China Redraws the Energy Map

CHINA’S OUTSIZE energy needs and its reliance on overseas suppliers have underpinned its foreign policy for decades. Now those needs are changing.

- CLARA FERREIRA MARQUES

The planet’s largest oil and coal importer wants to become greener and more self-reliant and has already taken strides toward those goals. The rest of the world needs to pay attention.

By 2060 the world’s second-largest economy aims to transform its power generation mix from roughly 70% from fossil fuels today to 90% from renewable sources such as wind and solar, as well as hydro and nuclear power, according to BloombergNEF’s China Policy Bulletin in April. That will cut its reliance on resource-rich jurisdictions and on sea lanes controlled by other states. In fact, Beijing’s dominance of battery materials and production may leave the rest of the world uncomfortably dependent on China in the green economy. The Western response—including U.S. government spending on technology research, mining, and processing and a European effort to build up supply chains and recycling capacity—is just beginning.

Energy security, always a worry for China, gained more attention after the Sino-Soviet split in the 1960s ended the supply of Soviet crude. It became a bigger priority when China became a net oil importer in the 1990s. Last year, China accounted for roughly a sixth of global oil consumption. Just over 70% of that came from overseas. Oil and gas from Chinese-held investments abroad satisfied less than a fifth of its domestic demand, and much of that fuel travels through chokepoints like the Straits of Malacca that are vulnerable to a naval blockade, in Beijing’s eyes.