Taking action on an urgent issue for all nations

VI. Coordinating energy and environment development

Climate change is a significant global issue of worldwide concern. It is both an environmental and development issue, and intrinsically a development issue. The large-scale exploitation and utilization of energy resources is one of the major causes of environmental pollution and climate change. Appropriate handling of the relationship between the exploitation and utilization of energy resources on the one hand, and environmental protection and climate change on the other, is an urgent issue facing all countries. China is a developing country in the primary stage of industrialization, and with low accumulative emissions. From 1950 to 2002, the aggregate amount of China's fossil fuel carbon dioxide emissions accounted for only 9.3 percent of the world's total in the same period. The amount of China's per-capita carbon dioxide emissions ranked 92nd in the world, and the elasticity coefficient of carbon dioxide emissions per-unit GDP was very small.

As a responsible developing country, China attaches great importance to environmental protection and prevention of global climate change. The Chinese government has made environmental protection a fundamental State policy, signed the United Nations Framework Convention on Climate Change, established the National Coordination Committee for Climate Change, submitted to the UN the Initial National Communication on Climate Change of the People's Republic of China, worked out the Management Measures on the Implementation of Clean Development Mechanism Projects, formulated the National Climate Change Program, and adopted a series of proactive policies and measures regarding environmental protection and climate change. China aims to achieve the goal of basically curbing the trend of ecological deterioration, reducing total emissions of major pollutants by 10 percent, and gain visible results in the control of greenhouse gas emissions during its 11th Five-Year Plan period (2006-10). Meanwhile, the country is actively adjusting its economic and energy structures, comprehensively advancing energy saving, emphatically preventing and controlling the pressing problems of environmental pollution, and effectively controlling emissions of pollutants to facilitate coordinated development between energy and the environment.

Comprehensive control of greenhouse gas emissions: China is expediting the transformation of its economic development mode, giving full play to the role of energy saving and optimization of energy structure in slowing climate change, and endeavoring to cut fossil energy consumption. It is vigorously developing a circular economy, fostering the comprehensive utilization of resources, enhancing the utilization efficiency of energy, reducing greenhouse gas emissions. It continuously improves the capability of addressing climate change with the aid of scientific and technological progress, thereby making positive contributions to the environmental protection of the Earth.

Energetically fighting ecological destruction and environmental pollution: China will pay more attention to the clean utilization of energy resources, especially coal, and make it a focus of environmental protection, energetically combating ecological destruction and environmental pollution. The country is quickening its pace of control of coal mining subsidence areas and the exploitation and utilization of coal-bed gas, and establishes and improves the compensation mechanism for the exploitation of coal resources and restoration of the eco-environment. It promotes the orderly exploitation of coal resources, restricts the exploitation of high-sulfur and high-ash coal, forbids mining coal with toxic and harmful substances, such as arsenic and radiotoxins, exceeding permissible limits. It actively develops clean coal technology and encourages the application of coal washing, processing, conversion, clean-burning and smoke-purifying technologies. At the same time, it is expediting the construction of desulfurizing facilities in coal-fired power plants, requiring that newly built coal-fired power plants must install and use desulfurizing facilities according to the permissible emission standards, and such existing plants must speed up their desulfurization upgrading. The Chinese government strictly prohibits the construction of new coal-fired power plants for the sole purpose of power generation in medium and large cities or on their outskirts.

Proactive prevention of motor vehicle emission pollution: The development of the automobile industry and the improvement of the people's livelihood have led to a rapid growth in the number of motor vehicles. Consequently, preventing motor vehicle emission pollution has been put high on the environmental protection agenda. China is actively taking effective measures to this end: strictly enforcing vehicle emission standards; intensifying inspection for the environment-friendly production of vehicles; strictly implementing the annual emission inspection system for motor vehicles; strictly forbidding manufacture, sale and import of motor vehicles exceeding the emission limits. At the same time, China encourages the production and use of vehicles burning clean fuels, and the production of hybrid electric vehicles, and supports the development of rail transport and electric buses.

Exercising strict environmental management of energy projects: Strengthening the environmental management of energy projects is an effective measure to ensure coordinated development between energy construction and environmental protection. China strictly enforces the environmental impact assessment system, restrains extensive mode of economic growth by exercising a strict environment access system. It ensures simultaneous design, construction and launching of environmental protection facilities at new, expansion and rebuilding projects, intensifies safe management of nuclear power projects, reinforces supervision and management of the safety and radiation environment of nuclear power plants, research reactors and fuel cycle facilities in operation, and practices meticulous safety examination and supervision of nuclear power facilities under construction. It further enhances environmental protection efforts in the construction of hydropower projects, pays equal attention to the requirements of comprehensive development and utilization of river basins while protecting the environment, and increasing the level of comprehensive utilization of water resources and eco-environmental benefits.

