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Prelims

Yi-Ming Wei
Qiao-Mei Liang
Gang Wu
Hua Liao

Energy Economics

ISBN: 978-1-83867-294-2, eISBN: 978-1-83867-293-5

Publication date: 23 September 2019

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Wei, Y.-M., Liang, Q.-M., Wu, G. and Liao, H. (2019), "Prelims", Energy Economics, Emerald Publishing Limited, Leeds, pp. i-xxxvii. https://doi.org/10.1108/978-1-83867-293-520191003

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Emerald Publishing Limited

Copyright © 2019 Emerald Publishing Limited

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ENERGY ECONOMICS

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ENERGY ECONOMICS

Understanding Energy Security in China

BY

YI-MING WEI

QIAO-MEI LIANG

GANG WU

HUA LIAO

Center for Energy and Environmental Policy Research (CEEP), Beijing Institute of Technology (BIT), Beijing, China

United Kingdom – North America – Japan – India – Malaysia – China

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Emerald Publishing Limited

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First edition 2019

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List of Figures

Chapter 1
Figure 1.1. Proved Recoverable Coal Reserves in Different Regions (2010). 2
Figure 1.2. Global Proved Oil Reserves (1980–2010). 3
Figure 1.3. Proved Crude Oil Reserves in Different Regions. 3
Figure 1.4. World’s Top 10 Countries of Oil Reserves and Annual Growth Rate (2010). 4
Figure 1.5. Global Proved Natural Gas Reserves (1980–2010). 4
Figure 1.6. Proved Natural Gas Reserves in Different Regions. 5
Figure 1.7. Proportions of World’s Top 10 Countries of Natural Gas Reserves (2010). 5
Figure 1.8. Global Primary Energy Consumption and Growth Rate (2000–2010). 6
Figure 1.9. Global GDP Growth Rate and Energy Consumption Growth Rate (1980–2010). 7
Figure 1.10. Changes in Proportions of Energy Consumption in OECD and Non-OECD Member Countries. 8
Figure 1.11. Global Renewable Energy Installed Capacity or Throughput (1996–2010). 8
Figure 1.12. Proportions of the World’s Major Biofuel-producing Countries (2010). 9
Figure 1.13. Global Renewable Energy Consumption and Growth (1990–2010). 10
Figure 1.14. WTI Crude Oil Future Price Trend (2010–2011). 11
Figure 1.15. Global Energy Demand Forecast (IEA, 2011). 12
Figure 1.16. Global New Investment for Renewable Energy (2004–2011). 12
Figure 1.17. Global New Investment for Renewable Energy (2004–2010). 13
Figure 1.18. Proportions of Nuclear Power in Primary Energy in the World’s Major Countries (2010). 15
Figure 1.19. Global Nuclear Power Generation and Proportion in Total Power Generation. 15
Figure 1.20. Natural Gas Prices in the World’s Major Markets (1996–2010). 17
Figure 1.21. World Primary Energy Consumption Structure. 19
Figure 1.22. World Energy Consumption Structure Evolution Trend (1970–2030). 19
Figure 1.23. Global Energy Consumption Structure (2035). 21
Figure 1.24. Primary Energy Consumption Structure in Major Countries (2010). 22
Figure 1.25. China’s Primary Energy Consumption Change (1953–2010). 27
Figure 1.26. China’s Primary Energy Consumption Structure Change (1953∼2010). 29
Figure 1.27. Energy Flow Map of China (2010). 31
Figure 1.28. Casualty Number of Mine Security Accidents and Mortality per Million Tons of Coal in China (1949∼2009). 37
Figure 1.29. Sulfur Dioxide Emissions in Main Countries Worldwide (1990∼2008). 37
Figure 1.30. Carbon Dioxide Emissions in Main Countries Worldwide (1900∼2007). 38
Chapter 2
Figure 2.1. China’s Oil Production, Consumption, and Net Import Volume (1965–2010). 68
Figure 2.2. Proportions of China’s Overseas Investment Projects in All Regions (2010). 70
Figure 2.3. Overseas Upstream Oil and Gas Assets Rights and Interests Output of Chinese Enterprises (10,000 tons). 71
Chapter 3
Figure 3.1. Nominal and Actual Crude Oil Price (1861–2010). 85
Figure 3.2. Spare Capacity of OPEC (US Energy Information Administration). 89
Figure 3.3. Contract Price of WTI Futures (January 2, 2008–August, 2011). 90
Figure 3.4. Responses of Brent Oil Prices to Structural One Standard Deviation Shocks. 95
Figure 3.5. Contributions of OPEC’s Political Risk Shocks to the Oil Price Fluctuations (%). 96
Figure 3.6. Brent Oil Prices’ Responses to Political Risk Shocks in Different Countries. 97
Figure 3.7. Brent Oil Prices’ Responses to Structural One Standard Deviation Shocks. 98
Figure 3.8. Total Consumption Quantity of Various Oils in Main Industries (2002–2009). 101
Figure 3.9. Impulse Response of Profit in Each Industry to Oil Price. 105
Figure 3.10. Impulse Response of Industry Investment to Oil Price. 105
