National Energy Administration, "To Change the Mode of Development and Speed up the Restructuring of Energy Industry; To Build a Steady, Economical, Clean and Safe Energy Supply System" June 1, 2009

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To Change the Mode of Development and Speed up the Restructuring of Energy Industry

Over recent years, great achievements have been made in China's energy development. The first is energy supply capacity has been notably strengthened. In 2008, the production volume of primary energy totaled to 2.6 billion tons of coal equivalent; raw coal 2.79 billion tons; crude oil 190 million tons and natural gas 76.08 billion cubic meters. Installation of power generation units jumped dramatically; there has been an annual newly installed capacity of about 100 GW for several consecutive years, which is a world record speed of power construction works. The total installed power generation capacity in 2008 reached 793 GW, which ranks No.2 in the world.

The second is that the energy consumption structure has changed in a positive way. Clean energy like hydropower, nuclear power, wind power and renewable energy grew rapidly. Hydropower installed capacity in 2008 reached 170 GW, which ranks No.1 in the world; wind power 12.17 GW; nuclear power 9.1 GW. An evident energy conservation effect has been achieved; in 2007 the energy consumption per 10 thousand RMB GDP was down by 4.04 percent year on year; in 2008 it was 4.59 percent, and in the first quarter of 2009, it was 2.89 percent.

The third is that the level of science and technology and outfits in energy industry has moved up significantly, modern petroleum and natural gas industrial system have been formed; machinery operation in major coal mines has been noticeably enhanced; 600 MW and 1,000 MW high specification units have become popularized; the performance of Chinese home-made 700 MW hydropower units has reached international level; equipments for 1,000 MW nuclear unit has been localized; the pilot 1,000 KV extra high voltage transmission line has been completed; the Test for Shenhua million-ton direct coal liquefaction operation has succeeded.

The fourth is that fruitful international energy cooperation has been achieved. China has participated in nearly 60 international bilateral and multilateral energy cooperation frameworks implementing cooperative projects with some 40 countries and regions in the areas of oil exploration and development, refinery and pipeline works. China has become a major energy producer as well as a consumer; a solid energy supply system is in place, which serves as a strong backup for its economic and social development.

Since the 3rd quarter of 2008, the world-wide financial crisis has been going more and more serious, economic entities have also suffered a severe impact. The change of economic situation has caused adverse impact to China's energy development. The first is that consumption has dropped. Taking power industry as an example, the total social power consumption in 2008 was 3.45 trillion KWH in 2008, which is an increase of 5.6 percent, but 10.32 percent down in growth rate year on year; from January to April this year, the total social power consumption dropped again by 4.03 percent. The second is that incomes of enterprises have declined. Again taking power industry as an example, power plants in the first half of 2008 suffered a dramatic cost increase as a result of the rising price of coal while in the 4th quarter affected by the dropping power generation volume, the annual utilization hours of power units in average were reduced by 337 hours as compared with that of the last year, and coal-fired power plants suffered a total loss of 70 billion RMB. From this January to April, the utilization hours of power plants in average were reduced by 202 hours; coal-fired plants reduced by 238 hours. The third is that the investment growth has slowed down. Due to the world-wide financial turmoil, the growth of investment in energy field dropped dramatically. The growth of coal investment in 2008 was 8 percent down as compared with the first 3 quarters, same for petroleum and natural gas was 17.4 percent down, completed investment in power generation projects amounted to 287.8 billion RMB, 10.78 percent down year on year.

The world-wide financial crisis provides both challenges and opportunities to China's energy development. As long as we can make the best use of the situation and deal with problems in a right way, there will be still opportunities of development and adjustment by which a disadvantage can be turned into an advantage and negativeness turned into positiveness. The financial crisis makes the energy demand and supply relation less tight, which provides an important strategic opportunity for energy restructuring, development of clean energy, international energy cooperation and an intensified energy system reform.

It is a major task of energy administration to deal with the financial crisis and to promote a steady and relative fast growth of the economy. The general requirement will be:

To hold high the great banner of socialism with Chinese characteristics; follow the guidance of Deng Xiaoping Theory and the important thought of Three Represents; thoroughly apply the Scientific Outlook on Development; speed up energy-oriented technical innovation; strengthen international energy cooperation; improve energy industry administration; promote the sustainable economic and social development as backed up by the sustainable energy development.

1. To Speed up the Restructuring of Power Industry

To build large coal for electricity bases. To promote construction of large scale coal for electricity bases in large coal field and locations with low heat value coal; and give considerations to linkages between coal resource, water resource, environmental capacity, power plant deployment, market environment and transmission lines; utilize coal resources to develop well-head power plants.

To continue the efforts of “Building Large Plant and Shutting down Small Plant”. In the 3 years to come, total capacity of 13 GW, 10 GW and 8 GW will be shutdown respectively; accordingly 50 GW large high efficient and clean coal-fired units will be installed.

To develop heat-power combined production projects on the principle of centralized heat supply; to encourage construction of 300 MW heat and power combined production units in large and medium cities; encourage construction of backpressure units in industrial zones; priority will be given to centralized heat supply in large or medium cities in north China.

To develop nuclear power. To speed up research on long and mid-term nuclear planning; focus on supporting localization of nuclear power generation equipments; formulate and publish nuclear power standards in different phases and steps; start construction of nuclear power plants in Zhejiang Sanmen, Shandong Haiyang and Guangdong Taishan.

To strengthen construction of power grid. To increase investment in construction and refurbishment of power distribution network; achieve coordinated development between power grid and power generation projects; innovate power grid technology; strengthen power grid capability against disaster; optimize layout; decide on the protection standards as applicable to power grid facilities in a scientific manner; positively promote technical innovations in power industry against disaster.

2. To Promote the Change of Coal Development Mode

To speed up construction of large coal bases. To focus on construction of 13 large coal bases covered by national planning; raise the volume of productions in large coal bases; give support to large groups; encourage cross-sector, cross-region and cross-ownership cooperation; encourage coal, power, rail, port and chemical industry integrated developments; exert the backbone function of large coal enterprises to secure national coal supply.

To promote merging and restructuring of coal mines. To continue readjustment and shutdown of small coal mines of unreasonably deployment, non-compliance with safety standards, waste of resources and non-conformity to environmental regulations; resolutely ban small coal mines operating illegally; give systematic assurance to facilitate merging and restructuring of coal mines through planning and supportive policy.

To stress on work safety. To increase input in safety; give help to enterprises which may cause severe harm, which are not profitable and owe debts left over by history; improve working conditions for safety; strengthen safety-related training; raise coal miners' sense of safety; be active to promote applications of safety-related technology; build safe coal mines; enhance extraction and utilization of coalbed gas; strengthen site supervision to prevent gas accident.

3. To Leverage Oil & Gas Resources at Home and Abroad

To strengthen international energy-oriented exchanges. To fully exert the functions of bilateral and multilateral agreements; continue further cooperation with international energy organizations; endeavor to shape conducive environment for international energy cooperation.

To intensify the joint exploration of international energy resources; uphold the principle of equality and mutual benefit; enhance substantial cooperation with countries of rich energy resources or energy productions; encourage and support enterprises to use their own advantages to invest in overseas energy development; increase oil and gas supplies all over the world.

To actively promote the construction of oil and gas pipelines. To complete construction of the “Central Asia Pipeline”, “West Section of West to East Gas Transmission No.2 Line”, “China - Kazakhstan Oil Phase 2”; to progress the construction of “China-Burma Oil-Gas Pipeline” and “China-Russia Oil Pipeline” so as to build up a diversified oil-gas assurance system.

Meanwhile to speed up the development of domestic petroleum and gas industry. To increase resources exploration and development; stabilize the production volume of traditional eastern oil fields in Songliao and Bohai Basin; speed up the progress of construction of oil fields in western Junggar, Tarim, Ordos and Sichuan Basin; enhance offshore oil-gas production volume; strengthen construction of domestic oil-gas backbone pipelines; build larger oil refineries and phase out small refineries of non-compliance.

4. To actively Develop Renewable Energy and New Energy

To actively promote development and utilization of hydropower. To change the way of relocating people for hydropower construction, that is to change the past concept of “Emphasizing Construction, Ignoring Relocation” to the present concept of “Relocation First, Construction Second”, by which hydropower development can be associated with poverty relief and promotion of local economy; to fully address the environmental issue of hydropower constructions where ecological space is well planned for rivers and ecological issue becomes an important part of hydropower constructions.

To promote wind power of larger scale. To adhere to the special wind power licensing system in support of large-scale wind power stations; to promote localization of wind power equipment and gradually build China's own wind power industry; to formulate a planning of building several million-KW wind power bases in Gansu, Inner Mongolia, Hebei and Jiangsu, according to the requirement of “Integration into Major Power Grid and Construction of Large Bases”.

To speed up the progress of development and utilization of solar energy. To gradually promote installation of solar water heater in government and commercial buildings which take larger area and consume more energy; initiate construction of demonstrative solar power generation project; develop demonstrative urban roof solar photovoltaic generation applications; promote R & D and industrialization of solar silicon.

To promote development and utilization of biomass. To evaluate biomass resources; organize formulation of the biomass development and utilization program; give support to construction of demonstrative biomass development and utilization project.

To continue improvement of power grid in rural areas of central and west China; raise the coverage of redeveloped rural power supply; speed up electric power constructions in areas not covered by power supply, key support is to be given to provinces with areas not covered by power supply, like Tibet, Xinjiang, Qinghai, Yun'nan and Sichuan; develop constructions of rural clean living energy; give support to biomass gasification project, biomass forming fuel project and rural solar water heater installations.

