petroleum reserve for the Asia-Pacific. The low oil prices we are currently experiencing can be taken advantage of to establish this reserve. Today, the petroleum reserve management system of the International Energy Agency is the only petroleum reserve system, and it

primarily serves the trans-Atlantic community. Currently, the Asia-Pacific region does not have a system. There is no sharing of petroleum reserves. A regional reserve offers important benefits. If, for example, tomorrow – heaven forbid – Japan, or Korea, or China suffer some sort of natural disaster, they could be supplied by oil and gas that is stored in the strategic regional reserve. The same could be true for a variety of other problems. Another opportunity we see today is that low oil prices enable us to do something that cannot be done with high oil prices: address the issue of energy subsidies. These subsidies are a significant drag on the economies of the Asia-Pacific region, many of which still highly subsidize energy. It is very difficult to do address these subsidies when prices are high, because under such circumstances governments do not want to further increase the burden of energy costs on their people. But with prices dropping, it may be the right time to eliminate these subsidies, so that people are exposed to the true cost of the commodity. These are two examples of the type of suggestions the IAGS has been developing. Although there are many more, the underlying point is to recognize the unique opportunities offered by the current period. To realize many of these opportunities, there needs to be more

CHINA EYE‧Issue 8

The “Energy Pivot to Asia” - Enhancing Energy Security in the Asia-Pacific LUFT, Gal

LUFT, Gal at “Sino-US Colloquium (VII) Silk Road Energy Dialogue Asian Energy Security Cooperation: Challenges and opportunities”

regional cooperation. The Asia-Pacific region needs to have an institution that enables countries to work together. Unfortunately, the Asia Pacific Economic Cooperation (APEC) has not delivered much in terms of regional energy security. The region needs an energy security specific architecture with more participation from private enterprises. This will create a more hospitable investment climate, and get more money invested in the necessary initiatives. The role of the United States also needs to be carefully assessed. In his “State of the Union”, Obama only mentioned the word “China” once, mainly in the context of the recent climate agreements1. Overall, the speech demonstrated a poor understanding of the importance of China as a major partner for the United States. The lack of focus on the region is troubling. More importantly, it demonstrates the need for

non-governmental initiatives to take the lead in the Asia-Pacific region. Nevertheless, the United States is important, because it has very close historical relations with many of the countries in the region – particularly countries that don’t feel at ease with, or are ambivalent about, the rise of China. Japan, Vietnam, the Philippines, and some other countries would like to see a more balanced situation in Asia. They want to see the United States involved in the region, and not solely in a military capacity. The relationship of the United States with the Middle East is a telling example. A common question these days is whether the United States is, in fact, becoming more energy independent, and if it is, whether this will impact its relationship with the Middle East. The reality is that the United States has never been dependent on the Persian Gulf for its oil

Climate should not be the main priority of the Asia-Pacific. The main priority should be achieve prosperity, because only prosperous countries can afford to tackle climate change. The region needs to become prosperous before it can address global warming. 1

CHINA EYE‧Issue 8

The “Energy Pivot to Asia” - Enhancing Energy Security in the Asia-Pacific LUFT, Gal

supply. Today, only 9% of U.S. oil comes from the Middle East. The most it has ever been is 14%. The United States is not dependent on the Middle East for oil. It is, however, dependent on the region for setting the price of oil. More importantly, the United States’ relationship with the Middle East is not based on energy, but on another industry: arms and aerospace. The United States is close to the Middle East because it likes to be close to its customers, to make sure they buy tens of billions of dollars of its products every year. The answer to the question is that even if the United States imports zero barrels from the Middle East, it will remain involved in the area. The United States typically only revisits its global commitments and military obligations when its economy is in recession. That is when people say “we need more butter and less guns.” Today, however, the U.S. economy is doing very well, so there is no pressure to swap “butter” with “guns”. The Shale Revolution and the prosperity it generated is actually reducing the change that the United States will re-evaluate its commitments abroad. We will continue to see U.S. involvement abroad, perhaps not necessarily in the form a military deployment. Regardless, the United States will not distance itself from the Middle East. .China can also re-evaluate its approach to energy cooperation in the Asia-Pacific. Dr. Ho has mentioned that one of the main thrusts of China’s strategic energy plan is to develop self-sufficiency. This focus on self-sufficiency, which is not unique to China, is understandable, and perhaps intuitive for many. But in today’s globalized world, a focus on self-sufficiency is outdated. Today, we live in an open economy, in which there is considerable movement of goods and services. It is difficult to see any scenario in which someone decides to block the flow of energy to China. If you block the flow of energy to China, you essentially block the flow of goods and services from China. This would be disastrous for the global economy. China is too big, too important, and too powerful to be

blocked by anybody. In this context, the focus on self-sufficiency seems to be a vestige of the past. Instead of focusing on self-sufficiency, we have to create more energy connectivity. Rather than focusing on segregating markets and building walls, we need to invest to increase the flow of energy resources around the world. We can create robustness and redundancy through cooperation, as would be the case with a regional petroleum reserve. Now is the time to embark on such projects, and to invest in a way that is truly productive, benefiting all the people of the Asia-Pacific region.

CHINA EYE‧Issue 8

Recent Developments on Indonesia’s Energy Security: The Challenges & Opportunities Ahead I Gusti Nyoman Wiratmaja

Recent Developments on Indonesia’s Energy Security: The Challenges & Opportunities Ahead (印尼能源安全發展近況：未來的挑戰與機遇) I Gusti Nyoman Wiratmaja Expert Staff for the Minister of Energy and Mineral Resources of Indonesia

would like to present to you the recent developments in Indonesia’s energy security, and the challenges and opportunities ahead. This is a very important forum for us because the largest investor that is doing business in Indonesia in terms of energy is the US, followed by China and Japan. All of these countries are represented here today and, as such, this forum is very important to us. When talking about energy and looking at the region, consider the image of Indonesia at night from a distant view. Satellite images of Indonesia show that only Java Island in the west of the region is bright at night, whereas if you look at a corresponding image of the US, you will find that it is bright everywhere. This is our dream. In the future, Indonesia will be bright everywhere just like the United States. Allow me to give you an overview of the demand of energy in Indonesia, in oil and gas, in the mining industry, and also in renewable energy. Indonesia has a population of almost 250 million at present. We have a high rate of population growth – almost 1.5%, and our economic growth is over 5%. We therefore need more and more energy – an almost seven to eight percent increase in energy is needed every year. At present, Indonesia is also a country that is very dependent on oil. Our target within the next ten years is to reduce the dominance of oil as a primary source of energy in our country and compensate with coal, gas and renewable

energy. Form 50%, oil’s share will be decreased to 25%, and the share of renewable energy, in particular, will be increased from 5% to 20%. These are the challenges we will face in the coming decade. The figure below shows the outlook for energy consumption in Southeast Asia.

Oil is still expected to take up the largest portion of the energy mix in 20 years’ time, and oil will continue to play a very important role in energy politics in Southeast Asia. As most of you know, Indonesia is exporting gas and also coal mainly to China, Japan and also Korea. But our policy in the new government is to shift from using energy as a commodity to using it as an economic driver. As a net importer of oil, Indonesia benefits from the low oil price. We used to provide a subsidy for gasoline and diesel fuel, which costs us around 20 billion US dollars every year. But starting this year, we have lifted the subsidy for gasoline but still give a small subsidy for

CHINA EYE‧Issue 8

Recent Developments on Indonesiaâ&#x20AC;&#x2122;s Energy Security: The Challenges & Opportunities Ahead I Gusti Nyoman Wiratmaja

diesel. In terms of infrastructure, to achieve our dream, to make the eastern part of the country as bright as the west, over the next ten years we will build a lot of infrastructure in the eastern areas (at present, the infrastructure is mostly concentrated in the western islands). Because the region is made up of islands, we will utilize LNG, as it is not possible to build pipelines for gas given the depth of the water in that area. Our plan involves large-scale infrastructure deployment in the east side of Indonesia. We will build regasification units, floating storage and regasification units (FSRU), and all of the power plants will be using either LNG or gas in the east side of Indonesia. Coal, aside from causing pollution, has a low energy density. Therefore, gas is comparatively very convenient for the development of power plants in the east side of Indonesia. As illustrated in the figure below, we will use what we call a virtual pipeline system. We will build one big hub and then use small ships to distribute the LNG using ISO tanks or other technology.

