Geopolitics of energy

The work divides its 13 articles into two parts, respectively entitled “Geopolitics, geo-economy and energy” and “Renewable energy and sustainable development”. The papers are written by specialists, often drawing from their ongoing research, yet address a larger audience. The editors have cast their net wide. At the regional level, Cutler and Umbach each focus on Caspian-Central Eurasian energy, though from a different perspective, while Sun Hongbo studies energy linkages between China and Latin America with the focus on Venezuela. The work has three chapters on Iran as foreign policy actor and oil exporter. At the national level, Rakel reports on elite change and its impact on the foreign policy orientation of Iran since the presidency of Ahmadinejad. Yu Guoqing studies Chinese–Iranian relations since the conclusion of the 1942 Friendship Treaty between Persia and the Kuomintang government. Currently, Iran is substantial oil supplier to China. Unlike China, Japanese–Iranian relations, studied by Raquel Shaoul, are severely constrained by Japan’s alliance with the US. Despite America’s inability to supply oil to Japan, its government has duly supported US sanctions on Iran since 2005. Zhao Huirong and Wu Hongwei follow up the theme of Umbach and Cutler with a case study of Chinese–Kazakh bilateral political economy of oil and gas deals, competing with the geo-political interests of particularly Russia. Chen Mo, reflecting on the long bilateral relations between China and Angola, writes on the current exchange relation between them of oil for infrastructure. In the 1970s Chinese-Russian competition in Angola landed China on the same side as the US , both supporting UNITA of Savimbi.

Clean energy

Part two, on clean energy, comprises five chapters, four of which are at the national level. Scholten writes on green innovation, Li Xiaohua studies the Chinese solar energy sector; Lima reports on biofuel developments in Brazil and its contested sustainability. Vermeer investigates causes of the slowing down of the hydro-energy projects announced in the 2008 National Development and Reform Commission’s plan. Hydropower is the largest source of efficient renewable energy. He finds that the 2007 change from high to low electricity prices, affecting investor’s rate of return, is one cause; the fragmented policy making machinery, driven by conflicting national and provincial actor interest, resettlement costs and concerns about responses to environmental impacts of the often large projects, are part of the equation. At the same time solar and wind energy equipment producers pressure for the expansion of their business. The recent trade conflict between the EU and China about solar panel subsidies testifies to the link-up between the industry and the Chinese government. The disappointment expressed by the US for the EU’s compromise with China, highlights the global importance of solar industry, as well as its clout, in China and the US. The largest producer of panels in the EU, Germany, the sector lost influence relative to automotive and machine tool exporters to the PRC. Vermeer takes into account the implication of the slowdown in hydropower for China’s 2010 Copenhagen commitment to procure 15% of electricity from non-fossil sources.

The work concludes with an essay on the somewhat torturous notion of global energy governance and its evolution since early 20th century, a thing which in the words of the author “is highly diffuse and almost non-existent”. Borrowing from Beriman’s Earth System Governance , the author sees global energy governance at work where others tend to see the pursuit of national interest by the strongest powers.

Potential areas of cooperation

What to make of this vast and multi-authored study? The editors of the work under review hint to potential areas of cooperation between these two large energy importers. However, this theme does not figure explicitly in the work. I find that unfortunate. Relations between domestic growth and international conflict about raw materials got, and still gets, most of the scholarly attention. Take for example the still influential study of Nazli Choucri and Robert C. North, Nations in conflict. National growth and international violence. San Francisco: Freeman (1975). They developed a model, and tested its observable implications empirically, for the era of Europe’s second industrial revolution annex competitive colonization drive. They found strong linkages between and among the expansion of industry in western European countries, domestic pressure to go beyond borders to get access to resources, conflicting claims on territory and maritime trade routes, alliance activity, military build-ups and militarized inter-state disputes. National level rival mobilizations around these conflicts were not mediated by parliament, leading to rallies and clashes between large, organized sectors of the domestic economy. These domestic contests played role in conflict escalation. The editors of the work under review take exception to the inevitability of a repetition of such a development. They hint to potential areas of cooperation between these two large energy importers. For many, turning around the causal linkage between growing resource use from conflict towards cooperation instead, may come as a surprise. Why? Ascending, middle-income, China is urbanizing its vast peasant population at an unprecedented rate. These low per capita energy consumers in the most populous country of the world used to depend on biomass for cooking and heating. Bringing these people to an urban environment will increase their per capita fossil consumption, which interacts with food and water supplies as well as emissions. Accordingly, it should not come as a surprise that China is destined to pass the US as the largest oil-importer in the next couple of years, increasing its still relatively low per capita rate of consumption. High-income, highly urbanized, Europe on the other hand, already operates on a high level of per capita fossil energy use. Indeed, World Energy Outlook 2010 estimates primary energy demand to increase by 36% between 2008-2035. As may be expected, most of that increase will come from Asian demand. In my opinion, these very characteristics of the Chinese–European dyad do not do only imply a potential for conflict. They also create a bargaining field for cooperation on the basis of shared interests. Chinese and European economies are connected through a dense network of trade, investment and transport linkages. It is in the EU’s interest to assist China further improving its energy efficiency in the fossil sector. It would slow down the rate of resource depletion when current oil exporters with high population growth are increasing their domestic consumption. Today, Saudi Arabia is the only exporter with an oil-surplus production capacity.

Another area of cooperation between China and the EU is the emerging clean energy sector. China and the European Union try to escape from the fossil-carbon emission trap by developing domestic sources of clean energy. If successful, developing domestic sources of clean energy should further reduce the level of lateral pressure in each of them to compete for access to sources beyond borders. The joint development of clean energy points to the shared long-term interest in viability of both societies in the face of climate change. In the European Union, international energy cooperation also serves the latent objective to contribute to the creation of energy policy competence at the EU-level, with the potential spin-off of for strengthening the EU’s Common Foreign and Security Policy.

Supported by, among others, the Chinese Academy and the International Institute for Asian Studies in Leiden, Amineh and Yang Guang have currently underway a shared research project on the trans-nationalization of Chinese oil companies and their involvement with local governments and institutions. We are looking forward to seeing what is happening on the ground in several large energy exporting countries of Africa and Latin America.

Henk Houweling, Associate Professor of International Relations, University of Amsterdam; Instructor at the Europe Institute of the University of Macau (hwhouweling@gmail.com)