Updates on the Chinese Energy Sector

Yanjia Wang

Tsinghua University, China

5th Asia Energy Security Workshop

31st October 2007, Beijing

Basic Facts in 2006Primary energy production: 2.21 billion tce, 7.4% higher th

an previous year (coal 7.6%, oil 1.9%, NG 18.7%,);Total energy consumption: 2.46 billion tce, 9.6% higher tha

n 2005;Coal consumption: 2.39 billion ton, 10.4% higherNew installed power capacity: 101.17.18GWTotal power capacity installed: 618.35GW, 19.6% higherPower generated: 2,865.73TWh, 14.6% higher (thermal po

wer 15.7%, hydropower 9.8%, nuclear 3.3%)Petroleum consumption 349 million ton, 7.2% higherCrude oil import (net): 139 million ton, 16.7% higherPetroleum import (net): 169 million ton, 17.9% higherNG consumption: 5.56 billion cu.m. 19.9% higher

Continue to Control Energy Growth

2003 2004 2005 2006

Elasticity of energy consumption

1.53 1.59 1.02 0.87

Elasticity of electricity consumption

1.56 1.52 1.30 1.32

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)

50 66.7 101.17

Total energy consumption growth rate

15.3% 16.1% 10.6% 9.6%

Top Priority: 20% EE & 10% PR Target

• National 11th 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.

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.

Sectoral Distribution

1. Steel 2642. Non-ferrous 713. Coal production 584. Electricity generation 1325. Petroleum & Petrochemical 996. Chemical 2407. Building materials 978. Textile 239. Paper 24

Four Economic Regions

Northeastern

Eastern

Western

Central

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

Eastern Central Western Northeast Total

Steel 117 77 46 24 264

Non-ferrous 6 27 34 4 71

Coal production

11 25 15 7 58

Electricity generation

33 53 29 17 132

Petroleum & Petrochemical

41 14 21 23 99

Chemical 101 63 64 12 240

Building materials

50 22 17 8 97

Textile 16 4 1 2 23

Paper 15 4 2 3 24

Total 390 289 229 100 1008

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.

Tariff in Jiangsu ProvinceTariff yuan/kWh Capacity charge

Customer Less 1

kV

1-10

kV

35-110

kV

110

kV

220kV

and

above

Max demand

Yuan/kW/month)

Transformer capacity

Yuan/kVA/Month

Resident 0.5283 0.5183

Non-resident

lighting 0.890 0.875 0.860

Other industry 0.763 0.748 0.733

(m- s- scale fertilizer) 0.370 0.355 0.340

Large industry 0.562 0.547 0.532 0.517 33 23

(calcium carbide,

alkali, ammonia,

phosphor)

0.552 0.537 0.522 0.507 33 23

(Chlor-Alkali,

Aluminum) 0.544 0.529 0.514 0.499 33 23

(fertilizer) 0.232 0.217 0.202 30 21

Plant which

development is

limited by the

government

0.582 0.567 0.552 0.537 33 23

Plant will phase out 0.612 0.597 0.582 0.567 33 23

Agriculture 0.440 0.430 0.415

Irrigation at poor

region 0.294 0.292 0.288

TOU in Jiangsu Province (Yuan/kWh) Peak Off-peak Valley

1—10kV 0.937 0.562 0.247

35—110kV 0.912 0.547 0.242

110kV 0.887 0.532 0.237

No subsidy

220kV and above 0.862 0.517 0.232

1—10kV 0.920 0.552 0.244

35—110kV 0.895 0.537 0.239

110kV 0.870 0.522 0.234

Calcium

carbide,

alkali,

ammonia,

phosphor 220kV and above 0.845 0.507 0.229

1—10kV 0.907 0.544 0.241

35—110kV 0.882 0.529 0.236

110kV 0.857 0.514 0.231

Membrane

Chlor-Alkali

220kV and above 0.832 0.499 0.226

1—10kV 0.387 0.232 0.137

35—110kV 0.362 0.217 0.132 Fertilizer

110kV and above 0.337 0.202 0.127

1—10kV 0.970 0.582 0.254

35—110kV 0.945 0.567 0.249

110kV 0.920 0.552 0.244 Limited

220kV and above 0.895 0.537 0.239

1—10kV 1.020 0.612 0.264

35—110kV 0.995 0.597 0.259

110kV 0.970 0.582 0.254

Large

industry

Phase out

220kV and above 0.945 0.567 0.249

< 1kV 1.272 0.763 0.314

1－10kV 1.247 0.748 0.309 No subsidy

35-110kV 1.222 0.733 0.304

<1kV 0.617 0.370 0.183

1－10kV 0.592 0.355 0.178

100kVA(kW)

and above

Other

industry Fertilizer

35-110kV 0.567 0.340 0.173

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 rig

ht now. • Penalty: suspend new power plant projects (no a

pprovals, reduce number of projects)

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

Specific Targets in 2009Sector E/VA SO2 COD Others

Petrochemical 16% 9.3% 8.4% 24% fresh water

Steel 16% 16% 23% 10% in energy consumption/ ton steel

Power 5.1% on gce/kWh

27.8% 0.36 percent point on grid losses

Non-ferrous 16% 8% 8%

Transport Aviation12.8%Water 14.2%

Chemical 16% 8% 8%

Coal 16% 8% 8%

Building materials

16% 15% 6%

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

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

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