Figure 3.11. Impulse Response of Ex-factory Price Index of Industrial Products to Oil Price. 106
Figure 3.12. Impulse Response Analysis of Road Transport Industry Shock. 107
Figure 3.13. Oil Prices and Global Economy Recession. 109
Figure 3.14. Net Oil Export Revenues of OPEC. 114
Figure 3.15. Biodiesel Production Trend. 125
Figure 3.16. Raw Materials for Producing Bio-fuels in the United States (2008). (a) Raw Materials for Producing Ethanol. (b) Raw Materials for Producing Biodiesel. 125
Figure 3.17. Raw Materials for Producing Bio-fuels in the EU-25 (2008). (a) Raw Materials for Producing Ethanol. (b) Raw Materials for Producing Biodiesel. 126
Figure 3.18. Flow Diagram of the SD-SPRC Release System. 132
Figure 3.19. Values of International Oil Price and China’s Oil Production under Three Different Scenarios. (a) International Oil Price (USD/barrell). (b) China’s Oil Production (10,000 Tons). 137
Figure 3.20. Effects of SPR Release in the Highest and Lowest Market Threshold. 138
Figure 3.21. Effects of SPR Release in the Highest and Lowest Market Threshold. 140
Figure 3.22. Effects of SPR Release in the Highest and Lowest Market Threshold. 141
Chapter 4
Figure 4.1. Number of Global Pirate Attacks (2000–2010). 150
Figure 4.2. Changes in Imports and Exports Volume of Crude Oil and Refined Oil in China (1993–2010). 155
Figure 4.3. Average Monthly Imports of Crude Oil and Average Monthly Price of Brent in China (1996–2010). 156
Figure 4.4. Relationship between Import Risk and Yield of Crude Oil and Refined Oil under Different Correlation Coefficients. 159
Figure 4.5. Diversification Index of Crude Oil and Refined Oil Imports in China (1994–2009). 159
Figure 4.6. Price Variance of China’s Crude Oil and Refined Oil Imports (1995–2009). 163
Figure 4.7. Yield of China’s Crude Oil and Refined Oil Imports during 1995–2009. 164
Figure 4.8. Investment Portfolio Risk of China’s Oil Imports (1995–2009). 165
Figure 4.9. Distribution of Global Piracy Attacks (2005–2010). 166
Figure 4.10. Sino-US Crude Oil Imports and External Dependence (1996–2010). 169
Figure 4.11. Diversification Index of Sino-US Crude Oil Imports (1996–2009). 172
Figure 4.12. Monthly Crude Oil Imports of Sino-US and Monthly Average Price of Brent Spot (1996–2010). 173
Figure 4.13. Proceeds and Yields of US Crude Oil Import Strategy Relative to China’s Actual Import Strategy. 180
Figure 4.14. China’s Coal Import and Export Situation (2000–2010). 180
Figure 4.15. China’s Coal Imports (2010). 182
Figure 4.16. China’s Natural Gas Consumption and Its Proportion in Energy Consumption (2001–2010). 185
Figure 4.17. Production, Consumption, and External Dependence of China’s Natural Gas (2006–2010). 186
Chapter 5
Figure 5.1. Changes in Strategic Oil Reserves and International Crude Oil Price of the United States. 197
Figure 5.2. Optimal Supplement Time and Strategy of Strategic Oil Reserves during 2011–2020, When the Probability of High Oil Prices Is Low. 207
Figure 5.3. Optimal Supplement Time and Strategy of Strategic Oil Reserves during 2011–2020, When the Probability of High Oil Prices Is High. 209
Figure 5.4. Monthly Average Price of International Brent Crude Oil (2010–2020). 214
Figure 5.5. Impact of Sudden Natural Disasters on International Oil Prices. 216
Figure 5.6. Impact of the Economic Crisis on International Oil Prices. 217
Figure 5.7. Impact of Local Armed Conflict on International Oil Prices. 218
Figure 5.8. Optimal Strategy of Strategic Oil Reserves in China under Natural Disaster Scenarios. 219
Figure 5.9. Optimal Strategy of Strategic Oil Reserves in China under Economic Crisis. 220
Figure 5.10. Optimal Strategy of Strategic Oil Reserves in China under Local Armed Conflict. 221
Chapter 6
Figure 6.1. China’s Provincial Assignment of Energy Intensity Reduction in 2011–2015. 236
Figure 6.2. China’s Provincial GDP Per Capital, Energy Intensity, and Energy Consumption. 237
Figure 6.3. Province Name and Their Codes. 238
Figure 6.4. Key Provinces for Energy Conservation in China. (a) Diesel and (b) Electricity. 240
Figure 6.5. Industrial Energy Consumption by Province in 2008 in China. 241
Figure 6.6. China’s Urban Residential Oil Consumption and Income Per Capita. 249
Figure 6.7. Air-condition Ownerships Per 100 Households across China’s Provinces in 2010. 250
Chapter 7
Figure 7.1. World Primary Energy Supply Structure in 2009. 254
Figure 7.2. Global Renewable Energy Supply Structure in 2009. 254
Figure 7.3. Average Annual Growth Rate of Various Energy Supplies from 1990 to 2009. 255
Figure 7.4. Consumption of World Renewable Energy in Different Regions in 2009. 255
Figure 7.5. World Electricity Consumption Structure in 2009. 256