VII. Deepening energy system reform

Improving the environment for development is an intrinsic requirement of China's energy development. In accordance with the requirements of perfecting the socialist market economy, China is steadily advancing its energy system reform to promote the development of the energy industry. In 1998, strategic reorganization was accomplished among petroleum enterprises, featuring the establishment of a new vertically integrated management system of the oil industry. In 2002, China's power industry realized the separation of government functions from those of enterprises, as well as the separation of power plants from grid operation in line with the power system reform plan. In 2005, after the market-oriented reform of the coal industry, China's coal industry saw deepened reform and further development pursuant to the Opinions on Promoting the Healthy Development of the Coal Industry issued by the State Council. China is further deepening reform of the energy system, elevating the energy marketization level, improving the energy macro-control system, and improving the environment for energy development in accordance with the requirements of innovation in concept, management, system and mechanism.

Strengthening energy legislation: It is an imperative requirement for energy development in China to improve the energy-related legal system to provide a legal guarantee for increasing the energy supply, standardizing the energy market, optimizing the energy structure and maintaining energy security. China sets great store by and actively advances the construction of the energy legal system. China has enacted and put in force the Clean Production Promotion Law and Renewable Energy Law, and has issued a series of supporting policies and measures. The amended Energy Conservation Law has been promulgated. The Energy Law, Circular Economy Law, Law on the Protection of Oil and Natural Gas Pipelines and Regulations on Energy Conservation of Buildings are being formulated. The Mineral Resources Law, Coal Industry Law, and Electric Power Law are being revised. Meanwhile, active efforts have been made in research into energy legislation concerning oil and natural gas, the crude oil market and atomic energy.

Reinforcing production safety: In the course of energy development, China pays high attention to safeguarding the lives and health of the people, and takes effective measures to halt the trend of frequent occurrences of serious accidents. It adheres to the principle of giving top priority to safety, placing the main emphasis on prevention, and exercising comprehensive control. It has intensified efforts in the control and comprehensive utilization of coal gas, and rectified and shut down small coalmines lacking conditions for safe production. It has enforced safety supervision of coalmines, and guided local governments and enterprises to intensify efforts in technological upgrading for coalmine safety and the construction of safety facilities. It comprehensively carries out education on safe production to enhance the sense of responsibility for safety, continues to consolidate electric power safety and petroleum and gas production safety, intensifies supervision and management measures, and practices a working system in which production safety is supervised by the State and administered by local governments while enterprises take the responsibility. It further implements the safe production responsibility system, and enforces rigorous safe production laws and regulations and a related accountability system.

Improving the emergency response system:As an important aspect of economic security, energy security has a direct bearing on national security and social stability. China practices unified power dispatch, hierarchical power management and operation of power grids by regions. A safety responsibility system with division of work among government departments, supervision organs and power enterprises has been established, in which the power grids and power generation enterprises work out emergency response plans to cope with large-scale emergencies. Following the principle of unified planning and step-by-step implementation, China has built national oil reserve bases and expanded its oil reserve capacity. It has gradually established a guarantee system for oil and natural gas supply emergencies to ensure secure supplies of energy.

Accelerating market system construction: China sticks to the policy of reform and opening-up, gives full play to the basic role of the market in allocating resources, encourages the entrance of entities of various ownerships into the energy field, and actively facilitates market-oriented reform related to energy. It has improved the coal market system in an all-round manner, established an open, orderly and healthy power market system characterized by separating government functions from those of enterprises and fair competition, paced up reform of the oil and natural gas circulation system, and promoted the healthy and orderly development of the energy market.

Deepening reform of management system: China has stepped up efforts in the reform of its energy management system, improved the national energy management system and decision-making mechanism, strengthened unified planning and coordination among State departments and local governments, and consolidated the State's overall planning and macro-control in the field of energy development, with the focus on changing functions, straightening out relations, optimizing the setup and raising efficiency, so as to form a management system that centralizes control to an appropriate degree, divides work in a rational way, fosters scientific decision-making, and ensures smooth enforcement and effective oversight. The Chinese government has furthered the transformation of government functions, giving priority to guidance by policy measures and attaching importance to information services. It has deepened the reform of the energy investment system, and established and improved the investment regulation and control system. It has further strengthened standardized management of energy resources, improved the management system of mineral resources development and exploitation, put in place and improved the system for paid use of mineral resources and the system of trade in mining rights, and rectified and regulated the order of mineral resources exploitation market.

Advancing price mechanism reform: The price mechanism is the core of the market mechanism. On the premise of properly handling the relations among various interest groups and taking full account of the acceptability of all social sectors, the Chinese government has advanced energy price reform in a vigorous yet steady way, gradually established a pricing mechanism that is able to reflect resource scarcities, changes in market supply and demand, and environmental costs. It has deepened coal price reform to realize all-round marketization. It has propelled electricity tariff reform to ensure that electricity generation and selling prices are eventually formed by market competition, with the electricity transmission and distribution prices being supervised and controlled by the state. It has improved step by step the oil and natural gas pricing mechanism to timely reflect changes in international market prices and domestic market supply and demand.

