Changes to the Global Energy Landscape

2015 will be a momentous year for global energy markets, as countries around the world are forced to address issues related to growing energy consumption, increased demand, and security of supply. The implications of changes to the global energy landscape have become increasingly clear, and 2015 may be the year in which dramatic steps are taken and possible solutions are found.

Increased shale gas production in North America, a result of improved hydraulic fracturing technologies, has provided readily available gas and coal from North America for Asian markets. The Asia-Pacific has driven global economic growth, leading to reliance on energy imports and producing significant environmental effects as a result of increased energy use. The perfect storm of rising demand, increasing supply, and rapid economic growth has shaped the current global energy market as we see it in early 2015—with technology innovation spurring greater options for consumers and buyers.

The need to address climate change and protect the environment has often taken a back seat to these dramatic developments, but 2015 may prove to be the year that global promises are made and followed through on with regard to environmental and energy challenges. Significant reductions in carbon emissions must take place in both developing and developed economies. Cooperation and leadership from China and the United States both on international climate and energy consumption standards and on technology development is one path forward in 2015.

The 2015 United Nations Climate Change Conference will be held in Paris and will set objectives for reaching an international agreement on addressing climate change. The 1992 United Nations Framework Convention on Climate Change is a legally nonbinding agreement to address changes to the climate as a result of man-made pollution. After years of indecisive action, 2015 is a crucial time to improve policy frameworks for encouraging responsible energy consumption, higher efficiency, and international standards for emissions, while supporting the growth of energy markets and ensuring security of supply.

The December 2014 U.S.-China climate deal, which set emissions targets up to 2030, is one major signal that CO2 emissions are becoming a global policy concern. It is essential that world leaders build on this momentum to make significant policy and industry changes in 2015. To start, promoting clean coal technologies (CCT), rather than rejecting the use of coal, will be an important part of this collaboration. CCT refers to a group of technologies that increase efficiency and lower emissions of coal-based electricity production. As global leaders in energy consumption and production, the United States and China can play an important role in CCT development and must encourage global and national policies that promote technology innovation in this area.

While there are many options for reducing emissions, coal technology will be critical for determining if—and when—global climate goals are reached. Coal is the most widely used electricity source in the world and has powered industrialization and economic growth in both the Western world and many Asia-Pacific countries. There are cleaner options, yes, but coal is the most readily available resource in the world: it is both abundant and easy to transport, and significant infrastructure is already in place to support its continued use. Improving how coal is utilized is one step toward making global climate goals more realistic and may be a catalyst for heightened cooperation among major superpowers and energy consumers. To this end, the United States and China should take a strong stance on both cleaning up the environment and addressing global energy security needs by (1) increasing funding for CCT development, (2) increasing the efficiency of coal-fired power plants, (3) replacing old plants entirely, and (4) setting goals for improved efficiency standards while emphasizing the importance of such standards for developed and developing economies.

Establishing global climate and emissions targets is an important way to improve energy and environmental security. Equally important is the need to depoliticize discussions of coal’s role in this process. Recognizing that coal can be utilized more efficiently, while also promoting international collaboration to address climate change and develop alternative technologies, will take energy policy much further in 2015 than it has gone before. U.S.-China leadership will be a major factor in this compromise and may help bring about significant advances in climate and energy policy.

Clare Richardson-Barlow is an Assistant Director of Trade, Economic, and Energy Affairs.