Figure 7.6. Proportion of China’s Hydropower and Nuclear Power in Primary Energy Consumption. 260
Figure 7.7. China’s Hydropower Generation during 2005–2010. 261
Figure 7.8. Distribution Map of China’s Total Wind Power Installed Capacity in 2010. 263
Figure 7.9. China Solar PV Installation Capacity. 264
Chapter 8
Figure 8.1. Regional Distribution of Global Population under Energy Poverty (2009). 272
Figure 8.2. Scale Drawing of Major Rural Household Cooking Energy in Different Provinces/Municipalities (2010). 274
Figure 8.3. Distribution of Educational Background of Population under Energy Poverty in Chinese Rural Regions (2010). 275
Figure 8.4. Changes in Fuel Wood Consumption of Chinese Rural Households and Per Capita Net Income (1998–2007). 277
Figure 8.5. Changing Relationship between Per Capita Fuel Wood Consumption of Rural Residents in Provinces/Municipalities and Per Capita Income of Rural Residents (1998 and 2007). 278
Figure 8.6. Changes in Actual Living Consumption of Fuel Wood of Rural Families in Various Regions (1998–2007). 281
Figure 8.7. Changes in Total Consumption of Straw of Rural Families in Various Regions (1998–2007). 282
Figure 8.8. Bubble Chart of Total Per Capita Consumption of Fuel Wood and Straw and Per Capita Net Income of Households in Rural Regions of Various Provinces/Municipalities (2007). 283
Figure 8.9. Forest Coverage of Different Chinese Provinces/Municipalities (2010). 286
Figure 8.10. Comprehensive Assessment of Energy Poverty Index in Chinese Provinces/Municipalities (2010). 295
Figure 8.11. Regional Distribution of Energy Poverty Index in China (2010). 296
Chapter 9
Figure 9.1. Contrast of Previous Global Oil Supply Shortage. 301
Figure 9.2. Linkage between Fluctuation in Oil Price and Global Economic Growth (1970–2017). 302
Figure 9.3. Oil Crisis and Major Oil-consuming Countries’ Economic Growth (1970–2017). 303
Figure 9.4. Energy Crises and Economic Growth of Big Power Groups (1970–2017). 303
Figure 9.5. Oil Crisis and Economic Growth in Major Oil-exporting Countries (1970–2017). 304
Figure 9.6. Oil Crisis and Global Inflation (1970–2017). 305
Figure 9.7. Social Inflation Rates in Major Oil Consuming Countries (1970–2017). 305
Figure 9.8. Impact of Oil Crisis on the US Employment (1970–2017). 306
Figure 9.9. Impact of Three Crude Oil Supply Shortage Scenarios on Sectors’ Employment. 315
Figure 9.10. Changes in Sectors’ Profits in the Three Scenarios of Crude Oil Supply Shortage. 316
Figure 9.11. Changes in Sectors’ Export in the Three Crude Oil Supply Shortage Scenarios. 317
Figure 9.12. Changes in Sectors’ Product Market Price under Government Regulation. 320
Figure 9.13. Changes in Sectors’ Product Market Price without Government Regulation. 321
Figure 9.14. Changes in Sectors’ Employment under Government Regulation. 321
Figure 9.15. Changes in Sectors’ Employment without Government Regulation. 321
Figure 9.16. Changes in Sectors’ Profits under Government Regulation. 322
Figure 9.17. Changes in Sectors’ Profits without Government Regulation. 323
Figure 9.18. Feedback Model of the Causal Relationship between Refined oil Retail and Supply. 327
Figure 9.19. Flow Model of Refined oil Retail Supply Stock. 328
Figure 9.20. Scenario Simulation Results. 334
Chapter 10
Figure 10.1. Proportions of Health Effect Economic Loss Caused by Air Pollutants in Major Cities (2007). 351
Figure 10.2. Proportions of Health Economic Loss of Major Cities in Their Own Municipal Districts GDPs (2007). 351
Figure 10.3. Evaluation Framework of City Dwellers’ Environment Health Economic Loss Based on Intake Fraction. 356
Figure 10.4. Health Economic Loss Proportion Caused by Each Sector’s Emission (2007). 368
Figure 10.5. Ten Sectors with the Biggest Total Marginal Damage (2007). 368
Chapter 11
Figure 11.1. Evaluation Index System of Energy Security. 391
Figure 11.2. Change of Energy Supply Security Index of Representative Developed Countries. 395
Figure 11.3. Change in Energy Supply Security Index of America (2000–2010). 397
Figure 11.4. Change of Energy Supply Security Index of Germany (2000–2010). 398
Figure 11.5. Change in Energy Supply Security Index of Japan (2000–2010). 399
Figure 11.6. Change of Energy Supply Security Index of Representativeness Developing Countries. 400
Figure 11.7. Change in Energy Supply Security Index of China (2000–2010). 402
Figure 11.8. Changes in India’s Energy Supply Security Indexes (2000–2010). 403
Figure 11.9. China’s s Energy Supply Security Index and Energy Consumption Volume (1996–2001). 409
Figure 11.10. China’s Energy Consumption Security Index (1996–2009). 411
Figure 11.11. China’s Energy Security Composite Index (1996–2009). 413