VIII. Strengthening international cooperation in the field of energy

China's development cannot be achieved without cooperation with the rest of the world, and the prosperity of the world needs China as well. With accelerating economic globalization, China has forged increasingly closer ties with the outside world in the field of energy. China's development of energy has not only satisfied its own needs for economic and social progress, but also brought opportunities and tremendous space for development to the rest of the world.

China is an active participant in international energy cooperation. In multilateral cooperation, China is a member of the energy working group of the APEC, ASEAN plus China, Japan and Republic of Korea (10+3) Energy Cooperation, International Energy Forum, World Energy Conference, and Asia-Pacific Partnership for Clean Development and Climate. It is an observer of the Energy Charter, and maintains close relations with such international organizations as the World Energy Agency and the OPEC. Regarding bilateral cooperation, China has established a mechanism for dialogue and cooperation in the field of energy with a number of energy consuming and producing countries, such as the US, Japan and Russia, and the European Union. It has intensified dialogue and cooperation regarding energy exploration, utilization, technology and environmental protection, as well as renewable energy and new energy resources, and has had extensive dialogues and exchanges with them in such aspects as energy policy and information data. In international cooperation in the field of energy, China has not only shouldered a wide range of international obligations, but also played an active and constructive role.

China has made active efforts to improve laws and policies related to its opening-up, promulgating in succession the Law on Sino-foreign Equity Joint Ventures, Law on Sino-foreign Cooperative Joint Ventures and Law on Foreign Capital Enterprises to create a fair and open environment for foreign investment. In 2002, China formulated the Regulations for the Guidance of Foreign Investment Orientation, and revised the Catalogue of Industrial Guidance for Foreign Investment and the Catalogue of Advantageous Industries for Foreign Investment in the Central and Western Regions in 2004, in order to encourage foreign investment in the energy sector, including energy and energy-related exploitation, production, supply, transportation and energy equipment production, as well as in the energy sector of the central and western regions.

Improving external cooperation in the exploration and development of oil and gas resources:China has implemented a cooperative mode based on product-sharing contracts with other countries in the field of oil and gas resources. In 2001, China promulgated the revised Rules on External Cooperation for Ocean Oil Exploitation as well as Rules on External Cooperation for Onshore Oil Exploitation. China protects the legitimate rights and interests of foreign business people participating in collaborative oil exploitation. It encourages foreign businesspeople to participate in cooperation in oil exploration and development, such as risk exploration for oil and natural gas, low-permeability oil and gas reservoirs (fields), and the improvement of the recovery rate of old oilfields. It encourages foreign investment in the construction and operation of oil and gas pipelines, as well as special oil and gas storages and port berths.

Encouraging foreign investment in exploration and development of unconventional energy resources: In 2000, China promulgated the Opinions on Further Encouraging Foreign Investment in Exploring and Exploiting Non-oil-and-gas Mineral Resources, further opening up its market in this regard. China allows foreign investors, either by themselves or in collaboration with Chinese counterparts, to conduct risk exploration on its territory. Foreign investors who invest in exploring and recovering paragenetic and associated minerals and utilizing tailing or exploring mineral resources in China's western regions are entitled to enjoy the preferential policy of reduction of or exemption from mineral resources compensation fees. Further efforts are being made to improve management of and services to foreign investment in the exploration and exploitation of non-oil-and-gas mineral resources.

Encouraging foreign investors to invest in and operate energy facilities such as power plants: China encourages foreign investment in the production and supply of electric power and gas, as well as in the construction and operation of thermal power plants with a single-generator capacity of 600,000-kw and above, power stations burning clean coal, power stations featuring heat and power cogeneration, hydropower stations mainly for electricity production, nuclear power stations in which the Chinese side holds the dominant share, as well as power stations with renewable energy or new energy resources. It encourages foreign investors to invest in technology and equipment production for thermal, hydro and nuclear power stations with a considerably large generating capacity as well as for thermal power desulphurization. It also encourages them to invest in the construction and operation of coal pipeline transportation facilities.

Further improving the environment for foreign investment: The Chinese government has kept its commitments to the WTO made when it joined the organization and has sorted out and rectified administrative regulations and departmental rules concerning energy management that are inconsistent with the WTO rules. In light of the demand of transparency of the WTO, China has relaxed control over the scope of geological data of a public welfare nature, strengthened the work of releasing energy policies, improved the energy data and statistics system and promptly released energy statistics, so as to ensure the openness and transparency of energy policies, statistics and information.

