China`s China`s Energy Energy

Situation and PolicySituation and Policy

Jiang Qingzhe & Xiucheng Dong

China University of Petroleum, Beijing

Speech OutlineSpeech Outline

China`s Energy SituationChina`s Energy Situation11

Current Energy Policy in ChinaCurrent Energy Policy in China22

China`s Energy Policy Outlook33

China`s Energy SituationChina`s Energy Situation

The rapid growth of total energy consumption11

Constant improvement of supply capacity 22

The obvious contradiction about transportation of coal, electricity and oil33

The arduous task on energy-saving and emission reduction44

Long way to go to maintain energy security55

The rapid growth of total energy consumption

China`s total energy consumption of standard coal was 2.96 billion tons China`s total energy consumption of standard coal was 2.96 billion tons and per capita energy consumption was 2.38 tons of standard coal in and per capita energy consumption was 2.38 tons of standard coal in 2011.2011.

The average annual growth rate of China`s energy consumption was The average annual growth rate of China`s energy consumption was approximately a half of the economic growth rate from 1981 to 2000.approximately a half of the economic growth rate from 1981 to 2000. The total energy consumption of standard coal was 489.5 million tons in The total energy consumption of standard coal was 489.5 million tons in 1981 and it increased to 979 million tons in 2000. China planned to 1981 and it increased to 979 million tons in 2000. China planned to doubled the current total energy consumption of standard coal within doubled the current total energy consumption of standard coal within 20 years.20 years.

The total energy consumption of standard coal had risen sharply since The total energy consumption of standard coal had risen sharply since 2001 and it was 1.99 billion tons in 2008. We can see that it had been 2001 and it was 1.99 billion tons in 2008. We can see that it had been doubled within only eight years. The energy consumption increment doubled within only eight years. The energy consumption increment from 2001-2008 was 2.1 times as much as that from 1981-2000. from 2001-2008 was 2.1 times as much as that from 1981-2000.

Constant improvement of supply capacity

In 2010, China's raw coal production reached over 3.0 million In 2010, China's raw coal production reached over 3.0 million tons; the transport volume reached 2.0 million tons; the import tons; the transport volume reached 2.0 million tons; the import volume achieved 146 million tons. In the meantime, the installed volume achieved 146 million tons. In the meantime, the installed power capacity reached 960 million kilowatts; the generating power capacity reached 960 million kilowatts; the generating capacity attained 4.14 trillion kilowatt-hour; the generating capacity attained 4.14 trillion kilowatt-hour; the generating capacity increased by 13.3%. Moreover, the crude oil production capacity increased by 13.3%. Moreover, the crude oil production was more than 200 million tons and it got an increase of 6.9%; was more than 200 million tons and it got an increase of 6.9%; imports of crude oil was 239 million tons and it increased by imports of crude oil was 239 million tons and it increased by 17.5%; the crude oil processing got to 423 million tons and it rose 17.5%; the crude oil processing got to 423 million tons and it rose by 13.4%; the apparent consumption was 449 million tons which by 13.4%; the apparent consumption was 449 million tons which had an increase of 12.3%. Furthermore, about natural gas had an increase of 12.3%. Furthermore, about natural gas production, there was 94.48 billion cubic meters and it increased production, there was 94.48 billion cubic meters and it increased by 12.1%; LNG import volume reached 9.34 million tons in 2010 by 12.1%; LNG import volume reached 9.34 million tons in 2010 and it rose by 75%.and it rose by 75%.

The obvious contradiction about transportation of coal, electricity and oil

With the rapid economic development of our nation and the constant weather abnormalities, the staged tension supply of energy often occurs, which leads to the shortage of power, oil and gas in some areas.

Due to a serious imbalance in the areas of energy production and consumption, the contradiction between transportation and conveying will exit for a long time, so will the situation of North-to-South coal transport, South-to-north Water Diversion, West-East natural gas transmission, North-to-South oil transport and West-East power transmission.

The contradiction among coal, electricity, oil and transportation will exit for a long time, which would be a long-term constraints to China’s economic development.

The arduous task on energy-saving and emission reduction

China's current total economic output is more than 30 million yuan, ranking second in the world, per capita GDP5000 dollars, less than half of the world average and less than 15% of the developed countries; Urbanization rate is less than 44% and the population in rural areas is 750 million; per capita car ownership is less than 30% of the world average; per capita housing areas is only 60% of those in developed countries; per capita electricity consumption takes only 30% in developed countries’ level.

China is going to achieve the 2050 target, however, if it continues the industrialization path, even though energy efficiency has reached the level of Japan and Germany, it also consumes 60 million tons of coal, which is impossible from the perspective of the global resources supply and the climate change.

Long way to go to maintain security In 2011, the crude oil production was 203 million tons altogether,

increasing by 1 percent compared with last year with the increasing rate dropping by 5.9 percent compared with 2010. In the meanwhile, the natural gas production was about 1,025.3 billion cubic meters, increasing by 6.9 percent compared with last year with the increasing rate dropping by 5.2 percent compared with 2010. Simultaneously, the refined oil production reached 267 million tons, increasing by 5.9 percent compared with last year with the increasing rate dropping by 3.8 percent compared with 2010.

