Special Report 4: China’s Energy
System Revolution
Shi Yaodong and Angus Gillespie
Innovation plays a crucial role in China’s energy
system transition and revolution. At the 6th
meeting of the Central Leading Group for Financial and Economic Affairs in June 2014, General
Secretary Xi announced that China would:
(i) carry out an energy system revolution to put
China’s energy development on the fast track;
(ii) reform the energy industry into an effective and
competitive market system with a market-oriented
pricing mechanism; and (iii) transform the government’s regulation of the energy industry and
improve the energy legislation system.
There have been many system constraints on the
sustainable development of China’s energy industry
for a long time. For example, state monopoly in the
oil, gas and power sectors has restricted market
competition and kept private capital investment low.
Government price control of those three sectors has
prevented the market from allocating resources
efficiently and distorted the prices of some products.
To address these constraints, the government has
introduced a series of guidelines and reform roadmaps over the past few years. These include the
Opinions of the CPC Central Committee and the
State Council on Further Deepening the Reform of
the Electric Power System (March 2015), the
Opinions of the CPC Central Committee and the
State Council on Advancing the Reform of the
Pricing Mechanism (October 2015), the Opinions
on Deepening the Reform of the Oil and Gas System
(May 2017), and the Action Plan for Energy System
Revolution (July 2017). These guidelines and
roadmaps clearly identify the objectives, pathways
and mechanisms for deep energy system reform.
With the introduction of these guidelines,
action plans and related support measures,
1 the
DRC Team Lead of Special Report 4: Shi Yaodong
from the Research Department of Industrial Economy,
DRC of the State Council of China.
Shell Team Lead of Special Report 4: Angus Gillespie,
Former Vice President Group CO2, Shell Global
Solutions.
Contributors: Philip Gradwell and Cameron Hepburn
from Vivid Economics; Li Weiming, Chen Jianpeng and
Zhou Jianqi from DRC of the State Council of China;
Liu Xiaoli from the Energy Research Institute, NDRC;
and Fan Jingli and Wu Lin from the China University of
Mining and Technology.
S. Yaodong (&)
Research Department of Industrial Economy, DRC
of the State Council of China, Beijing, China
A. Gillespie
Former Vice President Group CO2, Shell Global
Solutions, The Hague, the Netherlands
1
For example, the supporting documents for power system
reform include the Implementation Opinions on Promoting
the Reform of Power Transmission and Distribution Pricing
Mechanisms, the Implementation Opinions on Promoting
the Development of the Power Market, the Implementation
Opinions on Building and Consistent Operation of Power
Trading Institutions, the Implementation Opinions on the
Orderly Deregulation of Power Generation and Consumption Planning, the Implementation Opinions on Promoting
Power Retail Reform, and the Guidelines on Strengthening
and Regulating the Supervision and Management of
Backup Coal-Fired Power Plants.
© The Author(s) 2020
Shell International B.V. and the Development Research Center (DRC) of the State Council of the People’s
Republic of China (eds.), China’s Energy Revolution in the Context of the Global Energy Transition,
Advances in Oil and Gas Exploration & Production, https://doi.org/10.1007/978-3-030-40154-2_5
393
System Revolution
Shi Yaodong and Angus Gillespie
Innovation plays a crucial role in China’s energy
system transition and revolution. At the 6th
meeting of the Central Leading Group for Financial and Economic Affairs in June 2014, General
Secretary Xi announced that China would:
(i) carry out an energy system revolution to put
China’s energy development on the fast track;
(ii) reform the energy industry into an effective and
competitive market system with a market-oriented
pricing mechanism; and (iii) transform the government’s regulation of the energy industry and
improve the energy legislation system.
There have been many system constraints on the
sustainable development of China’s energy industry
for a long time. For example, state monopoly in the
oil, gas and power sectors has restricted market
competition and kept private capital investment low.
Government price control of those three sectors has
prevented the market from allocating resources
efficiently and distorted the prices of some products.
To address these constraints, the government has
introduced a series of guidelines and reform roadmaps over the past few years. These include the
Opinions of the CPC Central Committee and the
State Council on Further Deepening the Reform of
the Electric Power System (March 2015), the
Opinions of the CPC Central Committee and the
State Council on Advancing the Reform of the
Pricing Mechanism (October 2015), the Opinions
on Deepening the Reform of the Oil and Gas System
(May 2017), and the Action Plan for Energy System
Revolution (July 2017). These guidelines and
roadmaps clearly identify the objectives, pathways
and mechanisms for deep energy system reform.
With the introduction of these guidelines,
action plans and related support measures,
1 the
DRC Team Lead of Special Report 4: Shi Yaodong
from the Research Department of Industrial Economy,
DRC of the State Council of China.
Shell Team Lead of Special Report 4: Angus Gillespie,
Former Vice President Group CO2, Shell Global
Solutions.
Contributors: Philip Gradwell and Cameron Hepburn
from Vivid Economics; Li Weiming, Chen Jianpeng and
Zhou Jianqi from DRC of the State Council of China;
Liu Xiaoli from the Energy Research Institute, NDRC;
and Fan Jingli and Wu Lin from the China University of
Mining and Technology.
S. Yaodong (&)
Research Department of Industrial Economy, DRC
of the State Council of China, Beijing, China
A. Gillespie
Former Vice President Group CO2, Shell Global
Solutions, The Hague, the Netherlands
1
For example, the supporting documents for power system
reform include the Implementation Opinions on Promoting
the Reform of Power Transmission and Distribution Pricing
Mechanisms, the Implementation Opinions on Promoting
the Development of the Power Market, the Implementation
Opinions on Building and Consistent Operation of Power
Trading Institutions, the Implementation Opinions on the
Orderly Deregulation of Power Generation and Consumption Planning, the Implementation Opinions on Promoting
Power Retail Reform, and the Guidelines on Strengthening
and Regulating the Supervision and Management of
Backup Coal-Fired Power Plants.
© The Author(s) 2020
Shell International B.V. and the Development Research Center (DRC) of the State Council of the People’s
Republic of China (eds.), China’s Energy Revolution in the Context of the Global Energy Transition,
Advances in Oil and Gas Exploration & Production, https://doi.org/10.1007/978-3-030-40154-2_5
393