Changing the model of economic development

Energy conservation is a realistic choice for China to alleviate the pressure of energy shortage. It is a long and arduous strategic task to keep promoting energy conservation in the course of the country's economic and social development. China will advance energy conservation in all aspects, with the government playing the leading role, the market forming the basis and enterprises playing a major role, with participation of the whole society. China will establish an energy- and resource-saving industrial structure, development pattern and consumption mode by taking improvement of energy efficiency as the core, and transforming the mode of economic development, adjusting the economic structure and accelerating technological advance as the foundation. China will establish an energy-saving industrial system and practice a target-responsibility and performance-evaluation system in this regard. It will improve the mechanism for spreading energy-saving technologies, and encourage R&D of such technologies and products. It will deepen the reform of the energy system, improve the energy pricing mechanism and give full play to economic policies, including fiscal and taxation ones, in promoting energy conservation.

To promote all-round energy conservation, China will take the following measures:

Pushing forward structural adjustment: The major reasons for low efficiency of energy utilization for a long time have been the extensive mode of economic growth and a high proportion of high energy-consuming industries in China. The country will put the transformation of the development pattern and the adjustment of the industrial structure and of the internal structures of industries in the key place for the energy-conservation strategy, and work hard to bring into being a pattern of economic development with "low input, low consumption, less emission and high efficiency". China will accelerate the optimization and upgrading of its industrial structure, make energetic efforts to develop high- and new-tech industries and the service trades, set strict limits on the development of high energy-, material- and water-consuming industries, and eliminate industries with backward productivity, so as to fundamentally change the pattern of economic development and put in place an energy-saving industrial system on an early date.

Improving energy conservation in industry: Industry is a major sector of energy consumption in China. The country is determined to take a new road to industrialization characterized by high scientific and technological content, good economic returns, low resource consumption, minimum of environmental pollution, and full use of human resources. To achieve this, China will accelerate the development of hi-tech industries and transform traditional industries with high- and new-technologies, as well as advanced and applicable ones, and in turn upgrade the overall industrial standard. Industries with high energy consumption, such as steel, non-ferrous metals, coal, electricity, petroleum and petrochemicals, chemical engineering and building materials, will be the target sectors for saving energy and reducing energy consumption. The Chinese government has launched an energy-conservation drive among 1,000 enterprises, with the focus on tightening control over those consuming 10,000 tons of standard coal or more each year. It will readjust the product mix, speed up technological reform, improve management and economize on energy. It will support a group of key and demonstration projects aiming to conserve energy and cut consumption so as to rally industries to enhance their energy-saving level. It will continue to raise the standards for energy efficiency of industry, eliminate backward and high energy-consuming products, and perfect the market access system.

Launching energy-saving projects: China is carrying out 10 key energy-saving projects, including petroleum substitution, simultaneous generation of heat and power, surplus heat utilization and the construction of energy-saving buildings. The Chinese government supports key and demonstration energy-saving projects, and encourages extensive application of high-efficiency, energy-saving products. China will make vigorous efforts to construct energy- and land-saving buildings, actively promote the energy-saving renovation of existing buildings, and extensively use new walling materials. China will continue to implement petroleum substitution and develop substitute fuels in a scientific way. It will speed up the elimination of old automobiles and ships, actively develop public transport; set limits on high oil-consuming automobiles, and develop energy-saving and environment-friendly automobiles. It will accelerate the innovation of coal-fueled industrial boilers (kilns), regional simultaneous generation of heat and power and surplus heat and pressure utilization, and improve the efficiency of energy utilization. It will save more energy in the sphere of electrical machinery and optimize energy systems, so as to improve the efficiency of both. It will carry out the Green Lighting Project, and spread more rapidly high-performance electrical appliances. It will also spread technologies for firewood- and coal-saving stoves and energy-saving houses in rural areas, and eliminate old, high energy-consuming farm machinery and fishing boats, so as to promote energy conservation in agriculture and the rural areas. It will urge government bodies to save more energy, giving full play to the role of the government in leading energy conservation. It will put in place at an early date the system of energy-conservation monitoring and technological support, strengthening energy-conservation monitoring and establishing new energy services platforms.

