U.S. must challenge China in clean energy technology – Forward Observer Shop

U.S. must challenge China in clean energy technology

The following are excerpts of an analysis by Amy Myers Jaffe titled, “China’s Coming Challenge to the U.S. Petro-Economy,” republished by the Council on Foreign Relations. She is essentially arguing that the U.S. should take advantage of its rising dominance in oil-and-natural gas production to squeeze out Russia while at the same time developing new clean-energy technology as a means of countering China’s massive investments in the industry. Analysis follows.

— U.S. oil production is set to surpass its all-time record monthly high (first set in 1970), and U.S. liquefied natural gas exports are roaring ahead, with 800 billion cubic feet already shipped since 2016. The U.S. Energy Information Administration is expecting the United States to become a net exporter of natural gas soon. This all bodes well for the Donald J. Trump administration’s aspiration for America to “dominate” global oil and gas markets and will improve the U.S. trade balance. The geographical diversity of the shale revolution across the United States now also partly shields the U.S. economy from the net ill-effects of sudden oil price rises. This stands in contrast to China, which has become the world’s largest oil importer. But could there be too much of a good thing?

— Rising U.S. oil and gas production is weakening Russia’s ability to use energy as a lever in international discourse and has diminished Iran’s ability to use its oil and gas sector as a diplomatic lure. Energy abundance provides many strategic and economic advantages. But lawmakers and the White House should think twice before focusing too intently on the current U.S. petro-economy. Petro-economies can become overly vulnerable to cyclical changes in commodity prices or worse in the case of Venezuela and Russia.

— The United States needs to stay the course on advancing its digital economy, even if that means reducing demand for oil.

— China has recognized the strategic detriment of being too oil dependent when the United States is not and it is making a major energy pivot that could position itself to challenge U.S. energy dominance and even U.S. strategic pre-eminence. U.S. policy makers need to recognize this risk and take steps to mitigate it.

— [The U.S. should remain in the Paris (Climate) Accords.]

— China is banking on clean energy technologies as major industrial exports that will compete with U.S. and Russian oil and gas and make China the renewable energy and electric vehicle superpower of a future energy world.

— The U.S. Department of Energy estimates that Beijing has spent as much as $47 billion so far supporting domestic solar panel manufacturing, an effort that allowed China to dominate the panel export market and cratered costs.

— Chinese investment in battery technology is likely to have a similar effect on battery prices.

— China’s goal is not just to reduce its own dependence on foreign oil and gas. It hopes to use its clean energy exports to challenge the United States’ leading role in many regional alliances and trading relationships as well as to fashion an international order more to its interests.

— Presumably, China intends to fashion a global energy architecture that will favor its interests. At some point down the road, that will not be defending coal use. It will be to sell its clean energy technologies free of tariffs (and possibly aided by subsidies) while European, Chinese, and other nation’s fees on carbon emissions hamper U.S. oil and gas exports.

— The take away from this Chinese challenge is that the United States needs to find creative ways to meet its Paris climate accord commitments and continue to develop a substantive technology innovation and climate change policy approach. Washington should consider additional policies to promote private sector investment in clean energy, including allowing renewable energy investors to form master limited partnerships in the same way as their oil and gas compatriots. Washington should also consider new uses for natural gas and bio-methane that can help meet the U.S. emission reduction pledge and stay the course on automobile efficiency standards that contribute to our shrinking oil import bill. [source]

Analysis: Whatever your thoughts are on the issue of “climate change,” President Trump did not withdraw the U.S. from the Paris agreement (or from the Trans-Pacific Partnership Agreement) because he seeks to “abdicate” U.S. global leadership. He did so because he believed the agreements were economically advantageous for our strategic competitor, China, among others, while being detrimental to the U.S. economy. And a lot of smart people agreed with him.

As for the writer’s recommendation that the U.S. pursue a two-pronged strategy to dominate energy production and technologies now and in the future, that makes perfect sense. Like the Trump administration, the Chinese government understands it is strategically disadvantaged by having to rely on a potential adversary for at least some of its energy supply. That’s partly why Trump is expanding U.S. energy production — not only does it increase gross domestic product and provide more jobs for Americans, it also bolsters our national security. 

No matter the politics surrounding “clean energy,” developing it is also in our national interests. The world is moving in that direction; fossil fuels are finite and will eventually be depleted to the point where finding and extracting them will be cost-prohibitive. So it only makes sense to use our current growing advantage in fossil fuel production while simultaneously pursuing clean energy technologies, ahead of the Chinese.

Jon E. Dougherty is a political, foreign policy and national security analyst and reporter with nearly 30 years of experience in both fields. A U.S. Army veteran of Operation Enduring Freedom, he holds BA in Political Science from Ashford University and an MA in National Security Studies/Intelligence Analysis from American Military University.

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