Published: - Sep 08, 2017

Energy will always be mankind’s central asset for growth

If a country grows enough both in terms of human and technical capital relative to its trade partner, it may find incentives to start producing the same product its neighbor does without sacrificing its initial product. This situation is called an absolute competitive advantage and it monopolizes trade. One example is China producing traditional Colombian hats.

This described market takeover may take place by the mixture of two great forces. There are two scenarios in which this may happen, either one productive association grew at a much higher rate than the another, or the second group contracted its operation. The energy market relation between the United States and China shows a mixture of both.

The United States became an undisputed world power in the Rockefeller era when Standard Oil had the petroleum monopoly; on the other hand, China was a rural and conflicted country with enormous coal reserves, which it started to exploit in the 1950’s. The United States started in the nearly 1867.

Nowadays, China is facing a transition from a rural production economy to a sustainable hub of the world. The nation will have invested 367 billion dollars by 2030 to create renewable power generation, a market that will give 10 million people jobs. In order to accelerate the process, the Asian nation intends to cut 1.3 million jobs in the coal mine industry. The People’s Republic is not attached to coal.

On the other hand, the United States recently elected Donald Trump as a president, whose energetic agenda withdrew his nation from the Paris accord, a deal that wanted to prevent the planet from further global warming’s consequences. Given an oil-oriented economic strategy, it is no surprise that today the North American nation employs 260,000 people in solar farms, while China employs 2.5 million.

China intends to become a world superpower that is able to fully fuel itself, which generates further market independence. A major achievement for the Commonwealth occurred from June 17-23 in the province of Qinghai, where the region ran on 100% renewable energy for 7 days.

According to the National Geographic, there are three reasons to believe in this process. First, they have given priority to the long term over short-term effects by cutting coal; second, heavy investments have also occurred in the wind industry as the country could fill its electric demands by 2030 with wind. Finally, the transition from a manufacturing industry to a clean energy production one will benefit the planet greatly as well as dangerous emissions would be minimized.

Latin American Post | David Eduardo Rodríguez Acevedo

Copy edited by Susana Cicchetto