Our other plan for the future involves power plants. We have a massive 35 GW power plant deployment program to be implemented within the next five years. This will require about 28 billion US dollars in investment, which presents a very big challenge and opportunity for investors, because historically we have only been able to build about 8000MW per year, but in the next five years we will build 35,000 MW. This is a big challenge for us, and we need a lot of investment and technology for this program. In terms of renewable energy, we are very fortunate in the tropics to enjoy a hot season and a rainy season all year round. Before climate change, we usually had three months of dry season. But after climate change, we only have less than a month of dry season. We have rain almost every day of every week. As such, we do have a lot of potential in hydro energy. We also have vast potential in geothermal energy, utilizing currently less than 5%. Therefore we also require significant investments in geothermal energy â&#x20AC;&#x201C; around 6 billion US dollars to develop geothermal capacity in Indonesia. This is very clean and very convenient energy, but does require a lot of investment. Last but not least, as a tropical country, we have the benefit of biodiesel and biomass development. Indonesian is the largest producer of palm oil. We produced 28 million kiloliters of palm oil last year, of which only 10% is used for biodiesel. Next year we will use 20% mandatory biodiesel for transportation. For future energy, Indonesia has comparatively more oceans than land. However, we have not developed any technology to harvest the energy from the ocean. The potential is almost 2000 GW for energy harvested form the ocean floor, but we need a lot of research and cooperation with developed countries to harvest energy in this region in the future. In conclusion, Indonesia is shifting its policy. We used to use energy as a commodity but we will change this into energy as an economic driver; there will be no more subsidies for oil and diesel; we will give a high priority for gas for domestic supply and industrial feedstock. In

CHINA EYEâ&#x20AC;§Issue 8

Recent Developments on Indonesia’s Energy Security: The Challenges & Opportunities Ahead I Gusti Nyoman Wiratmaja

terms of infrastructure, we will build a virtual pipeline for the islands region, and also massive development in geothermal, hydro and also biofuels. We need a lot of investment and a lot of technology to make this dream come true.

CHINA EYE‧Issue 8

Opening the Transportation Fuel Market to Competition KORIN, Anne

The New Energy Landscape Opening the Transportation Fuel Market to Competition (運輸燃料市場引入競爭) KORIN, Anne The Future of Coal in China (煤在中國的未來) JONES, Ayaka (錢文華) The Road Towards Clean Coal (邁向清潔煤炭之路) ZENG Xingqiu (曾興球) The Effect of the US Shale Oil Revolution on Global Oil and Gas Production (美國頁岩油革命對全球油氣生產的影響) SUN Xiansheng (孫賢勝) The Implications of Falling Oil Prices (油價下跌的牽連) KOYAMA, Ken Working Together: A Solutions Based Approach to Climate Change Mitigation (合作謀求緩和氣候變化的方法) LIU Qiang (劉強)

CHINA EYE‧Issue 8

Opening the Transportation Fuel Market to Competition KORIN, Anne

Opening the Transportation Fuel Market to Competition (運輸燃料市場引入競爭) KORIN, Anne Co-director of the Institute for the Analysis of Global Security; Senior Advisor to the United States Energy Security Council

n order to fully grasp the magnitude and importance that this topic covers, and how these issues with cooperation do not discriminate, and the majority of humans on this Earth suffer the consequences as a direct result of failing to address single points of failure. To create a dialogue for the discussion on strategies for cooperation and issues related from lack thereof, indulge with me in the dissection of these cases thus, we can better understand what is most critical that we cooperate about. With that being said, I digress and now return to indulge in these two incidents, both of which had occurred during the 19h century: model incidents which support the critical importance of proper strategic cooperation. The first incident will seem very abstract to you at first: many people are convinced that the incident does not have anything to do with energy. On the contrary! This has a great deal of relevance to energy, and as a result provides supporting evidence on the broad concepts behind the importance of cooperate. Furthermore, these events hold considerable amounts of wisdom, which in turn mitigates most future single points of failure. Ireland went through a severe potato famine, beginning in 1845, lasting several years – devastating an entire third of Ireland’s population, who were already heavily dependent on a singular crop (the potato) for their basic food needs. The cause of this famine was the result of a fungus recognized as Phytophthora

infestans. Fungus has the ability to spread very quickly in certain conditions, and since it is such a resilient strain of fungus, every potato was destroyed. In a few years, the result of the potato famine put a million people into graves, and those who were not yet dead fled Ireland by any means possible. The figures put together show a total reduction of the total Irish population by one quarter; a whole quarter of a country disappeared in the dusk, of migrating. From the story of the Irish potato famine, a single point of failure was idling until that point failed. As a result of that single failure point, a catastrophe emerged, thus resulting in the disappearance of a quarter of the whole population of Ireland. An incident occurring in 1872 had an extremely large impact on the whole infrastructure of a country due to an outbreak of influenza which affected horses. The epidemic doesn’t seem so profound, but in 1872, horses had a huge role in the building of a society that we have come to appreciate today. The dependence of transportation and delivery of goods relied entirely on horses. Even trains could not get supplies of coal, and boats were motionless. The reliance on one animal, and the point of failure created by its illness, brought the United States Transportation System to a standstill in just 90 days. Essentially, transportation in the United States was completely shut down due by the great influenza pandemic of 1872. This had a devastating impact on the economy at the

CHINA EYE‧Issue 8

Opening the Transportation Fuel Market to Competition KORIN, Anne

KORIN, Anne at “Sino-US Colloquium (VII) Silk Road Energy Dialogue Asian Energy Security Cooperation: Challenges and opportunities”

time, due to a single point of failure. That single point of failure? Transportation was entirely depending on horses. It’s hard to put these incidents together and see the relevance to energy. Surely, these are very old events, so what relevance do they play in today’s society. The energy in this discussion is similar in terms of the horsepower of today, because it a fact often ignored: we also have a single point of failure. It’s very wide spread, and it’s like a cancer. It’s in the global economy, the transportation industry; again because all of these industries share a domination by one very overly used commodity: oil. A lot of conversation about oil is usually the profound effect it has on the environment. There is a void of profound, game changing ideas. Just like a virus, infecting the human body, viruses can also take the form of ideas. They spread across regions, very quickly, and it seems like they concentrate in the where all the bulk of the world’s oil is concentrated. An area of the

world known for it’s cheap extract oil reserves, and most conventional political environment. We’ve made a great mistake with The Middle East, and our reliance on the oil we get from them. The market control there is very volatile, it’s not smooth like many other reliable markets, and it also does not have a normally shaped volatility. Any number of small events could result in a fluctuation in oil price and supply. This alone can have a deep impact, as it is a fragile, single point of failure. The impact would not be isolated, but would stretch over the global economy, hitting developing nations hard. Any radical military organization or terrorist group, (ISIS, for example) report and boast that their fighters frequently talking about killing hundreds of thousands of people deliberately. Any human who is willing to take their own life in order to take more lives from the people surrounding nearby, or would crash an airplane to kill a thousand innocent people, would jump

