How China's energy sector turns "adversity into opportunity"?

14:39, January 20, 2010      

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In Chinese vocabulary, the word "crisis" reflects two aspects, namely, both "risks" and "opportunities". China's energy sector has successfully turned its "adversity" into "opportunity" while resisting to grave influence from the international financial crisis and it has given people a profound enlightenment or revelation.

When the crisis came, China's energy demand was obviously weakened. From June 2006 on, energy supply in the country was in a tense situation for six straight years, but there was a negative growth in 2008, which was extended to June 2009, when all five major power-generating companies were trapped in a loss; crude oil prices declined drastically to the lowest level of 37 US dollars a barrel from the maximum of 147 dollars per barrel in 2008. Consequently, all refined oil depots were filled, and a portion of oil wells had to shut down for the first time in decades.

Daily electric power consumption was 8.5 billion kilowatt hours (kwh) in the last quarter of 2008 due to an impact of the financial crisis. However, the daily electricity use reached 11 billion kwh after November 2009 and, in the first 15 days of this year, the daily consumption reached the maximum of 12 billion kwh. This also provides a strong evidence of rapid economic recovery.

In the past year, China has adopted the following measures to turn "adversity into opportunity":

First is to have in mind a view for long-term development and make big efforts to boost demand for domestic growth. Three nuclear power projects have started over the past two years, respectively in Sanmen city, Zhejiang province in east China, Yangjiang city in Guangdong province, south China, and in the city of Haiyang in eastern Shandong province. A total of 20 nuclear power generating units are currently under construction. If the average per-kilowatt generating unit is estimated to cost 12,000 yuan, the direct investment could amount to 250 billion yuan to the least.

The 11.7 billion yuan of funds arranged under the central budget in this regard is expected to drive or attract amore than 40 billion yuan of social capital. From January to November last year, the fixed asset investment in the electric power, coal and oil industries reached 1,413 billion yuan, a rise of 17 percent over 2008.

Second is to seize the opportunity to step up energy structure adjustment and to do away with outmoded production capacity. By the end of 2009, China had closed the small power-generating units with a total of 60.06 million kilowatts, which could save 64 million tons of raw coal and reduce 128 million tons of carbon dioxide emissions.

With the acceleration of merger and reorganization of coal industry, China shut down more than 1,000 small coal mines in 2009 and, with the hastened development of natural gas, its natural gas pipeline reached 34,000 kilometers. Moreover, hydropower and wind power account for 32.3 percent of China's new energy-generating capacity for the year.

Third is to capitalize on the global energy demand slowdown in the financial crisis and a declining trend in the demand for energy resources. China vigorously carried out the energy "going out" strategy. In 2009, it was active with its energy diplomacy and greatly enhanced the right to speak in the international energy realm; it conducted its energy policy dialogue with the United States and wrought a good momentum for an all-round development of energy cooperation with Russia in various fields.

After more than a decade of arduous negotiations, China's crude oil pipeline project has been settled and it is planned to go into operation at the end of 2010 with an annual transport volume of 15 million tons. Furthermore, the Central Asia Natural Gas Pipeline Project is expected to supply five billion cubic meters of natural gas this year.

Fourth, scientific and technological work has been strengthened in energy sector, and gratifying achievements scored in this regard. To date, China has issued 116 new norms and set up 16 testing centers in the energy industry, and substantial results have been scored with regard to its natural gas pipeline and offshore wind power projects.

In a nutshell, China's energy sector can be said to have handed in a satisfactory report in the course of responding to global financial crisis, and so the nation's energy industry has reportedly entered the world's advanced ranks in term of both quantity and quality.

By People's Daily Online and contributed by Zhang Guobao, deputy director general of the National Energy Bureau under China's National Development and Reform Commission (NDRC)
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