China Is Becoming More Secretive On Energy Matters

China is prioritizing confidentiality in its energy system to enhance its resilience to various challenges with a view to strengthening the country's national security.

This is the gist of remarks made this week by Zhang Jianhua, director of China's National Energy Agency.

China is already pretty private about some aspects of its energy system, such as the level of oil in storage. That privacy has forced analysts to use roundabout ways of trying to estimate how much oil the world's biggest importer has in storage.

Now, Zhang's remarks suggest, things will only get even more secretive with a view to making the energy system of the country more secure. The official noted China's heavy dependence on imported oil and gas, covering, respectively, 70% and 40% of domestic consumption as one aspect of its national security that needs addressing. Another was energy infrastructure, which has been drawing growing attention as a potential point of vulnerability in Western countries, too.

More interestingly, Xhang referred to "foreign hostile forces," per the automated translation, that are trying to undermine China's energy transformation and collecting sensitive data to that end, to "distort and defame my country's energy strategic planning, transformation and development, and interfere with the security and stable environment."

These forces were not named in the speech, but there aren't really many potential candidates. What is perhaps more interesting is that the transition to lower-carbon energy is being increasingly framed as a national security issue, Reuters' market analyst John Kemp noted in an analysis of Zhang's remarks.

This, Kemp suggested, "is likely to lead to much more restricted collection and sharing of information on the country's energy production, infrastructure, planning and emissions reduction efforts."

If things do turn out that way, this would effectively mean China is clamming up to the West with regard to transition matters. What the impact of such a development would be on what activist politicians call global transition efforts remains to be seen.

In fact, China has been a leader in terms of wind, solar, and EV capacity and production for years without the help of any other country. In further and more important point of fact, the country is the dominant power in transition supply chains, which makes those remarks by the head of its National Energy Agency potentially more worrying.

The United States and its friends in Europe and the Anglosphere only recently realized the implications of this dominance and decided to make an effort to shorten and localize those supply chains. Yet this would take a long time, in the meantime leaving all transition hopefuls dependent on China for things like lithium and rare earths processing and solar panels, among others.

This is not a comfortable position for these countries. Yet Zhang Jianhua suggests China is not comfortable with the pressure the West is exerting on it to reduce its emissions more quickly and deeply. They also suggest the result of that pressure will be a doubling down on energy security as priority number one, above emissions.

The marriage of the energy transition and national security is something that Western governments have embraced, too. The EU did it particularly loudly last year amid the price spike in oil and gas, claiming members need to build out wind and solar quickly and massively to enhance their energy security.

It did not work because there was no way wind and solar capacity could be boosted so considerably in a matter of months. What did work was switching from pipeline gas to LNG, even as officials from Brussels and national capitals kept swearing it was only for a little while.

Unlike them, Chinese officials seem to be aware of the fact that a resilient and secure energy system is an "all of the above" system, including both hydrocarbons and alternative sources of energy. It is this sort of system that China seems to be developing. But it's going to let the rest of the world know increasingly less about it.

By Charles Kennedy for Oilprice.com

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