List of Tables

Chapter 1
Table 1.1. Global Renewable Energy Development (2008–2010). 9
Table 1.2. Renewable Energy Consumption Proportions and Development Targets in Some Countries. 14
Table 1.3. Major Oil Exporting Countries or Regions and Trade Shares. 23
Table 1.4. Major Oil-importing Countries or Regions and Trade Shares. 24
Table 1.5. China’s Crude Oil Importing Sources and Shares within 2008–2010 (%). 24
Table 1.6. Chronology of Major Events of Energy Security in China. 35
Chapter 3
Table 3.1. Specifications of the Eight sub-components of the Political Risk Index. 94
Table 3.2. Estimated Results of the Dummy Variables in the Vector Auto-regression Models. 96
Table 3.3. Estimated Results of SVAR Model. 104
Table 3.4. Comprehensive Ranking of 10 Largest Oil Companies in the World (in 2008, According to the Comprehensive Calculation of Six Indexes). 123
Table 3.5. Ranking of 10 Largest Oil Companies in the World for Four Indexes including Total Income (2008). 124
Table 3.6. Definition of Variables. 133
Table 3.7. The Size of SPR which Effects the Stabilizing Oil Price Is Best in Baseline Scenario. 139
Table 3.8. The Size of the SPR that Effects the Stabilizing Oil Price Is Best in the Low International Oil Price Scenario. 140
Table 3.9. The Size of the SPR that Stabilizes Oil Price Is Best in the High International Oil Price Scenario. 142
Chapter 4
Table 4.1. Main Routes of China’s Oil and Gas Imports. 145
Table 4.2. Comparison of Main Sources of Crude Oil Imports in China in 2000 and 2011. 149
Table 4.3. Comparison on the Share of Main Sources and Regions of Crude Oil Imports between China and the United States in 2010. 170
Table 4.4. Comparison on Monthly Imports of Crude Oil and Changes in International Oil Prices in China and the United States (Unit: Millions of Tons). 176
Table 4.5. Coal Export and Reserve-production Ratio in Australia (2006–2010). 184
Table 4.6. Coal Export and Reserve-production Ratio in Indonesia (2006–2010). 184
Chapter 5
Table 5.1. Release of US Strategic Oil Reserves. 196
Table 5.2. Definition and Description of Variables in the Model. 204
Table 5.3. The Optimal Supplement Time and Strategy of Strategic Oil Reserves during 2011–2020 When the Probability of High Oil Prices Is Low. 206
Table 5.4. Optimal Supplement Time and Strategy of Strategic Oil Reserves during 2011–2020 When the Probability of High Oil Prices Is High. 208
Table 5.5. Variable Description of the Dynamic Planning Model. 212
Table 5.6. Setting for Main Parameter in the Dynamic Planning Model. 213
Table 5.7. Features of Different Emergencies. 215
Table 5.8 Impact of Different Emergencies on International Oil Prices. 217
Table 5.9. Impact of Supplement and Release of China’s Strategic Oil Reserves on International Oil Prices. 223
Table 5.10. Differences in Different Natural Gas Reserve Patterns. 228
Chapter 6
Table 6.1. The Key and Most-key Province × Sector for Energy Conservation in China’s Industrial and Construction Sectors. 243
Table 6.2. The Key Province × Sector for Energy Conservation in China’s Tertiary Industry. 247
Table 6.3. Energy Consumption in Residential and Some Tertiary Industries in 2008 in Beijing. 248
Table A1. Sector – Full Names and Their Codes. 251
Chapter 7
Table 7.1. China’s Renewable Energy Resources. 259
Table 7.2. China’s Wind Power Installed Capacity from 2003 to 2010. 262
Table 7.3. Renewable Energy Development Goals in Major Countries. 267
Chapter 8
Table 8.1. Proportion and Ranking of Disease Deaths Caused by Respiratory Diseases in Chinese Rural Residents (2000–2009). 276
Table 8.2. Analysis of Influencing Factors of Energy Poverty in Rural Households. 288
Table 8.3. Coefficients of Impacts on Traditional Biomass Energy Consumption of Per Capita Net Income of Rural Households in Provinces/Municipalities. 290
Table 8.4. Maximum and Minimum of Energy Poverty in 2010 in China (2010). 294
Chapter 9
Table 9.1. World Crude Oil Supply Shortage Scenario. 311
Table 9.2. Changes in Macro-variables in the Three Crude Oil Supply Shortage Scenarios (%). 311
Table 9.3. Changes of Three Savings against Different Scenarios (%). 312
Table 9.4. Impact on Macro-economy Indexes of Rising Oil Price under Government Control (%). 318
Table 9.5. Impact on Macro-economy Indexes of Rising Oil Price When There Is No Government Regulation (%). 319
Table 9.6. Changes in Sectors’ Export under Government Regulation (%). 324
Table 9.7. Changes in Sectors’ Export without Government Regulation (%). 325
Table 9.8. System Variable Interpretation. 329
Table 9.9. Parameter Setting in the Model. 331
Table 9.10. Scenario Settings. 332
Table 9.11. Index Setting. 333
Table 9.12. Indexes in All Scenarios. 335
Chapter 10
Table 10.1. Valuations of Dose–response Relationship and Health Effect. 346
Table 10.2. Air Pollutant Concentration and Population Data in 113 Key Environmental Monitoring Cities in China (2007). 347
Table 10.3. Health Effect and Economic Loss Caused by Air Pollution (2007). 349
Table 10.4. Health Effect of Air Pollution and Valuation Lower and Upper Limits of Economic Loss. 353
Table 10.5. Health Effect and Economic Loss in the Scenario of Valuation Lower Limit (2007). 354
Table 10.6. Health Effect and Economic Loss in the Scenario of Valuation Upper Limit (2007). 355
Table 10.7. Corrected Intake Fractions of Primary and Secondary Pollutant. 358
Table 10.8. SO2 and TSP Emissions, Sector Output, and Energy Consumption Data of 24 Sectors in China. 359
Table 10.9. Health Effect and Economic Loss Caused by All Sectors’ Air Pollutant Emission (2007). 364
Table 10.10. PM10 and SO2 Corresponding to Each Sector and Total Marginal Damage (2007). 365
Table 10.11. Marginal Damage of Energy. 370
Table 10.12. The Scenario of Valuation Lower Limit, the Health Effect, and Economic Loss Caused by All Sectors’ Air Pollutant Emission in 2007. 372
Table 10.13. The Scenario of Valuation Upper Limit, Health Effect, and Economic Loss of Air Pollutants Emitted by All Sectors in 2007. 373
Table 10.14. Sector Sensitivity Analysis Result. 374
Chapter 11
Table 11.1. Calculation Method and Description of Energy Security Evaluation Index. 393
Table 11.2. Evaluation Index of Energy Security and Its Description. 395
Table 11.3. Data of Various Evaluation Indexes of China’s Energy Supply Security (1996–2009). 407
Table 11.4. Various Evaluation Index Data of China’s Energy Use Safety (1996–2009). 408

