During President Obama’s Oval Office address to the nation on the subject of the BP oil spill, the chief executive pointed to China as a leader in clean energy investment in hopes of urging Congress to enact legislation that would encourage the U.S. to expand its own green energy spending. While the president has the right to call for more green investment, his reference to the role of green energy in China told only a very tiny and self-serving part of the story.
China’s clean energy spending, indeed, is at a high monetary level, but what the president fails to mention is the utterly massive level of spending that the Chinese have embarked upon in pursuit of expanding their traditional energy portfolio. As Kate MacKenzie points out in her recent Financial Times piece, Chinese national oil companies have embarked on a “mega-spree” of fossil energy foreign acquisitions, accounting in fact for almost 20% of the world’s global deal value in the first quarter of 2010.
Recently, Chinese oil giant Sinopec paid ConocoPhillips $4.65 billion to acquire its share in a Canadian tar sands project. Weeks later came the company’s $2.46 billion acquisition of Angola’s deep water oil reserves and a $7.56 billion acquisition of Swiss-based Addax Petroleum. PetroChina has announced a $20 billion loan to Venezuela to be paid by oil and the company will spend at least $60 billion over the next 10 years to acquire more oil and gas assets abroad. Even more recently, CNOOC, China’s third largest oil company, paid $6 billion to acquire the Brazilian Peregrino field.
Chinese officials tout these acquisitions as key to the country’s national security. Indeed they are. In 2009, oil production by Chinese companies operating overseas exceeded 800 million barrels; that’s 2.2 million barrels per day, or about 57% of total imports.
Contrast the rhetoric of the White House’s hope for clean energy with the aggressive expansion of all forms of energy on the part of the Chinese. While Western politicians remain narrowly focused on "green" policies, China is on the hunt, bagging valuable oil and gas resources around the world and strengthening their energy security through a massive investment in the traditional energy reserves. Sure, they’re spending big on clean energy as well, but the Chinese view this much less as an issue of moral imperative, and much more as an issue of cementing a robust and secure energy profile to fuel its continually exploding economy.
Green energy is desirable, but try telling China to limit its consumption, production, and acquisition of traditional oil, gas, and coal resources and see how far you get. Soon, reality will alter America’s energy posture. As China’s economy continues to grow and the United States' demand for fossil resources lingers (and it will linger) competition between China and the U.S. for the same world oil resources will evolve into the defining geopolitical challenge of at least the next two decades.
For the last few years the Chinese have acted largely unchallenged from a handicapped Bush administration and a disengaged Obama administration held hostage by its alternatives rhetoric. This cannot last long.
If the U.S. hopes to keep its place as a global power, then it is going to have to change its perspectives toward the role of traditional fuels in its energy portfolio. The Chinese have this figured out and they’re in no rush for others to catch on and start competing with them for the resources they’ve been snaring unopposed for the last several years.