Address by Secretary of Energy Spencer Abraham Tsinghua University Beijing

December 17, 2004

Posted on Dec 17, 2004

Thank you, Professor Ni.

President Wang, Professor Ni, distinguished guests, members of the faculty, students of Tsinghua University, ladies and gentlemen, I am delighted to be here today.

I wanted to come today to discuss our two nations’ shared energy challenges, and the potential for energy cooperation between the United States and China.

Tsinghua University is a particularly appropriate setting to deliver my remarks, for two reasons. First, as China’s leading center for the study of mathematics, science, and engineering—rather like M.I.T is for the United States—the future of China’s energy sector will in large part be shaped here.

In the days when energy came primarily from burning oil in lamps, and wood in fireplaces, these academic subjects weren’t really very relevant. But today, supplying energy to growing nations like China and the United States depends enormously on developments in science and engineering. And this will only become more pronounced in the future.

Secondly, Tsinghua’s early mission of preparing students to study in the United States highlights the importance of international communication and cooperation, especially between our two countries, which I believe will be essential to the energy sectors of both our nations.

It is in this spirit of exchange and interaction that I wanted to come today to discuss global energy markets and scenarios as we move forward into the 21st century.

The United States and China will obviously play huge roles in painting the global energy picture over the coming decades. What that picture will look like will depend in great part on the degree to which our countries decide to work together, and the degree to which we maintain and strengthen our commitments to science and technology.

As we contemplate what the future of energy is going to look like, it is worth noting that our nations face scenarios that are similar in many ways.

Our nations are among the world’s largest and most dynamic economies. That means we are two of the world’s largest energy consumers as well. Our energy consumption is both a consequence of our economic might, and a prerequisite for anticipated future economic growth.

Together, our two nations make up a third of world energy consumption, and our need for energy will only continue to grow.

Until 1993, China was a net exporter of oil; but it now imports 37 percent of its crude oil needs. By 2025, China’s oil demand is expected to more than double, and natural gas consumption is expected to quadruple. Similarly, the demand for electricity is projected to increase from 1.2 trillion BTUs to 3.4 trillion, over the next 20 years.

My own nation knows all to well the challenges posed by such increasing energy demand, not to mention the uncertainty involved in depending on foreign sources of petroleum.

In fact, by 2025, the United States’ demand for oil is expected to grow 44 percent—with our reliance on imported petroleum rising from 56 to 68 percent. That is in addition to an increase in demand of 40 percent for natural gas. And our demand for electricity is projected to rise by almost half over the next 20 years.

So China’s and America’s energy future in the 21st century involves overcoming many of the same hurdles.

The question then is, How will we confront these challenges?

Some outside observers might predict that we must necessarily become competitors for supply—a move which could lead to shortages, strained supplies, higher prices, and dampened economic growth for both nations.

But I reject that scenario, because I believe there is no possible long-term winner in this sort of competition.

Instead, I believe it is essential that we focus on areas of energy cooperation, and work together to address shared challenges. That is the only realistic choice to make.

Because our two nations will drive the demand curve over the next 50 years, it would be wise to collaborate on ways to drive the supply curve, and lead the way in energy efficiency and technology.

We already have an excellent track record of energy collaboration on which to draw.

The U.S. Department of Energy and your Ministry of Science and Technology have cooperated on science and technology since 1979. We have had fruitful collaboration in a variety of areas. And I am pleased that these efforts have made good progress under our Administration.

In January, I met with National Development and Reform Commission Chairman Ma Kai and we agreed to form the US-China Energy Policy Dialogue. This Dialogue would enhance our bilateral collaboration in high energy and nuclear physics, fossil energy, energy efficiency and renewable energy and energy information exchanges. By communicating information, sharing research, and pooling resources, our two nations can benefit in ways that each one, acting alone, could not. That effort is continuing, and in May, at the International Energy Forum in Amsterdam, Minister Zhang Guobao and I signed a Memorandum of Understanding establishing the agenda for this Energy Dialogue, and we are now preparing to move forward on a policy level.

What does that mean concretely? To begin with, we can—and should—build on the work of several international partnerships to which China and the United States already belong.

Let me begin with coal.

