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Haley Zaremba

Haley Zaremba

Haley Zaremba is a writer and journalist based in Mexico City. She has extensive experience writing and editing environmental features, travel pieces, local news in the…

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How China Is Racing To Expand Its Global Energy Influence

China US relations

The global geopolitical power map is changing. While oil has been king of the world for centuries, it’s becoming irrefutably clear that the once invincible resource and bestower of geopolitical might will soon be singing its swan song. As the world continues a trajectory toward clean energy transition on the eve of catastrophic climate change, the concept of peak oil has become an increasingly common refrain in headlines.

Of course, the world didn’t always run on oil, and the geopolitical power map has been in near-constant flux since the Industrial Revolution. While the Middle East once held enormous power in international relations thanks to the region’s massive oil deposits, in recent years the United States upset political power structures around the world with a flood of cheap shale oil and gas flowing out of the West Texas Permian Basin. The United States’ shale revolution “redrew the global political map” by unseating OPEC at the helm of the world energy market and handing that power over to the “Big Three”: the United States, Russia, and Saudi Arabia. If you’ve been paying any attention at all to the headlines coming out of the Permian Basin in recent years, and especially in recent months, you’ll know that it’s grim business. The once-mighty U.S. shale revolution has been pronounced dead countless times now by a huge variety of news outlets as domestic production has waned over the last few years and received what seems to be its coup de grace from the COVID-19 pandemic, which caused the West Texas Intermediate crude benchmark to plummet to nearly $40 below zero in April. 

With the U.S. losing its foothold in global oil and energy markets, the geopolitical maps will once again have to be redrawn, and this time it looks like China could come out on top. Under Xi Jinping, China has made huge inroads into global power markets, in large part thanks to Beijing’s assertive Belt and Road Initiative announced in 2013. This global infrastructure development program involves Chinese investment in around 70 countries and international organizations. 

Related: U.S. Oil Rig Count Rises During Election Week

Energy has played a huge part in China’s ambitious entry into global markets. Beijing has been very vocal about the country’s lofty ambition to become carbon-neutral by 2060, and has invested heavily into growing its nuclear and renewable energy sectors as part of that plan. While Beijing’s rhetoric has been largely framed around environmental consciousness, decarbonization, and clean energy, however, it’s been speculated that this initiative has much more to do with Chinese energy security than anything else. 

Indeed, as China’s homegrown energy sector is working to become less carbon-intensive, China’s overseas Belt and Road Initiative (BRI) poses a direct threat to meeting global climate change and greenhouse gas emissions goals. According to Yale Environment 360, “BRI has the potential to transform economies in China’s partner countries. Yet it could also tip the world into catastrophic climate change.” the RBI initiative can be seen as a workaround for China to continue to talk the talk about cleaning up its emissions act while getting rich off of dirtying the air in other countries. “While China has imposed a cap on coal consumption at home, its coal and energy companies are on a building spree overseas,” Yale Environment went on to report. 

According to some, BRI also means that we could be headed into an “energy export battle with China” as the United States struggles to retain its market sector for shale exports and China ramps up its own infrastructure both at home and overseas. While China’s massive appetite for energy has made the country largely reliant on imports, Xi Jinping’s ambitious plans clearly intend to change that.

By Haley Zaremba for Oilprice.com

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  • Mamdouh Salameh on November 08 2020 said:
    The author should get it into her head that oil will continue to reign supreme throughout the 21st century and probably far beyond for reasons I have expounded time and again in my comments on articles posted by oilprice.com.

    The global geopolitical power map is indeed changing in favour of China because it is now the world’s largest economy with a GDP of $27.5 trillion based on purchasing power parity (PPP), the largest importer of crude oil, the biggest energy market, the largest gas market (both natural gas and LNG), the world’s largest investor in renewables and the fact that it is wedded to Russia the world’s superpower of energy. Furthermore, this energy prowess is underpinned by the Belt and Road Initiative (BRI) adding a huge dimension to China’s economic pre-eminence and the Chinese-Russian strategic alliance.

    A post-COVID global economy resuming its growth and a rising world population both enhance the pivotal role oil will continue to play well into future. This means that the geopolitical power of the Gulf countries which sit on a combined proven crude oil reserves estimated by the BP Statistical Review of World Energy at 830 billion barrels is on the ascendency but only if they stop kowtowing to the United States and look after their own interests.

    Moreover, OPEC will continue to play a pivotal role in stabilizing both global oil market and prices well into the future.

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London

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