The dynamic growth that has made China the world’s second largest economy has also positioned China as the largest energy producer and consumer on earth, the biggest importer of oil, and the leading burner of coal and generator of greenhouse gases. Together with North America’s concurrent energy boom and low oil prices, these developments have important implications for Sino-American relations, climate change and bilateral energy cooperation. The U.S.-China Energy Track II Dialogue brings together American and Chinese experts from academia, think tanks, and industry for a two-day dialogue exploring how significant climate change and energy developments are altering each country’s energy outlook. This dialogue was last held in 2016.

2016 U.S.-China Track II Energy Dialogue

April 7, 2016 to April 8, 2016
New York, NY

The third round of the U.S.-China Energy Track II Dialogue was last convened in New York City on April 7 and 8, 2016. With generous support from the Starr Foundation and Cornerstone Acquisition & Management Company, LLC, the dialogue brought together 17 American and Chinese experts from academia, think tanks, and industry for off-the-record discussions and a public program on U.S.-China energy cooperation at a time of global energy transition. Together, the group discussed each country’s energy outlook, the global energy market and the geopolitics of energy, and Sino-American cooperation in climate change and energy. A consensus document summarizing dialogue participants’ policy recommendations for strengthening U.S.-China energy cooperation is available below.

2014 U.S.-China Track II Energy Dialogue

September 11, 2014 to September 12, 2014
New York, NY

Dramatic changes in American energy production, Asian energy consumption, and climate change awareness across the world have altered the global energy landscape during the past decade. To explore the implications of these shifts on Sino-American relations, the second U. S.-China Track II Energy Dialogue was convened in New York City on September 11 and 12, 2014.  The dialogue brought together 21 Chinese and American experts from academia, think tanks and industry for off-the-record discussions and a public program.

The year since the previous Dialogue witnessed significant changes in both energy and Sino-American relations, so there was much to discuss.  Major developments included:

– the 30-year $400Bn gas deal signed by China and Russia in May 2014;
– disruptions in Iraq, Venezuela, Russia/Ukraine and other energy-producing countries;
– the start of a historic decline in oil prices (from June 2014);
– rising public pressure in China to address urban air pollution;
– China’s announcement at its Communist Party’s Third Plenum (November 2013) of potentially transformative reforms and economic rebalancing for the decade ahead;
– a raft of new challenges in the U.S.-China relationship;
negotiations toward the American and Chinese joint announcements on Climate Change (subsequently announced at the APEC Summit in Beijing in November 2014);
– China’s total energy consumption (22.4 percent of the world’s energy consumption) surpassed that of the United States (22 percent), making China the world’s largest energy producer and consumer, and the largest emitter of greenhouse gases. 

Also new was the sense that the interests of China and the United States increasingly align in the areas of energy and climate change – generating opportunities for concrete progress on many fronts.  Two days of discussion among the Dialogue participants generated:

– Energy outlook estimates for both countries through the rest of this decade;
– Implications and policy recommendations for economics and business, the environment and climate change, geopolitics and security, and prospects for greater Sino-American energy cooperation. 
– A consensus that the unconventional energy boom, changes in energy markets, environmental pressures, new technologies, and China’s ongoing economic and societal changes — all create growing opportunities for China and the United States to collaborate.

2013 U.S.-China Track II Energy Dialogue

September 17, 2013 to September 18, 2013

In September 2013, a new Track II Energy Dialogue was convened 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 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.

2016 U.S.-China Track II Energy Dialogue
April 2016 Consensus Agreement  (PDF | 中文)

2014 U.S.-China Track II Energy Dialogue
September 2014 Consensus Agreement  (PDF | 中文)

2013 U.S.-China Track II Energy Dialogue
September 2013 Consensus Agreement  (PDF | 中文)

“US Energy Outlook” Dialogue presentation by Howard Gruenspecht, Deputy Administrator, U.S. Energy Information Administration
“China Energy 2020” Dialogue presentation by Xu Xiaojie, Director, World Energy, Institute of World Economics & Politics, Chinese Academy of Social Sciences
Remarks by Zhang Guobao, former Vice Minister, National Development & Reform Commission, and former Director, National energy Administration of China – given at China Energy 2020 Public Program on September 11, 2014, New York City (Chinese and English)
“Five Points Promoting A Revolution in Energy Production and Consumption” Address by President Xi Jinping, at the Central Financial Work Leading Group, June 13, 2014 (Chinese and English)
“China’s Shale Gas Development Five Year Plan 2011-2015” English Translation
“China’s Shale Gas Development Five Year Plan 2011-2015” Chinese Version

Photo Gallery