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Last Updated: Tuesday, 15 January 2008, 18:57 GMT
China and India's pressing energy crunch
By Kumar Malhotra
BBC News

Power station in China

The warm welcome given by Chinese and Indian diplomats to the recent agreement by the two countries to strengthen economic, military and business links did not specifically mention one key issue - access to energy supplies.

By 2030, China will be importing the same amount of oil as US currently imports daily. And India's daily oil imports will have overtaken the European Union and Japan.

Those figures are from the International Energy Agency (IEA), which advises governments around the world on energy issues.

"The oil markets will get tighter and tighter," says Fatih Birol, the IEA's chief economist.

'Democratic aspirations'

He believes the next decade will be critical in addressing the security and environmental challenges this thirst for fuel poses.

For both Beijing and Delhi, the race for oil as well as gas has become a key concern. Most analysts agree China has been quicker off the mark, securing deals in Latin America, Central Asia and Africa.

China is generally less inhibited about who it does business with

"I think China is already ahead in a sense in their strategic positioning in securing energy supply, ahead of India," according to Shirong Chen, the BBC's China editor.

But China's needs are greater because their economy is based on manufacturing, while India's is more service orientated.

China is generally less inhibited about who it does business with, whether it is Iran, Burma or Venezuela.

"Being able to collaborate with regimes which are unfriendly to the West is something China has a great advantage in," says Lawrence Saez, senior lecturer at the School of Oriental and African Studies in London.

"India - even though it has a very independent foreign policy - is slightly more responsive to the democratic aspirations of some of these countries."

India's more open political system can also slow down decision-making. Attempts to finalise a nuclear fuel deal with the US have been bogged down in lengthy arguments between the government and its Communist allies in parliament.

Another option

What the International Energy Agency wants to see is greater efficiency in the use of energy, and more use of nuclear power and renewable sources of energy.

India's electricity management and distribution network are widely viewed as in need of reform. Every year, a sizeable chunk of India's power is simply lost or stolen.

People in India
Both countries have growing populations and need more power

More efficient use of coal would be another option as both China and India are heavily dependent on coal to generate electricity. And last year China even started importing it, despite having large reserves of its own.

China is eager to exploit clean coal technology, but Western companies are not that keen to part with it for hard-nosed commercial reasons.

"What if China got all this clean coal technology and their economy would develop even faster? What would happen to the big economies like the USA and India?" says the BBC's China editor Shirong Chen.

Nuclear power is another option - and both India and China have well-established nuclear programmes which they want to expand, and possibly even co-operate on.

But it is a sensitive subject, touching on concerns about technology transfer, proliferation and global security as well as safety issues.

This week, Australia announced it would not be selling uranium to India because it has not signed up to the nuclear Non-Proliferation Treaty.

Coal power station belching out smoke in Beijing
The authorities are taking a tougher line on illegal polluters

Even in China, with its more advanced nuclear power programme, nuclear power is not expected to make up much more than 4% of the energy mix by 2020, although some Chinese officials have said they may exceed that target.

Wind, biomass, solar and hydro-electric sources may turn out to be more promising.

China wants 15% of its energy from renewable sources by 2020, and India, which is aiming for 10% by 2012, has become a world leader in wind farms.

Salman Zaheer of the World Bank says India could also do much more to exploit hydro-electric power.

"In North America, 80% of their hydro-electric power has been exploited, in Europe it is 60-70%. In India, it is just 10%."

But as the rest of the world grapples with the impact of China and India on the world's energy supplies, Lawrence Saez of the School of Oriental and African Studies believes the immediate priority for Beijing and Delhi is to pursue growth.

"India and China do not want to be a laboratory for the West. They see that the West has developed as result of energy use. And they are quite aware that to curtail that would hurt them economically."

And that means that for at least the next couple of decades, the race to secure oil, gas and coal will continue.

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