Powering up BRICS

ZHANG YUJUN/FOR CHINA DAILY

Group should strengthen cooperation for a greater say in global energy governance

As an important part of the world economy, BRICS countries--Brazil, Russia, India, China and South Africa--play an important role in the international energy market. The BRICS countries are highly complementary in the energy sector, and the potential for their energy cooperation is huge.

According to data released by the UK oil giant BP in its Statistical Review of World Energy 2022, Russia was the world's second-largest crude oil exporter and the largest natural gas exporter last year, while China and India were the world's largest and third-largest crude oil importers respectively. China surpassed the United States to become the world's largest importer of crude oil, both in terms of total imports and net imports. In addition, China and India were also major buyers of natural gas.

At present, the BRICS countries, especially China and India, are in a stage of rapid economic growth, and their demand for energy will continue to rise in the future. There is thus immense potential to be tapped.

But despite the progress made in recent years, the influence of BRICS energy cooperation on the global energy pattern is still limited. Due to historical reasons, the energy trade among the BRICS countries has not been fully developed. According to the BP report, although Russia was the world's largest oil exporter, including crude oil and refined oil, in 2021, 52.62 percent of its crude oil exports went to Europe, and more than 70 percent of its refined oil products and natural gas exports headed to the US and Europe. Only 30.2 percent of Russia's crude oil exports went to China, while exports to other BRICS countries such as India only took up a tiny proportion of Russia's crude oil exports. Although China and India were the world's largest and third-largest net importers of crude oil, their imports mainly came from the Middle East, West Africa and Central and South America. With the recent changes in the global energy supply pattern due to the Russia-Ukraine conflict, it is expected that more Russian oil and gas will flow to the BRICS countries such as China and India in the future.

From the perspective of global energy supply and demand, the world's two most populous and fastest-growing energy-demanding economies are China and India. China is the world's largest energy consumer and a major source of global energy growth over the past two decades. As China is shifting to a cleaner, low-carbon energy structure, its demand for natural gas will continue to rise rapidly. China's natural gas market is likely to maintain double-digit annual growth in the next few years. China plans to increase the proportion of natural gas in its primary energy consumption to about 15 percent by 2030 from the present less than 9 percent. Although the total energy consumption in India is relatively low, with its large population base, the nation would see huge energy demand if it could maintain a high economic growth rate.

The energy transition of BRICS countries is of great significance to controlling greenhouse gas emissions and combating climate change globally. Among the BRICS countries, Russia and China have rich experiences in the construction of nuclear power plants. China has the world's largest industrial production capacity in terms of wind power and photovoltaic power, with its annual installed capacity also topping the world. In addition, China has rich experience in the construction and operations of power infrastructure. BRICS countries can take advantage of the opportunities from the Belt and Road Initiative to strengthen regional cooperation in energy production capacity.

There is broad room for BRICS cooperation in energy security. In 2016, over 30 percent of the global oil supply was shipped via the Indian Ocean and the South China Sea. China is not only a major buyer of Russian oil and gas, but also a key channel for its energy exports to the East Asia. In order to ensure energy security, the BRICS countries, especially China, need to further diversify their sources of energy supply. It fits into the common interests of BRICS countries with respect to energy security to strengthen the control of energy routes and the protection of pipeline transportation.

But challenges exist to the energy cooperation among BRICS countries. The development of the international landscape is beneficial to energy cooperation among BRICS countries, however, they will need to make efforts to strengthen their energy ties.

On the one hand, the BRICS countries should increase their strategic mutual trust. At this stage, the primary task of the BRICS, a grouping of developing countries, is boosting their economies and overcoming the middle-income trap. It is important for the countries to realize that they stand to gain from energy cooperation. Through the establishment of a community with shared energy interests based on a reasonable pricing system and stable supply, the interests of the BRICS countries in the energy sector can be linked together.

On the other hand, countries should make full use of their complementary strengths in the energy sector and strengthen bilateral and multilateral regional cooperation. In particular, it is important to strengthen regional cooperation in technology and production capacity among the BRICS members by taking advantage of the opportunities generated by the Belt and Road Initiative. Meanwhile, the countries can work together in establishing a joint energy fund to promote investment and construction of energy infrastructure.

To sum up, the BRICS countries, with their large share of supply and demand in the global energy market, have the potential and conditions to strengthen their energy cooperation and play a more prominent role in the global energy governance. The BRICS members are highly complementary in the energy sector and have broad prospects for regional energy cooperation. But there are also some practical constraints. In order to better promote BRICS energy cooperation, the governments of BRICS countries need to fully consider and balance various factors in their policies.

The author is head of the China Institute for Studies in Energy Policy at Xiamen University. The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn