Accessibility links

Breaking News

Low Oil Prices Challenge China’s Fight Against Pollution

FILE - PetroChina's logo is seen at its gas station in Beijing, August 29, 2013.
FILE - PetroChina's logo is seen at its gas station in Beijing, August 29, 2013.

The low price of oil has saved China billions of dollars on imports. But energy analysts and industry experts say it is also creating challenges for China's leaders who have committed themselves to cleaning up the environment.

China has pledged to take steps to reduce its carbon footprint to improve its sullied image as one of the world’s worst emitters of greenhouse gases. Its determination to fulfill the pledge will be closely watched at the United Nations climate change talks in Paris later this year.

In recent years, China has adopted a range of strategies to reduce its use of oil by building additional capacities in sectors such as natural gas, hydroelectricity, nuclear, solar and wind power. But the higher price of oil and the need for a clean environment were key drivers of such initiatives.

The public demand for a smog-free environment is still there, but the price of oil has slipped by nearly $20 a barrel in recent months.

World biggest oil importer

China has seen a massive surge in imports and its reserves have bulged. Last month, the country surpassed the United States as the world’s biggest importer of oil for the first time.

“The government’s goals were formulated when oil prices were high. Now, the strategies applied to reduce oil use have become less economical,” said Kang Wu, vice chairman of FGE an energy consultant company.

Wu was among a wide range of energy industry experts, scholars and officials who attended the Pacific Energy Summit in Beijing this week that focused on the energy challenges China and other countries face.

Chen Weidong, a former energy economist with the state-run China National Offshore Oil Corporation said there is a clear sign the government is committed to increasing storage capacity, and expanding the imports of crude oil.

Earlier this week, Chinese President Xi Jinping said the increase in imports was essential to China’s efforts to build up a complete contingency safety plan for oil reserves.

Coal to natural gas

Crude oil contributes 19 percent in the country’s energy mix, natural gas accounts for six percent, while coal is still the biggest contributor meeting 64 percent of China’s energy requirements.

And it is not just the low price of oil that is creating problems, coal is cheap too and that is making it difficult for the government to switch to natural gas.

Zhou Dadi, an energy expert with China’s National Development and Reform Commission said that efforts to shift energy usage away from polluting coal to cleaner natural gas is facing stiff challenges.

“Getting people to pay more for natural gas rather than cheaper coal is difficult,” Zhou said. China has set a goal to increase its usage of natural gas to replace coal, but analysts say that the low price of coal is making it extremely difficult to reach that goal.