U.S. Relations With the People's Republic of China (2009)

U.S. Department of State

On-the-Record Briefing on International Energy Affairs

David L. Goldwyn
Coordinator for International Energy Affairs
Washington, DC
October 9, 2009

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MR. GOLDWYN: Great, thanks. Good afternoon. As part of the Administration's energy policy, the Secretary recently appointed me as the Coordinator for International Energy Affairs. And what I thought I'd do this morning is talk a little bit about what my position is, a little bit about what I mean by energy security, and then how I plan to implement this mission.

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On the demand side, the energy security mission is to engage major consumers. And that's China and India, of course, but a lot of other countries. And there, we want to engage them on how they use electricity. Do they do it efficiently? Do they have subsidies that subsidize the rich, as opposed to just subsidizing the poor? Can they create a different legal framework that will allow renewables to compete with traditional energy? And that's a case of partnering with them to -- in both the G-20 context to eliminate energy subsidies, but also just talking to other countries about how they get electricity and how they set up the system.

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QUESTION: But how do you move the politics out of it, if China has this gigantic push to get resources all around the world? Isn't that a highly centralized political decision by that government?

MR. GOLDWYN: Well, China is going to be sort of front and center of our conversations. I mean, it's ironic: China is a producer, China is a consumer, China trades most of the oil that it produces that it has equity shares in around the world. On the open market, it buys most of its supply on the spot market. So the conversation, I think, with China going forward is China and the U.S. are the two countries who have the greatest amount in common in terms of having a liquid, oil, and gas market, access to acreage overseas, safety in the places that you operate, and a system which can address oil disruptions in a major way. So if you were designing the IEA today, China would be the first place that you would go to get a partner.

Now, the issue that we have often with China is do they -- what standards do they use in the places where they operate? And that's why we're going to talk to China about the utility of the Extractive Industries Transparency Initiative about stability in other places.

QUESTION: But not just -- but not just transparency about the oil, but a lot of times you find that a country like China that needs to and wants to invest in the oil sector in a country doesn't have any standards for the political situation or the governance in that country. I mean, human rights, the kind of things that America promotes --

MR. GOLDWYN: That's right.

QUESTION: -- aren't as important to China that really needs the oil.

MR. GOLDWYN: Right. And that's a key part of our foreign policy is to engage the Chinese in places either where they are or where they're going and why we think it's not in our interest, but it's not in their interest to do it. And I think part of the conversation here, and it's probably -- it's best done in private diplomacy than in a public way, is you can look at all of the mistakes that Western oil companies have made in places where they have developed over the last 20 years, and you just hope that China doesn't have to actually make those same mistakes for itself, because their return on capital is going to be impacted.

I mean, they could have very, very plain commercial reasons why they ought to worry about investing in places where we're worried about their investing, and also that they need to worry about the standards, because having the communities where you operate not hate you is really important for maintaining a 30-year investment. And it's hard to do it right. And there isn't a great record by Western oil companies, but a lot of lessons have been learned. And I think that's really the content of the energy security conversation with China. It's both where, and it's how, and it's the impact that this has.

And that's -- having that conversation and injecting that into our bilateral diplomacy at a senior level is the reason why Secretary Clinton created this position. Because you can have these conversations in a marginal way at a low level, and you're not talking to policymakers. But if you can mainstream energy into the conversations of the Secretary of State and the deputies and the under secretaries and you can make that part of the core of our foreign policy, you will have much more impact on how you deal with these issues. And that's what I'm here for, both to do that and to support the principals of the department in dealing with the issues you're talking about.

QUESTION: Thank you.