Executive Director Nobuo Tanaka makes his case at a summit in Beijing.
28 June 2011
On 25 June, Nobuo Tanaka, Executive Director of the International Energy Agency, spoke at the Second Global Think Tank Summit. Among those attending the summit in Beijing were the Deputy Premier of China, Li Keqiang, and former US Secretary of State, Dr Henry Kissinger, who played a key role in the founding of the IEA in 1974.
At the summit, Mr Tanaka shared IEA analysis regarding China’s future importance to the global energy market over the next few decades.
The Executive Director went on to cite five reasons why closer co-operation with the IEA would be beneficial for China.
Below is a full transcript of Mr Tanaka’s speech:
Mr Zeng, Dr Kissinger, Lord Prescott, distinguished guests, ladies and gentlemen,
It is an honour to be in such distinguished company this evening for the opening of this Second Global Think Tank Summit. I am very pleased to be able to address you in China at such a critical time in energy markets. Especially I am very happy to talk in front of Dr. H. Kissinger, a founding father of our organization. I can’t thank more for his wisdom and vision to create us.
Just a couple of days ago, we made a decision to release our Strategic Petroleum Reserve (SPR) to the market, for the third time in history. This decision taken among IEA member countries to release oil stocks in the face of a continuing disruption from Libya, and as a bridging action to further production increases from Saudi Arabia, highlights the importance of unity among major market players during such crises.
The OECD countries, which at the founding of the IEA accounted for about 75% of oil demand, now account for less than half, with the rise of emerging economies. Both in recent years and looking forward, the increase in non-OECD emerging countries consumption is led by brisk growth in China. In our 2010 World Energy Outlook, we see Chinese primary demand surging by 75% in 2008-2035, a far bigger increase than in any other country or region.
The need for closer co-operation is clear. But I would like to go even further, and discuss why China’s closer alignment with the IEA should be such a priority for China, and for us.
China’s future importance to the energy market cuts across all fuels, so let me give you some figures.
In 2000, China’s energy demand was half that of the United States, but preliminary data indicate it is now the world’s biggest energy consumer. Looking forward, China’s primary energy climbs by 75% to 2035, reaching two-thirds of the level of consumption of the entire OECD. Although China’s per-capita energy consumption is currently below the world average, in 2035 it is 40% higher than today’s global average, thanks to strong economic growth and relatively slow population growth.
However, China is not just a major and growing consumer of interest to the IEA. It is also increasingly dependent on global markets which are well managed within an international framework, for its own energy security.
China’s electricity demand is projected to almost triple from 2008 to 2035, requiring capacity additions equivalent to 1.5 times the current installed capacity of the United States.
China’s net imports of coal increase to 2015, but depending on policy it could become either a net exporter by 2035 or require the equivalent of all of today’s internationally traded coal.
Oil imports jump from 4.3 mb/d in 2009 to 12.8 mb/d in 2035 – representing all of current Saudi and Mexican production combined – and imports rise from 53% to 84% of demand.
Natural gas imports also increase to reach a share of 53% of demand in 2035, requiring a major expansion of pipeline and LNG regasification infrastructure. In our recent “Golden Age of Gas” scenario, the expansion is even more dramatic.
So China’s rise is not only a case of up, but also in. Into international markets, into political frameworks which guide those markets, into joint mechanisms for managing crisis, and perhaps one day, into the IEA as a global energy governance forum.
Let me be clear – the IEA respects the sovereign decisions of all of its partners, and deepening institutional ties is a long, complex, and sometimes slow process. But the IEA also recognizes the imperative to bring major emerging economies into its fold if credibility to act in the name of the global market – such as this week’s stock release – is to be maintained. We are very grateful that China publicly supported our stock release. It is a good indication of the progress we have made in closer collaboration over the last couple of years.
Then, what is in it for China? Let me give you some good reasons why China joins the IEA, though there could be 100 reasons:
Let me conclude just by saying that China’s evolution represents nothing less than a transformation of the global energy economy. At the IEA we are proud to be able to embrace such change, but urge the new major emerging economies like China to assume their role as equal partners in global energy governance.
My major achievement as Executive Director over the last 4 years is to establish very good collaboration with China. But, if any regret, it is that I have never succeed in making China a member of the IEA. I even asked Dr. Kissinger to help me to convince China. I am leaving the organization in the end of August, but I am very much committed to work with you in a personal capacity to make this global energy governance happen. Together, we can ensure that the transition to a secure affordable and sustainable energy future is a harmonious one.
Thank you very much.
Photo: Beijing, China. © GraphicObsession
Browse IEA news by topic: