CHINAwatch

Scramble for shale gas threatens ecosystems

“China urgently needs new sources of energy, but is shale gas the way forward?”, asked China Dialogue, a global environmental online platform. Click here

According to a Special Report, World Energy Outlook 2011, by the International Energy Agency (IEA), “Based on assumptions of the Gas Scenario, from 2012, gas will rise by more than 50% and account for over 25% of world energy demand in 2035, surely a prospect to designate as The Golden Age of Gas”. Click here

A Map of the world’s gas reserves featured in an article in The Economist (6 August 2011) shows that China and America have respectively the world's largest and second largest technically recoverable shale gas reserve. Click here

According to the China Dialogue article of 26 July, 2012 by Xu Nan and Wang Haotong, “In late 2011, the State Council – China’s highest executive organ – officially recognised shale gas as China’s 172^nd “independent mineral resource”, an important milestone. This was followed in spring this year by premier Wen Jiabao’s annual parliamentary report, in which he outlined government intentions to speed up efforts to survey and develop the country’s shale-gas resources”. Premier Wen, incidentally, is well technically-qualified as a trained geologist.

A vital consideration during this trajectory is China’s energy security, as much of China’s continued oil and gas imports are from some of the world’s most unstable regions such as the Middle East and Africa, through sea channel choke points such as the Strait of Hormuz near Iran where events are beyond China’s control, and the Malacca Strait under the sway of America’s 7^th Fleet.

So it is no wonder that China is enthusiastic about the prospects of shale-gas on China’s own turf where China is not only poised to become energy self-reliant but a potential energy exporter in the long run.

“But key questions remain unanswered”, continue Xu and Wang, the two co-authors of the China Dialogue article. “what impact will fracking, the controversial technique used to extract gas from shale rock, have on China’s already stressed water resources? Does China have the technical ability to tap these deep underground gas reserves, often located in far-flung and mountainous regions? Who will regulate the business? And how reliant will Chinese firms have to be on more experienced US partners?”

“In the late 1990s, breakthroughs in horizontal drilling and multi-stage hydraulic fracturing techniques in the United States kick-started the “shale gas revolution”. But in China, where the shale gas lies much deeper underground and in tougher terrain than the US, no companies have yet mastered multi-stage hydraulic fracturing. Some say this means China will have to work with American firms. Others worry it will be hard to adapt imported technology and expertise to Chinese geology.”

Bill McKibben, an American environmentalist and founder of the campaign group 350.org, highlights the environmental risks of shale gas exploitation in China in a parallel interview in China Dialogue dated 25 July, 2012.

“One, the extent of damage to water supplies has become clearer, and also the threat of associated damage like earthquakes”. “Two, the methane that leaks from the fracking process has been estimated in some studies to be high enough to make it worse for the climate than burning coal. Three, even if no methane leaks, widespread fracking seems likely to undercut the push for renewables, and the International Energy Agency has said that a gas-dependent world would still have 660 parts per million CO2, a figure that is much too high”, he opines.

In response to the question on comparing the water footprint of fracking against  coal (20% of China’s water usage), McKibben points out that it’s not so much water usage but contamination of fresh water sources caused by the resultant wastewater. As to whether  shale-gas could provide an interim solution for China as it seeks to wean itself off coal, he suggests that “what we need is an all-out push towards renewables, and here of course China has become a leader. The potential was illustrated in Germany last month, when one day the country generated more than half its power from solar panels within its borders”.

However, while China is leading in the use and development of renewable energies, for a fairly long time, China needs all the energies she can get to drive the country’s relentless industrialization and urbanization, to generate sufficient jobs to absorb China’s massive labour surplus, and to balance the economy with a viable, consumer-oriented middle-class to become a middle-income nation by mid-century. During this trajectory, fossil energy will only drop to 80% by 2020, and 45% by 2050 while new and renewable energies will grow to 16% by 2020 and 45% by 2050, according to a Strategic General Report “Science and Technology in China: A Roadmap to 2050” of the Chinese Academy of Sciences, Springer Heidelberg Dordrecht, London, New York, 2010.