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Opening the Transportation Fuel Market to Competition KORIN, Anne

for joy if they had the opportunity to millions. It would be no surprise at all if this is a legitimate case. However, this is something that avoids being discussed like the plague. The topic is never touched, and the potential hazards of an occupation of suicidal maniacs, sitting on top of a territory with nuclear capabilities, and also the bulk of the Earths oil reserves is not going to end well. We should not worry about state actors using nuclear power, but our newer generation will be characterized by the assimilation and modification of warfare into a new characterization: fourth generation warfare. The power lies in non-state officials, such as ISIS. The thought of a group similar to ISIS obtaining access to nuclear power, while having no qualms or reservations on destroying entire key oil structures in the Middle East is absolutely terrifying. A situation like that could bring the global economy to its knees. But, the truth is, we know this can happen. Everybody is aware of the risk that are a normal course of human life; however, ignoring the possibility and moving forward only opens the wound move, and the infection spreading is called risk. Society is too busy to deal with these issues at hand, we want to raise families, start businesses, travel, work -- and these things are the true black swans -- the real points of failure. These are indications of dormant types of risks, which could modify the nature of our existence. Therefore, cooperation must urgently focus on to remove the biggest single point of failure which places the entire world’s quality of living at risk. That point of failure is the global economy, and the monopoly Big Oil has created in the transportation industry. It is absolutely critical that we open a transportation fuel market to competition. For example: electricity. We can see that there are many different ways across the world used to generate electricity - coal, natural gas, hydro, nuclear power, and other renewables on the peripheries. There is not a status quo in which we will be held hostage to destructions; or deliberate, accidental, weather-driven on one type of energy supply when it comes to

electricity generation. This is not the case of transportation fuel. And the two most urgent avenues for collaboration, when it comes to transportation fuel, is gasoline and diesel. When it comes to gasoline, its light duty vehicles that people use go to and from work. When it comes to diesel, it’s mostly heavy duty vehicles, trucks and so forth that industry uses. In reference to consumer cars, introducing them into competition is very inexpensive. It’s under a hundred dollars a vehicle to make a vehicle flex-fuel. This is a car that has a normal vehicle combustion engine and a liquid fuel tank, and it can run a variety of fuels, from gasoline, variety of alcohols made from coal, natural gas, and even made from biomass. When it comes to heavy duty vehicles, the company Mobile anticipates that in a decade and a half, diesel will outplay gasoline as the primary fuel in the world. In Asia, diesel is much more important than gasoline. So when we look at heavy duty vehicles, we think of how we open them up to competition. That competition alone contains a lot of information which both the United States can learn from China via manufacturing and engineering, and vice versa. The rest of Asia can participate in this as well, because heavy duty vehicles can be opened to fuel made from coal, natural gas, and methanol – the fuel that light duty vehicles can use. This will serve to clean up the air, which is a primary issue in urban areas in China; especially it’s been a major issue reducing particulate emissions. It will also serve to dampen the price of fuel over a long term. There are different ways to do this, and in China, they have had great advances in terms of projects, such as having two fuel tanks in a truck - diesel fuel tank and a methanol fuel tank. Whereas in the United States, there’ve been efforts to have one blended fuel tank in a truck, this is a much earlier stage than the light duty vehicle, which is a real, in reality, if you go to Shanxi province in China, you will see there are many multiples of cars running on methanol. As was mentioned earlier, if you go to Brazil, new cars using combination gasoline

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Opening the Transportation Fuel Market to Competition KORIN, Anne

with alcohol included in the mixture went from 0 to 70%. So these things are very doable. We are not talking about technology that is far-off or terribly expensive or anything like that; it’s just a decision by government. The paperwork can take several forms. It doesn’t have to be a mandate saying to auto-makers, to truck makers that you must open your vehicle to competition. It can be an incentive that doesn’t cost the government or the taxpayers any money and the way to do it is simply to offer auto-companies, truck companies amends their productions in their fuel-efficiency requirements if they open a substantial proportion of their fleet to fuel competition. It’s also very necessary that we see cooperation in terms of technology proliferation. China has made tremendous strides in converting its coal supply into the alcohol fuel methanol. India has a lot of coal. Indonesia has a lot of coal. Countries in developing Asia have a lot of coal. The technology that China could export to these countries in collaboration with the United States could change the dynamic completely when it comes to the transportation or the fuel market. In coordination with a governmental policy that opens new vehicles to fuel competition, in the cheapest, easiest, most technologically feasible ways. The second thing that is very important is very important to do is to delink natural gas pricing from oil pricing in Asia. In the United States, natural gas price for the past several years has been very very cheap. It has nothing to do with the price of oil. It flows independently from the price of oil. But in Asia, natural gas is index to oil price, and let me be very convenient now, when oil price is falling, oil price will rise, and natural gas will rise with it. And because natural gas is index to oil, that means that the only competitor that you potentially have for oil in Asia is coal. And that’s fine, coal is fantastic competitor if you open cars to fuel made from coal. But why neglect the potential competition of natural gas? Tthe only way that let natural gas to compete with oil is to delink gas pricing from oil pricing. It is to move gas-to-gas

indexing as opposed to gas-to-oil indexing. The third avenue for cooperation is more focused on cooperation amongst Asian countries, rather than with Western countries. We talked about viruses before, and there are also different kinds of virus has been proliferated through the West for quite a while now and that’s the virus of green-ism. Greenism is an ideology that places the status of the planet, the unchanging nature of the planet over the well-being of human-beings. I heard a very beautiful statement made by our colleague in Indonesia looking at the slide that showed the United States in Indonesian and said, “We want Indonesia to be as well-lived as the United States.” That is a beautiful statement. That is a very humanist statement. We want people to be prosperous. We want people to be healthy because health is linked to prosperity. We want people to have good lives, while the green-ist is against all of that because they would like the United States to be as dark as Indonesia. But they know they don’t have the ability to do that so what they would like to do is to keep Asia as dark as possible. This is essentially a form of ivory-tower-imperialism if you will. We have a Davos meeting going on now and one of the major topics of the Davos meeting is climate. There are 1,700 private jets that made their way to Davos to talk about the importance of other people restricting their energy consumption, so as to supposedly not change the world’s climate. I will say this is hypocrisy and I will say this is evil. At the end of the day with their means is to keeping Asia in the dark; keeping a hundreds, millions of people throughout Asia, countless more in Africa and regions that don’t have access to enough energy to cook two meals a day, keeping them poor and keeping them miserable, and keeping their lives short. So in terms of cooperation throughout Asia, there needs to be an ideological pushback against this anti-human philosophy. There needs to be an ideological pushback what amounts to this cliché against coal because coal is a cheap, useful, secure source of energy, and it can

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Opening the Transportation Fuel Market to Competition KORIN, Anne

be harmless, cleanly by cleaner without the particulate emission that causes asthma and respiratory diseases. It can be harmless in the way that benefits the economy and I think one of the best ways of harmless coal is to convert it into a transportation fuel. But first, Asia has nothing to apologize about wanting to become wealthy, wanting to drastically increase its per capita use of energy, in doing it in the cheapest and most economical way possible. That is the third avenue of cooperation. In summary, first, open the transportation fuel market to competition, both focusing on the light duty and heavy duty sector. Second, delink natural gas pricing from oil so that natural gas can flow freely and be allowed to compete with oil and so that both coal, natural gas, and other resources can be arbitraged against oil and serve as a permanent damper to keep the price of oil permanently low. We talked about OPEC, and people may dispute OPEC’s ability to manage the market year-to-year, day-to-day. But let’s not forget, if you look at OPEC production, and again, OPEC sits on some three quarters of world’s conventional oil reserves. Three quarters, and the cheapest to produce oil. If you look at OPEC’s production 40 years ago, it was 30 million barrels of oil a day. Think what has happened in the global oil demand in the past 40 years. It has almost doubled. Think what has happened to the global population, to global GDP in the past 40 years. Do you know what has happened to OPEC production in the past 40 years? It has not changed. OPEC produces 39 (million) barrels of oil a day, the same as it produced 40 years ago. That make sense for OPEC countries since their goal is to maximize revenue for their members, but if it was Sinopec, CNPC, Mobile, or other companies that were sitting on those 72% of global oil reserves that are controlled by OPEC, I guarantee you that 72% of world’s oil reserves will not account for less than a third in the global oil supply today. Oil prices should be much, much lower. The only way we can achieve that is by arbitraging coal, natural gas and other resources against

oil. So the third avenue for cooperation, again, is this ideological pushback against the greenist philosophy, against the anti-coal, the antienergy, the anti-human philosophy.

