By Sarah Ladislaw & Jane Nakano

Worldwide interest in China’s energy sector, and the Chinese economy as a whole, is understandably strong given the dynamic growth and investment taking place there in recent years.  The pace and scale of this growth in the past decade and projections for the future are no less than staggering.

There has been a great deal of talk about whether and how China will manage its need to provide enough energy to ensure continued economic growth while avoiding the local and global environmental impacts of their energy production and use.  To listen to the political discourse – China is either a global leader on clean energy technologies and transformation or the largest source of emissions with serious and systemic local environmental degradation.  How can China at once be a low carbon leader and a laggard?

China’s ability to be both lies in the pace of its current energy transformation, its size, and its willingness to put in place tough policies to try and alter its current energy trajectory.  With its current energy mix, China’s rapid growth and the associated environmental implications will undoubtedly wreak havoc on the global climate and local environmental conditions.  Chinese policy makers recognize the so-called unsustainable nature of their development pathway and have instituted a series of policies to steer them toward a more sustainable trajectory.  These policies have attracted lots of new investment and made China the most exciting market on earth for clean energy technology ventures.  The truth, however, is that this pathway will be difficult to achieve and navigates a great deal of uncharted territory.  Success on a number of fronts, on the other hand, could assist the rest of the global community to overcome some shared challenges.

China’s drive to address its own concerns over the economic, security and environmental impacts of its energy production and use has widespread implications not only for other countries individually, but also for economic, environmental and geopolitical issues at the global level (markets, and international dynamics around the world).  Given the globally integrated and interdependent nature of energy markets, investment and trade flows, and global supply chains, it is hard for any country’s energy policies and practices not to impact at least some interests outside its borders.  Three areas of note stand out:

Clean Energy Competition – China has planted its flag on the competitive high ground it perceives in clean energy products and services, by investing in clean technology manufacturing, growing its domestic market, providing clean energy incentives, and prioritizing so-called new energy industries for further support and additional research and development.  China is not alone.  Several other countries and regions, such as the EU, Japan, Korea and United States, have stated and supported their clean energy economic agenda with varying levels of policy and economic clout.  These policies contribute to a growing market for clean technologies but also contribute to trade tension among these countries.

Security – Concerned over the ability to secure affordable and reliable supplies of energy, China is promoting efficiency, creating diversity of energy supplies, building strategic stocks, and investing in energy production outside its borders.  China’s energy security concerns are such a significant driver of its energy policy decisions and have such an enormous impact on energy markets all over the world that China’s actions on energy security are impossible to ignore.

Climate Change – The world’s largest greenhouse gas emitter has shifted its position on climate change to reflect the progress it is making at home to reduce it emissions growth rate relative to GDP.  Analysts now envision a time when China’s emission could peak by 2040 but China is still projected to be the largest source of emissions going forward.

For a broader breakdown of the issues in this post, readers can see our recently published report: “China: Leader or Laggard on the Path to a Secure Low Carbon Future?”

Sarah Ladislaw is a Senior Fellow and Jake Nakano is a Fellow with the CSIS Energy and National Security Program.