The Two Giants: Energy Policy in China and the United States

1. The Two Giants: Energy Policy in China and the United States

2. Energy System - China

3. China’s boom • Average annual growth rate 2000-10: 10% • From 1990 to 2009, moved from net exporter of oil to world’s second largest net importer • World’s largest producer and consumer of coal –46% world’s coal consumption

4. Projected to be top importer by 2014

5. Electricity system - China

6. China - Coal

7. Economy size • US 16 trillion • China 12 trillion and gaining • Population • US: 316 million • China 1.4 billion

8. Oil, Coal consumption – US v China coal oil US 2013 – 18.9million bpd China 2013 – 10.7 million bpd • US 2012 – o.9 billion short tons (declining) • China 2012 – 4.0billion short tons (rising)

9. Renewable share in electricity – US v China China 2012 US 2013 Hydro 6.6% energy 7.4% capacity (summer 2012) Other renewables 6.2% energy 7.2% capacity (summer 2012) • Hydro – • 22% capacity • Other renewables • 6.2% capacity

10. Growing share of global GHGs

13. China still modest per capita

14. Gilley: Authoritarian vs. Democratic Environmentalism • Authoritarian –concentrates authority in few executive agencies manned by capable and uncorrupt elites seeking to improve environmental outcomes • Democratic--spreads authority over several levels and agencies of government, including representative legislatures, and that encourages direct public participation from a wide cross-section of society

15. Gilley: Authoritarian Environmentalism in China • “Citizen participation is limited to learning and obeying state policies.” p. 291 “A Renewable Energy Law was completed in 2004 after fewer than nine months of drafting and then passed into law with no amendments by an unelected national legislature in 2005” p. 290

16. China – energy governance • National Development and Reform Commission (NDRC) -primary policymaking and regulatory authority in the energy sector, • National Energy Administration (NEA) (formed 2008) key energy regulator for the country • approves new energy projects • sets domestic wholesale energy prices • implements central government's energy policies, • National Energy Commission (formed 2010) – coordinate energy policy among the various agencies under the State Council

17. China – National Oil Companies • China National Petroleum Corporation (CNPC) - leading upstream player in China • publicly-listed arm PetroChina, • together account for roughly 60 % domestic oil and 80% natural gas output • China Petroleum and Chemical Corporation (Sinopec) • downstream activities (refining and distribution) •  China National Offshore Oil Corporation (CNOOC): offshore oil exploration and production

18. China GHG policy • Reduce emission intensity of GDP 40-45% by 2020 (over 2005 levels) • At Durban , China agreed to negotiate a legally binding treaty (including the possibility of an absolute emission cap) by 2020

19. Does authoritarian work? • Can produce a rapid response to problem • But if fragmentation remains, can undermine implementation due to illegitimacy • Federalism issues • Low social concern makes authoritarianism more necessary and more difficult

20. US Energy Policy • US energy system • Institutions • Policy

21. US energy system (2011) http://www.eia.gov/totalenergy/data/annual/pecss_diagram.cfm

22. US energy system 2012

24. US energy system

25. US energy system

26. US GHG emissions at 1996 levels

27. US governance • Federalism: gives extensive powers to 50 states • Separation of powers • Congress • 2 equal chambers • House – 435 seat elected every 2 years • Senate – 2 seats per state elected every 6 years • President – elected separately every 4 years • Courts

28. US governance: extraordinary majorities • House: 50% +1 • Senate: effective majority is 60% • Treaties: 2/3rd of Senate requires • President needs to sign laws passed by Congress • If president vetos, 2/3rd of both houses can overturn

29. US governance: extraordinary majorities Congress and president same party: working majority is 60% Congress and president different party: working majority is 67% Note contrast to Canada, China

31. Party Balance in Congress - Obama • 2009-10 House and Senate Democratic • 2011-2014 House Republican, Senate Democratic • Current Senate: 55 D – 45 R • Current House: 201 D – 231 R

32. US energy policy history • 1973 oil shock prompted • Creation of Department of Energy 1977 • Strategic Petroleum Reserve • Corporate Average Fuel Economy Standards • Every president developed a plan but little coherence

33. 2013 Inaugural: We will respond to the threat of climate change, knowing that the failure to do so would betray our children and future generations.   The path towards sustainable energy sources will be long and sometimes difficult.  But America cannot resist this transition, we must lead it.  We cannot cede to other nations the technology that will power new jobs and new industries, we must claim its promise.  That’s how we will maintain our economic vitality and our national treasure -- our forests and waterways, our crop lands and snow-capped peaks.  That is how we will preserve our planet, commanded to our care by God.  That’s what will lend meaning to the creed our fathers once declared.

34. Automobile efficiency standards • 2001 – US cars and trucks averaged 24.7 m.p.g. • 2011 --29.6 m.p.g. • New regs: up to 55 m.p.g. by 2025 • Feb 2014: announces intention for new heavy duty vehicle standards Sustainable Energy Policy

35. Obama agenda • Try Congress first – cap and trade • Use administration action if that fails • Core focus on auto standards • Emerging focus on coal • Strong standards on new plants • New coal plants essentially off the table • New commitment to regulate existing plans, but timing uncertain

36. Climate Legislation - federal • 2009 – House passes Waxman-Markey • 17% reduction by 2020 • Riddled with concession • 2010 Senate • Coalition building required giving everything away • Coalition of senators fell apart when initiative got framed as “gas tax” • “on climate change, Obama grew timid and gave up, leaving the dysfunctional Senate to figure out the issue on its own” • Personal impact

37. State initiatives: renewables • As of early 2014, 38 states have RPS or Alternative Energy Portfolio Standards; another six have voluntary standards (source) • California most aggressive – 33% by 2020

38. State initiatives - GHG • California leadership • 1990 levels by 2020 (30% reduction) • 80% below 1990 levels by 2050 • Cap and trade program now in place

39. Reflections on Two Giants • Global leaders in power, energy, emissions • 2/5 of global GHG emission • Different stages on carbon path • Chinese growth core driving force • emission intensity: >factor of 2 difference • Starkly different political systems • If they cooperated, enormous change possible • Prospects for meaningful cooperation?