By Xiong Guangkai
 
The first few years of the 21st century have witnessed long queues at petrol stations across the globe, while soaring prices in the New York petroleum futures market remind us how grim the world energy security situation is.

Increasingly strained relations between supply and demand, the rising international oil price, strategic contentions focusing on energy producing areas and environmental pollution caused by energy consumption give us no cause for optimism, with the negative effects of soaring oil prices already being felt by the global economy.

The driving force of global economic growth resides in the spiralling increase in energy consumption. "World Energy Statistics, 2005," issued by energy giant BP, shows that the average annual increase in global oil consumption over the past decades hit 1.7 percent. According to the statement from the International Energy Agency, daily global oil demand will grow by 50 percent by 2030, reaching 130 million barrels a day. That proves that the shortage of energy supply will become increasingly aggravated.

The sharp fluctuation in oil prices will threaten the stability of the international energy market. Beginning from 2000, the price of international crude oil entered a new upswing, recording a steep climb on the basis of an average of US$28.5 per barrel. At one point on August 29, 2005, the futures price of crude oil in the New York market hit a historic new high of US$70.8 per barrel. Thereafter, the oil price remained in a state of constant flux and yet, for a long time, the price remained at around US$60 a barrel.

Global warming and damage to the environment starting from the 1990s have gradually raised humankind's awareness of energy consumption security and environmental protection. Statistics show that 75 percent of global emissions of carbon dioxide comes from the burning of oil, coal and charcoal.

As the world's second-largest energy producer and the second-largest energy consumer, China has a stake in global energy security.

China's total energy volume is by no means small, and yet its per capita volume is fairly low, even below half the global average. In recent years, economic growth in China has progressively swelled its energy demand.

The Chinese Government is implementing a series of policies and measures in a bid to solve the energy security issue, an issue which has a strategic significance. Saving energy and slashing energy consumption is regarded as a fundamental national policy. The 11th Five Year Plan (2006-10) set out the goal of cutting the consumption of energy per unit of GDP by a hefty 20 percent over this period. The government work report delivered to the National People's Congress this year has explicitly stipulated that the consumption of energy per unit of GDP will ease by about 4 percent while the GDP will grow at roughly 8 percent.

The country has put in place the strategy of developing multiple sources of energy, while also developing alternative sources of energy. The Mid- and Long-Term Development Plan for China's Energy states clearly that the central task of ensuring energy supply in China at present and in the coming period is to optimize its energy structure by way of gearing up the work of tapping hydro-electric power, stepping up nuclear-electric power construction and encouraging the development of wind power, biological energy sources and other renewable sources of energy. It is designed to increase the proportion of renewable sources of energy in the entire energy structure to around 15 percent by 2020 from the current 7 percent.

China is both an energy consumer and an energy producer. Based on statistics from the State Information Center, China's aggregate lump sum energy consumption in 2004 stood at 1.97 billion tons of standard coal, while the total lump sum energy production capacity was 1.846 billion tons of standard coal, putting the degree of China's self-sufficiency in energy at 93 percent, outstripping the West's average level of 70 percent.

Per capita consumption indicates that the lump sum per capita consumption of energy in China in 2004 stood at 1.08 tons of oil equivalent, accounting for 66 percent of the global average of 1.63 tons of oil equivalent, 13.4 percent of the US figure of 8.02 tons of oil equivalent, and 28.1 percent of the Japanese 3.82 tons of oil equivalent.

China's oil consumption in 2004 when a sharp increase was recorded, stood at 300 million tons, roughly 8 percent of the aggregate global oil consumption; while US oil consumption was 938 million tons in the same year, accounting for 25 percent of global aggregate oil consumption, outstripping China twice. In that year, China's net oil imports were less than 149 million tons, about 6 percent of the global trade volume in oil; while US net oil imports in the same year stood at 590 million tons, outstripping China three times.

The above-mentioned facts, whether in terms of energy self-sufficiency, per capita energy consumption, or oil consumption, prove false the allegation that China poses a threat to world energy security. The solution to the energy security issue lies in cementing co-operation and in the joint efforts of all countries.

Fossil fuel will remain the dominant fuel in terms of energy consumption in the early half of this century, and yet demand for oil will continue to soar. Energy experts in every nation are generally of the view that one of the major reasons causing a shortfall in oil surplus capacity in the world today resides exactly in the under-investment in oil industry in every country in recent years.

Feasible policies to increase energy supply and defuse the strained situation of energy supply require all states to improve their investment environment in order to ensure increased investment and to boost investment in extracting, transporting and processing energy.

The current global energy security system was established in the 1970s, consisting primarily of such multilateral organizations as OPEC representing the interests of oil exporting countries, the International Energy Agency representing the interests of developed oil consumers, and the International Energy Forum.

The changing international situation has given rise to signs that the oil security system established to deal with oil crises is no longer able to address today's complex global energy security situation. For instance, intricate political and economic factors have contributed to the reality that Asia has to pay a higher price for importing oil than European and American states.

Some developing countries are currently joining the club of major energy importers, and for that matter, how to ensure the energy security of developing countries in the context of the new international trade structure has become a novel topic.

Despite the various rivalries in tapping and exploiting overseas resources, the globe's energy-consuming nations, especially developed countries and the up-and-coming consumers, share common interests in upholding the stability of the international market, tapping new energy, saving energy, and environmental protection. We ought to further promote dialogue between the energy producing states, the transporting countries and consumer nations, and increase contacts and exchanges.

The author is chairman of China Institute for International Strategic Studies.

(China Daily May 29, 2006)