About the Authors

Yi-Ming Wei is Distinguished Professor of Energy and Environmental Economics at the Beijing Institute of Technology (BIT). He is the Founding Director of the Center for Energy and Environmental Policy Research at BIT. His recent research and teaching focuses on energy policy and energy economics, CO2 emission and climate policy, and energy and climate policy modeling. He has performed over 40 research projects for various Chinese governmental agencies including National Development and Reform Commission (NDRC), Ministry of Science and Technology (MOST), National Energy Administration (NEA), National Natural Science Foundation of China (NSFC), China National Petroleum Corporation (CNPC), STATE GRID Corporation of China (SGCC), and Chinese Academy of Sciences (CAS), and international organizations such as the World Bank and The Seventh Framework of European Commission (EU-FP7). He has published 20 books and over 300 papers in peer-reviewed journals including Nature-Climate Change, Nature-Energy, Climatic Change, Energy Economics, and Ecological Economics.

Qiao-Mei Liang is Professor in the School of Management and Economics at the Beijing Institute of Technology. She received her PhD degree in Management Science and Engineering from Chinese Academy of Sciences in 2007. She was awarded by the Excellent Young Scientist Foundation of National Natural Science Foundation of China (NSFC) in 2014. She was also selected for the “Program for New Century Excellent Talents in University” by the Ministry of Education, and the program of “Beijing-funded Plan for Talents”. Her main research interest is energy economic complex system modeling and energy and environmental policy. She has undertaken more than 20 projects which are supported by NSFC, European Union FP7, and so on. She has published more than 40 academic papers and seven books in collaboration with others. She has received academic honors including Nomination Award of National Excellent Doctorate Dissertation of China and the Award of Beijing Excellent Doctorate Dissertation.

Gang Wu is Director of the Division of Business Administration in the Department of Management Sciences of the National Natural Science Foundation of China (NSFC). His research focuses on energy security and environmental policy. He has published five books and over 40 papers, and he has more than 20 papers published in international journals such as Energy Economics, Energy Policy, and Applied Energy. Professor Wu was awarded the 14th Young Scientist Award prize by the China Association for Science and Technology (2015). He was a Visiting Scholar in the School of Engineering and Applied Sciences at Harvard University from September 2010 to September 2011.

Hua Liao is Professor and Deputy Director of the Center for Energy and Environmental Policy Research (CEEP) at Beijing Institute of Technology (BIT), China. He was awarded the Changjiang Young Scholar by the Ministry of Education of China. He is Vice President of the Chinese Society of Energy Economics and Management. He has been the Principal Investigator of over 10 energy economics and climate policy research projects granted by the National Natural Science Foundation of China (NSFC) and other ministries of China. He has published over 70 articles in peer-reviewed journals and is one of the co-authors of China Energy Report (various volumes) and Energy Economics: Understanding and Interpreting Energy Poverty in China. He has served several journals as Editorial Member or Guest Editor.

Preface

Since the Industrial Revolution, fossil energy such as coal and oil has gradually replaced fuel wood as the main body of energy consumption. With the restraints in natural endowment and distribution of fossil energy resources, the international energy trade has emerged and expanded rapidly. The issue on how to ensure sustainable and stable energy supply in the complex international energy trade has aroused general concern among energy-importing countries. As the first world oil crisis caused by the oil embargo movement launched by Arab countries in 1973 led to huge economic losses of industrialized countries such as in European and American countries, the global economic growth rate decreased from 6.8% in 1973 to 2.8% in 1974. In order to cope with the oil supply shortage, the Organisation for Economic Co-operation and Development (OECD) established the International Energy Agency (IEA) in 1974 and initially defined the concept of energy security as the uninterrupted availability of energy sources at affordable prices, which means that the energy supply shortage amount shall not exceed 7% of energy imports in the last year, and there shall be no continuous and unaffordable high oil prices.