The degree of security about overseas oil sources in our country is low. It is not easy to stabilize supply capacity in long-term.

China use single mode to transport energy from overseas, so the ability to control the transport corridors of international energy is still relatively poor.

The "going out" strategy for China`s oil companies is restricted by multi-pressures. The relationship with the neighborhood is complex and changing. Therefore, our territorial sovereignty is being challenged.

Current Energy Policy in ChinaCurrent Energy Policy in China

Give priority to conservations and improve efficiencyGive priority to conservations and improve efficiency11

Base on coal and pay attention to domestic marketBase on coal and pay attention to domestic market22

Focus on Focus on oil and gas and advocate diversified developmentoil and gas and advocate diversified development33

Increase investment Increase investment and promote and promote technological innovationtechnological innovation44

Create friendly environment and reduce emissionsCreate friendly environment and reduce emissions55

Strenghen international cooperation and realize mutual benefit Strenghen international cooperation and realize mutual benefit 66

Implement reformImplement reform and improve the mechanism and improve the mechanism77

Give priority to conservations and improve efficiency

Adjust the economic structure and transform the mode of economic growth.

Accelerate the processing of energy-saving technology industrialization and standardization, transform and upgrade traditional industries.

Set energy saving targets, strictly control the development of high energy-consuming industries, and speed up elimination of outdated production capacity.

Improve and adjust to energy prices and tax policies. Improve energy efficiency standards and strengthen energy key area

s. hundred millionhundred million tons standard tons standard

coalcoal

5

15

25

35

45

55

65

75

1990 2000 2010 2020 2030

亿吨标准煤

线性增长一般趋势节能优先

Linear growthGeneral trendpriority to energy saving

Base on coal and pay attention to domestic market Develop coal industry orderly; improve efficient, clean, and sustainable develop

ment of coal. Optimize the structure through restructuring, mergering and integration of exist

ing coal resources. Establish large-scale coal production bases to accelerate high-yield and efficient

mine construction, develop coal liquefaction and gasification industry orderly and encourage gas drainage and utilization.

Improve coal supply and marketing system, improve the coal price formation mechanism.

Focus on oil and gas and advocate diversified development

Develop the onshore and sea simultaneously. Tapping the potential of the eastern, accelerate the development of the western and expanse the offshore oil field to ensure steady growth.

Vigorously develop the natural gas industry to speed up the construction of the pipeline network and expand import channels. Import natural gas from Russia and the Central Asian pipeline and import coastal liquefied natural gas.

Focus on optimizing the thermal power, moderate hydropower development and actively develop nuclear power.

Develop new energy and renewable energy trying to adjust the energy structure.

靖边

南宁

北京

上海

轮南

西安

深圳

西气东输二线干线

忠县武汉

青山

安平

吐鲁番

中卫

淮阳

武穴

广州

南昌

乌鲁木齐

湘潭

泰安郑州

平顶山枣阳十堰

樟树

靖边联络线

上海支干线

南宁支干线

轮南支干线

深圳支干线

湘潭支干线

泰安联络线

湖北支干线

平顶山储气库

霍尔果斯

靖边

南宁

北京

上海

轮南

西安

深圳

西气东输二线干线

忠县武汉

青山

安平

吐鲁番

中卫

淮阳

武穴

广州

南昌

乌鲁木齐

湘潭

泰安郑州

平顶山枣阳十堰

樟树

靖边联络线

上海支干线

南宁支干线

轮南支干线

深圳支干线

湘潭支干线

泰安联络线

湖北支干线

平顶山储气库

霍尔果斯

Focus on oil and gas and advocate diversified development

7.5%

10%

15%

0%

5%

10%

15%

20%

2005 2010 2020

可再生能源在一次能源消费中的比例

renewable energy source ratio

Focus on oil and gas and advocate diversified development

TIME 2005 2010 2020

hydropower 0.117 billionbillion 0.19 billionbillion 0.3 billionbillion

biomass power generation

2000 thousand 5500 thousand 30000 thousand

wind power generation

1260 thousand 5000 thousand 30000 thousand

renewable energy source power generation(kilowatt)

Increase investment Increase investment and promote and promote technological innovationtechnological innovation

Promote key technologies: exploration and development technology for complex geological oil and gas resources, efficient development technology for low-grade oil and gas resources, clean coal technology, gasification and processing and conversion technology, the third-generation pressurized water reactor nuclear power technology, alternative energy technologies, large-scale renewable energy technologies, UHV transmission technology,

grid security technologies, etc. Enhance the level of equipment manufacture: coal mining equipment, large-

scale coal chemical equipment, efficient and clean power generation equipment, drilling and production equipment for oil and gas exploration and development, transportation equipment, etc.

Strengthen frontier technology research and conduct basic scientific research. First, pay attention to technology research and get early preparations. Second, carry out research and development at the same time track actively. Include: hydrogen energy systems, gas hydrates, controlled nuclear fusion, etc.