CHINA EYE‧Issue 8

The Future of Coal in China JONES, Ayaka (錢文華)

The Future of Coal in China (煤在中國的未來) JONES, Ayaka (錢文華) General Engineer of United States Energy Information Administration

he China Energy Fund Committee’s annual publication, “CEFC China Energy Focus 2014: Towards Clean Coal” is a highly relevant and timely report to help western audiences feel the pulse of the development of energy in China, and to open the dialogue between the US and Chinese experts. The views offered serve to confirm and deepen our understanding of issues related to energy in China and will prove helpful in our preparation for the International Energy Outlook. My comments will focus more on the broader changes in the economy, industry restructuring and environmental energy policy to see how these changes have brought about changes in the broader energy consumption pattern in China, and how that, combined with the government push for revolutions in energy supply, form the so-called energy revolution that is occurring right now in China and how that will impact on coal. I will explain why clean coal is urgently needed to reconcile the tension between the need to grow the economy, and the need to protect the environment and fight climate change. First let us take a look at how coal is used in China. The chart below shows us the history of coal consumption in China and how it is distributed in different sectors:

Sources: Energy Information Administration (EIA), Lawrence Berkeley National Laboratory (LBNL), IHS

Mainly, as it is widely known, electricity and heat generation uses about 60% of the total coal consumption in China, and electricity alone represents about half the consumption. The remainder – the 36% – is used in the industrial sector, which includes coking coal for coke making and other direct combustion of coal for industrial processes. The highlypublicized “coal chemicals” took up just under 10 million tonnes of coal in 2012, which is less than 5% of total coal consumption. So most of the coal used in the industrial sector is for direct burning of coal – in EIA terminology we call this the “end use of coal”. The coal is typically burned in very small, inefficient, highly-polluting industrial boilers, which is a big contributor to air pollution in China. With this in mind, let us look at what is happening in coal right now. In the chart below, the bars chart represents coal consumption (please note that I have represented coal consumption for 2010 and 2013 differently, because the NBS has published new data in February this year and there is a big

CHINA EYE‧Issue 8

The Future of Coal in China JONES, Ayaka (錢文華)

JONES, Ayaka at the publication release of “CEFC Energy Focus 2014: Towards Clean Coal”

adjustment for coal production and total energy consumption for 2013, which means that all the data from previous years could be revised in a significant way. Right now I have used the data available in the public domain).

Sources: EIA, China National Bureau of Statistics (NBS), IHS. Notes: 2010-2013 coal consumption could be revised by NBS. * Annual spot prices for Datong 5,800 NAR, FOB Qinhuangdao

From this chart we can see that, after spectacular growth between 2003 and 2011

coal has reached a turning point in China. In 2014, according to current NBS data, coal consumption has declined for the first time in a decade. I think that there are 3 major drivers for this: China’s economic rebalancing, its industry restructuring and its energy and environmental policies. I call these external factors because they are external to the coal sector itself, and these external factors are playing a bigger role in deciding the future of coal compared to dynamics inside the coal sector. Between 2003 and 2012, the economy has been growing in an extensive mode, basically pumping money and energy into the heavy manufacturing sector and the industrial sector – the engine of economic growth. In the meantime, energy policy was emphasizing the security of supply, and so total consumption grew dramatically because the country was experiencing doubledigit economic growth. Other supply sources have been ramped up, and coal is the major driving force to support economic growth. However, in the past 3 years, since the

CHINA EYE‧Issue 8

The Future of Coal in China JONES, Ayaka (錢文華)

start of the change, large investments in heavy manufacturing has benefitted China in many ways but not without side effects. So the government has rebalanced the economy in an effort to gain a more sustainable footing for continued long-term economic growth, even if the price to pay for this is lower GDP growth. It is widely-reported that GDP growth has slowed, and part of the economic rebalancing is industrial upgrading and restructuring. That means that the development focus has shifted away from investing in heavy manufacturing. At the same time, energy supply policy has also been changing. Instead of emphasizing supply security, the policy has also started to emphasize supply sustainability mainly because of the environmental issues the country is facing. Inside the coal sector over the past ten years there have been a lot of supply side issues like rural transportation, the high cost of coal supply and the tight supply driving up the coal price (as shown by the trend line in the figure above). But in the past, all these supply side issues didn’t stop coal from growing. This is because energy demand is high and there are no alternatives. Over the past three years though, all these supply side issues have been abated, a lot of investments have gone into the coal sector, many new mines and transportation systems gave been built – railways and new transmission lines, which have enabled access to cheaper coal in the west of the country. The cost of production for coal has also been declining. All these improvements have not had an effect on coal demand and coal demand has softened. This demonstrates the point that it is really everything else that is driving coal’s future, and not what is happening within the coal sector. So to understand the use of coal in the future, we have to look beyond the coal sector and at everything else. The graph below shows the value added (in nominal dollars) by each sector as a percentage of GDP. It shows that, historically, the service sector’s share of GDP has been increasing – it is a sector that is far less energy intensive than the industrial sector.

Within the industrial sector, a large share is taken up by the manufacturing sector. Over the past 40 years, the service sector’s share has been increasing but has actually taken away from the agricultural sector (the industrial sector’s share has remained largely flat). But when looking at developed economies, we see a long-term steady decline in the manufacturing sector, and the result is a drop in the industry sector’s share. Combining the experience of the developed economies with the policies the government is driving today – shifting away from investment and extensive growth to more of a consumption-driven, service sectordriven, organic growth of the economy, we can see that, over time, the service sector will start talking a share from the industrial sector as well. As a result, the industrial sector share of GDP will decline, although probably not to the level of developed economies. However, the long term trend is quite compelling. Because the industry sector is more energy intensive, the decline in its contribution to the GDP will result in slower growth in energy demand. And because coal is the major supply source, this trend will affect coal demand overall. This is one of the reasons coal demand will start to grow slower than seen in the past 10 years. The figure below shows how industry restructuring is cutting back on heavy manufacturing and shifting energy consumption patterns. It shows that the growth rate of production in coalintensive industries has been declining over the past 10 years, especially in 2014 (NBS data shows that fertilizer production growth has actually declined in 2014). Another major coal user is the cement industry. The growth rate for

CHINA EYE‧Issue 8

The Future of Coal in China JONES, Ayaka (錢文華)

this industry has dropped to a ten-year low of 2%. The growth rate for the steel industry has also dropped. All these contributed to slower growth in coal use in the industrial sector.

The graph below shows the share of total energy end-use of the various sectors.

The bar chart represents the manufacturing sector, and its share of energy demand has been declining. On top of this trend, within the industrial sector there has been a longterm trend of “electricity substitution”. As you introduce more advanced manufacturing, you use more electricity instead of the enduse of primary energy. This trend is expected to continue. In other sectors – residential, commercial etc., of course, electricity use will be taking up a larger share. Overall, this chart points to two major trends. Firstly, the industrial sector’s share of total energy demand will decline, which will affect coal .Secondly, the share of electricity (for the substitution of coal) will increase. Therefore, if coal wants to

grow, it really depends on how much room it has in the power sector. I have used two hypothetical cases to demonstrate coal’s role in future electricity generation. This really comes down to two questions: 1. How high electricity demand will become; 2. How much and how fast other supply sources can ramp up. In the figure below, the two bars on the right show the range of power demand as depicted by major long term projections found in the public domain. Basically, by 2040, most of the projections show that China’s electricity demand will grow to somewhere between 9,000 TWh (Terawatt hours) and 14,000 TWh. I have shown here two cases. The first case is based on a low power demand scenario but with very strong nonfossil fuel expansion. In the other case, I have shown how high electricity demand with very high non-coal capacity expansion. The Results are shown in the table below.

