China Issues Guidelines For The Development Of Energy Sector

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To ensure a healthy development of the economy, on January 23, 2013, the State Council of the People’s Republic of China announced the long-awaited Energy Development 12th Five Year Plan, one of the 18 national-level key sector-specific plans for the “12th Five Year” period (i.e., 2011 to 2015).

The plan identifies nine major tasks on which to focus in the “12th Five Year” period:

(1) accelerate the exploitation and development of oil and natural gas, efficiently and safely promote the development of coal and nuclear power, actively develop hydro power, and accelerate the development of renewable energy;

(2) promote clean energy development;

(3) promote the change of energy supply, strongly develop distributed energy, enhance the construction of smart grids, and strengthen the construction of energy supply facilities for new-energy cars;

(4) accelerate the construction of energy storage and transportation facilities, and strengthen the energy reserve capacity and the emergency response capability;

(5) undertake public projects and strengthen the energy-related services in rural areas;

(6) control the energy consumption, promote the energy savings, and raise the energy utilization efficiency;

(7) accelerate the construction of a modern energy market system, promote the institutional reforms in electricity, coal, oil, natural gas, renewable energy, and distributed energy areas, and improve the energy pricing mechanism;

(8) strengthen the technological innovation, enhance the domestic supply of energy equipment, and carry out major technological projects; and

(9) deepen international cooperation, actively participate in the development of overseas energy resources, and expand foreign trade and technological cooperation.

To ensure the implementation, the plan calls on the government to continue to provide funds to encouraged areas and projects, to improve energy-related tax policies, and to strengthen the support of credit loans and expand other finance channels for energy enterprises. The plan also calls for maintaining the leading role of the state in key energy areas, and strengthening the guiding function of industrial plans and policies on investment. In addition, the plan directs authorities to loosen restrictions on investment and financing in the energy sector, encourage private capital to enter areas not prohibited by laws or regulations, encourage foreign capital to invest in areas permitted by laws or regulations, and allow qualified non-state-owned capital to participate in the development of coal-bed gas, shale gas, and shale oil, and promote the opening of the oil distribution market.

According to an official from China’s National Energy Administration, the total investment in China’s energy sector is expected to reach 13.5 trillion RMB (US$ 2.2 trillion) in the “12th Five Year” period, of which, 8.5 trillion RMB (US$ 1.4 trillion) will be invested in the construction of energy production capacity, and the rest will be used in the construction of energy storage and transportation facilities and public service projects.

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