Peking University
National Committee on US China Relations
China’s Energy Strategy:
areas for further US-China collaboration
China’ Economy in 2011: forecast and views from Chinese
economists
New York Stock Exchange, January 10, 2011
Zha Daojiong
Email: zhadaojiong@pku.edu.cn
Broad picture
• Overall philosophy behind energy policy: maximize
domestic capacity to meet supply needs
– Current level of self-sufficiency: 90%
– Level of dependence on imports
• Oil: 55% in 2010; natural gas: 5%; coal: <1%
• All set to grow
• Macro-level energy policy instruments
– Energy intensity target, as of 11th FYP
• Drop by 20%, 2010 (base year 2005)
– Total consumption control target, beginning with 12th FYP
• 4.5-4.9 btce [per capita 3.1-3.4 tce; cf: 2.38 tce in 2010]
• 15% from non-fossil fuel sources, by 2020
• CO2 intensity to drop by 40-45% in 2020 (base year 2005)
Projected non-fossil fuel
composition, 2020
Hydro 41-48%
Nuclear 21-25%
Wind 8-13%
S olar 1%
Biomass 2-3%
Other renewables 17-19%
Source: State Grid Company
study
3
Old challenges remain
• Coal being the #1 source of primary energy
– 3.2 btce consumed in 2010
• 68% of total energy
– When annual increase stays at 170 mtce  4 btce by 2015
• Net importer of coal
– Since 2008; 160 million tons in 2010
• Power consumption in coal-rich provinces set to see
double-digit growth
– Anhui, Chongqing, Guizhou, Hebei, Inner Mongolia, Shangdong,
Shanxi
– Major cause: transfer of industrialization from coastal areas
– Unavoidable phase in poverty alleviation and urbanization
Coal: international collaboration
• More efficient electricity transmission
– Smart grid, smart meters
• More efficient thermal power generating units
– Average per kwh coal use: 340 grams
• 270 grams for top notch domestic facilities
Source: W. Chen, "Clean Coal
Technology Development in
5
Coal: international collaboration
• Progressive pricing for electricity
– Nation-wide plan announced in December 2010
– NEEDED: Business models for incentivizing household
conservation
• Metering residential heating, announced in 2010
– North of Yellow River, average community heating for 125 days
– NEEDED: Retro-fitting buildings, commercial and residential
– NEEDED: Making the meters,…
• Coal liquefaction, gasification
– Water, environmental and social constraints
– NEEDED: Selected treatment of enthusiasm from within China
Natural Gas
• Consumption constrained by supply
– Average 9.9 b cf per day, first half of 2010
• increase by 18.3%, y-o-y
• Massive investments to bring in external supply by land
– Pipelines from Central and South Asia
– Import accounts for 12% of total gas consumption, 2010
• Desirable future: expanded import of LNG
– Cleaner fuel for consumption in coastal areas
– Direct energy savings on energy transport from far-flung regions
of China, north, northwest, and southwest
– Demonstration effect on managing geopolitical concerns
• More collaboration over unconventional gas
– Coal-bed methane, 2.6 bcm in 2010 in China, cf: 80 bcm in US
– Shale gas extraction
Last but not least
• Foster policy discussions to promote deeper
mutual energy market integration
– More energy-related manufacturing by Chinese
companies in the United States
• Suntech’s plant in Arizona, 2010
– Chinese and American oil companies jointly bid for
projects in third-country upstream markets
• BP and CNPC in Iraq, 2009
– Integrated energy business for American companies
to service China
• Joint refinery project among, ExxonMobil, Saudi Aramco,
Fujian government, 2007
Thank you for listening
• Questions and comments welcome