It shows that even with very aggressive expansion of all the other energy resources, coal still has a big role to play in the future. It will still supply 40% to 45% of the electricity. This demonstrates why China is so committed to clean coal technology. China has achieved a lot in improving coal plant efficiency over the past decade. The figure below shows that the country now runs the most efficient power fleet in the world, more efficient than the US.

CHINA EYE‧Issue 8

The Future of Coal in China JONES, Ayaka (錢文華)

information and share their experiences. In summary, there are structural changes that are occurring in China. In the future, coal will remain the cornerstone of China’s energy economy, but the way coal is used is going to be more centralized and more efficient, and deep processing will help to extract every ounce of energy from the coal. * This article is excerpted from the author’s speech at the publication release of “CEFC Energy Focus 2014: Towards Clean Coal” held by the China Energy Fund Committee on April 22, 2015, at the National Press Center, Washington DC, United States.

Sources: EIA, CEC

By 2014, China had very high efficiency control installations. 91% of the plant capacity has desulfurization equipment and over 80% have deNOx equipment. But if we look at emission rates, China still lags behind the US. The reason for this lies in the enforcement, monitoring and the design of market mechanisms to allow greater efficiency in reducing emissions. In this regard, the US has a lot of experience and technologies to offer and this is one area for the two countries to collaborate on. On the efficiency side, even though China has achieved a lot, we see the Energy Development Strategy Action Plan (2014-2020) released in September, 2014, calling for even greater reduction in coal consumption per KWh of electricity output. That means that increasing the pressure and temperature of the steam can only get you so far in terms of increasing efficiency. China will have to rely more on the optimization of the system, operation sills of the operators etc., and this this also a good area for China and the US to come together, exchange

CHINA EYE‧Issue 8

The Road Towards Clean Coal ZENG Xingqiu (曾興球)

The Road Towards Clean Coal (與邁向清潔煤炭之路) ZENG Xingqiu (曾興球) Vice Chairman of the Energy Research Center, China Investment Association; Former Director General of International Cooperation Department, China National Petroleum Corporation

hina is a huge producer and consumer of coal. In order to achieve low-carbon development, the clean and efficient utilization of coal is crucial to China’s energy development strategy. Recently, on the 11th to 12th of April, the 2015 International Symposium on new coalto-chemicals technologies in China was held in Beijing. Chinese and foreign experts were in attendance, with many experts from the United States, to discuss how to use coal more cleanly and efficiently. China produces 4 to 4.5 billion tons of raw coal each year, and coal accounts for around 65% of primary energy consumption. In 2014, this number dropped slightly from the previous year to 62%. This figure will not vary by much in the next few decades. It is estimated that by 2035 the share of coal consumption will remain over 40%. This is the case not only in China but for many countries around the world, including the United States, which has abundant coal reserves and uses it primarily for power generation. In terms of long-term development, coal will inevitably have to be replaced by new energies. However, it is as yet impossible to eliminate the use of coal, and too soon to start taking about a “Post-Coal” era. At present, a common task among coal industries world-wide is to actively promote the clean and efficient use of coal throughout the industrial chain. Synthesizing the valuable views and opinions of Chinese experts, the China Energy Fund Committee has produced this detailed

report focused on the clean and efficient utilization of coal in China. It contains a set of recommendations and is of great reference value. Here, I would like to congratulate them on this remarkable achievement. The Chinese government has long pushed for clean and efficient coal utilization. On the 25th of March this year, the National Energy Administration released its “Guiding opinion on promoting the scientific development of coal industries”. The document emphasizes the importance of continuing to advance clean coal utilization, and requires that clean and efficient coal utilization be given equal importance as developing clean energy. It calls for strategic planning and systematically addressing issues pertaining to clean coal utilization in various areas such as exploration, transportation, coal conversion and utilization. In particular, efforts should be directed towards the following 4 areas: 1. Restructuring the coal industry Relying on large-scale coal bases, China should build medium to largescale modern coal mines and eliminate outdated capacity. It should gradually develop coal processing projects that convert coal into clean energy products. In key coal consuming regions, 11 largescale coal storage and distribution bases will be constructed. Deep coal processing should be promoted and clean distribution processes for coal should be improved.

CHINA EYE‧Issue 8

The Road Towards Clean Coal ZENG Xingqiu (曾興球)

ZENG Xingqiu at “Sino-US Colloquium (VII) Silk Road Energy Dialogue Asian Energy Security Cooperation: Challenges and opportunities”

2. Establishing technical standards for clean and efficient coal utilization The importance of clean and efficient coal utilization technologies to China’s energy development should be made clear. A compulsory certification system should be implemented for industrial coal utilization equipment, the quality of commodity-grade coal must be improved, and research and development into new clean and efficient coal utilization technologies should be encouraged. Coalfired power generation technologies and the level of coal consumption per unit of electricity supply in China must be improved to meet advanced international standards. (The share of coal for power generation should be raised to above 60% of total coal consumption; operating efficiencies of coal-fired boilers should be increased by 7% over 2013 levels, coal conversion efficiencies should be raised

by 2%, and progress should be made regarding the integrated utilization of low-grade coal) 3. Improving laws, regulations and policies Financial support should be provided to projects that use coal cleanly and efficiently; projects that do not meet the proscribed technical standards should be penalized according to law; supervision and management should be strengthened and clean and efficient coal utilization should be incorporated into the legal framework. 4. Strengthening international cooperation The road ahead for clean and efficient coal utilization in China is long and arduous. Progress has been made over the last decade, but there remains a considerable

CHINA EYE‧Issue 8

The Road Towards Clean Coal ZENG Xingqiu (曾興球)

gap between China and developed countries in terms of technological and managerial expertise. We will continue to adhere to the principle of mutual benefit, open-up our industries further, strengthen international cooperation and learning and improve China’s capacity for clean and efficient coal utilization. The US has a wealth of experience with clean and efficient coal utilization. We sincerely welcome enterprises from the United States to come and invest in China, to provide us with new ideas, new technologies and new approaches.

* This article is excerpted from the author’s speech at the publication release of “CEFC Energy Focus 2014: Towards Clean Coal” held by the China Energy Fund Committee on April 22, 2015, at the National Press Center, Washington DC, United States.