Both of our countries possess abundant quantities of this inexpensive fuel. This is certainly a valuable resource. But, as you know, burning coal presents some serious health and environmental challenges. So we are using technology to make coal a safe and environmentally friendly—as well affordable—source of energy.

China and the U.S. are charter members of the Carbon Sequestration Leadership Forum. This is an international research and development to remove the pollutants, and capture and store the greenhouse gasses, from coal-fired power plants. Officials in my Department and the Ministry of Science and Technology, as well as DOE scientists and Tsinghua Unversity researchers, are working with others around the world to perfect the technology for sequestration.

In addition to carbon sequestration, China and the U.S. are working to harness the power of pollution-free hydrogen. Developing viable hydrogen energy will not only provide a clean and almost limitless source of transportation fuel, it will greatly enhance the diversity that is critical to our energy security. But getting there requires overcoming a number of serious technological challenges: in hydrogen production, fuel cell design, storage and transportation issues, and other areas. To meet and overcome all those challenges, international cooperation is simply essential. That is why the U.S. and China are members of the International Partnership for the Hydrogen Economy—a multi-lateral effort to overcome the technological hurdles and make hydrogen a staple of our energy supply.

Looking even further ahead, there is also the very ambitious effort to realize the potential of nuclear fusion. China and the U.S. are two of the five nations and the E.U. involved in the International Thermonuclear Experimental Reactor. If successful, this project could alter the world’s energy equation in truly remarkable ways. Producing vast amounts of electricity during the day, a fusion plant could also generate hydrogen at night—with greatly diminished concerns regarding proliferation, pollution, or greenhouse gasses. China and the U.S. are both enthusiastic participants in this effort.

Clearly, these formal agreements for scientific and technological collaboration hold a great deal of promise. And I hope that as part of these cooperative efforts, we can also promote greater scientific exchanges between our two countries. But there are also other areas, involving basic but important subjects, where joint U.S.-Chinese energy cooperation can pay huge dividends.

One is developing enhanced oil recovery technology, especially through chemical and carbon processes. The United States has made significant strides in successful carbon dioxide flooding to increase the oil production of some fields. China, meanwhile, has developed commercially successful processes with large scale surfactant polymer flooding. Both of these techniques work; but we could learn much from each other about ways produce a greater fraction of the original oil in reservoirs.

Another area is natural gas. Unconventional sources of natural gas, like coalbed methane, have become increasingly important in the United States—supplying almost ten percent of our domestic production. Because this is something China is interested in pursuing, our countries have sponsored two workshops on this technology—one in Wuxi and one in Washington. Obviously, further dialogue along these lines could be beneficial.

With natural gas becoming a global commodity, as oil is now, both our nations are looking to international markets to develop and maintain adequate, secure and affordable supplies. China has embarked on major expansion of its gas infrastructure. And both the U.S. and China are both working on large-scale natural-gas pipeline projects.

We are also intensifying our focus on building a global market in liquefied natural gas. LNG holds very promising possibilities for meeting the fast-growing gas demand. But we both need to do more to encourage the necessary infrastructure, in our own countries and abroad, as well as address transport and storage safety issues.

Beyond traditional fossil fuels, there are China’s very impressive efforts to accelerate its supply of nuclear power. China has announced its intention to expand nuclear power generation capability from the current level of 6,200 megawatts to 32,000 megawatts by 2020.

To achieve this, China is embracing the newest generation of nuclear reactors. In fact, just before arriving here I had the opportunity to visit the Tsinghua-MIT cooperative pebble-bed reactor developed by your Institute of Nuclear Energy Technology.

Clearly, China is taking a global lead in nuclear power. In addition to providing large-scale and pollution-free electricity generation, nuclear power is also essential to energy diversity. This is an argument my Department has been making for the last four years, and I hope that I can learn more about your progress in this area.

On the other hand, I think it is fair to say that my country has put a lot effort into promoting energy efficiency and conservation—another area that is a logical topic of cooperation. This is becoming a larger priority for China, and I am glad that we are finding ways of working together on these issues. One example is the Green Olympic Protocol we signed earlier this year. The purpose of this partnership is to demonstrate clean energy technologies, as well as to provide technical assistance in energy and environmental policy and planning, for the 2008 Summer Olympic Games in Beijing. Since the Statement of Intent for this Protocol was signed in 2002, eleven teams from both countries have been working to improve energy, air quality, severe weather forecast, water quality, and transportation issues.