Strengthening the administration of energy conservation: The government has established a system of compulsory government procurement of energy-saving products, actively advocating energy-saving (including water-saving) products as a priority for government procurement; and included some products with outstanding results and stable performance on the list of compulsory procurement. It will give full play to the role of governmental purchase in policy guidance and in encouraging all sectors of society to produce and use energy-saving products. It will study and formulate fiscal and taxation policies to encourage energy conservation, implement preferential taxation policies for those effectively making comprehensive use of resources, and set up an energy-saving mechanism with multi-channel financing. It will deepen the reform of energy prices to introduce a pricing mechanism favorable for energy conservation. It will put in force an evaluation and examination system in respect of energy conservation in fixed assets investment projects and strictly control increase of energy consumption at the roots. It will set up a new energy-conservation mechanism for enterprises, adopt an energy efficiency labeling mechanism, and promote contract-based energy management and voluntary energy-conservation agreements. It will improve the legal framework regarding energy conservation, and strengthen energy-conservation management by law. It will improve the overall quality of energy-conservation managerial personnel, and step up efforts in law enforcement, supervision and examination.

Advocating energy conservation in society: The Chinese government energetically advocates the significance of energy conservation by various means, constantly strengthening the public awareness of the importance of resources conservation. It will promote the culture of energy conservation, and work hard to bring into being a healthy, civilized and economical mode of consumption. It will incorporate energy conservation into the system of elementary education, vocational education, higher education and technical training, and publicize and popularize relevant knowledge by means of mass media. It will enhance the energy-conservation week campaign, and mobilize all sectors of society to participate in it. All these measures will help to build a long-term mechanism of energy conservation with the participation of all sectors of society.

IV. Improving the energy supply capacity

For a long time China has relied largely on domestic energy resources to develop its economy, and the rate of self-sufficiency has been above 90 percent, much higher than that in most developed countries. China is now the second biggest energy producer in the world, and has a relatively strong foundation for energy production and supply. In the course of building a moderately prosperous society, China will rely mainly on domestic energy resources, give priority to optimizing its energy mix, and work hard to increase its energy supply capacity.

China boasts great potential in energy resources exploitation. Coal resources already verified only account for 13 percent of the total deposits, and recoverable reserves account for 40 percent of the discovered resources. Only 20 percent of the country's hydropower resources have been utilized so far. Verified oil reserves are 33 percent of the total deposits, and China has begun to enter the middle phase of oil prospecting, still seeing a big potential. Proven reserves of natural gas account for 14 percent, showing that China is in the early stage of exploration and indicating bright prospects in this sphere. Regarding non-conventional energy, China is still at the early stage of exploitation and utilization, with a great potential for development. As for renewable energy, China has only just started in its exploitation and utilization, so there is immense room for development in this regard. Good prospects are also seen for conserving, making comprehensive use of and recycling resources.

To increase its energy supply capacity, China will take the following measures:

Developing the coal industry in an orderly way: Coal is a basic energy in China, and it is an urgent need to increase the supply capacity, optimize the energy mix, ensure coal mining safety, reduce environmental pollution, increase resource utilization efficiency and build a new coal industry system, so as to guarantee the development of the national economy. China will step up its efforts in prospecting coal resources, render support to large coal mining bases in conducting resource surveys and detailed geological surveys, set standards for commercial prospecting, improve the level of guarantee for coal resources, and steadily push forward the building of large coal mining bases. By merger and reorganization of enterprises, the country will bring into being some large coal mining conglomerates each with a total annual production capability of 100 million tons. It will continue to push forward the development and integration of coal resources by renovating medium- and small-sized coal mines and closing down, in accordance with the law, small ones not conforming to industrial policies, with poor safety conditions, wasting resources and harming the environment, so as to further optimize the structure of the coal industry. It will promote the coordinated development of related industries, and encourage coal-electricity joint operation or coal-electricity-transport integrated management, so as to extend the coal industry chain. It will further mechanize coal mines and enhance overall mechanization in coal mining, promote the clean production and utilization of coal, encourage R&D and spreading of clean coal technologies, and quicken the research into and demonstration of substitute liquid fuels. China will actively develop a circular economy, step up efforts in environmental protection, promote the comprehensive utilization of resources, and accelerate the industrialized development of coal-bed gas. It will strengthen the building of the coal transport system and steadily increase the coal transport capacity. It will establish a responsibility system for safe production, beef up safety installations and put more money into gas prevention and control, so as to improve the level of safe production.

Actively developing electric power: Electric power is a highly efficient and clean energy. It is also a basic requirement for the steady development of the national economy and society to establish an economical, highly efficient and stable power supply system. China will optimize the power supply structure based on structural adjustment. On the basis of taking into overall consideration such factors as resources, technology, environmental protection and the market, the Chinese government will develop clean coal-fired electric power by setting up large coal-fired power bases and encouraging the building of power plants at pitheads, with emphasis on large, highly efficient, environment-friendly power generating sets. It will actively develop cogeneration of heat and power, and speed up elimination of small and backward thermal power units. On the condition that the ecological environment is protected and problems affecting local people are properly settled, energetic efforts will be made to develop hydropower. It will also actively develop nuclear power, and appropriately develop natural gas power generation. It will encourage power generation with renewable and new energy resources. It will strengthen the building of regional power grids and power transmission and distribution networks and expand the scope of power transmission from western to eastern China. Uniform planning and distribution of electric power will be adopted, and an emergency response system for power safety will be set up to enhance the safety and reliability of the power system. China will continue to strengthen power demand-side management (DSM), exert control over power use for the purpose of conserving energy and work hard to increase energy utilization efficiency.

