for energy development between 2016-30. Using
the plan as a guide, this report looks at possible
strategic pathways to implement the plan and
achieve China’s energy revolution. The report is
not about making predictions in multiple scenarios. Rather it focuses on the following three
goals identified by China: first, aligning mediumand long-term economic and social development
with the goal of building China into a great
modern socialist country, as stated by President
Xi in his address to the 19th National Congress
of the Communist Party of China in 2017. Second, controlling greenhouse gas emissions and
air pollution. And third, guaranteeing energy
security.
(2) Strategic pathway drivers—economic
development, energy security and environmental protection
Research on China’s Medium- and Long-Term
Energy Development Strategy
10 summarises the
main drivers of China’s energy development in
the future—economic development, energy
security and environmental protection—and
proposes optimal energy development pathways
by balancing the goals of those three drivers. In
the traditional economy and energy system, the
three drivers are independent rather than integrated: (i) rapid economic growth means more
energy consumption, which traditionally means
more fossil fuels—this leads to worsening environmental pollution and puts energy security at
risk from greater dependence on oil and gas;
(ii) the environment-first approach tends to slow
down economic growth; and (iii) the
security-first approach slows down economic
growth and reduces demand.
However, in the new normal of China’s
slowing economic growth, and as new energy
technologies and business models appear, the
integration of economic development, energy
security and environmental protection significantly strengthens. In economic development,
the traditional growth drivers of real estate and
energy-intensive industries gradually slow down,
and the new drivers—primarily the high-tech and
service industries—begin to take over. This
changeover gradually loosens the rigid coupling
between economic growth and energy demand.
As energy demand growth will mainly come
from the service industries and households, the
demand for cleaner energy and supply flexibility
will grow. The more developed the economy, the
greater the demand for clean energy and supply
flexibility. This in itself represents a new
challenge.
In energy security, the national government
has identified electric vehicles (EVs) as the main
means of road transport in the future. EV manufacturing and its upstream and downstream
industries will see rapid growth. It is possible that
the replacement of conventional petrol and diesel
vehicles with EVs may escalate at a speed
beyond expectation, triggering a rapid shift from
oil to electricity as the predominant energy for
transport. This will mitigate the long-existing
energy security risk of oil import dependency
and facilitate the switch to renewable energy in
China’s power grids. China is also diversifying
into natural gas, thanks to rapid growth in
domestic shale gas production and successful
pilot exploration of natural gas hydrates. This
gradual strengthening of domestic supply
capacity will support the substitution of gas for
scattered coal at scale, and increase the capacity
to use low-cost, high-quality natural gas resources in international markets.
In environmental protection, haze prevention
is a major concern. China vigorously promotes
measures such as replacing coal with electricity
and gas and shutting down small coal-fired
boilers. This not only reduces coal-induced pollution, it helps to unlock the market potential for
cleaner alternatives like renewable energy,
geothermal power and natural gas. Greater use of
clean energy creates opportunities for the
deployment of Energy Internet technologies,
which spurs innovation and encourages new
business models.
10
Development Research Center of the State Council and
Shell International Limited. 2013.
130
W. Xiaoming et al.
the plan as a guide, this report looks at possible
strategic pathways to implement the plan and
achieve China’s energy revolution. The report is
not about making predictions in multiple scenarios. Rather it focuses on the following three
goals identified by China: first, aligning mediumand long-term economic and social development
with the goal of building China into a great
modern socialist country, as stated by President
Xi in his address to the 19th National Congress
of the Communist Party of China in 2017. Second, controlling greenhouse gas emissions and
air pollution. And third, guaranteeing energy
security.
(2) Strategic pathway drivers—economic
development, energy security and environmental protection
Research on China’s Medium- and Long-Term
Energy Development Strategy
10 summarises the
main drivers of China’s energy development in
the future—economic development, energy
security and environmental protection—and
proposes optimal energy development pathways
by balancing the goals of those three drivers. In
the traditional economy and energy system, the
three drivers are independent rather than integrated: (i) rapid economic growth means more
energy consumption, which traditionally means
more fossil fuels—this leads to worsening environmental pollution and puts energy security at
risk from greater dependence on oil and gas;
(ii) the environment-first approach tends to slow
down economic growth; and (iii) the
security-first approach slows down economic
growth and reduces demand.
However, in the new normal of China’s
slowing economic growth, and as new energy
technologies and business models appear, the
integration of economic development, energy
security and environmental protection significantly strengthens. In economic development,
the traditional growth drivers of real estate and
energy-intensive industries gradually slow down,
and the new drivers—primarily the high-tech and
service industries—begin to take over. This
changeover gradually loosens the rigid coupling
between economic growth and energy demand.
As energy demand growth will mainly come
from the service industries and households, the
demand for cleaner energy and supply flexibility
will grow. The more developed the economy, the
greater the demand for clean energy and supply
flexibility. This in itself represents a new
challenge.
In energy security, the national government
has identified electric vehicles (EVs) as the main
means of road transport in the future. EV manufacturing and its upstream and downstream
industries will see rapid growth. It is possible that
the replacement of conventional petrol and diesel
vehicles with EVs may escalate at a speed
beyond expectation, triggering a rapid shift from
oil to electricity as the predominant energy for
transport. This will mitigate the long-existing
energy security risk of oil import dependency
and facilitate the switch to renewable energy in
China’s power grids. China is also diversifying
into natural gas, thanks to rapid growth in
domestic shale gas production and successful
pilot exploration of natural gas hydrates. This
gradual strengthening of domestic supply
capacity will support the substitution of gas for
scattered coal at scale, and increase the capacity
to use low-cost, high-quality natural gas resources in international markets.
In environmental protection, haze prevention
is a major concern. China vigorously promotes
measures such as replacing coal with electricity
and gas and shutting down small coal-fired
boilers. This not only reduces coal-induced pollution, it helps to unlock the market potential for
cleaner alternatives like renewable energy,
geothermal power and natural gas. Greater use of
clean energy creates opportunities for the
deployment of Energy Internet technologies,
which spurs innovation and encourages new
business models.
10
Development Research Center of the State Council and
Shell International Limited. 2013.
130
W. Xiaoming et al.