5. To Promote Energy-Saving Technology and Equipment

To enhance energy conservation in energy industry. Energy industry produces energy, meanwhile, it also consumes a lot of energy, so attention needs to be paid to energy conservation in energy industry. Effort will be made to develop energy conservation and resources utilization pilot project; to encourage energy-saving renovation in coal-fired power plants in service so as to raise the efficiency and reduce waste discharge; encourage and support applications of energy-saving technology and products.

To promote key technical innovations. To continue implementation of the 2 national key research projects – the “Large Advanced Pressurized Water Reactor & High Temperature Gas-Cooled Reactor” and the “Large Oil-Gas Field & Coalbed Gas Development”; encourage clean coal technology; raise the technical level of coal exploration and exploitation; to positively develop key technology and equipment for oil-gas exploration and development; strengthen researches into power distribution and operation safety technologies; priority will be given to development of renewable energy technology.

To promote equipment manufacturing. To implement the Resolutions to Speed up the Equipment Manufacturing Industry issued by the State Council; build energy-oriented equipment manufacturing research platform based on key enterprises; increase input in R & D, software and hardware facilities; steadily raise the technical level, production capacity and innovative capability of equipment manufacturers; encourage procurement and the use of the key equipment launched for the first time.

6. To Strengthen Energy Legislation and Researches into Key Issues

To strengthen energy legislation. To work in collaboration with the Legal Office of the State Council on the examination of the “Energy Law” (draft), which is hoped to be submitted as soon as possible to an executive meeting of the State Council for review. The “Electric Power Law” and “Coal Law” are being amended at the moment; the “National Petroleum Administration and Reservation Act” has been listed in the legislation plan of 2009 of the State Council; to be quick to draft the “Nuclear Power Development Regulation”, “Hydropower Development Regulation”; be quick to formulate all energy-oriented regulations and normalized documentation.

To strengthen researches into key energy issues. To propose researches into key energy issues in a proactive, comprehensive and strategic manner, and commit resources from this Administration and from the energy industry to the research work while taking into account the necessity to alleviate present problems and giving overall considerations to other factors and future prospects.

7. To Strengthen and Improve Administration of Energy Industry

To establish an energy information system. To gradually establish and make perfect the energy information system so as to have a timely command of updated information on electric power, coal, oil, gas and new energy development, as well as to enable forecast of energy demand-supply status and its future trend.

To strengthen strategic study and planning. To adhere to the strategic principle of “Energy-Saving First, Based upon Domestic Supply, Diversified Development, Environment-Friendly, Strengthening of International Cooperation”; formulate energy development planning to ensure implementations of the energy strategy; develop the initial period researches into the energy planning to be included in the 12th-Five Year Plan.

To make perfect the industry policy system. To speed up the release of industry policies regarding development of petroleum, natural gas, electric power, renewable energy and coalbed gas; make adjustment and amendment in due course to the industry policies in practice.

To speed up formulation of industry standards. To publish the “Standardization Regulations in Energy Industry”; carry out inspection, tracking and evaluation of application of standards in the energy industry; be quick to formulate product and technical standard as applicable to development of wind power, nuclear power, coal based fuel, liquid fuel and coalbed gas.

8. To Strengthen Management of Working Staffs in Energy Industry

To do well in administration of the energy industry depends on people and on good teams who are politically reliable, technical competent and hard-working. Working staffs in energy industry will further assume their responsibilities and duties; continue their study and improvement to work style; strengthen exchanges and communications to form a resultant force and cohesion; and will work jointly to promote China's energy industry on a good and fast basis.

Click here for a listing of PRC-issued white papers on various topics.

Other articles and documents on green energy:

Green Energy Programs in China and the U.S. | US-China Study on CO2 Storage | China’s Greenhouse Gas Emissions | Strategy for Clean Air and Energy Cooperation between EPA and SEPA | U.S.-China Renewable Energy Partnership | U.S.-China Energy Efficiency Action Plan | U.S.-China Clean Energy Research Center | Politics and energy policy in post-Mao China | US-China Memorandum of Understanding to Enhance Cooperation on Climate Change, Energy, and the Environment | To Change the Mode of Development and Speed up the Restructuring of Energy Industry | Country Analysis Briefs: Taiwan | Country Analysis Briefs: China |  U.S.-China Energy Policy: Toward Closer International Partnerships | US Treasury Secretary Paulson on Energy and the Environment | China’s Energy Conditions and Policies | Sustainable Development in Asia: Coal, Oil, and Renewable Energy in China | 11th Five Year Plan on Energy Development | Engaging Developing Countries, House Committee on Energy and Commerce hearing | Carolyn Cartier | Richard Louis Edmonds | David Zweig |