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China’s Sustainable Fuel Strategies

About the project

The goal of this research project is to understand the context of China’s energy economy, decision making process, and (even) social mores. This understanding will enable the collection of relevant and accurate data to both feed analysis and drive the interpretation of model outputs. The project aims to analyze and assess information to obtain policy relevant insight. The focus is on investigating the global consequences of changes to energy markets within China.

The overall objective is to combine an understanding of the fundamentals of China’s energy economy (derived from KAPSARC’s Energy Model for China) and of the policy landscape (through the construction of the KAPSARC Energy Policy Database). The two platforms and the associated knowledge are then used to answer a range of questions looking at the reform of China’s energy sector, ultimately leading to an informed view on the future of China’s energy mix.

In line with KAPSARC’s overall objectives, the intent is to produce policy relevant insights that help actors outside China understand the consequences of decisions taken by actors within China.

The workshop series fits into the overall project by providing a space for a continuing dialogue that raises the key issues, provides feedback on current work, and can set future directions. In addition, the workshops are an open collaborative forum that enables the discussion of particular questions that feed into the overarching research questions.

Summary

KAPSARC’s China Research Project is investigating the policy-economic nexus that underpins the growth and evolution of China’s energy economy. This workshop investigated one of the major emerging trends of China’s energy transformation: the development of sustainable fuel use.

Any discussion of sustainable fuel use in China is likely to start with the statistic that the last two decades have seen China move from being a net exporter of coal and oil to being the largest importer of both. Yet beyond the underlying surge in energy demand, the consumption of coal and oil raise very different sets of questions in terms of sustainability.

For coal, the discussion largely centers on its environmental costs. The international debate on climate change and the domestic questions of poor urban air quality have thrown the spotlight on China’s ability to continue to use coal as it has in the past. In contrast, the discussion around the sustainable use of oil revolves around China’s rising oil import ratios and what this means in terms of the country’s involvement in the international energy markets and the actions necessary to ensure security of supply.

Despite the different questions, three distinct themes underscore the dangers of setting policy in isolation and failing to coordinate with other initiatives and so recognize the broader context:

- Policies are a means to an end, not an end in themselves: policymakers will always respond to realized outcomes in the ongoing pursuit of their goals, and models of policy effectiveness risk irrelevance if they do not take this into account.

- Policies that induce changes in consumer energy use do not necessarily drive desired changes in the underlying fuel mix.

- Coordinating energy policies between economies in North East Asia has proved extremely difficult, but the potential benefits make it a priority still worth pursuing.

As China’s importance in global energy markets continues to grow, the effect of its policy decisions will be felt throughout the world in economic, environmental and political arenas. Understanding the motivations of policymakers and aligning research with real-world political problems is a critical step in informing the debate around China’s sustainable fuel strategies.

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