Tag Archive | "natural gas"

China Smog_thumb

Critical Analysis: China and a Clean Energy Future

When Chinese authorities fired up numerous coal-fired power plants in the northern province of Heilongjiang, a dense cloud of smog descended upon the city of Harbin.  As air pollution soared high above what the World Health Organization deems “safe”, schools, airports, and roads shut down.  With winter descending, people are left wondering whether smog clouds will become more common.  Harbin’s smog cloud was not the first incidence of extreme air pollution in China’s cities.  Beijing has become known for its heavy air pollution and garnered world attention last January when off-the-chart levels of air pollution were recorded during what news sources called “airmageddon.”  Although there are several reasons for smog clouds such as those covering Harbin and Beijing, the main culprit is coal, China’s main source of energy.  To stem the pollution problems, and the environmental and society issues that arise alongside them, China has pledged to move away from coal to other, cleaner, sources of energy.

Northern China smog shuts down roads, schools, and airlines. Source: Reuters

Northern China smog shuts down roads, schools, and airlines. Source: Reuters

Globally there is no consensus as to what our energy future should look like.  Ideally, we will move away from burning fossil fuels entirely, but for now natural gas is seen as a good transition fuel.  In the United States, a shift from coal to natural gas has brought about a decrease in carbon dioxide emissions.  China’s pollution reduction pledge includes switching from coal to natural gas, but it will take years, maybe decades, for China to achieve energy changes, similar to those the United States is currently undertaking, due to chronic shortages of natural gas[G1]  in China.  China does not have the same domestic natural gas production levels that are aiding the U.S.  shift to cleaner fuel.  A current boom in U.S. natural gas production is keeping domestic natural gas prices in the United States at a fraction of the prices in Europe and Asia.  This price disparity is leading many to push for U.S. exports of natural gas, which would be an economic boon to the United States while creating a more competitive global market for natural gas.

Energy security and politics go hand in hand.  This week the Guardian newspaper declared that Russia and Ukraine are inching closer to a “gas war.”  Russian state energy giant Gazrom has demanded swift payment by Ukraine of $882 million in gas debt.  Some say this demand is politically motivated by Russia’s displeasure with Ukraine creating closer political ties with the European Union.  The pipelines running through Ukraine help supply Europe with natural gas, so political squabbles between Ukraine and Russia could jeopardize Europe’s gas supplies.  Should the United States begin exporting natural gas, the increased economic competition could alter the political relationships between countries that have grown up around current gas supplies.

Natural gas is not China’s only option for a cleaner energy future.  In addition to pledging to increase use of natural gas, China has also pledged to increase the use of renewable sources of energy, such as solar and wind power.  Moving away from fossil fuels is something many nations share in energy development.  Japan recently began a project to construct 140 offshore wind turbines by 2020 to add to the nation’s energy supplies in light of rising oil prices and concerns over nuclear power.  Japan’s new turbines are expected to create the same amount of energy generated by a nuclear reactor.  The United Kingdom recently gave the go-ahead to a new nuclear power plant, the first to be built in a generation.  China currently has seventeen nuclear power plants in operation and dozens more under construction.  Although nuclear power carries many concerns, increases in this energy source could also reduce the air pollution blanketing China’s cities.

China’s smoggy cities provide a clear example of the global energy problems.  While not all countries face the problems associated with dense smog clouds like those in China, the changing energy use in China tracks with global changes in energy use.  For China, like the rest of the world, the increased demand for natural gas will carry environmental, economic, and political changes.  Already we are seeing how the reliance on natural gas globally is altering international relationships on both political and economic fronts.  However, from an environmental standpoint, natural gas cannot be the final solution.  It is still a fossil fuel.  Non-fossil fuel and renewable energy sources should play a large part in China’s energy future, as they should globally if the full extent of the pollution problems are to be addressed.


Laura Wood is a 3L and the Senior Managing Editor for the Denver Journal of International Law and Policy.

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President Cristina Fernández de Kirchner (FPIF)

Argentina Re- Nationalization of YPF: Spain and the European Union Respond

President Cristina Fernández de Kirchner (FPIF)

Back in middle of April, the Argentine government announced its re-nationalization of YPF (the company was initially founded in 1922 by the Argentine state), a major Argentine energy player and subsidiary of Spain’s Repsol, with a 51% takeover of the company (taking over 51% of Repsol’s 57% ownership stake).  Argentine President Cristina Fernandez de Kirchner justified the takeover, which Argentine lawmakers later approved, citing Respol’s alleged failure to keep investment promises and funneling of profits outside of Argentina through dividend payments.

Repsol countered by accusing Fernandez de Kirchner of not only political opportunism but, more importantly, economic opportunism.  The recent discovery of the Vaca Muerta basin, possibly the third largest recoverable natural gas deposit in the world, is what Repsol believes is behind the re-nationalization.  This is not Fernandez de Kirchner’s first brush with controversy over her handling of Argentine commodities.  Her export tax on Argentine soybean producers brought on months of historic nationwide protests back in 2008 and was eventually defeated.

Repsol Out! (NYT)

Predictably, the move to re-nationalize YPF left Repsol, Spain, and the European Union unimpressed.  Repsol and the investment firm Yale Texas Capital Corp. sued Argentina in the U.S. District Court in Manhattan demanding that Argentina actually make an offer for its stake in YPF and also demanding compensation for money lost when shares of YPF and Repsol plummeted after the takeover.  Repsol’s stock lost approximately one-third of its value since the takeover.  Spain also retaliated strongly when it halted imports of Argentine biodiesel, which earned the country $1.2B last year.  Finally, last month, the European Union began legal proceedings against Argentina at the World Trade Organization saying the re-nationalization of YPF “was indicative of the worsening business climate in the country that has been seeking to limit foreign imports for the last seven years.”  The EU is hoping that others that have voiced their displeasure, including Japan, Australia, and the United States, join the proceedings.  Clearly, there is significant international pressure related to the takeover, but it is unclear when there will be a result and what the result will ultimately be.  Legal proceedings of this magnitude will likely take years and are extremely unpredictable.

In short, the Fernandez de Kirchner Administration has, again, ruffled feathers at home and abroad with its adventurous protectionist economic policies.  It remains to be seen what the results of the YPF affair will be, but in the short term Argentina faces tremendously stiff and powerful opposition on several fronts.

Darren D. Stone is a Partner at McFarland Pyle & Stone, DU Sturm College of Law and Josef Korbel School of International Studies alumni, and former DJILP Managing Editor.  He lived in Argentina during the 2008 protests against the export tax.

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University of Denver Sturm College of Law

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