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David Dodwell

As the world’s largest oil and gas importer, China undoubtedly faces a significant disruption, what with the US-Israeli war on Iran and its cascading impact across the Gulf.
But it could have been worse. Beijing has worked unstintingly for well over a decade to build energy self-reliance and reduce the role of fossil fuels in powering the country’s manufacturing economy.
For leaders gathered in Beijing for the annual parliamentary “two sessions” meetings, which will endorse China’s 15th five-year plan, the Iran conflict will provide the strongest vindication of its long-standing energy security strategy – in particular its “30-60 plan” to lead the world in renewable energy development and build a new national energy system, peaking carbon emissions by 2030 and achieving a net zero economy by 2060.
There will be keen interest in what the new five-year plan will say in detail on the energy security plan going forward.
China has been under acute pressure over the past decade because of its colossal consumption of fossil fuels and contribution to global warming. It could not have become a manufacturing superpower without a massive investment in power generation, with the lion’s share coming from coal-fired plants. The International Energy Agency (IEA) says China’s power generation per capita has soared by over 550 per cent since the turn of the century.
China’s economic rise has come at huge environmental cost, in terms of carbon emissions and air pollution. China’s energy sector is responsible for nearly 90 per cent of its greenhouse gas emissions, with coal still accounting for over 60 per cent of power generation. Air pollution driven by coal-fired power is estimated to have caused over 400,000 deaths in 2021 alone.


China is the world’s largest user of coal, most of it locally mined, and also the second largest oil consumer and leading importer by far. As the IEA notes, China accounts for one third of carbon emissions worldwide: “There is no plausible path to limiting the global temperature rise to 1.5 degrees Celsius without China.”
To reduce its emissions, China’s leadership recognised early that it faced two options: it could either curb economic growth – and with it the impetus for rising living standards – or cut its use of fossil fuels. Cutting fossil fuels was the lesser of two ills, but forced a radical commitment to building a green economy.
Today, China has more green energy in place than the rest of the world combined. In 2024 alone, it commissioned 278GW of solar power – more than the entire US installed capacity then – taking its total installed capacity to 888GW, and to 522GW for wind power. China now accounts for over 80 per cent of the global production of solar panels and 60 per cent of wind turbines.
Combined with this progress, China’s leadership in the development of electric vehicles and batteries, as well as an ultra-high-voltage transmission network that massively reduces transmission losses, has made it the world’s green technology superpower.
It would be nice to believe China’s motives in building up green energy infrastructure were entirely due to environmental and global warming concerns. Sadly, that is not true. Equally important has been the gnawing recognition that China’s heavy reliance on imported oil and gas makes it hugely vulnerable.


Energy self-reliance has been a very high priority since long before Russia’s invasion of Ukraine and Israel’s assault on Gaza, and has only been reinforced by the disruption of global energy supply chains due to the US-Israeli war on Iran.
Since the attack on Iran, many commentators have suggested that this disruption, particularly the closure of large oil and gas refineries across the Gulf, as well as shipping lanes through the Strait of Hormuz, might pose existential challenges to China.
While the disruption is clear, there is as yet no sign that the disruption might be severe. First, Beijing has invested massively in enhanced oil storage capacity. Analysts estimate that China has enough oil and gas stored to cover 124 days without new deliveries. While around 16 million barrels per day would normally pass through the Strait of Hormuz, oil stocks of around 2 billion barrels are currently held outside China and India – equivalent to a further 125 days of supply from the Gulf.
While China still relies heavily on Gulf oil and gas, it has diversified extensively in recent years, in particular boosting supplies from Russia along the Power of Siberia pipeline. China is also buying directly from new suppliers like Guyana, Brazil and Canada.




The relatively calm oil and gas prices also suggest the absence of any acute or immediate threat. Global oil prices may be headed towards US$100 a barrel – which would be stressful for many economies, not least the United States – but the volatility does not compare with past crises like the 1973-74 Arab oil embargo or Iraq’s invasion of Kuwait in 1990 (when prices surged by 260 per cent and 180 per cent respectively).
While China has reasonably robust energy security measures in place, leaders at the two sessions will undoubtedly regard the Gulf crisis as a valuable stress test.
It will also provide an important agenda item for President Xi Jinping’s Beijing meeting with US President Donald Trump at the end of the month – so long as the Gulf conflict does not escalate to force a cancellation of the summit. But let’s perhaps concentrate on one crisis at a time.


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China’s energy transition proves a boon in the Iran crisis

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China waits and watches as the US fights all its tigers at once

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Illustration: Craig Stephens

As US-Iran war threatens global energy markets, will China speed up its green transition?

Iran announced on Monday announced it had closed the strategic Strait of Hormuz, while Qatar halted liquefied natural gas production and Saudi Arabia shut down its largest oil refinery. The turmoil has hit global energy markets, as oil and gas prices soar. Photo: Reuters

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China is expected to face no significant disruption but as the ‘two sessions’ open in Beijing, energy security is staying a top focus


China is expected to face no significant disruption but as the ‘two sessions’ open in Beijing, energy security is staying a top focus.


Energy

China energy security

US-Israel war on Iran

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Inside Out & Outside In

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Expresses the views, ideas and conclusions of the author. (Eg. Enough of Crazy Rich Asians, think of crazy poor Hongkongers.)


China’s energy transition proves a boon in the Iran crisis

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}China is expected to face no significant disruption but as the ‘two sessions’ open in Beijing, energy security is staying a top focus

China is expected to face no significant disruption but as the ‘two sessions’ open in Beijing, energy security is staying a top focus