Beijing Eyes Green Energy Shift To Counter Global Oil Volatility

Beijing is putting its power strategy under the microscope as China navigates the impact of a shipping crisis in the Strait of Hormuz that risks becoming a long-term economic liability.

Calling energy security a pillar of national stability, Premier Li Qiang on Monday convened a high-level study session of the State Council, China’s Cabinet, according to Xinhua.

The meeting, focused on coordinating energy security and the sector’s transformation, was the latest in a series of policy discussions and re-evaluations by policymakers. Also in attendance were China’s top-ranked vice-premier, Ding Xuexiang, and Li’s other deputies.

Alluding to volatility in global oil and energy prices since the start of the US-Israeli war on Iran, Li stressed vigilance.

“Given upheavals in the international situation and the steady growth of China’s energy demand, we must maintain vigilance and a bottom-line mentality to enhance resilience and secure supplies,” Li argued.

First-quarter data shows China’s economy was largely spared from the Iran conflict and disruption in the Hormuz since February, as gross domestic product increased a robust 5 per cent across the three months, year on year.

Economic resilience has been buttressed by China’s decision to stockpile oil before the war, helping offset some of the blow to businesses and livelihoods.

But China’s dependence on oil imports – including shipments via the Hormuz – is seen as a strategic vulnerability as Beijing endeavours to bolster economic and energy security. The country imports about 70 per cent of its oil needs. On Monday, President Xi Jinping said in a call with Crown Prince Mohammed bin Salman of Saudi Arabia that the strait should remain open.

It was the first time the Chinese leader had openly called for the reopening of the blocked waterway that has snarled global shipping, energy flows and supply chains.

Meanwhile, in a hint of Beijing’s push to lessen dependence on imports, Li said at the study session that the key lies in optimising the energy structure and leveraging new energy.

“We shall further promote the green, low-carbon transformation of energy production and consumption, including tapping the potential of renewable energy such as wind power, photovoltaic power, hydropower and other new-energy sources,” Li said.

In a tacit admission that China cannot immediately wean itself off coal – one of China’s most abundant resources – Li noted the need for clean, efficient utilisation of fossil energy and upgrading coal-fired power plants as a supply backstop.

He also stressed the role of artificial intelligence in the transformation, and he pointed to ongoing programmes to modernise grids.

Li also promised that suppliers and users of green energy will be rewarded via the reform of the national electricitymarket.

China has been in the vanguard of popularising clean and green energy, even though it remains the world’s largest emitter of greenhouse gases. Juggling energy security and transformation, China aims to peak carbon emissions by 2030 and reach carbon neutrality by 2060.

Also on Monday, Zheng Shanjie, head of the National Development and Reform Commission, the top economic planner, vowed in a People’s Daily article to reinforce China’s strategic reserves and response capabilities.

“We shall enhance the security and supply of food and energy, with priorities including mineral exploration and increased oil and gas reserves,” Zheng said, adding that China should “expand oil and gas cooperation with Russia”.