CHINA EYE‧Issue 8

The Effect of the US Shale Oil Revolution on Global Oil and Gas Production SUN Xiansheng (孫賢勝)

The Effect of the US Shale Oil Revolution on Global Oil and Gas Production (美國頁岩油革命對全球油氣生產的影響) SUN Xiansheng (孫賢勝) President, CNPC Research Institute of Economics & Technology

he global oil and gas sector is undergoing a significant and fast-paced revolution. The shale oil revolution in the United States has largely affected the production and supply of global oil and gas resources; meanwhile, international oil prices are dropping significantly. These changes strongly influence the strategic decisions and competitive behaviors of governments and energy corporations. The global energy landscape is changing rapidly. On the supply side, energy independence in the United States has shifted the center of gravity for international oil and gas supply westwards. Emerging economies such as China and India, on the other hand, have shifted the center of gravity for oil and gas consumption eastwards. We are seeing the formation of three major consumption centers – North America, the Asia-Pacific, and Europe – and two major oil routes, “Eastern” and “Western”. The “East Route” is the supply area dominated by conventional oil and gas, and is constituted mainly by North Africa, the Persian Gulf, the Caspian Sea, and Siberia. These regions account for oil and gas reserves of 263.1 billion tons of oil equivalent (toe), constituting 68% of the world’s total reserves. In 2013, oil production in these regions reached 2.34 billion tons, constituting 53.6% of the world’s total. The area will remain a major source of global oil and gas supply. By 2030, oil production in the area is expected to rise to 2.61 billion tons,

constituting 54.0% of the world’s total. The “West Route”, by comparison, is an emerging unconventional energy supply area. It is constituted mainly by Canadian oil sands, shale gas and oil in the US, Venezuelan extraheavy oil and Brazilian pre-salt assets. The total oil and gas reserves in the area amount to 9.4 billion toe, constituting 26% of the world’s total reserves. In 2013, oil production in this region reached 1 billion tons, which was 23.0% of global production. It is expected that oil production in this area will reach 1.37 billion tons and comprise 28.2% of the world’s total production volume by 2030. On the demand side, we will see North America, the Asia-Pacific and Europe as the three major centers of oil and gas consumption. The consumption trends for these areas are, however, different. North American and European oil and gas consumption is peaking. By 2030, their share of global crude oil consumption is expected to fall from 28% and 21%, to 22% and 17%, respectively. Natural gas consumption in these two regions is also expected to decline from 26% to 16% and from 16% to 14%, respectively. By 2030, the Asia-Pacific region is expected to surpass Europe and the US as the largest oil and gas consumption center in the world, with its share increasing from 35% to 41%. The region’s share of natural gas consumption is also expected to increase from 19% to 25%

CHINA EYE‧Issue 8

The Effect of the US Shale Oil Revolution on Global Oil and Gas Production SUN Xiansheng (孫賢勝)

within the same period. The following table shows oil and gas consumption for North America, Europe, and the Asia-Pacific: Oil 2030

2013

2020

2030

North America

10.7

11.0

9.8

27.9%

25.9%

22.4%

Europe

8.2

8.0

7.4

21.4%

18.8%

16.9%

Asia Pacific

13.7

15.8

18.0

35.8%

37.2%

41.1%

Sum of above regions

2020

32.6

34.8

35.2

85.1%

81.9%

80.4%

World

Hundred million tons 2013

38.3

42.5

43.8

Natural Gas

2013

2020

2030

2013

2020

2030

North America

8745

9411

10619

25.5%

22.4%

21.3%

Europe

5520

6405

7082

16.1%

15.3%

14.2%

Asia Pacific

6522

9210

12397

19.0%

21.9%

24.8%

Sum of above regions

20787

25026

30098

60.6%

59.6%

60.3%

World

Hundred million m3

34297

41966

49921

The US’s increasing energy independence is causing a shift in international oil and gas trade flows. There has been a drastic drop in US crude oil imports, and the United States is expected to become a net exporter of natural gas in the next few years. US crude oil imports were 390 million tons in 2013, a drop of 120 million tons from the 2008 level. Within the same period, oil imports from the Middle East and Africa dropped by 90 million tons, to 130 million tons. Dependence on foreign oil has dropped to 31%. By 2020, a further 75 million ton decrease in US crude oil imports is expected, compared to the 2013 level, and crude oil imports from the Middle East and Africa will decrease by 50 million tons. Therefore, an increasing number of oil exporters in the Middle East and Africa are expected to turn to the Asia-Pacific market. In 2013, net gas imports from the US were 37.1 billion m3. It is foreseeable that the situation of the US will change to 52.8 billion m3 net gas exports by 2020, mainly due to a drop in imports from Canada. In 2013, the US imported 78.8 billion m3 of natural gas from Canada. In 2020, this number is expected to decrease by 12.5 billion m3, and reach 66.3 billion m3. By that time, 75 billion m3 of natural gas from North America will be redirected to the AsiaPacific market. The US mainly imports oil from neighboring countries. From 2003 to 2013, US’s crude oil imports from American countries remained around 250 million tons. The share of imports from this region out of the country’s total imports, however, increased from 49% to 64% during the same period. From January to October of 2014, US crude oil imports from American countries took up 68% of the total import volume. In 2003, only 3 American countries were among the top 10 sources of US crude oil imports. By 2013, the number increased to 5. For the period of January to October of 2014, the number climbed to 6: Canada, Mexico, Venezuela, Columbia, Ecuador and Brazil.

CHINA EYE‧Issue 8

The Effect of the US Shale Oil Revolution on Global Oil and Gas Production SUN Xiansheng (孫賢勝)

US crude oil imports by country and region (100 million tons)

Proportion

2013 Import Volume

Proportion

2008 Import Volume

Proportion

Import Volume

2003

sources of China’s crude oil imports. In 2013, this number remained unchanged. During the period of January to November, 2014, the number climbed to 8: Saudi Arabia, Angola, Iraq, Iran, Oman, the UAE, Kuwait and Libya. China’s crude oil imports by country and region (100 million tons)

America

2.5

49%

2.5

49%

2.5

64%

Canada

0.8

15%

0.9

18%

1.3

33%

Mexico

0.8

15%

0.6

11%

0.4

11%

Venezuela

0.7

13%

0.7

13%

0.4

10%

Middle East

1.2

24%

1.2

23%

1.0

26%

Saudi Arabia

0.9

17%

0.7

15%

0.7

17%

Iraq

0.2

0.3

0.2

Kuwait

0.1

0.2

Russia and Central Asia

0.1

0.2

10%

0.4

13%

Africa

0.9

18%

1.2

23%

0.3

Russia

0.1

0.2

Nigeria

0.4

0.5

0.1

Kazakhstan

0.0

0.1

0.5

51%

0.9

50%

1.5

52%

Proportion

2013 Import Volume

Proportion

2008 Import Volume

Proportion

Import Volume

2003

Angola

0.2

0.3

0.1

Middle East

Others

0.5

0.2

0.1

Saudi Arabia

0.2

17%

0.4

20%

0.5

19%

Oman

0.1

10%

0.1

0.3

Iraq

0.0

0.2

Iran

0.1

14%

0.2

12%

0.2

UAE

0.0

0.1

Kuwait

0.0

0.1

Africa

0.2

24%

0.5

30%

0.6

23%

Angola

0.1

11%

0.3

17%

0.4

14%

America

0.0

0.1

0.3

10%

Venezuela

0.0

0.1

0.2

Others

0.1

16%

0.1

Total

0.9

1.8

2.8

Total

5.2

5.1

3.9

US sources of crude oil imports for January – October, 2014

China’s sources of crude oil imports for January – October, 2014 China, by comparison, depends highly on oil imports from the Middle East and Africa. From 2003 to 2013, the volume of China’s total crude oil imports rocketed from 90 million tons to 280 million tons. The share of crude oil from the Middle East and Africa remained around 75% to 80%. From January to November 2014, the proportion of crude oil imported from the Middle East and Africa was 52% and 23% respectively. In 2003, Middle Eastern and African countries comprised 7 of the top 10 largest

CHINA EYE‧Issue 8

The Effect of the US Shale Oil Revolution on Global Oil and Gas Production SUN Xiansheng (孫賢勝)