Meanwhile, profits seem to trump everything. According to Xu and Wang, “State-owned energy giant China National Petroleum Corporation (CNPC) has made the fastest progress, obtaining rights to drill four shale-gas “blocks” with good prospects in southern Sichuan and northern Yunnan, and achieving commercial-quality flows at four wells. CNPC is joining forces with Shell, which in March announced it had signed China’s first shale-gas production partnership. The two companies plan to jointly survey, develop and produce shale gas resources”.

“Sinopec has drilled five prospecting wells in Guizhou province and Sichuan, both in western China, and in Anhui province in the east. Another mega state-owned firm, China National Offshore Oil Corporation, is still in the early surveying stages”.

“The country’s big power companies, including Huaneng, Huadian and Honghua, are also getting involved. Between them, these three have signed shale-gas development agreements with local governments in Chongqing city, as well as Hunan and Sichuan provinces”.

“The US State Department’s special envoy and coordinator for international energy affairs Carlos Pascual has been quoted as saying that American oil giants such as Exxon-Mobil and Chevron may benefit by partnering with Chinese firms to develop shale-gas resources”.

Southern Sichuan and Northern Yunnan, for example, are home to some of the world’s most pristine ecosystems. It is hoped that amidst the scramble for energy and profits in the Age of Resource Scarcity, a balance can be struck and effective institutional safeguards can be put in place to conserve some of the world’s most precious ecological heritage not only for China but for the entire world.  

Formal charge of Boku Kailai for pre-meditated murder - Behind the curtains of the unfolding Bo Xilai affair

The formal charge of Madam Boku Kailai for pre-mediated murder of a foreign national is quite unprecedented, involving as it does a dynastic and charismatic family, the untimely death of a foreign national, and the alleged corruption and palace intrigue behind the scene. Click here for an article in the New York Times on 26 July, 2012.

There is, however, much more than meets the eye. First, some useful insight into the machinations beneath the surface may be gained by visiting my earlier anaysis "The curious case of Bo Xilai Part II"  Click here

The current formal charge of Madam Bo is the logical sequence of the following epiphany -

(a) The detailed and international investigations suggest a determination that the murder charge must be handled according to the due process of law.

(b) It also suggests that the murder (which is essentially connected with the inner strife of the Bo family) must not be allowed to be mixed with the more distabilizing case of Bo Xilai himself, who has been suspended of powerful party positions pending the completion of party disciplinary investigations.

(c) The Chinese Communist Party is waking up to a systemic challenge from within to its long-term stability. This strengthens its resolve to root out disruptive, "usurptive" elements and to reform and transform the Party into a "ruling party" that must win not only the purse but the hearts and minds of the masses through better governance delivered by a competitive meritocracy. The movement is perhaps towards a model not entirely unlike that of Singapore, where the same Party has been firmly in power since its independence.

Bo Xilai's political departure is leaving a limited vacuum which needs to be filled by competing party rising stars. This is now taxing the Chinese leadership.

There is a fair chance that the number of top leaders in the Politburo Standing Committee will be reduced from nine to seven, conveniently removing the hard-line disruptive forces within the state's highest decision making-body. This is likely to pave the way for a swathe of social and political reforms expected in the course of the coming leadership, as heralded in the 468-page joint report of the World Bank and the State Council's Development Research Centre "China 2030: Building a Modern, Harmonious, and Creative High-Income Society". Click here

"Historically, the number of members on the standing committee has ranged from five to 11 at different times. The view is that the more members there are on the committee, the more interest groups there will be which could impede future reforms. Seven members therefore is seen as the optimum number for preserving the group decision-making process in the most efficient manner. The places on the standing committee currently occupied by the party's propaganda chief and the head of the political and legal commission are the two likely be removed", according to an article in WantChina Times, a Taiwanese online news outfit on 17 July, 2012. Click here

All will become much clearer when the new leadership (the Standing Committee of the Politburo) is finally unveiled in the autumn.