Based on the long-term attention to and research on the energy security issue, we consider that the national energy security can be divided into two levels, energy economic security and energy eco-environmental security, among which economic security refers to traditional energy supply security, and eco-environmental security refers to energy use security. In this book, energy security is defined as reliable, affordable, and uninterruptible energy supply that can meet the demands of national economic development and ensure the production and use of energy never destroys the sustainable development of ecological environment. In fact, the national energy security is just like a roof consisting of several tiles, and each tile represents an influencing factor of energy security, such as geopolitics, energy transport, energy prices, energy reserves, armed conflicts, sabotage, strikes, technologies, accidents, natural disasters, and pollutant emission of energy consumption. Just like any defective tile may affect or cause rain leakage of a house to some extent, any factor may affect the national energy security.

Since the beginning of the industrialized development stage, energy, similar to capital and labor, has become a production factor with significant influence on the national economy. In particular, in the current period with high oil prices, the energy crisis has become one of the important blasting fuses for evolution and development of the economic crisis. Therefore, energy security has been an important part of national security, arousing general concern among all countries in the world.

In recent years, the international energy market has been turbulent frequently. In 2008, the global financial crisis caused by the US subprime mortgage crisis led to collapse in international crude oil prices, sharp decrease in investment, and reduction in energy demands. However, the international oil prices returned to the high level of USD 80/bbl rapidly when many international forecasters and investment banks reduced their future energy expectations in succession. The price fluctuation like a “roller coaster” had strong impact on the energy supply security of all energy-importing countries. With the outbreak of “Jasmine Revolution” in North African countries from the end of 2010 to the beginning of 2011 hitting the international energy market again when the countries hadn’t gone out of the shadows of global financial crisis and European debt crisis, the crude oil prices rapidly broke through USD 100/bbl and 110/bbl in succession. The turbulent political situation in North African oil-exporting countries such as Sultan and Libya caused huge fluctuation to the oil investment, production, and trade. As the Gaddafi government was overthrown in August 2011, the storm of “Jasmine Revolution” blew over temporarily, and the international oil market went smoothly by a rare chance. *However, good times didn’t last long. As the Iran nuclear crisis broke out again, with the further worsening of relationship between US and Iran, Iran claimed the use of force to block the Strait of Hormuz in case of any conflict between the United States and Iran. As the United States and Europe jointly carried out economic sanctions to Iran at the beginning of 2012, Iran responded intensely and threatened to interrupt the oil supply to all European countries. Meanwhile, the three main Asian oil-importing countries including China, Japan, and India successively reduced their oil import volumes from Iran under international pressure. In this case, the international oil market has been trapped in turbulence again, and the geopolitics of international energy has been increasingly complex and changeable.

As the largest energy-consuming country and the second largest oil-importing country in the word, China has faced with the net import of all fossil energy since 2009. With the increasing external dependence of energy year by year as well as frequent occurrence of “oil shortage,” “coal shortage,” and “electricity shortage,” the energy security issue has been increasingly serious. What is the level of energy security in China? How to improve the national energy supply security and reduce the energy trade risks? All of these hot issues have attracted the common attention of decision-makers and researchers.

This book carries out systematic research starting with the history of world energy geopolitics and domestic energy security, focusing on hot issues such as the complexity of the international energy market, domestic energy import trade risks, domestic strategic energy reserve strategies, impact of energy crisis on the domestic economy, problems of domestic energy poverty, effects on the environment and health by energy consumption, potential analysis on key energy-saving industries, development potential of renewable energy, energy security early-warning and contingency plan, international comparison of energy security, etc. in order that national relevant decision-making departments provide decision-making reference and information support. The main issues discussed in this book include the follows:

  • World energy supply and demand and evolution of China’s energy security

    The distribution of world energy consumption and supply is significantly imbalanced. On the one hand, with the turbulent political situation in Middle East and North Africa, the world energy production and trade patterns have been changing; on the other hand, under the impact of global financial crisis and European debt crisis, the world energy consumption pattern has also been changing quietly, and energy consumption in emerging countries such as China and India has expanded rapidly. All of these factors lead to a trend of increasingly diversified world energy trade. Meanwhile, the global climate change is attracting more and more attention. As various countries have taken actions and measures to mitigate the global climate change in succession, the world energy consumption structure is transforming into one focusing on clean and renewable energy. Based on the systematic analysis of the world’s energy supply and demand situation, this chapter comprehensively elaborates the history of and current challenges for domestic energy security.

  • World energy geopolitics and China’s energy diplomacy

    The development history of energy, especially the development history of oil, is actually a history of local wars. In the history, wars caused by scrambling for oil resources broke out one after another, leading to the intricate and complex world energy geopolitical relations. China has gradually transformed from an energy-importing country to an energy-exporting country since the founding of the People’s Republic of China (PRC), but has become an energy net-importing country again in recent years. The energy diplomacy policies of China have also constantly varied with its role in energy trade. Starting with the development history of the world energy geopolitics, this chapter discusses on the role and influence of energy diplomacy in national energy security.

