China is on track to reach levels of oil use on par with today’s US demand by 2040, according to a new study by the James A Baker III Institute for Public Policy at Rice University in Houston.
The study, The Rise of China and Its Energy Implications, came out in early December, on the eve of global climate deliberations in Durban, South Africa.
Driving much of the country’s growing energy demand is the number of vehicles on Chinese roads, including an estimated 50 million passenger cars in use today, the study said. Sporadic government policies aimed at discouraging private car ownership have had little effect: the Baker Institute report projects that by 2020, China could have more than 200 million vehicles in use and more than 770 million by 2040, if the country’s GDP growth averages 6% between now and 2030.
That would put the country’s oil consumption at 4.8 million b/d in 2020 and 13.4 million b/d by 2040 for transportation use alone, the study’s authors said. Factoring in non-transport use pushes the total to 19 million b/d by 2040, roughly what the US currently consumes.
China’s NOCs spent about $15 billion in 2009 on oil & gas acquisitions; in 2010, that sum grew to $26 billion. The study noted that China’s efforts to shore up reserves abroad has run into difficulties ‘in light of geopolitical events and rising global political risks in oil-producing regions’. One result has been increased investment in the US and Canada to offset risk, which the Baker Institute said could give the US more leverage in seeking China’s cooperation in international diplomacy.
‘China is learning that owning equity oil in risky regions may not be as effective an energy security strategy as it had previously imagined,’ said Amy Myers Jaffe, a Baker Institute fellow in energy studies and one of the report’s authors.
‘China is now finding itself mired in more energy-related foreign diplomacy than it bargained for. But this could be good news for the United States,’ Jaffe said. ‘It may mean China will be more inclined to act in concert with other members of the international community in conflict-prone regions.’
Like the US, China has enormous shale gas potential but development of unconventional gas resources could be delayed for several years by technical and infrastructure challenges, the study said. RM
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