This is but one of the many facets of a vast country in rapid transition with massive growth of a more educated and economically more independent middle class at the heart of a globalized, inter-connected and inter-dependent world.  What works in the past may not continue to work in the future and Change is the only constant.

However, what is reasonably certain is that, warts and all, China is most unlikely to download the Western model of confrontational party democracy where increasingly cracks are appearing to reveal that the masses are often short-changed to suit the vested interest of the 1% elite.

"For China, It’s All About America"

An article in The Diplomat (6 July, 2012) by Dr. Michael Auslin, a scholar in Asian and security studies at the American Enterprise Institute in Washington, claims that China's foreign relations are all about America, which has hampered Washington in forging a better relationship with Beijing. It alleges that China's outreach has been largely motivated by self-interests, and that the country's forging working relationships are seldom based on trust or a sense of truly shared values. Smaller nations are used as pawns in a larger game to counter the United States. The Shanghai Cooperation Organization, for example, is no more than a symbolic counterbalance to America’s informal liberal bloc in Asia.

Click here for the full text of this article.

Let's first appreciate that China is so full of domestic problems, economic, social, ethnic, political and ecological, that the country would be foolish to harbour global hegemonic ambitions, at least for now.

Besides, China's military is some 30 – 50 years behind the U.S..the United States in terms of technology, outreach, training and global surveillance, although there is no doubt that China's A2/AD (anti-access/area-denial) capabilities are increasing in the Taiwan Strait where her leading core interest lies, according to an overview in The Economist. Click here

But emerging from more than centuries of foreign aggression, China is extremely sensitive to any threats to her territorial integrity and sea channels vital to her economic survival, such as those in the South China Sea. This sensitivity is now pitted against America's re-engineered Pivot to Asia, taking the form of widening military ties and exercises with countries with conflicting territorial claims against China. In the circumstances, it is no wonder that China seems paranoiac about American intentions.

China's relations with her Asian neigbours are by no means antagonistic or exploitative. Indeed, many of China's neighbours have China as their largest trading partner and welcome China's economic partnersship, as evident from such regional trade blocs as ASEAN+1, +2, and +3, all including China. In these trade blocs, China often ends up as the net importer. Moreover, China has been careful not to take the lead as ASEAN remains the host.

In the light of increasing strategic importance of Central Asia, not least its potential for Muslim-inspired separatist terrorism, China, along with Russia, took the initiative of establishing the Shanghai Cooperation Organisation (SCO) in the wake of 9/11. Since then, the SCO has grown to be an influential regional partnership based on equival status and win-win cooperation in areas extending beyond the mitlitary to trade, investment, culture and much closer diplomatic exchanges. Such influence is by no measure symbolic as India wants to upgrade to a full membership and Iran, Afghanistan and Turkey are getting more involved in various forms.

Talking about shared values, the influence of the SCO is precisely the shared value of respecting ideological, political and developmental diversity instead of a single world view dominated by Western norms.

Lastly, America's recently re-energized Trans Pacific Partnership (PPP) deliberately sets out to exclude China. As China is at the heart of a regional production and supply chain, this hardly makes economic sense. So it is only natural that China is convinced that along with the Asian Pivot, this is yet another tool with which the United States wants to contain the rise of China, no matter what is openly claimed to the contrary.

So an incipient Cold War mentality against a rising China feeds into itself in a classic Security Dilemma with mutually reinforcing negative feed back loops.

Perhaps a better way to manage this fractious relationship between a status quo world power and a rising one is to work on areas where mutual trust can best be built rather than seeking manoevres that inevitably diminish such trust. The challenge is striking a sensible balance.

Best regards,

Andrew

Challenges facing Hong Kong's new Chief Executive, C.Y Leung

Live TV interview on BBC World on 2 July, 2012

Download Live interview on BBC World