  • Oil price and China’s energy security

    Since the financial crisis broke out in 2008, the international oil price has experienced steep rise and fall like a roller coaster due to the linkage between oil market and financial market, causing great impact on the energy security of oil-importing countries. In addition, the soaring oil price since 2002 has significantly stimulated the biofuel development in America and Europe, causing contradictory dispute between oil security and food security. This chapter carries out quantitative research on the complexity of oil market, impact of oil price fluctuation on the energy supply and demand and the economy, financial oil development risks, future trend of international oil price, China’s energy security, etc.

  • China’s energy trade and transportation risk research

    In particular, the significant imbalanced distribution of world energy resources, the highly concentrated and monopolistic international energy trade, and the long-distance energy transportation bring unpredictable risks to energy trade. At present, China’s energy trade is mainly based on the oil import trade, which is frequently accompanied with unreasonable phenomena such as “buying when price rises and not buying when price drops” and “price-volume increase.” Based on the systematic analysis of main transportation corridors for China’s energy import, this chapter carries out quantitative research on the composite risk of China’s oil import, risk comparison of crude oil trade between China and America, characteristics and transportation risk analysis of China’s coal trade, and characteristics and transportation risk analysis of China’s natural gas trade, so as to provide decision-making support for the reduction of energy trade and transportation risks in China.

  • Research on China’s energy reserve strategies

    To ensure national energy supply security, China is accelerating the construction of the national strategic oil reserves and emergency coal reserves. In the face of intensive fluctuations of the international crude oil price, how can we minimize the total security cost through timely establishment and dynamic supplement of strategic reserves? In case of oil supply shortage in the future, how can we release the national strategic oil reserves to defuse the crisis? Which are the reserve strategies that should be taken to China’s energy reserves according to different storage characteristics of oil, coal, and natural gas? For the problems above, this chapter sets up the optimization model and carries out quantitative research on China’s energy reserve strategies.

  • Research on key energy-saving regions and industries on the premise of ensuring energy security

    Significant energy saving is important to slow down the growth rate of energy imports and ensure national energy security. The energy-saving and emission-reduction work in different regions shall be adjusted according to the local conditions due to the extremely imbalanced regional economic development and energy consumption in China as well as the relatively large difference of marginal energy-saving costs in different economic regions. This chapter carries out quantitative research on the issues including the key energy-saving departments in the regions, the degree of inter-provincial difference of energy intensity among the departments, the key energy-saving regions of the departments, and the differences of energy-saving in residents’ lives between rural and urban regions and among different regions, with the hope to provide decision-making information support for energy-saving and emission-reduction work of the 12th Five-year Plan.

  • Role of clean and renewable energy in the national energy security

    With the rapidly decreasing reserve-production ratio of the global fossil energy as well as the increasingly serious negative effects of the use of fossil energy on the environment, energy security, especially fossil energy supply security, has become a great challenge for world economic development at present. Striving to develop clean and renewable energy and reducing the dependence on fossil fuels have become important ways for developed countries to improve their national energy security. This chapter carries out systematic analysis focusing on the utilization of clean and renewable energy, clean and renewable energy policies of major countries in the world, the potential of clean and renewable energy resources in China, and its influence on China’s energy supply security.

  • Energy poverty and energy use security

    Energy poverty is one of the three major challenges for energy development all over the world. The extensive existence of energy poverty restricts sustainable development in all countries in the world, especially the developing countries, hinders the establishment of the social justice systems, increases the social environment pressure, threatens the health of residents, and further, influences the secure atmosphere of energy consumption. Energy poverty and energy use security are in a close relation of mutual restriction and mutual effect, so the energy poverty alleviation work will ultimately benefit the improvement of energy use security. China is one of the countries with concentrated population under energy poverty, but the composition of the population under energy poverty has certain specificity compared with other countries. This chapter carries out a systematic analysis on the influencing factors of energy poverty, the relation between energy poverty and public health, and the relation between energy poverty and energy use security, as well as quantitative research on the current situation of regional energy poverty in China.

  • Research on the impact of energy crisis on China’s macro-economy

    An energy crisis is always the blasting fuse of an economic crisis. The three energy crises since the 1970s have caused significant impacts on the world’s economic growth, social inflation, employment, etc. As the world’s biggest energy consumer and second largest oil importer, China relies more and more on foreign energy. In case of any energy crisis in the future, we cannot imagine how great the impact on China’s economy will be. Based on a comprehensive analysis on the impact of historical energy crises on macro-economy, this chapter carries out quantitative research on the impact of oil supply shortage and oil price rise on China’s macro-economy by the China Energy & Environmental Policy Analysis (CEEPA) system.

  • Energy consumption and public health in China

    As the deterioration of urban air quality seriously threatens the health of urban residents, the urban air pollution in China has become an important influencing factor of national energy use security. Urban pollution in most cities of China is mostly as a result of coal burning, with pollutants mainly occurring from fossil energy consumption. Starting with the issue on how energy consumption influences the environment and public health, this chapter carries out quantitative research on the evaluation on health effect in the environment with urban atmospheric pollution, the economic evaluation on urban atmospheric pollution and public health effect, the evaluation on health effect in the environment with pollutant emissions from major energy consumption departments, and the influence of pollutant emissions from major energy consumption departments on public health as well as the economic evaluation.