Since late June of 2014, international oil prices have been plummeting. The WTI Crude Oil futures price plunged from 107.26 USD per barrel to 50.04 USD per barrel. The Brent Crude futures price dived from 115.06 USD per barrel to 53.11 USD per barrel. These two prices dropped by 53.3% and 53.8% respectively, and in less than six months the price of oil declined by over 50%. The recent drop in oil prices may be attributed to factors that were also behind the two drops during the 2008 - 2009 period. Similar factors include a shift in the fundamental supply and demand dynamics, and the notable appreciation of the US dollar. However, there are still significant differences between the current and past drop, attributable to a number of specific factors. With regards to the similarities, first, the periods share a shift in the fundamental supply and demand dynamic. During 2008 and 2009, the global demand for oil, influenced by the global financial crisis, recorded negative growth. Since supply remained largely unchanged, there was excess supply. In 2014, the growth in global oil demand slowed. However, the global capacity for supplying oil has been increasing, leading once again to excess supply. Second, both periods exhibit a notable appreciation of the US dollar. From July to December of 2008, the US Dollar Index rose from 71 to 88. Its correlation with the oil price was -0.92 – a significant correlation. From June to November of 2014, the US dollar index rose from 79 to 88. Its correlation with the oil price was also -0.92. With regards to differences between the two periods of dropping prices, the main factor specific to the drop in 2008 and 2009 was the financial crisis. The crisis traumatized the economy and caused a drastic decrease in demand, while supply remained constant. As demand rose again, there was once again upward pressure on oil prices, and oil prices bounced back shortly after the drop. Several factors are specific to the drop in 2014. First, growth in demand has slowed,

while supply has increased. Excess supply has become the new normal, making it hard for oil prices to recover from the drop. The success of the shale revolution in the United States and changes in Saudi Arabia’s policies are other factors. During the 2008-09 financial crisis, although demand dropped drastically due to the collapse of the global economy, there was a minimal change to the supply. Therefore, as demand rose again, so did the oil price. This time, however, slowing economic growth and adjustments to energy consumption patterns has led to a long term reduction in demand growth. At the same time, the rapid development of unconventional oil and gas resources has increased total supply. Excess supply is now the norm, and, as such, it will be very hard for oil prices to recover.

Geopolitical factors have also played an important role in the current decline of oil prices. For example, the US and Europe have increased sanctions against Russia. Since March of 2014, the US and Europe have targeted Russia in three areas – markets, technology and finance – with six rounds of sanctions. Both the scope and the intensity of these sanctions are increasing. The sanctions, in total, have led to a 130 billion USD capital outflow from Russia and caused a traumatic 47.2% depreciation of the Russian ruble, from 1:32 to 1:61.5 (as of December 19, 2015). On December 15, 2015, the exchange rate dropped to as low as 1:80.1. Inflationary pressures increased, trade settlement became difficult and the cost of financing increased significantly. The drop in oil prices cost Russia a financial loss of 100

CHINA EYE‧Issue 8

The Effect of the US Shale Oil Revolution on Global Oil and Gas Production SUN Xiansheng (孫賢勝)

billion USD. The fundamental conflict of US and Russian strategic interests complicates the situation, and has led to the long term sanctions against Russia. Saudi Arabia’s policy changes have also paved the way for the drop in oil prices. Instead of limiting production to prop-up oil prices, Saudi Arabia has lowered its oil prices, in an attempt to secure its market share. This initiated an internal price war among OPEC members, since none of the members are willing to cut production and risk losing their own market share. Thanks to its enormous foreign exchange reserves and low operational costs, Saudi Arabia is capable of withstanding low oil prices. To preserve its market share and other long term interests, Saudi Arabia is implementing a strategy to suppress high-cost production by means of low oil prices. Going forward, the global oil market will continue to be affected by excess supply. This will continue to exert downward pressure on oil prices. The US dollar’s appreciation and the bear market for commodities will continue to put pressure on oil prices. Accordingly, international oil prices for 2015 will continue to face considerable downward pressure, and prices will likely drop further before increasing later in 2015. Low prices will likely remain the most effective sanction against Russia, Iran, and Venezuela. In conclusion, the success of the shale oil revolution in the US has dramatically affected the global energy and geopolitical landscape, as well as international oil and gas markets. Energy is gaining unprecedented importance in global markets and its spillover effects are becoming ever more apparent. Energy has become a strategic tool for great power rivalries, as evidenced by the US and the EU’s sanctions against Russia, Saudi Arabia’s efforts to maintain their market share, and the volatility of the international oil price. In 2015, the global energy landscape will undergo rapid changes. Sino-Russian cooperation on oil and gas will continue to be

strengthened, US and EU sanctions on Russia will persist, and international oil prices will remain low, due to the combined effect of geopolitical and supply and demand factors. Developments in the global oil and gas sector will need to be followed closely in the years ahead. * This article is excerpted from the author’s speech at “Sino-US Colloquium (VII) Silk Road Energy Dialogue Asian Energy Security Cooperation: Challenges and opportunities” held by the China Energy Fund Committee on January 24, 2015, at Hong Kong Convention and Exhibition Centre.

CHINA EYE‧Issue 8

The Implications of Falling Oil Prices KOYAMA, Ken

The Implications of Falling Oil Prices (油價下跌的牽連) KOYAMA, Ken Chief Economist and Managing Director, The Institute of Energy Economics, Japan

his is a very turbulent time for oil prices. Before June of last year, the price of oil hovered over a hundred dollars per barrel for more than three and a half years. Today, we are seeing an unprecedented, sharp decline. The decline of oil prices is likely to continue. For at least for the first half of this year, prices are expected to reach very low levels. Unless there are unexpected events – such as a production cut by OPEC or other supply disruptions, such as those due to geo-political disruptions – it is very likely that we will see a very bearish market for the first half of this year. Oil prices this low, however, should not be regarded as sustainable. Price declines are, of course, a key factor in understanding the state of the market. The current situation is driven by both weakening demand and increasing supply – the latter being particularly due to very strong growth in U.S. shale production. The Saudi Arabian government’s decision not to reduce their production has also been critical to the drop in prices. The Saudi’s – who are makers, rather than players, of the oil market – do have the option to reduce the supply of oil, in order to protect prices. That option, however, is neither reasonable nor sustainable. The Saudi government learned that tough lesson in the “oil glut” of the mid-1980’s. This time, they are letting the market find a new price equilibrium. The Saudi’s do have vast financial resources, so compared to their rivals, they can wait out low oil prices for some time. From the perspective of the market, there are pros and cons to low oil prices. Overall, in

the global context, low oil prices are probably positive: they stimulate the global economy and are boon for consumers, particularly those in import-dependent countries. For oil exporting countries, on the other hand, the costs far outweigh the benefits. For net importing countries like Japan, China, the United States, and the E.U. – low oil prices are a gift. Japan’s economy, in particular, has been suffering for the last three or four years mainly because of the transition from nuclear power to fossil fuels, which it has to import. Because of this, in recent years Japan went from a trade-surplus country to a tradedeficit country. For ordinary consumers, lower oil prices provide benefits similar to a decrease in taxes: there is more disposable income to spend. But even for Japan, the picture is not completely positive, since unstable prices create uncertainty, and thus pose an economic risk. In general, the situation in Asia is complex. Energy demand is growing in many Asian countries. On the supply side, more options are becoming available. Beyond the Middle East, we see options for energy sourced from the United States, Canada, East Africa, Australia, and Russia. The question that really needs to be explored is how low oil prices will impact highcost investments in the energy supply chain. In resource rich countries heavily dependent on export, the low prices are a disaster. The resultant economic instability in these countries is worrying, since it could precipitate a financial or credit crisis, spreading this risk internationally. This could happen in countries like Russia, Venezuela, or Nigeria.