Expediting development of oil and gas: China will continue to implement the policy of "simultaneous development of oil and gas", steadily increase crude oil output and make efforts to increase the output of natural gas. The country will step up its efforts in prospecting for and exploiting oil and natural gas, with the focus on major oil and gas basins, including those of Bohai Bay, Songliao, Tarim and Ordos, and actively explore new areas, fields and strata on the land and major sea areas, so as to increase the amount of recoverable reserves. It will tap the potential of major oil-producing areas, improve renovation for stable yields, increase the recovery ratio and slow down the yield decreasing trend in old oilfields. On the condition of reasonable cost, it will actively develop coal-bed gas, oil shale and tar sand and other non-conventional energy resources. The country will expedite the construction of oil and gas pipeline networks and supporting facilities and gradually improve the national network of oil and gas pipelines.

Vigorously developing renewable energy:China gives top priority to developing renewable energy. The exploration and utilization of renewable energy resources plays a significant role in increasing energy supply, improving the energy mix and helping environmental protection, and is also a strategic choice of China to solve the contradiction between energy supply and demand and achieve sustainable development. China has promulgated the Renewable Energy Law and priority policies for renewable energy electricity, entailing priority to be connected to grids, acquisition in full and preferential price, and public sharing of costs. It has earmarked special funds for renewable energy development to support resource survey, R&D of relevant technologies, building of pilot and demonstration projects, as well as exploration and utilization of renewable energy in rural China. It has released the Medium- and Long-term Program for Renewable Energy Development, putting forward the goal of increasing renewable energy consumption to 10 percent of the total energy consumption by 2010 and 15 percent by 2020. China will further the comprehensive and cascade development of areas with hydropower resources, speed up the construction of large hydropower stations, develop medium- and small-sized hydropower stations based on local conditions, and construct pumped-storage power stations under appropriate circumstances. It will spread the latest technologies for the utilization of solar energy, methane and other renewable energy sources, and increase their market shares. It will also actively popularize technologies utilizing wind, biomass and solar energy for power generation, and build several million-kw wind power bases to achieve industrialization by means of scale power generation. It will actively implement policies supporting renewable energy development, foster a renewable energy market featuring sustained and stable development, and gradually establish and improve an industrial system and a market and service system of renewable energy, so as to promote renewable energy technological advance and industrial development.

Improving energy development in the rural areas: China has a rural population of 750 million. Due to economic and technical limitations, people in most rural areas still use traditional biomass energy. It is an inevitable demand in the building of a new socialist countryside in all aspects to solve the energy problem for the rural areas. This is also a problem unique to China. The Chinese government sticks to the principle of "development based on local conditions, supplementation between multiple energy resources, comprehensive utilization with focus on actual results", and works hard to improve energy development in the rural areas. The government has improved the energy conditions for rural people's life and production, and solved the power problem for over 30 million rural people who had no access to electricity and in remote areas not connected to the grid, by carrying out the Lighting Project, "rural grid renovation", "electrification of hydropower-based rural areas" and "connecting villages with the grid" campaigns, and making full use of small-sized hydropower stations, wind energy and solar energy for power generation. Basically, rural and urban residents are connected to the same grid and pay the same rate. China will further actively develop rural household methane and make better use of biomass and solar energy, so as to provide clean energy for the rural people. It will continue popularizing firewood- and energy-saving stoves and small energy facilities, such as small windpower and hydropower stations, in rural areas. It will increase the supply of high-quality fossil energy and increase the proportion of commercial energy consumption in rural areas. Continuous efforts will be made to strengthen the construction of the rural grids to expand their coverage. Moreover, China will actively build green-energy counties for demonstration, and accelerate the exploration and utilization of renewable energy resources in rural areas.

V. Accelerating the progress of energy technologies

Science and technology is the primary productive force and the main motive force of energy development. China sets great store by the development of energy science and technology, and has narrowed its technological gap with the developed countries in the energy industry and effectively promoted the overall development of the energy industry. The government promulgated the Outline of the National Plan for Medium- and Long-term Scientific and Technological Development (2006-10) in 2005, which gives top priority to the development of energy technologies, and, in line with the principle of making independent innovations and leapfrogging development in key fields, shoring up the economy and keeping in step with leading trends, stresses accelerating progress of energy technologies and strives to provide technological support for sustainable energy development.

