Jennifer C. Li Foundation for Environmental Security & Sustainability/ George Mason University

1. CHINA &INDIA’S RESOURCE NEEDS and RELATED IMPACTS on AFRICA Jennifer C. Li Foundation for Environmental Security & Sustainability/ George Mason University September 18, 2008 Sustainable Growth, Resource Productivity, and Sustainable Industrial Policy – Recent Findings, New Approaches for Strategies and Policies WI and EIIW Colloquium in Wuppertal

2. Presentation outline • China and India’s economic performance, energy, emissions and energy policy emphases • Implications on the environment and international energy security • Implications for Africa’s development • Outlook

3. Economic performance, past and projected Source: International Energy Agency 2007

4. China and India’s contribution to global growth Source: Authors’ own calculation based on IMF World Economic Outlook Database, Sept. ‘08

5. China and India’s GDP growth rates compared to other regions Source: International Energy Agency 2007

6. Source: International Energy Agency 2007

7. China and India’s energy needs relative to ROW • China and India together account for nearly half of the entire growth in world energy demand between 2005 and 2030 • China and India’s combined share of global primary energy demand growing at phenomenal rate – but still less than 30% by 2030 • In 2007 China overtook the United States to become the world’s largest emitter of energy-related carbon dioxide and, by 2015, India will be the third largest emitter • By around 2010, China will overtake the United States to become the world’s largest consumer of energy. In 2030, India will be the third largest oil importer in the world • Over the period to 2030, China will install more new electricity generating capacity than exists in the United States today

8. China and India’s energy profiles • Oil and gas in both predominantly state owned • India imports 70% of its oil; China imports around 50% • Both reply heavily on coal • India’s energy intensity still quite high, and per cap primary energy consumption quite low • India’s coal runs out in 40 years, appears to lack real alternatives at the moment

9. China and India’s energy mixes, 2005 Source: World Energy Outlook 2007

10. China and India’s energy mixes, 2030 Source: World Energy Outlook 2007

11. Source: International Energy Agency 2007

12. Source: International Energy Agency 2007

13. Energy Policy of C&I • Similarities • Focus on supply side • Continuous domestic E&P, great investment energy infrastructure needed (large gap in India) • Acquisition of equity stakes in overseas oil exploration and development assets • Strategic oil reserves • Domestic political economy around energy: C&I • Chinese government and NOCs (greater friction at home, more cooperation abroad) • “Cluster of policies” lacking strategy in India’s case (more lacking of clear energy alternatives)

14. Global environmental implications

15. Global environmental implications in 2015, Reference & HG Scenarios

16. Global environmental implications in 2030, Reference & HG Scenarios Source: 2007 World Energy Outlook

17. Rising energy insecurity • China’s and India’s oil and gas imports would be higher with faster economic growth. • As a result, riskof a disruption may be higher, as more of the oil and gas consumed worldwide is traded internationally and more of that oil is supplied by a small number of countries – especially in the Middle East. • Dependence on Russian and Central Asian oil and gas would also grow. • Stronger demand reduces spare crude oil production capacity in OPEC countries, therefore impact of an oil-supply disruption would be more severe • Most of the major oil-supply disruptions in recent decades have occurred in Middle East • Russia´s energy provision not separate from foreign policy • Gameplan of the Gas Exporting Countries Forum (GECF) not yet clear

18. Source: 2007 World Energy Outlook

19. C& I’s global acquisition of oil • C&I seeking exclusive access to oil & gas • Achievable or not debatable – oil an international commodity, although gas is less so • Chinese NOCs’ incentive incompatibility problems • Silver lining: investment in international energy infrastructure, may actually improve global energy security by bring to market oil other wise not have been developed • Real risk not so much commercial competition for scare hydrocarbon resources, but that upstream developments get caught up in broader foreign policy issues

20. Implications for Africa’s development • C&I’s (Asian Drivers) engagement with Africa • Combination of Altruism, Mutual Benefit, and Strategic or Political Interests • Aid (tied, both C&I) • Trade and Investment • Trade With China: from deficit to surplus • Trade with India: from surplus to deficit • So far, Investment mostly in extractives • Infrastructure corridor, China • Plans and projects to promote African industry, China • Special Economic Zones • Voluntary Export Limits • Elimination of trade barriers • Debt relief • Kinds of impacts • Trade: competing and complementary • FDI: competing and complementary • Example of manufacturing • A few specific cases

21. Rising Africa's merchandize trade with China and India Source: UNCTAD Trade Structure by Origin and Destination

22. Commodity price on the rise, but volatile Source: IMF International Financial Statistics

23. Helpful framework on impacts • Possible trade impacts of the Asian Drivers

24. Helpful framework on impacts • Possible FDI impacts of the Asian Drivers

25. Angola, Sudan, Nigeria • Important exporters to China or India • Impact has been mainly through growth of exports

26. Ghana, Ethiopia, Kenya, Uganda, Tanzania • Most affected by China and India‘s imports

27. South Africa • SA’s investment in rest of Africa totaled US$5.6bn in 2005; compare with China’s FDI of US$3bn in 2006 • But this is set to change shortly • Multi-pronged approach of China • SA’s firms less cost competitive • Potential for SA companies to lose mkt share to Chinese co.s considerable • Sectors to watch – telecomm, banking, consulting (SA and Africa mkt and network knowledge) • Prospects for collaboration

28. Risks for Africa • Difficult to see positive future for manufacturing in Africa unless SSA can insulate infant industries from global competition combined with greater intra-regional trade • Labor intensive sectors in SSA, if developed, also face competition particularly from China

29. Looking ahead: China, India, & Africa • Greater role of and terms set by African institutions (eg., AU, NEPAD, regional economic blocs) • NOCs and smaller private Chinese firms more independent of Chinese state agendas • Economic (context specific sectoral, trade unions, class*, racial, and cultural impacts) and sociological investigation of impacts • South-North-South cooperation and growing multi-lateral engagement (South-South, and South-international financing institutions)

30. Conclusion • Collective Action needed to address global energy security challenges, environmental challenges, and sustainable development challenges particularly in Africa • Opening with respect to South-North-South and South-South cooperation in seeking sustainable development of Africa

31. Thank you!Vielen Dank Zou!

32. China and India’s net oil imports Source: EIA International Petroleum