Energy and climate change are two important areas in which there is much more cooperation than competition between China and India. After a few years of trying to outbid each other for oil and gas exploration and production licenses, both have found it more productive to bid jointly for many such contracts. Even though neither China nor India has agreed to limits on their emissions of greenhouse gases, both are committed to reducing the carbon intensity of their development, by 40 to 45 percent from 2005 levels by 2020 for China, and 20 to 25 percent over the same time period for India. To achieve these goals, the two countries have launched major programs to install power plants using renewable energy sources and nuclear energy, and to increase the efficiency of energy use. It is unlikely that either China or India will agree to absolute reductions in greenhouse gas emissions from their present levels soon, but they may be willing to cap them at future levels that still permit their future per capita income to become comparable to that of countries in Western Europe. At the recently concluded United Nations Climate Change Conference in Cancun, China was strongly supportive of a continuation of the Kyoto Protocol for a second commitment period, but India indicated that it may be willing to explore other approaches suggested by the United States, the EU and small island nations. Though their paths to addressing climate change may begin to differ, it is highly likely that China and India will continue to share the same strategic goal of achieving parity with the West in terms of standard of living of their populations, even if it means higher emissions for another decade or two.
Competition for scarce natural resources has been an important determining factor in human development. Tribes of hunter-gatherers fought over land and the flora and fauna that surrounded them, and early agricultural societies that existed along rivers fought deadly conflicts over getting their share of the water. Kingdoms large and small traded or battled for iron, gold and other metals, as well as precious stones. The beginning of the Industrial Revolution in Western Europe and the input materials it required were major reasons for the expansion of colonialism.
The horrors of two world wars during the 20th century, and of a cold war that almost became hot, convinced most countries that it was better to buy commodities needed for economic development than to occupy countries militarily. This lesson was confirmed by the high cost the United States has incurred since its occupation of Iraq in 2003. The largest commodity in global trade today is energy--oil, coal and natural gas. Oil is the fossil fuel with the smallest reserves-to-production ratio. (1) Europe has been a net importer of oil for more than a hundred years. The United States lost its energy self-sufficiency and became a large importer of oil during the decade following the Second World War, and China went from being a net exporter of oil to a net importer during the 1990s. As countries around the world industrialize and become more affluent, concern is growing that there may not be enough oil at affordable prices to accommodate the development needs of these countries. China and India are by far the two most populous nations and have high rates of economic growth and energy demand. Between 1990 and 2010, the total energy used in China has almost tripled and that in India doubled during the same period. (2)
Essentially all energy sources can be used to generate electricity, provide heating and cooling for homes and offices, and run industrial processes. However, the world's transportation systems are still almost completely dependent on oil. Energy used for transportation has been growing faster than for any other use, and total oil requirements have increased faster in the BRIC countries (Brazil, Russia, India and China) than anywhere else. …