Less coal. Less bureaucracy. More renewables. More market. Those are four key elements in the “new balance” China is seeking in its energy sector, after years of huge growth in fossil fuel consumption. Professor Han Wenke, Director-General of the Energy Research Institute of the National Development and Reform Commission (NDRC), China’s largest ministry, explains the ramifications of the new Five-Year Plan for the energy sector in an interview with World Energy Focus. “We want to attract more private investment.”
The most important theme of the 13th Five-Year Plan for 2016-2020, which the Chinese government adopted earlier this year, says Han Wenke, “is rebalance and restructuring”. After many years of strong economic growth, China has accepted that “the new normal” will be characterised by lower – and more sustainable – growth.
For the Chinese energy sector, this means above all four things, says Professor Wenke, who has been involved in a wide diversity of energy projects in China, ranging from energy efficiency and lighting (China Green Lights Project) to oil import strategy and electric power reform. First, China will greatly reduce its coal consumption. Secondly, it will invest much more in wind power and other forms of renewable energy. Thirdly, energy governance and administration will be reformed. And fourthly, the role of government will be reduced and the role of the market (private investment) will be expanded.
According to the Five-Year Plan, $368 billion will be invested in smart grids, ultra high-voltage grids and distribution grids in the next five years
These plans are in line with the recent findings of the World Energy Council’s 2016 Issues Monitor Report. In the “deep dive” for China, the study highlights that energy leaders in China perceive renewable energies, energy efficiency and coal to be action priorities.
Innovation and research
China has already become the world’s largest investor in clean energy in recent years, but the new Five-Year Plan will further reinforce this trend. China plans to more than double its wind power capacity to 250 GW, nearly triple solar PV capacity to 160 GW and expand hydropower 40% to 420 GW. By 2030, the country wants to meet 20% of its energy needs with non-fossil fuel resources, which is roughly twice as high as today. By 2020, the energy intensity of the economy will be reduced by 15%, coal use by 20% and the share non-fossil energy must reach 15%.
China aims to achieve a closed nuclear-fuel cycle in which no waste is generated
China will invest in innovation and research across a wide range of sectors: wind and solar power, smart grids, next-generation nuclear technology, and energy efficiency and conservation, says Wenke. For example, according to the Five-Year Plan, $368 billion will be invested in smart grids, ultra high-voltage grids and distribution grids in the next five years.
Nuclear power will be expanded from 26 GW to 58 GW by 2020, with further growth projected to 2030 of up to 150 GW. The share of nuclear power in China’s energy mix is still quite small, says Wenke. “For China, safety and security in nucear power are paramount.” The country has developed its own “third-generation” reactor, the Hualong One, of which two prototypes will be built in the next few years. It aims to achieve a closed nuclear-fuel cycle in which no waste is generated.
But China also intends to grow the share of natural gas, says Wenke. “We hope to double it in the next five years from 5% to 10%. We will develop our own resources, both conventional and unconventional, and import more, both from Russia and elsewhere.”
China has committed to peak greenhouse gas emissions in 2030, but Wenke says it is possible that this peak will be achieved earlier, somewhere around 2025-2028. The country will start a nationwide carbon emission trading market next year, but according to Wenke, this should be seen as merely one of the ways in which China is trying to reduce emissions. “We are still exploring this. China is too big to cover all emitters. The emission market is a supplemental measure, although it may play a big role some day. The major problem is timing.”
Who is Professor Han Wenke?
Professor Han Wenke is Director General of the Energy Research Institute within China’s National Development and Reform Commission, as well as a research professor. He is also Co- Chair, US-China Clean Energy Forum. In recent years, he has both led and participated in extensive research and various projects: China’s energy conservation technology policy, China Green Lights Project, environment emission mitigation technology options in the urban transportation sector of Asian countries, China’s strategy and countermeasures on utilization of foreign high quality energy resources, oil import strategy, sustainable energy industrial policy of the early 21st century, energy development strategy in western areas of China, energy development planning within the 10th Five-year Plan, and electric power institutional reform.
A crucial part of the Five-Year Plan is reform of energy governance, Wenke notes. “Many approval procedures that are now taking place at the national level will be transferred to the local level. Or abolished altogether.” Energy monopolies will be broken up and market pricing introduced. “We want to give more room to the market and to attract private investors.”
In many ways, China is now taking the lead in the low-carbon energy transition. That creates challenges of its own, as there are no models anymore to fall back on. According to Professor Wenke, China will seek international cooperation to solve energy challenges together with other countries. Wenke is Co-Chair of the US-China Clean Energy Forum, an example of such an international initiative.
But Wenke does not yet see China as leading the world on its own. “We have not reached that stage yet. But we do intend to get more involved in international energy affairs and governance.” The opening up of the Chinese market to private (foreign) investors will help drive that process forward.
This article was first published on World Energy Focus, a free digital magazine produced by Energy Post for the World Energy Council.