China Ramps Up Shale Gas Production

china shale gasAccording to the Energy Research Institute under the National Development and Reform Commission of the People’s Republic of China, the country is predicted to heavily step up its shale gas production to surpass 1.5 billion cubic meters by the end of 2014 (7.5 times that of 2013), and top 6.5 billion cubic meters by 2015. Although still playing catch-up in shale gas productions in comparison to the U.S. and Canada, China’s vast potential deserves  close international attention, considering the rate at which its national production is growing. A 2013 report by the US government’s Energy Information Administration also found that China had the world’s third most technically recoverable shale oil resources. Having already surpassed every European nation in terms of percentage of GDP spent on science and technology R&D, China is projected to be on par or even rise above the U.S. in R&D intensity in the next decade, with the bulk of the expenditure devoted to exploring new technologies to exploit its vast shale gas reserves.  Looking solely at these statistics, China seems to be coming to the forefront of international efforts to achieve alternative efficient methods of renewable energy production.

Reality, however, is more complicated than numbers on paper

While the Chinese central government has put many eggs in one basket, the basket of renewable energies, it is questionable whether or not this leapfrogging strategy will pay off in the long run. On one hand, China is certainly capable of achieving great feats if it puts its energies into doing so. Recall China’s investment frenzy in wind turbines in 2006. China has since then, through both central governmental and private entrepreneurial initiatives, completed some of the largest, most renowned renewable energy projects in human history. China is currently the 4th leading wind-power producer on the planet ahead of the U.S., and its Three Gorges Dam hydroelectric power plant redefined the global standard for renewable energy use with its unprecedented scale.

Yet if you were to visit Chinese metropolises such as Beijing or Shanghai, all these “feats” would be thrown quickly out the window into the dense pollution smog. According to the U.S. Energy Information Administration, China’s net energy consumption (as of 2011) is still heavily reliant on conventional energy sources. Coal and oil made up 69% and 18% of energy generation respectively, with wind-power and hydroelectric power altogether contributing to less than 8%. Likewise, the coal and oil industries possess major economic and political leverage, and will not take kindly to major attempts to wean China off their supply. Xi’s administration has shown itself capable and willing to take proactive steps in collaborating with both domestic and international partners to promote energy efficient futures, but fundamental changes to China’s energy composition are not going to happen overnight.

On the issue of shale gas investments, Chinese authorities will most likely have to deal with additional concerns such as water contamination and ecosystem disruption, which could be linked to shale rock fracking. The country’s already rampant water shortage problems and history of environmental degradation cast shadows and doubts over governmental initiatives to fully take advantage of their newly discovered energy sources.

Political challenges

Another dimension to China’s energy conundrum is the impact on China’s international image and its role in the global arena. A recent China-Vietnam oilrig dispute near the Paracel Islands amply demonstrates the breadth of foreign opposition to China’s search for energy resources. China’s neighbors, in particular, often have competing claims to maritime territory and its accompanying natural resources. Though China has plenty of shale gas reserves on its own, there is no denying that the neighboring seas are also extremely rich in reserves. If China wants to take full advantage of this new source of energy production, it will in likelihood be forced to solidify its control over these disputed territories, which is bound to provoke counter-challenges from other states.

While some international analysts see China’s attempts at creating an “energy revolution” as part of its overall goal to achieve regional dominance, it seems far more likely that China is seeking energy alternatives for the sake of greater energy security. The bulk of China’s oil and energy imports pass through the strategically crucial Straits of Malacca, making it vulnerable to sudden blockades by the U.S. or other major world powers that have greater access to the Straits.  Given this vulnerability, it makes sense that China is seeking to strengthen its domestic sources of energy so as to decrease its reliance on the Straits of Malacca and foreign pressure in general.

Realistically, however, one must not ignore the fact that China since Xi’s inauguration, is still operating under a domestic focus. With serious, immediate domestic problems to tackle, China’s accelerated investment on alternative energies should be primarily seen as an attempt to alleviate its domestic energy concerns, rather than an attempt to expand its hegemonic influence in the region.