Wang Ying

    BEIJING, Jan. 20 (Xinhuanet) -- Energy conservation is now high on the Chinese Government's agenda.

    In order to better utilize sparse energy resources, the government has drawn up a strategic plan for energy conservation - the China Medium and Long Term Energy Conservation Plan.

    Official sources said the implementation of the plan is divided into two phases - the 11th Five-Year Plan (2006-10) and the period between 2010 and 2020.

    The objectives and focus of energy conservation in the first period have been basically drawn up, while the details for the second period have yet to be firmed up.

    According to the plan - drawn up by the National Development and Reform Commission (NDRC), one of China's economic decision-makers -China's total energy consumption will be held below 3 billion tons of coal equivalents by 2020, through enhancing energy efficiency.

    China's demands for energy by 2020 is expected to top more than 4 billion tons of coal equivalents, according to NDRC sources.

    Energy consumption per 10,000 yuan (US$1,205) of GDP (gross domestic product) is expected to plunge to 1.54 tons of coal equivalents, from 2.68 tons in 2002, indicating an annual energy conservation of 3 per cent between 2003 and 2020.

    The energy conservation plan focuses on cutting consumption in power-hungry industries such as iron and steel, non-ferrous metals, oil and petrochemicals, and coal.

    The government plans to formulate and implement incentive policies to encourage energy conservation, and promulgate laws to regulate the medium and long-term implementation of the plan.

    China is also attaching great importance to improving public awareness of energy conservation.

    Commenting on the government's role in energy conservation, Hartmut Keune, an official from the German Embassy in Beijing, said, the government should offer "appropriate incentives" to individuals and enterprises to encourage them to save energy. Through sustained government efforts, China will do as well as other developed countries in energy conservation.

    The major financial channel for the programme will be the energy conservation fund proposed by the plan, said Yu Cong, director of the NDRC's Energy Research Institute.

    A proportion of the programme's finances will come from the issuance of treasury bonds, added Yu.

    The institute is now studying the feasibility of possible incentive measures for energy conservation, including taxation and pricing, to introduce a market-oriented mechanism in energy conservation, Yu added.

    For example, the government is considering imposing taxes on fuel oil in order to cut consumption, said Yu.

    Pilot energy conservation projects are currently being carried out in certain parts of the country, some in co-operation with foreign countries including members of the European Union, Yu pointed out.

    As to the fundamental work for the establishment of an energy conservation mechanism, Yu said, China's foreign co-operation in this regard currently focuses on policies and technological research.

    In the long term, the energy conservation plan will alleviate China's energy shortage, according to analysts.

    China, the world's second-largest energy consumer after the United States, has been suffering from energy shortages in recent years.

    And these shortages resulted in massive economic losses in 2004.

    The year saw a power supply gap of 30,000 megawatts, said sources from the State Grid Corp of China (SGCC).

    More than 27 municipalities, provinces and autonomous regions had restricted power supplies in 2004, with the hardest-hit areas being East China's Zhejiang and Jiangsu provinces, and North China's Shanxi Province and Inner Mongolia Autonomous Region.

    Power shortfalls in these areas almost paralyzed regional economic development when power supplies were at their tightest in 2004, experts say.

    Zhejiang suffered from a power shortage of over 7,500 megawatts, leading to direct GDP losses of 100 billion yuan (US$12 billion).

    Although China currently ranks second in terms of global energy consumption, per capita energy utilization is lower than the global average, according to NDRC sources.

    An official study showed that China uses 1,274 tons of coal equivalents to produce US$1 million of GDP, more than 2.4 times the world's average.

    Energy efficiency in China is 10 per cent lower than that of the world's advanced level, said industry sources.

    China's average efficiency of thermal power generation, for example, is 33.8 per cent, 7 per cent lower than developed countries.

    The energy efficiency gap between China and developed countries indicates a great potential for energy conservation in China.

    According to relevant studies, the potential exists for China to save 300 million tons of coal equivalents when comparing the nation's current energy conservation with the world's advanced level.

    Along with energy conservation, industry experts say China should develop renewable energies for the country's sustainable development.

    "We cannot rely on the conventional energies such as coal, oil and gas, to fuel sustainable economic development, as these energy resources are exhaustible, meaning that there is an urgent need to promote the use of renewable energy," said Ma Shenghong, an analyst with the China Academy of Sciences.

    Some international research institutes including the Association for the Study of Peak Oil & Gas (ASPO) and the World Resources Institute projected the global oil supply is expected to reach its peak between 2010 and 2030.

    China is expected to promulgate a law this year to encourage the use of renewable energy, including hydropower, wind power, bio-mass and solar energy.

    According to the government's blueprint, renewable energy is expected to account for 10 per cent of the total energy consumption by 2010, from the current level of around 1 per cent.

(Source: China Daily)