Following the laws and traits of scientific and technological development, China actively develops and popularizes advanced and applicable technologies in the fields of energy saving, substitution, recycling and pollution control, and is creating a favorable policy environment for the progress of energy technologies. The Chinese government strives to gradually establish a market-oriented system for technological innovation, in which enterprises play the leading role and which combines the efforts of enterprises, universities and research institutes. It vigorously promotes R&D and the application of advanced energy technologies, guides enterprises to expedite technological progress and enhance energy utilization efficiency through the market mechanism. It strengthens the training of talented people in energy science and technology, and improves policies, laws and regulations, and technical standards in this respect to create favorable conditions for the development of energy technologies.

Popularizing energy-saving technologies:China gives priority to the development of energy-saving technologies, with focus on key technologies in the high energy-consumption sectors, to enhance the utilization efficiency of primary and end-use energy resources; implements the policy outline on energy-saving technologies and guides social investment into the application of energy-saving technologies; places emphasis on R&D of energy-saving technologies and equipment for industry, transport and construction, and the application of technologies connected with integrated renewable energy systems and energy-saving construction materials; strengthens energy measurement, control, supervision and management; and actively fosters an energy-saving technological service system.

Spurring innovation in key technologies:China encourages the development of clean coal technology, reinforces R&D of advanced technologies, such as coal gasification, processing and conversion, popularizes advanced power generation technologies, including integrated gasification combined cycle (IGCC), supercritical and ultra-supercritical power generation, and large-scale circulating fluidized bed (CFB), and develops coal gasification-based poly-generation technology. China attaches particular importance to mastering the third-generation pressurized-water reactor (PWR) nuclear power generation and high temperature gas-cooled reactors (HTGR) for industrial experimental technologies. It actively develops technologies in connection with prospecting for and exploitation of petroleum and gas resources under complicated geographical conditions, and highly efficient exploitation of low-grade petroleum and gas resources; encourages the development of technology for substitutes of energy resources, gives priority to the development of technologies for large-scale utilization of renewable energy; and steadily improves the technology of power transmission at voltages of 800 kv DC and 1,000 kv AC and power grid safety technology.

Enhancing equipment manufacturing level:The equipment manufacturing industry is the foundation of the development of energy technologies. China gives impetus to the technological progress of the equipment manufacturing industry through key state projects. The Chinese government encourages the development of comprehensive excavation machinery in coal mining, large comprehensive mining, hoisting, transport and washing equipment for underground coal mining, and heavy-duty open-pit mining machinery. It supports the development of complete sets of large equipment for coal chemicals as well as R&D of coal liquefaction and gasification, and coal-to-olefin conversion equipment, the development of high-efficiency and low-pollution power generation equipment, high-efficiency coal-fired power generation units, hydropower and pumped-storage units, heavy-duty gas turbines, PWR nuclear power generation units with a capacity of 1 million kw, high-power wind-driven generators, and superhigh-power transmission and transformation machinery. It encourages the development of oil and natural gas prospecting and drilling equipment and support equipment for large offshore oil projects, crude oil carriers with a capacity of 300,000 dwt, liquefied natural gas carriers and high-power diesel engines.

Strengthening frontier technology research: Frontier technology, as a new potential driving force for energy development, can blaze the way for the leapfrogging development of energy industry and technologies. China focuses on research into conversion from fossil, biomass and renewable energy resources to hydrogen, and high-efficiency hydrogen storage, transmission and distribution technology. It also conducts research into the technology for the manufacturing of basic and key components of fuel cells, integration of fuel cell stacks, fuel cell power generation and automotive fuel cell power systems, and strives to make breakthroughs in the technology for the end-use energy conversion, storage and combined cooling, heating and power projection of fossil energy-based micro-miniature gas turbine systems. Meanwhile, the country is speeding up research into the engineering and core technology of gas-cooled faster reactors (GFR), and technology for developing magnetic confinement fusion (MCF) and natural gas hydrate technology.

Developing basic scientific research: Basic research is the source of independent innovation and it determines the strength and potential of energy development. China concentrates on research into the basic theories of the high-efficiency and low-pollution utilization and conversion of fossil energy, key principles of high-efficiency heat-work conversion, high-efficiency energy saving and storage, basic technology for large-scale utilization of renewable energy, and basic theories concerning technology for large-scale utilization of nuclear and hydrogen energy resources.

(China Daily 12/27/2007 page15)