Edmontonjournal – China is the emissions elephant in the room

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By Gary Lamphier, Edmonton Journal

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An aerial view shows buildings standing out amid haze engulfing Wuhan, central China’s Hubei province on December 3. China will need to invest up to $30 billion U.S. a year to meet its goal of curbing greenhouse gas emissions, the state press said, citing an academic study, as Beijing set its targets before world leaders gather in Copenhagen this month for talks on negotiating a new global warming pact to replace the Kyoto Protocol that expires in 2012.

Photograph by: STR , AFP/Getty Images

EDMONTON – China topped the U.S. as the world’s largest energy consumer in 2009.

Despite fawning press accounts of China’s growing use of solar and wind power, it still relies on coal for two-thirds of its energy needs.

Although China has set “intensity-based” targets (like Alberta) in a bid to slow the growth of its carbon footprint, its total emissions continue to ramp up steadily. Today, China accounts for about 30 per cent of global carbon emissions, or about twice that of the U.S., while Canada sits at two per cent.

You’d think U.S. President Barack Obama, who gives soaring speeches on the need to address climate change, might have something to say about that. After all, it boils down to simple math, and the numbers don’t lie. China is the elephant, Canada is a pimple. But Obama is oddly silent when it comes to China’s emissions. Instead, his government seems more intent on impeding the proposed Keystone XL pipeline — a pipeline that would transport oil from Canada, America’s closest ally and friend.

Killing Keystone would do zilch for the climate, of course. That’s obvious to anyone who can add, and Obama knows it. But this is all about politics, not saving the planet.

With “friends” like Obama, Canadians might rightly ask, who needs enemies? Rejecting Keystone XL would surely poison Canada-U.S. relations for years to come.

In a more sensible world, Obama would instead be focused on finding ways to help China cut its coal consumption, while using that as a bargaining chip to win better access to China’s fast-growing consumer markets.

Indeed, the U.S. is itself already moving away from coal and toward increased use of cheap, plentiful natural gas. Hydraulic fracturing (fracking) and horizontal drilling have opened up vast new supplies of U.S. shale gas, as well as shale oil.

Meanwhile, China is sitting on even bigger reserves of shale gas than the U.S. According to the U.S. Energy Information Administration, China is home to an astonishing 20 per cent of the world’s shale gas reserves.

An estimated 1,275 tcf (trillion cubic feet) of technically recoverable shale gas is found in just two onshore basins — the Tarim Basin in northwest China and the Sichuan Basin in south-central China. Untold additional reserves are located offshore.

Unfortunately, China’s quest to significantly increase the exploitation of its vast shale gas reserves has been a giant bust so far. Blame it on a lack of expertise in new technologies, such as fracking — something Canadian and U.S. companies have in spades — as well as domestic policies that have stymied shale gas development.

Although China has set an ambitious target of 80 billion cubic meters of shale gas production a year by 2020, analysts expect it to fall more than 75 per cent short of that goal, according to a recent survey by Bloomberg.

“China’s production targets are not realistic,” Chris Faulkner, CEO of Dallas-based Breitling Oil and Gas, told Bloomberg. “The only way China is going to be able to meet its output goals is for the government to pour money into exploration and development, and ease up on price controls.”

Indeed, by capping its domestic natural gas prices, critics say China’s Communist government has effectively discouraged investment in shale gas exploration and development, while increasing its reliance on foreign imports of expensive LNG (liquefied natural gas) as well as gas that’s piped in from Asian countries like Turkmenistan.

China currently spends about $17 billion US a year on natural gas imports. Roughly half of it is spent on LNG, which is driving a boom in construction of LNG import terminals.

This year alone, China is expected to add five LNG terminals, boosting annual capacity by a record 15.7 billion cubic meters, Bloomberg reports.

CNOOC and China Petrochemical (or Sinopec Group), have invested more than $5.7 billion in unconventional oil and gas assets overseas, but lack the technological expertise to exploit such reserves in China.

“None of these companies have the below-ground experience of oil producers,” Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein, told Bloomberg. “They need to partner with other companies to even come close to the targets.”

Of course, a big issue surrounding the exploitation of shale gas is the amount of water that’s required. And in a country like China, unless desalination proves to be an economically viable solution, that could be the biggest obstacle of all.

glamphier@edmontonjournal.com

Original Article: http://www.edmontonjournal.com/business/energy-resources/Lamphier+China+emissions+elephant+room/8014741/story.html?__lsa=6f1b-ebc6