During China’s annual Two Sessions in early March, 2021, Zhang Jianhua, head of National Energy Administration accepted an exclusive interview with China Electric Power News (CEPN). He talked about the key and pressing issues on energy, including how the energy sector contributed to China’s economic growth in 2020; how China is accelerating its clean and low-carbon energy transition while ensuring energy security, in the face of an increasing complex energy security environment.
CEPN: What are the historic achievements for China’s energy sector in the 13th Five-Year Plan (FYP) period?
Zhang: Under the guidance of the new energy security strategy of “Four Revolutions and One Cooperation”, the national energy industry has made concerted efforts to cope with a series of challenges and make significant achievements, which laying a solid foundation in six aspects to kick off the 14th FYP.
Faster clean and low-carbon transition. Adhering to the basic national policy of resources conservation and environmental protection, China has built a dual control system of targeting both total energy consumption and intensity, and has incorporated the energy-saving indicators into the performance evaluation systems of ecological civilization and green development. Since the start of 13th FYP, China has kept a slow annual growth in energy consumption of less than 3 percent, and a medium to high-speed economic growth, meaning a significant improvement of energy utilization efficiency. In 2020, China lowered the share of coal use in its primary energy mix to 56.8 percent and stepped up the transition to a greener energy structure.
Higher quality of supply capacity. With the orientation of ecology first and green development, China deepened supply-side structural reform in the energy sector, prioritizing the development of non-fossil energy. During the 13th FYP period, China’s energy supply-demand balancing continued to be improved, with an energy self-sufficiency rate over 80 percent. Several indicators including installed capacities of hydropower, wind power, solar PV and nuclear power under construction remained the world largest. By the end of 2020, the renewables capacity has amounted to 1.083 gigawatts, approximately half of the total installed capacity (49.2%), surpassing coal for the first time. China therefore built a diversified clean energy supply system.
Greater impetus to technology innovation. China implemented the innovation-driven development strategy, built a green energy technology innovation system, and speed up the transition from a follower to a leader on green energy technology innovation. A comprehensive industrial chain for manufacturing the clean energy equipment has been built. The technology to improve the utilization and efficiency of fossil fuels has been significantly leveled up. Besides, China has built the world’s largest power grid with stable and reliable power supply. With a large number of new technologies and business models flourished, technological progress has become the essential driver for the energy transition.
Further increased market vitality. China has deepened the market-oriented reform of key energy fields by building a market with effective competition and optimizing the pricing mechanism mainly by the market. China has orderly opened up the market of oil and gas exploration and reformed its pipeline network operation system by separating transmission and distribution of oil and gas. Besides, China has worked actively to build a unified national power market system, with mid and long-term trading as anchor, ancillary services market as stabilizer and spot trading as pilot. China has also made significant progress on reforms to “Streamline Administration, Delegate Powers, improve regulation and upgrade services” (SADP). 72 percent of administrative approval items have been cancelled or decentralized, further facilitating market entities and individuals to do business.
More comprehensive international energy cooperation. Following the principle of mutual benefit and win-win, China actively engaged in global energy governance, jointly maintained the stability of the global energy market, and guided international cooperation on climate change. It has greatly eased market access for foreign investment and thus improved the cross-border investment and infrastructure connectivity in the energy sector. China has become an important participant and influencer on global energy stage under multilateral cooperation mechanism. As of March 2021, it has built Belt and the Road Energy Partnership (BREP) with 29 other member countries.
More solid benefits on public wellbeing. Ensuring and improving people’s livelihood is considered as a keystone of energy development in China. Energy supply plays a crucial role in realizing the goal of building a moderately prosperous society in all respects and revitalizing rural areas. In its latest renovation and upgrading of the rural power grid, the electrification rate in rural areas reached 18%. China has built solar PV power plants for poverty alleviation projects, with 26.36 gigawatts cumulative installed capacity in 2020, benefiting 60,000 poor villages and 4.15 million poor households. Clean heating rate in northern regions rose to above 60%.
CEPN: Taking into account both domestic needs and international contexts, what kind of new challenges China will face for now and future?
