September 17, 2013 to September 18, 2013

In September 2013 the National Committee, in partnership with the China Energy Fund Committee (CEFC), convened a new Track II Energy Dialogue to explore a timely focus:  the implications of the shale oil and gas boom in North America for U.S.-China relations.  Eighteen experts and former government officials from both countries convened for discussion at the New York offices of CEFC.  The Dialogue agenda addressed three sets of questions:  1) What was the nature of the current American “shale revolution” and could it be successfully reproduced in China?  2) What will be the economic, trade and environmental implications of America’s rapid increase in unconventional oil and gas production and China’s equally-rapid growth in energy consumption?  And 3) What are the likely geopolitical and security ramifications and ripple effects for which the two governments should prepare?

These issues were frequently in the headlines in the weeks leading up to the dialogue meeting, including assessments of America’s rapidly changing energy profile, China’s prospects with unconventional oil and gas, State Council proposals to reduce air pollution in China, predictions that the U.S. would shortly surpass Saudi Arabia in oil production, and Citigroup’s controversial prediction that China’s demand for coal could peak before 2020. 

Some highlights of the Dialogue and areas of consensus included:

  • Chinese delegates proposed four key obstacles facing China’s shale development: 

    1. Energy prices in China are too low to incentivize investment in unconventional oil; 
    2. China has almost no oil services market, nor experts outside of the three major companies, CNPC, Sinopec and CNOOC;
    3. The mineral rights to nearly 100 percent of likely shale fields are already held by the three majors, leaving no room for entrepreneurial, higher risk and alternative approaches;
    4. Geological data is held by the three majors, rather than by the state, crowding out any other actors.
  •  The United States and China should prioritize and encourage the transfer of the technology and intellectual property on shale oil and gas, because of the considerable environmental, economic and other benefits to China and to the world.  It is in the global interest for China to reduce coal consumption and increase use of cleaner energy, use the most up-to-date technologies and follow best practices to reduce methane emissions and environmental damage.
  • The United States should welcome Chinese investment in America in hydraulic fracturing and other extractive and green technologies.  Likewise, American energy investment in China should be encouraged by both sides.  Since the 2013 Sunnylands summit, bilateral cooperation has accelerated on economic issues, including movement toward a Bilateral Investment Treaty (BIT).  This same focus should be brought to bilateral energy cooperation.  BIT should allow Chinese and U.S. energy companies to enjoy national treatment in each others’ energy sectors.
  • A boom in natural gas is a net positive for the global environment and for CO2 reduction, to the extent that policies are in place to ensure that abundant natural gas displaces higher-carbon energy sources, such as coal.  To ensure that a natural gas production boom yields substantial benefits, meaningful climate change policies and implementation are needed.  U.S. and Chinese governments should lead global efforts to experiment with and establish effective carbon pricing mechanisms. 

Following the meetings in September, the group’s Consensus document was widely circulated in both countries in late 2013.  Subsequently, major developments in energy markets, climate change, environmental protection and in the U.S.-China relationship led both American and Chinese participants in the Dialogue call for a follow-up meeting in 2014.

PARTICIPANTS IN THE U.S.-CHINA TRACK II DIALOGUE ON ENERGY 2013:

ALLEN BARBER, President, Denver-Hainan Company
JASON BORDOFF, Director, Center on Global Energy Policy, School of International and Public Affairs, Columbia University
JAMES BRADBURY, Senior Associate, Climate and Energy Program, World Resources Institute
CHEN WEIDONG, Chief Energy Researcher, Energy Economics Institute, CNOOC
JEFFREY COLGAN, Assistant Professor, School of International Service, American University
EDWARD CUNNINGHAM, Assistant Professor, Department of Earth and Environment, Boston University, and Director Harvard Kennedy School Asia Energy and Sustainability Initiative
HOWARD GRUENSPECH, Deputy Administrator, U.S. Energy Information Administration (EIA)
HU XIAOJUN, Energy Specialist and Lecturer, Shanghai Jiaotong University
HUANG TAO, Assistant, Academic Research Office, CEFC
LIN BOQIANG, Director, China Center for Energy Economics Research, Xiamen University
STEPHEN ORLINS, President, National Committee on U.S.-China Relations
SHI YUEHUA, Vice Director, CEFC Shanghai Office, and Associate Professor, Shanghai Jiaotong University Center for National Strategy Studies
XU XIAOJIE, Chief Energy Research Fellow and Head, World Energy Division, Institute of World Economics and Politics, Chinese Academy of Social Sciences
DAVID YOUTZ, Senior Consultant, National Committee on U.S.-China Relations
ANTHONY YUEN, Director, Citigroup
ZHANG MENG, Director, Energy Division, China Business New Strategy Research (CBNSR).
ZHOU YUNHENG, Assistant Research Fellow, College of Public Administration, Zhejiang University
ZHUANG JIANZHONG, Deputy Director, International Energy Research Center, Shanghai Jiaotong University

U.S.-China Track II Energy Dialogue

U.S.-China Track II Energy Dialogue

American and Chinese experts from academia, think tanks, and industry gather for a two-day dialogue exploring how significant climate change and energy developments are altering each country's energy outlook.

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