1. Updates on the Chinese Energy Sector Yanjia Wang Tsinghua University, China 5th Asia Energy Security Workshop 31 st October 2007, Beijing

2. Basic Facts in 2006 Primary energy production: 2.21 billion tce, 7.4% higher than previous year (coal 7.6%, oil 1.9%, NG 18.7%,); Total energy consumption: 2.46 billion tce, 9.6% higher than 2005; Coal consumption: 2.39 billion ton, 10.4% higher New installed power capacity: 101.17.18GW Total power capacity installed: 618.35GW, 19.6% higher Power generated: 2,865.73TWh, 14.6% higher (thermal power 15.7%, hydropower 9.8%, nuclear 3.3%) Petroleum consumption 349 million ton, 7.2% higher Crude oil import (net): 139 million ton, 16.7% higher Petroleum import (net): 169 million ton, 17.9% higher NG consumption: 5.56 billion cu.m. 19.9% higher

3. Continue to Control Energy Growth 2003200420052006 Elasticity of energy consumption 1.531.591.020.87 Elasticity of electricity consumption 1.561.521.301.32 Growth of crude oil import (net)--41.4%1.45%16.7% Growth of oil products import (net) --83.6%-33.9%37.56% Commissioned power capacity (GW) 5066.7101.17 Total energy consumption growth rate 15.3%16.1%10.6%9.6%

4. Top Priority: 20% EE & 10% PR Target National 11 th Five-Year Plan(2006-2010): 20% reduction of energy intensity of GDP 10% reduction of pollutant emission First year results: 1.23% of EE, not achieved year-targets Only Beijing achieved the target. More efforts are making. All measures and actions are for achieving the targets.

5. Thousand Enterprises Action Plan 9 energy intensive sectors: steel, non- ferrous, coal production, electricity generation, petroleum, chemical, building materials, textile, paper. 998 enterprises (1008 in 2004, year- consumption 0.18 million tce and above) These enterprises consumed 670 Mtce, accounted for 33% of national total, 47% of industrial total in 2004.

6. Sectoral Distribution 1.Steel 264 2.Non-ferrous 71 3.Coal production 58 4.Electricity generation 132 5.Petroleum & Petrochemical 99 6.Chemical 240 7.Building materials 97 8.Textile 23 9.Paper 24

7. Four Economic Regions Northeastern Eastern Western Central

8. Regional Distribution Eastern region (Beijing, Tianjin, Hebei, Shanghai, Jiangsu, Zhejiang, Guangdong, Hainan, Fujian, Shangdong) 390 Central region (Huibei, Hunan, Henan, Jiangxi, Anhui, Shanxi) 289 Western region (Inner Mongolia, Guangxi, Chongqing, Sichuan, Guizhou, Yunnan, Tibet, Shannxi, Gsansu, Qinghai, Ningxia and Xinjiang) 229 Northeastern region (Liaoning, Jilin, Helongjiang) 100

9. EasternCentralWesternNortheastTotal Steel117774624264 Non-ferrous62734471 Coal production 112515758 Electricity generation 33532917132 Petroleum & Petrochemic al 4114212399 Chemical101636412240 Building materials 502217897 Textile1641223 Paper1542324 Total3902892291001008

10. Re-thinking Tariff Subsidy Policy Subsidy: low price to large consumers by direct supply or sales agreement. 2 cent/kWh discount to 13 aluminum plants with annual output above 50,000 tone each in 1999 2 cent/kWh discount to aluminum, ferrous-alloy, alkali enterprises during 2000-2005 when NDRC raised tariff. New tariff difference regulation in June 2006(large industry, several elec. intensive sectors, industry, etc). Review the policy implementation (June 2007): partly adopted in Hebei, Fujian, Jiangxi, Ningxia, Xinjiang; no implementation in Yunnan; keep subsidy in Sichuan, Hubei.

11. Tariff in Jiangsu Province

12. TOU in Jiangsu Province (Yuan/kWh)

13. Cancel Subsidy to Energy Intensive Enterprises on Electricity New policy published by NDRC, MoF and Power Supervision Commission on Oct. 11st, 2007 By Oct. 20th, 2007, stop subsidies to ferrous- alloy sector except got permission from NDRC. By the end of 2007, stop special subsidies to aluminum and adopt elec.-intensive tariff. By the end of 2008, stop subsidy to Chlor-Alkali. Stop all subsidies given by local governments right now. Penalty: suspend new power plant projects (no approvals, reduce number of projects)

14. EE Timetable to Large State- owned Enterprises (Aug. 30 2007) 154 enterprises under SASAC(State-owned Assets Supervision and Administration Commission of the State Council) 3 types: key 33, attention 66, general 58 State-owned enterprises produce 100% of oil, NG and ethylene, 50% of elec., 15% of coal. 230 state-owned enterprises within ‘1000 enterprises’ State-owned petrochemical plants consume 5.8% of total energy, metallurgy 2.9%. 2009 target for key enterprises

15. Specific Targets in 2009 SectorE/VASO2CODOthers Petrochemical16%9.3%8.4%24% fresh water Steel16% 23%10% in energy consumption/ ton steel Power5.1% on gce/kWh 27.8%0.36 percent point on grid losses Non-ferrous16%8% TransportAviation12.8% Water 14.2% Chemical16%8% Coal16%8% Building materials 16%15%6%

16. Re-emphasize to Shutdown Small Coal-fired Power Plants (Jan. 2007) Shutdown: 1.Below 50MW 2.Below 100MW and operated 20 years 3.Below 200MW and full lifetime 4.Supply efficiency (gec/kWh) 10% higher than provincial average or 15% higher than national average of 2005 5.Failure to reach the environmental standards Co-gen 1.Replace small co-gen by large ones 2.Encourage to build back-pressure and biomass-fired co-gen 3.Encourage retrofit medium scale power plant (less 15-years operation) to co-gen 4.Limit or stop operation during off-space-heating season to those co-gen which coal consumption 10% higher than provincial average or 15% higher than national average of 2005

17. Re-emphasize to Shutdown Small Coal-fired Power Plants (Jan. 2007) (con’d) No more higher tariff to small power plants (equal or less than local benchmarking tariff) Install de-Sox facilities to all generators with capacity of 135MW and above Surcharge to on-site generation plants (three gorges, rural grid, public affaires, renewables, emigration) Prohibit to transfer public power plants to enterprises

18. Medium- Long-term Renewable Energy Development Planning (Sept. 2007) 15% consumption from renewables in 2020 (hydro 300GW, wind power 30GW, biomass 30GW, solar PV 1.8GW, solar water heater 300 million sq. m., biofuel 10 million toe, biomass briquette 50 million ton) 8% of capacity is renewables to all power companies which total capacity reached 5 GW. Total investment required 2 trillion yuan) NDRC continues to control power pricing