Zhang: While the world is witnessing once-in-a-century changes, China is in a critical period of achieving the great rejuvenation of the Chinese nation. It is essential to promptly and accurately assess the domestic and international energy development situation. China must strive to seize opportunities amidst crises and create new prospects amidst changes.
The world is undergoing a new round of technological and industrial revolution with scale and depth. The energy development shows the trend featuring decarbonization, electrification and intelligence. The Covid-19 pandemic will have a widespread and lasting impact on global energy market and governance, which puts forward higher requirements for China to build a clean, safe and efficient energy system.
Since the 18th CPC National Congress, China has achieved positive results in implementing the new energy security strategy featuring “Four Revolutions and One Cooperation”. It has many favorable conditions for energy development, given the long-term positive fundamentals of China’s economy have not changed. What we faced is increasing dilemmas in energy transition. The issue of unbalanced and inadequate development stands out. Carbon emissions peaking and decarbonization have become the hard constraints of energy development in China. These challenges require us to plan the energy transition path reasonably and develop high-quality energy continuously.
We will take a dialectical view of the multiple changes encountered in the development of energy security, and resolutely implement the major decisions and deployment made in the Outline of the 14th FYP For Economic and Social Development and Long-range Objectives through the Year 2035 of China, which adopted at the fourth session of the 13th National People’s Congress. To get the 14th FYP off to a good start, it is important to coordinate the relationships between development and security, government and market, central and local governments, ensuring supply and energy conservation.
CEPN: What the energy sector should do to serve and integrate into the new development pattern in the 14th FYP period?
Zhang: The 14th Five-Year Plan period is the first five years after China has fully built a moderately prosperous society and achieved the first 100-year goal. It will usher the momentum to open a new journey of building a modern socialist country and march to the second 100-year goal. For the 14th FYP period, the energy industry will better implement the new development concept of innovation, coordination, green, open, and sharing. To promote the strategy of Four Revolutions and One Cooperation into a practical way, we need to focus on the following five aspects of work.
First, implement the requirements for high-quality development and accelerate the low-carbon and intelligent transition of the energy system. Focusing on the goals of carbon peaking and neutrality, China will explore the new models of energy production and consumption. It needs to actively develop the renewable energy, as well as promote the clean and efficient use of fossil fuels. Besides, it is necessary to enhance the digital and intelligent level of the entire energy industrial chain.
Second, upgrade the modernization and security level of the energy industry and supply chain with technological innovation. Adhering to the principles of independence, safety and efficiency, China will endeavor to make technological breakthroughs and carry out pilot projects. It is essential to work on the policy framework, build the technology innovation platforms, and apply it to new business models.
Third, hold firmly to the bottom line of energy security. China needs to improve the energy production-supply-storage-distribution system. A dynamic balance between domestic energy supply and demand should be maintained. It is crucial to enhance the energy security for economic and social development. Meanwhile, international cooperation in energy sector should also be strengthened across the board.
Fourth, put people at the center of energy development and continuously improve the level of energy consumption for production and livelihood. The country has carried out projects to renovate and upgrade power grids in rural and poverty-stricken areas, and to use renewable energy for winter heating in northern China. Efforts should be made to narrow the energy consumption gap between eastern and western regions as well as urban and rural areas. People’s clean energy demand for better lives will be met with higher electrification rates in industries, transportation, construction and other sectors.
Fifth, optimize the allocation of energy resources and promote regional coordinated development. A new development pattern among energy, economy and ecological civilization will be created. On one hand, China should prioritize ecological conservation. Large-scale energy power bases in the Yellow River Basin and along the upper and middle reaches of the Yantze River should be built into ecological and environmental protected areas. On the other hand, China should accelerate the development of distributed energy resources (DERs), with focus on boosting the energy self-sufficiency capacity in central and eastern regions. All sides should facilitate the integration of energy source-grid-load-storage, and foster the complementary development of multiple energy sources. They should increase the utilization rate of existing trans-regional energy transmission channels and the proportion of new energy transmitted through newly constructed pipelines.
Source: Wang Yi, SCO Energy Club