China Releases White Paper on Energy

Saturday, January 12, 2008 0:18
Posted in category Invest in China, Red Tape

In what appears to be a first, and perhaps an insider view into the discussions surrounding the Draft Energy Law, the State Council Information Office published a White Paper on Energy on their website.

Broken into 8 parts, the white paper provided some interesting insights into the current situation of china’s Energy industry in terms of how it is provided, how it is distributed, and how it is consumed. The writers (and researchers) were obviously very conscious of the fact that China’s energy policy and practices in their current form are not ideal:

— The distribution of energy resources is imbalanced. China’s energy resources are scattered widely across the country, but the distribution is uneven. Coal is found mainly in the north and the northwest, hydropower in the southwest, and oil and natural gas in the eastern, central and western regions and along the coast. But, the consumers of energy resources are mainly in the southeast coastal areas, where the economy is the most developed.

— The development of energy resources is fairly difficult. Compared with other parts of the world, China faces severe geological difficulties in tapping its coal resources, and has to get most of its coal by underground mining, as only a small amount can be mined by opencast methods.

— Progress has been made in environmental protection. The Chinese government sets great store by environmental protection, and has made it a fundamental state policy to strengthen environmental protection. Public awareness of environmental protection has been raised.

— Incomplete market system and emergency response capability yet to be enhanced. Coal production safety is far from satisfactory, the structure of power grids is not rational, the oil reserves are not sufficient, and an effective emergency pre-warning system is yet to be improved and consolidated to deal with energy supply breakdowns and other major unexpected emergencies.

As you can see from the above, there was a fairly honest tone to the article, and while we were surely not given all the details of the hurdles China faces, the picture was clear. China has a lot of resources that vary in location and quality, that the current methods of collecting, distributing, and consuming those resources have problems, the environmental conditions have been deteriorating as a result, and that something needs to be done.

The next section that focuses on the goals is a bit weak as it takes more of a party tone vs. a pragmatic tone:

China’s energy development is based on the principle of relying on domestic resources and the basic state policy of opening to the outside world. The country is striving to ensure a stable supply of energy with a steady increase in domestic energy production and promote the common development of energy around the world. China’s energy development will bring more opportunities for other countries and expand the global market, and make positive contributions to the world’s energy security and stability.

Where I am encouraged though is that rather than mention the need to find untapped resources, or pay more than the next person for them, the focus is on reduction of resources used through education, optimization, and development of new technologies.

  • Giving priority to thrift.
  • Relying on domestic resources.
  • Encouraging diverse patterns of development.
  • Relying on science and technology
  • Protecting the environment.
  • Cooperation for mutual benefit.

To bring about a reduction in energy consumption, the following means were offered:

  • Pushing forward structural adjustment.
  • Improving energy conservation in industry.
  • Launching energy-saving projects
  • Strengthening the administration of energy conservation.
  • Advocating energy conservation in society.

Of these, the most interesting is the fourth as that could indicate that SEPA may get some real teeth..

Following all this were sections on the development of technologies and system reforms which were also quite interesting, and very relevant.

Having just received a copy of the Draft Energy Law, I will be making my way through the 60 pages of that to see how it compares to the above. My guess is that by reading this white paper fully, and reading the draft energy law fully, real insights will be gained and as such, real plans can be made.

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7 Responses to “China Releases White Paper on Energy”

  1. Evan Jerkunica says:

    January 12th, 2008 at 1:04 am

    small typo, you can delete the comment when you fix it.
    China has a lot f reources that vary in location and quality

  2. Evan Jerkunica says:

    January 12th, 2008 at 1:12 am

    Great that thrift is making it to the top of the list.

    Have you read the book, ‘The River Runs Black’? Great book about the environmental challenges that are facing China, and it even gives some insight into the complicated bureaucratic system that control China’s environmental fate. Great snapshot of a China a few years back.

    Love the blog,
    Evan Jerkunica

  3. Rich says:

    January 12th, 2008 at 5:49 am

    Hey Evan,

    Thanks for stopping in and spell checking the article!

    I have not read the book The River Runs Black, but I will at some point. I made my annual purchase of books at Borders over the holiday and I am a bit sad that many of the books I wanted were not in stock.

    Hope all is well in the TW!

    R

  4. Levin says:

    January 12th, 2008 at 9:04 am

    This white paper still sound very “planned economics”. I didn’t see anything about allowing private sector to find, develop, produce, distribute, and strengthening the regulatory machinery of the government. There was no mention of corruption in all of these, and ways to reduce the risk of “poor planning”.

  5. Rich says:

    January 12th, 2008 at 8:58 pm

    Levin,

    All fair questions, and looking back the paper does not do a good job of identifying the parties or their responsibilities when it comes to a number of areas. However, there have been a number of actions taken lately to adress the role of innovation, the role of NGO, and to strengthen the overall machine. PErhaps it could have been better addressed in the paper.

    with regard to the poor planning, I would be interested to learn more about the groups they have been reaching out to. I was a bit surprised by the candor expressed in saying how poor the planning had been..

    Appreciate the comments as always.

    Have a good week
    R

  6. Rich says:

    January 13th, 2008 at 6:56 am

    Over at China Herald, Fons has wrapped up his coverage of my post The environment and China’s good intentions on the above by saying:

    Getting good intentions written down in white papers is still important, but not really an indication of what direction the country is going to take: the real work still has to begin.

    to be honest, this is fair. After all, the last week has provided horrible some of the worst smog Shanghai has seen in a while. however, I would like to remind him that there is plenty of real work going on.. and many experts say that China is actually on the right path.

    World Bank President Welcomes China’s Role in Global Development

    Report: Innovation in China’s Energy Sector

    The Real Meaning of Public Hearings in Xiamen

    Now maybe that is really just all anecdotal evidence, but I see a trend. The central party is giving SEPA teeth, environmental NGOs are being supported publicly, China is leading the way in renewables.. and this is before the white paper.

    I am not saying there isn’t room for improvement, but I do believe that China’s progress can be measured in a light that makes me wonder why the U.S. is having such a difficult time getting their act together.

  7. Nikolai Jerkunica says:

    February 27th, 2008 at 12:36 am

    Hi
    I am Evan’s little bro. I saw him on internet just wanted to say hi lol!