Further expanding the scope of foreign investment: In bringing in foreign investment for the development and utilization of energy resources, China pays primary attention to introducing foreign advanced technology, management experience and people of high caliber to further shifting the focus from investing in fossil energy resources to renewable resources, from emphasizing exploration and development to the development of service trade, and from relying mainly on foreign loans and direct foreign investment to directly pooling funds on the international capital market.

For a fairly long time to come, international energy trade will remain a major means by which China utilizes foreign energy resources. China will actively expand international energy trade, promote the complementary advantages of the international energy market and maintain the stability of this market. China will pursue energy imports and exports, and improve policies for fair trade in accordance with its commitments to the WTO and the WTO rules. It will, step by step, change the current situation of relying too heavily on spot trading of crude oil, encourage the signing of long-term supply contracts with foreign companies, and promote the diversification of trading channels. China supports direct overseas investment by domestic qualified enterprises to engage in transnational operation, and encourage such enterprises to participate in international energy cooperation and in the construction of overseas energy infrastructure, and steadily expand cooperation in energy engineering technology and services in accordance with international practice and the rules of the market economy.

Energy security is a global issue. Every country has the right to rationally utilize energy resources for its own development, and the overwhelming majority of countries could not enjoy energy security without international cooperation. To realize a steady and orderly development of the world economy, it is necessary to promote economic globalization to develop in a direction featuring balance, universal benefit and win-win, and it is necessary for the international community to foster a new concept of energy security characterized by mutual benefit and cooperation, diversified development and coordinated guarantee. In recent years, sharp fluctuations of oil prices on the international market have affected the development of the world economy. The causes are multiple and complex, which demands that the international community strengthen dialogue and cooperation to work out a solution together from various aspects. To safeguard world energy security, China holds that the international community should make efforts mainly in the following three aspects:

Intensifying mutually beneficial cooperation in energy exploration and utilization: To ensure world energy security, it is imperative to strengthen dialogue and cooperation between energy exporting countries and energy consuming countries, as well as between energy consuming countries. The international community should strengthen consultation and coordination as regards energy policies, improve the international energy market monitoring and emergency response mechanisms, promote oil and natural gas development to increase energy supply, realize globalization and diversification of energy supply, ensure stable and sustainable energy supply internationally, maintain reasonable energy prices on the international market, and ensure that each country's energy demands are well met.

Setting up a system to develop and popularize advanced technology: Energy conservation and diversification is a long-range plan for global energy security. The international community should strive to develop and popularize energy conservation technology, promote the comprehensive utilization of energy, and encourage each country to improve energy efficiency. It is necessary to actively advocate cooperation in highly efficient utilization of fossil fuels, such as clean coal technology, encourage cooperation of the international community in major energy technologies, such as renewable energy, hydrogen energy and nuclear energy, and explore for the establishment of a future world energy supply system using resources that are clean, economical, safe and reliable. Aiming at the sustainable development of humanity, the international community should handle well the problems concerning capital input, intellectual property rights protection and popularization of advanced technology, so as to benefit all countries and allow them to share humanity's achievements.

Maintaining a safe, stable and wholesome political environment: Safeguarding world peace and regional stability is the prerequisite for global energy security. The international community should work collaboratively to maintain stability in oil producing and exporting countries, especially those in the Middle East, to ensure the security of international energy transport routes and avoid geopolitical conflicts that affect the world's energy supply. The various countries should settle disputes and resolve contradictions through dialogue and consultation. Energy issues should not be politicized, and triggering antagonism as well as the use of force should be avoided.

Conclusion

In the course of building a moderately prosperous society in all respects that benefits the 1.3 billion people of China, energy has a significant bearing on China's economic and social development. It is a long and arduous task to use sustainable energy development to support the sustainable economic and social advancement. The Chinese government will strive to address the energy problem properly to realize sustainable energy development.

Though China's energy consumption is growing rapidly, its per-capita energy consumption level is still fairly low - only about three-fourths of the world's average. The figures for China's per-capita oil consumption and imports account for only half and one quarter of the world's average, respectively, far below the level of the developed countries. China did not, does not and will not pose any threat to the world's energy security. China will continue to maintain its sustainable energy development and promote the sustainable development of the world's energy resources, thus making positive contributions to the world's energy security.

Peace and development remain the themes of our era. Pursuing peace, seeking development and promoting cooperation have become an irresistible trend of the times. With the continuous economic globalization, rapid advances in science and technology, quickened flow of the factors of production as well as the accelerated changes of industries, all countries and regions in the world have intensified their interactions. The world needs to strengthen cooperation to safeguard global energy security. China will, together with all other countries, make unremitting efforts to safeguard the stability and security of energy supplies in the world, strive to achieve mutual benefit, win-win and common development, and protect this home human beings share.

(China Daily 12/27/2007 page16)