  • Research on the comprehensive comparison of energy security in typical countries

    Energy-importing countries are different in the energy consumption structure, energy import resources, energy reserve modes, and relevant energy policies depending on their different natural endowment, geographic locations, and geopolitics of energy resources. In order to ensure energy security, America and other developed countries have established the International Energy Agency, on the one hand, and successively prepared and introduced a series of policies and measures for ensuring the energy security, on the other hand. For both supply security and use security, this chapter establishes a set of energy security evaluation index systems and carries out quantitative research on the changing trend of energy security in China, America, Germany, Japan, and India in recent years, so as to provide decision-making support for ensuring China’s energy security.

  • Outlook of China’s energy security in 2020

    In the future, what will be the changing trend of China’s energy supply and demand? How will energy trade and transportation risks change? How will energy reserves develop? Can energy poverty be controlled or solved? For the problems above, based on the quantitative researches in previous chapters, this chapter carries out forecasting analysis on China’s energy security in 2020 and puts forward policy recommendations on China’s energy security policies.

To further be committed to scientific research, personnel training, and international exchange of energy and environmental policies, in 2006, I cooperated with professors such as Yong-Fa Xu and Ke-Yu Liu of CNPC Economic and Technology Research Institute to found the Center for Energy and Environmental Policy Research 1 and served as the first Director of the center. In 2009, invited by Academician Hai-Yan Hu, President of Beijing Institute of Technology (BIT), and Professor Da-Cheng Guo, Secretary of the Party Committee, I together with the core members of my team joined BIT and established the Center for Energy and Environmental Policy Research, BIT (CEEP-BIT), subordinate to the School of Management and Economics, BIT, with the approval of the President’s Office Will.

For this book, Yi-Ming Wei and Gang Wu were responsible for the overall design, planning, organization, and compilation; Gang Wu, Hua Liao, Jian-Ling Jiao, Qiao-Mei Liang, Lan-Cui Liu, Lu-Tao Zhao, Shi-Wei Yu, Zhong-Yuan Ren, Bin Fang, Kang Li, Liang-Qiong Xiong, Wei-Dong Zhao, Zhi-Shuang Zhu, Ke Wang, Bing Wang, Tao Wang, Qian Wang, and Yun-Fei Yao completed the contents of relevant chapters in this book. Zhao-Hua Wang, Ju-Liang Jin, Zhi-Yong Han, Jiu-Tian Zhang, Xiao-Wei Ma, Bao-Jun Tang, Yue-Jun Zhang, and Rui-Guang Yang participated in the discussion and proof-reading of partial chapters in this book. This book is the manifestation of the collective wisdom of the Center for Energy and Environmental Policy Research.

During the research and preparation of this book, we gained support from the projects such as the major project of National Natural Science Foundation of China (70733005), International Cooperation Program (71020107026), and National Natural Science Funds (70701032 and 71173207). We successively gained encouragement, guidance, support, and selfless assistance from experts and leaders, including Academician , Academician Su-Ping Peng, Academician Chong-Qing Guo, Jing-Yuan Yu, Jian-Kun He, Wei-Xuan Xu, Ji-Fa Gu, Jian-Guo Song, Yan-He Ma, Jing Huang, Hong Sun, Shan-Tong Li, Xiao-Tian Chen, Yi-Jun Li, Shou-Yang Wang, Zi-You Gao, Wei Zhang, Hai-Jun Huang, Ji-Zhong Zhou, Ji-Kun Huang, Lie-Xun Yang, Zuo-Yi Liu, Ruo-Yun Li, Zheng-Xiang Ge, Zhao-Liang Fang, Yan-De Dai, Yong-Fa Xu, Ke-Yu Liu, Ri-Sheng Guo, Si-Zhen Peng, Xiao-Feng Fu, Jing-Ming Li, Xu-Yan Tu, Lei Ji, Chen Cai, Zhi-Jie Li, Hong Chi, and Jian-Min Zhang, as well as various forms of support and assistance from foreign colleagues who were once invited to visit the Center for Energy and Environmental Policy Research for academic exchange, including Tol R. S. J., Hofman B., Martinot E., Drennen T., Jacoby H., Parsons J., MacGill I., Edenhofer O., Burnard K., Nielsen C., Nguyen F., Okada N., Ang B., Yan J., Tatano H., Murty T., and Erdmann G. Academician Zhong-Li Ding, Vice President of the Chinese Academy of Sciences, gave encouragement and support for the publishing of this book. On this occasion, I would like to extend my sincere thanks and great respect to the above-mentioned leaders and experts.

I would like to take this opportunity to express my special thanks to Secretary of the Party Committee, Professor Chang-Lu Zhao, BIT President, Academician Jun Zhang, and other leaders as well as all colleagues of functional departments and the School of Management and Economics of BIT, for their support and assistance for my research work and that of our team. Without their support and assistance, it would be difficult for us at the Center for Energy and Environmental Policy Research to complete the research work and publish of this book within such a short time.

Thank to all authors mentioned in the citation of this book!

Inevitably, there might be some defects, deficiencies, and even mistakes in this book due to our limited knowledge. Please don’t hesitate to criticize and correct us!

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Under the co-construction of the Institute of Policy and Management, Chinese Academy of Sciences, and CNPC Economic and Technology Research Institute.

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