Now let me turn to some ideas for collaboration that are not currently under way, but that I hope might be pursued in the coming years.

As part of the of the carbon sequestration efforts I mentioned earlier, the U.S. and our Department of Energy are very excited about a project called FutureGen. This is a $1 billion demonstration project to build the world’s first zero-emissions, coal-burning power plant producing both electricity and hydrogen. Because of the massive scope of this project, and the global impact of carbon emissions, we are actively seeking international partners to make FutureGen a reality. Given China’s extensive use of coal, I think that cooperative research and development in this project could have very positive results.

Additionally, there many avenues for further collaboration in scientific research. Recent progress in neutrino science, for instance, has been remarkable. A possible next-generation experiment using a reactor at Daya Bay, China, provides a major opportunity for China-United States scientific cooperation. For such a large-scale experiment, the engineering and project management expertise at our Department’s national laboratories could be an important contribution to its success.

We should also consider expanding our efforts in the very exciting field of nanoscience. As you know, all of the elementary steps of energy conversion take place on the nanoscale. Thus, development of new nanoscale materials, as well as the methods to characterize, manipulate, and assemble them, open up incredible possibilities for developing new and revolutionary energy technologies. These could include splitting water with sunlight for hydrogen production… developing solid-state lighting at 50 percent of the present power consumption… building super-strong, light-weight materials to improve the efficiency of cars and airplanes… and creating low-cost fuel cells, batteries, thermoelectrics, and ultra-capacitors built from nanostructured materials.

Nanotechnology also holds great promise for producing better solar energy modules with greater power and lower cost. In fact, solar energy in general is another area in which we could both benefit from working together. Solar photovoltaic technologies are already being employed in the U.S. and in China, but the high cost of the technology compared to conventional energy technologies has kept it a minor player in the energy mix.

New breakthroughs in the laboratories, new manufacturing techniques, and greater economies of scale are ways to bring down the cost of solar energy to the point where it can better compete with other electricity providers. And obviously, the widespread use of solar energy could help both our nations tackle the challenges of urban air quality and carbon emissions, even as we enhance the reliability of the existing electricity grid.

Finally, let me add a word about something that does not involve energy supply directly, but is important to building reliable energy markets. That is, improving the transparency of energy data. Ensuring accurate and easily accessible information about energy supplies, usage, expected demand, and related statistics not only allows resources to be used more efficiently, but it is also invaluable to those who are trying to make intelligent investment decisions. Therefore, cooperation between our nations to improve energy data transparency in China is another possible path to pursue.

These are a few of the most promising avenues I foresee for Chinese-U.S. energy cooperation.

You may have noticed that several of the subjects I have discussed—carbon sequestration and hydrogen, nuclear energy and fusion power—rely heavily on advances in science and technology.

I hardly need to tell this audience how dramatically science is changing our lives in a host of ways. This is certainly true of energy.

By harnessing the vast potential of science, and pushing forward with path-breaking new technologies, we can use our current energy resources in cleaner, safer, more efficient ways… we can explore and develop new sources of energy… and by supporting ongoing research in basic science we can open the door to discoveries and inventions we cannot even imagine today.

We may, in the not too distant future, use super-intense light – even more intense than the sun – to investigate the smallest particles known to man in an effort to devise 21st century fuels.

We can conceive of computers the size of a grain of sand performing millions of calculations per second, providing avenues for controlling and monitoring energy use that will revolutionize energy efficiency.

Or we could look forward to specially designed microbes that eat the pollution and carbon dioxide from a coal fired power plant.

These … and indeed other wonders … can be realized if we cooperate, share resources, and invest today in the scientists and facilities that can develop revolutionary ways to power our homes, businesses, schools, and automobiles.

I am confident that this can happen. Both of our nations are pioneers in scientific research and development. Both of us have growing economies that must be fueled by increasing energy supplies. And both of us have benefited from the cooperative energy and science partnerships I have outlined.

By continuing on this path, we can assure a brighter future for China, the United States, and indeed the world.

Thank you.