China and the Global Energy and Emissions Landscape

with Reference to Africa and Oil

Moustapha Kamal Gueye

Senior Programme Manager – Environment Cluster, ICTSD

Moving ideas, pursuing solutions

China and Global Energy Demand

Climate Scenarios in the IEA World Energy Outlook

• 550 ppm Policy Scenario: Global temperature at 3 degrees - Energy-related CO2 emissions rise from 27 Gt in 2006 to 33 Gt in 2030. The share of low-carbon energy in global primary energy mix increases from 19% in 2006 to 25% in 2030.

– Global investment in energy-related infrastructure and equipment in 2010-2030 is $4.1 trillion (or 0.25% of annual world GDP).

• 450 ppm Policy Scenario: Global temperature at 2 degrees - Energy related CO2 emissions drop sharply from 2020 onwards, reaching 25.7 Gt in 2030.

– Low carbon energy accounts for 40% of global power generation by 2030.

– Global energy investment is $9.3 trillion, or 0.55% of annual world GDP.

Fossil Fuel Dominate Global Energy Mix in 2030 IEA Reference Scenario

IEA WEO 2008: Global demand expands by 45% between now and 2030 – Fossil fuels account for 80% of the world’s primary energy mix – Oil remains the dominant fuel, but coal accounts for more than 1/3 of the overall rise – Renewables grow most rapidly, overtaking gas after 2010 to become the 2nd largest source of electricity behind coal.

China and India Drive the Rise in Global DemandIEA Reference Scenario, 2006-2030

India’s demand grows at 3.9% per year, followed by China, at 3.5% – Non-OECD countries account for 87% of the increase – Demand in OECD drops – Cumulative investment in energy-supply infrastructure amounts to $26.3 trillion to 2030.

Change in Oil Demand by Region in the Reference Scenario, 2007-2030

All of the growth in global oil demand comes from non-OECD, with China contributing 43%, the Middle East 20% and other emerging Asian economies most of the rest

China and Global GHG Emissions

World Greenhouse-gas Emissions

Energy-related CO2 emissions will continue to be the main source of GHG in all scenarios

Energy-related CO2 Emissions in the IEA Reference Scenario

Non-OECD countries account for 97% of the projected increase in energy-related emissions between now and 2030 – 3/4 coming from China, India & the Middle East alone

Reductions in Energy-related CO2emissions in the Climate Policy Scenarios

Improvements in energy efficiency provide the greatest potential for emissions cut – Increased deployment of existing low-carbon technologies accounts for most of the CO2 savings

Implications for Global GHG Reduction Efforts

OECD countries alone cannot take the world to a 450-ppm goal, even if they were to reduce their emissions to zero. Hence the importance of enabling and supporting National Appropriate Mitigation Actions in developing countries

Facing an Unprecedented Challenge

• "It took developed countries several decades to solve the problems of saving energy and cutting emissions, while China has to solve the same problem in a much shorter period. So the difficulty is unprecedented”

Chinese Premier, at Beijing High-level Conference

on Climate Change Technology

China, Africa and Oil Trade and Investment

Meeting China’s Energy Demand

• China’s primary energy demand is projected to more than double from 2005 level to 2030.

• In the IEA Reference Scenario, net coal imports reach 3% of its demand and 7% of global coal trade in 2030.

• China’s net oil imports jump from 3.5 mb/d in 2006 to 13.1 mb/d in 2030, as conventional oil production in China peaks in the next decade and starts to decline.

Growing Oil Demand from Africa

China’s imports from Africa as a share of China’s global imports

Share of Africa's Exports by Destination

Average annual merchandise export growth rate, Africa to AsiaShare of Africa's exports

by destination

Source: Broadman, 2007

Product Distribution of Africa’s Trade with China

Africa's merchandise exports to China, 2004

Africa’s Exports to China by Commodity Groups

Chinese FDI in Africa

Chine FDI flows to Africa and their % growth

2004 Chinese FDI outflows

Source: Broadman, 2007

Transfer of Technology and Skills

• The 2006 white paper on “China’s Africa Policy” seeks to promote cooperation in technical knowledge for development.

• A World Bank survey (Broadman, 2007) found that in engineering services, in general, Chinese firms sub-contract services to local firms, providing opportunities for acquisition of experience and access to technology.

• However, African firms are not equally benefiting from acquisition of experience and access to technology through sub-contracting, because in many cases, Chinese firms import all materials, technology and staff from China.

Oil/Gas Exports: Development Spillover for Africa?

• Government revenues from oil and gas in the top ten oil and gas producing African countries is projected to rise from some $80 billion in 2006 to about $250 billion in 2030 – with a cumulative revenues of all ten countries over 2006-2030 reaching $4.1 trillion (IEA, 2008).

• Less than a third of households in the majority of these African countries have access to electricity or to clean fuels for cooking, like LPG, kerosene, biogas and ethanol gelfuel.

• An estimated $18 billion is needed to achieve universal access to electricity and to LPG cooking stoves = 0.4% of the projected cumulative government revenues from oil and gas export revenues in 2007-2030.

• With the right policies, oil and gas revenues can contribute to alleviating energy poverty in African countries and to a sustainable energy transition

Thank you

International Centre for Trade and Sustainable Development (ICTSD)

www.ictsd.org

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Moving ideas, pursuing solutions