In a remarkable clear report “China Energy Policy” the Energy Research Institute under NDRC (ERI) recommends much more focus on the energy demand side and on non-fossil energy supply. ERI recommends to strengthen in energy administration by increasing the National Energy Administration grow into an Energy Ministry taking more responsibility for the energy demand side from other ministries. Not only the energy intensity should be controlled but also the total energy consumption. And non-fossil fuels should have priority in the supply chain, reducing the current heavy dependency on coal and oil. Taxes and other financial policies should be the main driver for the future deployment of non-fossil fuels – basically renewables and nuclear power.

Stop expansion of long-distance transport of energy

Another interesting recommendation is to let import substitute long distance transport of coal and electricity from the North West China to the large energy consumers in the South East China. The idea that China should strive for coal self-sufficiency should be abandoned. Instead ERI suggest that the growth in energy consumption in the South East China should be covered by increased import of coal and LNG. Actually ERI finds that China by increasing the import of LNG could increase it’s pricing power. Last but not least ERI recommends that long-distance transport of electricity using Ultra High Voltage (UHV) transmission lines should be avoided due to the high cost and the increased risk for nation-wide power outages. The power supply of the South East coastal regions should be up to the the region itself. This recommendation is in sharp contrast to the current State Grid strategy where the UHV lines have an important role. Also the ERI recommendation could reduce the possibilities for obtaining a high share of renewables in China’s energy system as the resources of wind power and solar energy are focused in the North and North West of China. But nevertheless an interesting viewpoint worth further analyses in i.e. long term scenario analyses.

National and global conclusions and recommendations

“China Energy Policy” is a comprehensive analysis of the next five years development of the energy system in China, including 12 conclusions and 10 policy recommendations, covering both national  and international topics. Very interesting reading for everyone interested in the Chinese viewpoint on national and global energy policy. The executive summary can be found on this link, and a hardcopy of the whole report can be purchased on the ERI web site.