CHINA EYE‧Issue 8

The Implications of Falling Oil Prices KOYAMA, Ken

Oil prices heavily impact the Middle East. The region is currently experiencing instability in a variety of forms: ISIS and the nuclear issue in Iran, among other things. It will likely take a long time to resolve these issues. The oil and gas supply from this region is important, so the stability of this region is a common challenge for energy consumers. For Saudi Arabia, oil prices are not just a strategic issue, but a matter of survival. Low oil prices have considerable implications for the future of Saudi Arabia, including its relationship with neighboring countries and with the United States. Because Saudi Arabia is the sole manager of surplus capacity, its policies will continue to be important in the long term. The situation in Russia is also of particular concern. The Russian economy is dependent on gas revenue, particularly sold on the European market. That market is suffering because of its own economic difficulties, and is also further affected by sanctions imposed in response to the Ukrainian crisis. In addition to these difficulties, Russia now also has to deal with low oil prices. In the long term, low oil prices could affect the stability of Russia, and thus Eurasia as a whole. Currently, Putin’s popularity remains high, because the Russian public’s opinion of the Ukrainian crisis is generally positive. If economic problems continue, however, it will likely affect the stability of the country. Accordingly, the situation in Russia needs to be monitored. There are other negative impacts from low oil prices this low. The energy market often demonstrates cyclical features. As the saying goes – “the deeper the valley, the higher the peak”. This will lead to concern over the stability of future prices; in turn, this will have adverse effects on investment in energy supply. For example, unpredictability makes investment more difficult for both consumers and governments choosing a source of energy, or pursuing certain energy infrastructure. Similarly, there are also difficulties for the

private sector. Low oil prices in the 1990’s created strong incentives for the energy industry to cooperate, integrate, and differentiate. Generally, low oil prices increase the need to reduce costs and improve efficiency. If oil prices remain low for the remainder of the year, and beyond, we will likely see industries respond in this manner. In sum, oil prices present both opportunities and risks. For Japan, establishing a long-term energy strategy is more important than the short term volatility in oil prices. Ultimately, understanding the international market’s situation, as well as the situations of its major players, will be key to determining Japan’s energy strategy. * This article is excerpted from the author’s speech at “Sino-US Colloquium (VII) Silk Road Energy Dialogue Asian Energy Security Cooperation: Challenges and opportunities” held by the China Energy Fund Committee on January 24, 2015, at Hong Kong Convention and Exhibition Centre.

CHINA EYE‧Issue 8

Working Together: A Solutions Based Approach to Climate Change Mitigation LIU Qiang (劉強)

Working Together: A Solutions Based Approach to Climate Change Mitigation (合作謀求緩和氣候變化的方法) LIU Qiang (劉強) Director, Energy Economics Division, Institute of Quantitative & Technical Economics at the Chinese Academy of Social Sciences; Secretary-General, Global Forum on Energy Security

limate change conferences have sometimes resembled gladiatorial contests, pitting politicians, private entities, environmental organizations, media and the public against one another. A recent example of the antagonism that often features in climate change diplomacy is the heated debate between developed and developing countries – such as the E.U. and the BRICS. The debate, as is now well-known, revolves around the “common but differentiated responsibilities” approach to mitigating climate change. Put simply, the argument is over how to partition the burden of mitigating climate change. E.U. countries have been pressuring the BRICS to contribute more to mitigation efforts, since the latter are arguably the greater source of current and project emissions. In response, developing countries point out that developed countries have emitted about 75% of total GHG emissions in human history. Consequently, they argue, developed countries should take on more responsibility for reducing emissions. China, in particular, has often been criticized for its growing industrial output and the accompanying GHG emissions. On the other hand, those arguing in favor of Chinese development stress that its people deserved the right to a civilized, modern lifestyle. They also emphasize that most of China’s industrial

products are made for export, to serve the needs of other countries. Therefore, it is not only unfair to attribute these emissions to the Chinese people, but unfair not to account them to developed countries. It is tempting to proclaim that one side of this debate is right, and the other side wrong. Unfortunately, it is often easier to point fingers than to devise solutions. More importantly, the debate itself is misguided. The real limit to mitigation is not what countries decide to assign on a basis of responsibility. Rather, the limit is how much a nation can, feasibly and realistically, actually mitigate their emissions. Rather than argue over how to split the burden of mitigation, what we should explore is how much potential a country has to contribute to mitigation. As a starting point, we can quantify potential reductions by evaluating the extent to which a country can maintain the same level of economic production while actively mitigating its emissions. Consider, for example, the following factors for China: • China uses coal as its main source of energy, which compared to other energy sources, emits more GHGs per amount of energy generated. • In the past ten years, China has undergone

CHINA EYE‧Issue 8

Working Together: A Solutions Based Approach to Climate Change Mitigation LIU Qiang (劉強)

a period of transformative urbanization. This transformation required considerable amounts of high-energy-intensity products, such as steel and cement. • During this same time period, private automobile use skyrocketed. Traffic management, so far, has been inadequate. • Also during this period, China lost a substantial amount of its forests – and it did not have much acreage to begin with. Forests are important carbon sinks. These factors all contribute to higher energy consumption and GHG emissions in China. Emissions reductions can be achieved in all these areas, and in some cases, change is already happening on its own. First, China has already begun to adjust its energy structure. It is substituting coal with cleaner alternatives, including both natural gas and renewables. Over time, this will result in major reductions in GHG. Second, China’s urbanization phase is coming to an end. Today, more than 60% of the population lives in cities and towns, and most already have access to housing. Consequently, the demand for construction material, whose production consumes much energy, is beginning to wither. Construction materials industries, including the steel, iron, cement, glass, and aluminum industries, constituted 29.9% of China’s total energy expenditure in 2013. If demand for these industries drops, energy consumption and GHG emissions will also decrease. In fact, a drop in demand is already visible. In 2014, planned floor space for residential areas dropped by 14.4 percent. The growth rate of crude steel was only 1.2%, compared to 7.6% in 2013; cement was 2.3%, compared to 9.3% in 2013. This decline in growth is not attributable to any economic crisis. It is simply a consequence of a more mature market. Third, China has many other areas where it can reduce its GHG emissions. The more significant areas are industrial boilers, manufacturing, cities, and forests. Among many

other things, China can upgrade the efficiency of its boilers, add green space to its cities, better manage its traffic, and reforest under-cultivated land. Reducing emissions in these areas also presents economic opportunities for China’s enterprises. All of these factors indicate a promising future for China’s efforts to mitigate climate change, something that is reflected by its recent pledge with the United States to fight climate change. More importantly, these brief examples demonstrate that it is possible to estimate the reductions available for a country, and to find economically sound means of fulfilling those reductions. Going forward, the focus should be on designing development paths that produce less emissions, are less reliant on fossil fuels, and utilize energy more efficiently. As exemplified by China, a variety of opportunities to reduce emissions exist. They should be taken advantage of, regardless of responsibility for emissions. Smarter design, environmentally sound technology, and more thoughtful policy should be implemented wherever they are economically feasible. The coming round of climate negotiations in Paris needs to be guided by a sense of cooperative pragmatism. Quarrelling over responsibility will ultimately prove fruitless, as responsibility bears little on the process of actually solving the problem of climate change. Our focus needs to shift from the problem to the solution. By working together intelligently, we can solve this problem.

CHINA EYE‧Issue 8

Working Together: A Solutions Based Approach to Climate Change Mitigation LIU Qiang (劉強)

Call for Papers China Eye is an international academic journal on geopolitics, energy security, economy and culture. It is published by China Energy Fund Committee (CEFC) - a non-governmental nonpartisan Chinese think-tank registered in Hong Kong. This English publication aims to facilitate a better understanding of China by providing a forum for diverse views, carrying Chinese as well as non-Chinese perspectives. Would-be contributors should forward their proposed original contributions with a synopsis, to include:

(1) title; (2) author’s affiliation, and (3) e-mail address, phone and fax numbers.

Our contact details are: E-mail: chinaeye@chinaenergyfund.org Phone number: (852)-2655 1666 Fax number: (852)-2655 1616 Address: Room 3401-08, 34/F, Convention Plaza Office Tower, 1 Harbour Road, Wanchai, Hong Kong

CHINA EYE‧Issue 8

Working Together: A Solutions Based Approach to Climate Change Mitigation LIU Qiang (劉強)

CHINA EYE‧Issue 8

Working Together: A Solutions Based Approach to Climate Change Mitigation LIU Qiang (劉強)

CHINA EYE‧Issue 8