1. Jennifer C. Li Foundation for Environmental Security & Sustainability/ George Mason University September 18, 2008 Sustainable Growth, Resource Productivity, and Sustainable Industrial Policy – Recent Findings, New Approaches for Strategies and Policies WI and EIIW Colloquium in Wuppertal C HINA & I NDIA’S R ESOURCE N EEDS and R ELATED I MPACTS on A FRICA

2. Presentation outline China and India’s economic performance, energy, emissions and energy policy emphases Implications on the environment and international energy security Implications for Africa’s development Outlook

3. Economic performance, past and projected Source: International Energy Agency 2007

4. China and India’s contribution to global growth Source: Authors’ own calculation based on IMF World Economic Outlook Database, Sept. ‘08

5. China and India’s GDP growth rates compared to other regions Source: International Energy Agency 2007

6. Source: International Energy Agency 2007

7. China and India’s energy needs relative to ROW China and India together account for nearly half of the entire growth in world energy demand between 2005 and 2030 China and India’s combined share of global primary energy demand growing at phenomenal rate – but still less than 30% by 2030 In 2007 China overtook the United States to become the world’s largest emitter of energy-related carbon dioxide and, by 2015, India will be the third largest emitter By around 2010, China will overtake the United States to become the world’s largest consumer of energy. In 2030, India will be the third largest oil importer in the world Over the period to 2030, China will install more new electricity generating capacity than exists in the United States today

8. China and India’s energy profiles Oil and gas in both predominantly state owned India imports 70% of its oil; China imports around 50% Both reply heavily on coal India’s energy intensity still quite high, and per cap primary energy consumption quite low India’s coal runs out in 40 years, appears to lack real alternatives at the moment

9. China and India’s energy mixes, 2005 Source: World Energy Outlook 2007

10. China and India’s energy mixes, 2030 Source: World Energy Outlook 2007

11. Source: International Energy Agency 2007

12. Source: International Energy Agency 2007

13. Energy Policy of C&I Similarities –Focus on supply side –Continuous domestic E&P, great investment energy infrastructure needed (large gap in India) –Acquisition of equity stakes in overseas oil exploration and development assets –Strategic oil reserves Domestic political economy around energy: C&I –Chinese government and NOCs (greater friction at home, more cooperation abroad) –“Cluster of policies” lacking strategy in India’s case (more lacking of clear energy alternatives)

14. Global environmental implications

15. Global environmental implications in 2015, Reference & HG Scenarios

16. Global environmental implications in 2030, Reference & HG Scenarios Source: 2007 World Energy Outlook

17. Rising energy insecurity China’s and India’s oil and gas imports would be higher with faster economic growth. As a result, risk of a disruption may be higher, as more of the oil and gas consumed worldwide is traded internationally and more of that oil is supplied by a small number of countries – especially in the Middle East. Dependence on Russian and Central Asian oil and gas would also grow. Stronger demand reduces spare crude oil production capacity in OPEC countries, therefore impact of an oil-supply disruption would be more severe Most of the major oil-supply disruptions in recent decades have occurred in Middle East Russia´s energy provision not separate from foreign policy Gameplan of the Gas Exporting Countries Forum (GECF) not yet clear

18. Source: 2007 World Energy Outlook

19. C& I’s global acquisition of oil C&I seeking exclusive access to oil & gas –Achievable or not debatable – oil an international commodity, although gas is less so –Chinese NOCs’ incentive incompatibility problems –Silver lining: investment in international energy infrastructure, may actually improve global energy security by bring to market oil other wise not have been developed –Real risk not so much commercial competition for scare hydrocarbon resources, but that upstream developments get caught up in broader foreign policy issues

20. Implications for Africa’s development C&I’s (Asian Drivers) engagement with Africa –Combination of Altruism, Mutual Benefit, and Strategic or Political Interests –Aid (tied, both C&I) –Trade and Investment Trade With China: from deficit to surplus Trade with India: from surplus to deficit So far, Investment mostly in extractives Infrastructure corridor, China –Plans and projects to promote African industry, China Special Economic Zones Voluntary Export Limits Elimination of trade barriers Debt relief Kinds of impacts –Trade: competing and complementary – FDI: competing and complementary Example of manufacturing A few specific cases

21. Rising Africa's merchandize trade with China and India Source: UNCTAD Trade Structure by Origin and Destination

22. Commodity price on the rise, but volatile Source: IMF International Financial Statistics

23. Helpful framework on impacts Possible trade impacts of the Asian Drivers Direct ImpactsIndirect Impacts ComplementaryGrowth of exports to Asian Drivers Improved terms of trade from increased world prices of primary commodities CompetitiveDisplacement of local producers by imports from Asian Drivers Competition from exports Asian Drivers in 3 rd markets

24. Helpful framework on impacts Possible FDI impacts of the Asian Drivers Direct ImpactsIndirect Impacts ComplementaryIncreased flows of FDI from Asian Drivers FDI in Asian Drivers stimulating FDI in other countries involved in integrated production systems Competitive“Crowing out” of domestic investment by FDI from Asian Drivers Diversion of FDI from other developing countries to Asian Drivers

25. Angola, Sudan, Nigeria Important exporters to China or India Impact has been mainly through growth of exports

26. Ghana, Ethiopia, Kenya, Uganda, Tanzania Most affected by China and India‘s imports

27. South Africa SA’s investment in rest of Africa totaled US$5.6bn in 2005; compare with China’s FDI of US$3bn in 2006 But this is set to change shortly Multi-pronged approach of China SA’s firms less cost competitive Potential for SA companies to lose mkt share to Chinese co.s considerable Sectors to watch – telecomm, banking, consulting (SA and Africa mkt and network knowledge) Prospects for collaboration

28. Risks for Africa Difficult to see positive future for manufacturing in Africa unless SSA can insulate infant industries from global competition combined with greater intra-regional trade Labor intensive sectors in SSA, if developed, also face competition particularly from China

29. Looking ahead: China, India, & Africa Greater role of and terms set by African institutions (eg., AU,NEPAD, regional economic blocs) NOCs and smaller private Chinese firms more independent of Chinese state agendas Economic (context specific sectoral, trade unions, class*, racial, and cultural impacts) and sociological investigation of impacts South-North-South cooperation and growing multi-lateral engagement (South-South, and South-international financing institutions)

30. Conclusion Collective Action needed to address global energy security challenges, environmental challenges, and sustainable development challenges particularly in Africa Opening with respect to South-North- South and South-South cooperation in seeking sustainable development of Africa

31. Thank you! Vielen Dank Zou!

32. China and India’s net oil imports Source: EIA International Petroleum