Create friendly environment and reduce emissionsCreate friendly environment and reduce emissions

To prevent and govern the destroy of the ecosystem and pollution of the environment: with the development of using the clean energy as the focus, and we should manage the coal mining subsidence area, develop and utilize coal-bed gas, and establish the mechanism of exploration of coal resources and ecological environment restoration and compensation.

Comprehensive control of greenhouse gas emissions: vigorously develop the circular economy, promote the comprehensive utilization of resources and the utilization efficiency of the energy and resource, propose the emission reduction targets to the world and cogently reduce greenhouse gas emissions.

Actively control the vehicle exhaust pollution: improve and strictly carry out the motor vehicle emission standards, adhere to the system of annual inspection, encourage the production and utilization of clean fuel vehicle and hybrid electric vehicle and develop the rail transportation and electric buses.

Strenghen international cooperation and realize mutual benefitStrenghen international cooperation and realize mutual benefit

Actively participate in the international energy cooperation mechanism: APEC energy working group, ASEAN energy cooperation, International Energy Forum, World Energy Congress, the Asia-Pacific Partnership on clean development and climate and other organization formal member; the Energy Charter observer; to establish close relations with the International Energy Agency and the organization of the petroleum exporting countries; to establish energy dialogue and cooperation mechanism with the United States, Japan, the European Union, Russia and other countries.

Refine the international cooperation of oil and gas resources exploration and development : revise the regulations with foreign about offshore and onshore oil and gas resources ,encourage the foreign investment in the exploration risk, low permeability oil and gas field development, improving oil recovery of old oil fields, oil and gas pipelines, pools and wharf construction and management.

Optimizing the environment for foreign investment , expand the fields of foreign investment, encourage foreign investment in the exploration and development of unconventional energy resources, invest and operate of power energy facility.

Encourage large energy enterprise to go out and participate in international energy market actively.

Implement reformImplement reform and improve the mechanism and improve the mechanism

Strengthen energy legislation: Promulgate Cleaner Production Strengthen energy legislation: Promulgate Cleaner Production Promotion Law, Renewable Energy Law, Energy Conservation Law, Promotion Law, Renewable Energy Law, Energy Conservation Law, Oil and Natural Gas Pipelines Protection Law. Formulate Energy Oil and Natural Gas Pipelines Protection Law. Formulate Energy Law, Circular Economy Law, building energy conservation Law, Circular Economy Law, building energy conservation regulations. Revise Mineral Resources Law, Coal Law and the regulations. Revise Mineral Resources Law, Coal Law and the Electricity Act.Electricity Act.

Strengthen production safety and perfect the emergency response Strengthen production safety and perfect the emergency response system: Implement the responsibility system for production safety, system: Implement the responsibility system for production safety, execute the safety standards strictly and implement accountability execute the safety standards strictly and implement accountability system seriously. Put unified scheduling, hierarchical management system seriously. Put unified scheduling, hierarchical management and partition runs into practice for electricity to create an oil reserve and partition runs into practice for electricity to create an oil reserve base and improve the reserve capacity.base and improve the reserve capacity.

Accelerate the construction of the market system, promote the reform Accelerate the construction of the market system, promote the reform of the price mechanism, and deepen the reform of the management of the price mechanism, and deepen the reform of the management system.system.

China`s Energy Policy OutlookChina`s Energy Policy Outlook

11

22

33

44

Continue to develop and improve the energy planning

Use tax leverage to adjust the energy consumption

Continue to encourage technology innovation on energy

Continue to improve the price mechanism of energy

55 Continue to improve and perfect the energy laws and egulations

66 Continue to expand the international energy cooperation

Continue to develop and improve the energy planning

Improve the scientific nature of planning

Focus on key areas and key projects

Develop, improve and adjust the plan

Use tax leverage to adjust the energy consumption

Encourage the development of new energy and renewable energy

Encourage the development of electric vehicle

Encourage the development of hybrid vehicle

Encourage electric bus and rail transit

Encourage the development of coal-bed methane

Encourage the exploration and development of unconventional energy

Inhibit excessive energy consumption

Tax lever adjustment

Exploration and development technology for complex geological oil and gas resources

Smart grid technology

Clean coal and nuclear power technology

New energy and renewable energy development technology

Driving force of technological innovation

Continue to encourage technology innovation on energy

Continue to improve the price mechanism of energy

Perfect the oil price formation mechanism

Release the price reform program of natural gas

Introduce the reform program of stepped tariff

Continue to improve the electricity and coal price reform

Perfect the energy transportation price system

Establish and improve the mechanism of price subsidies

Price adjust consumption

Continue to improve and perfect the energy laws and regulations

Enact the Energy Law

Revise the Mineral Resources Law, Coal Law and the Electricity Act

Legislate the Oil and Nature Gas Law

Formulate oil market management regulations

Formulate petroleum reserve act or regulations

Fulfill the new 36 terms from State Council

Create fair environment

Continue to expand the international energy cooperation

Safeguard energy supply

Encourage large energy enterprises to go abroad

Strengthen cooperation with countries with resources

Strengthen cooperation with consumer countries

Cooperation with the International Energy Agency

Cooperation with the Organization of Petroleum Exporting Countries

Strengthen energy cooperation mechanism with surrounding countries

Safeguard energy supply