(2) Energy regulation and policies play an
increasingly important role
Government regulation and policies are playing
an increasingly important role. The government
has promoted a shift in energy production by:
(i) introducing an assessment system for energy
conservation and emissions reduction; (ii) restraining total energy consumption by shutting
down outdated production facilities and cutting
overcapacity; and (iii) stimulating the development of new and clean energy with tax incentives. Although these are all government-led
mandatory policies, they have delivered genuinely strong results to date. The ability of government regulations and policies to incentivise or
disincentivise the energy industry is critical to the
efforts to create an ecological civilisation and
promote sustainable energy development.
However, government is still intervening in
market access. The government has imposed
selective control of the energy sector and set
many access thresholds in terms of investment
scale, site choice, equipment level and product
sourcing for energy development projects. Compared with large enterprises and foreign-owned
companies, small and medium-sized enterprises
and domestic companies are faced with high
restrictions on access.
(3) Energy planning promotes balance and
adapts
to
economic
and
social
development
Planning is an important government function in
the energy system and is increasingly adapted to
economic and social development.
Energy planning has been shifting from
“meeting demand with sufficient supply” to balancing supply and demand. China’s energy
market has entered an era of diversified competition, where energy substitution occurs at multiple levels and supply and demand are changing
rapidly. The previous energy market, driven by
supply, has changed, with the demand side now
playing an increasingly important role.
Energy planning functions have also changed,
from mandatory to directive. Previously, energy
planning started from the supply side and
focused on state-owned energy enterprises in key
sectors. With the reform of the energy market
and enterprises, the mandatory planning function
is gradually weakening and energy plans are
rapidly assuming a more directive role.
Energy planning has gradually become scientific, consistent and democratic. The practices
in the 12th and 13th Five-Year Plans (2011–15
and 2016–20 respectively) prove that the government values research during the early stages
of energy planning and seeks opinions from all
walks of life, striving to ensure that energy plans
are in the common interests of all stakeholders.
(4) Energy strategies are valued factors in
decision-making
China values energy strategies and considers
them an important basis for decision-making.
Both central and local government develop
strategies for each energy source and each part of
the energy value chain, as well as medium- and
long-term strategies for some key sectors. China’s Strategic Action Plan on Energy Development (2014–20) of the General Office of the State
Council describes the major actions and safeguards required to implement energy strategies.
(5) Energy reserves are valued and emergency response stocks have improved
Energy reserves are the responsibility of the
energy administration under the central government. Reserves of fossil fuels are mainly physical
(energy products) and cannot respond quickly to
ongoing events. In terms of energy source, China’s reserves are mainly oil and coal. The oil
reserve is of strategic significance. Due to China’s high self-sufficiency in coal, coal reserves
are not kept at strategic levels. In addition, natural gas reserves are mainly used for balancing
gas supply with demand, so natural gas storage
facilities are small and used for peak shaving.
National strategic oil reserves are the responsibility of the National Energy Administration
(NEA). China has built a national oil reserve
centre. The NEA is responsible for building and
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S. Yaodong and A. Gillespie
increasingly important role
Government regulation and policies are playing
an increasingly important role. The government
has promoted a shift in energy production by:
(i) introducing an assessment system for energy
conservation and emissions reduction; (ii) restraining total energy consumption by shutting
down outdated production facilities and cutting
overcapacity; and (iii) stimulating the development of new and clean energy with tax incentives. Although these are all government-led
mandatory policies, they have delivered genuinely strong results to date. The ability of government regulations and policies to incentivise or
disincentivise the energy industry is critical to the
efforts to create an ecological civilisation and
promote sustainable energy development.
However, government is still intervening in
market access. The government has imposed
selective control of the energy sector and set
many access thresholds in terms of investment
scale, site choice, equipment level and product
sourcing for energy development projects. Compared with large enterprises and foreign-owned
companies, small and medium-sized enterprises
and domestic companies are faced with high
restrictions on access.
(3) Energy planning promotes balance and
adapts
to
economic
and
social
development
Planning is an important government function in
the energy system and is increasingly adapted to
economic and social development.
Energy planning has been shifting from
“meeting demand with sufficient supply” to balancing supply and demand. China’s energy
market has entered an era of diversified competition, where energy substitution occurs at multiple levels and supply and demand are changing
rapidly. The previous energy market, driven by
supply, has changed, with the demand side now
playing an increasingly important role.
Energy planning functions have also changed,
from mandatory to directive. Previously, energy
planning started from the supply side and
focused on state-owned energy enterprises in key
sectors. With the reform of the energy market
and enterprises, the mandatory planning function
is gradually weakening and energy plans are
rapidly assuming a more directive role.
Energy planning has gradually become scientific, consistent and democratic. The practices
in the 12th and 13th Five-Year Plans (2011–15
and 2016–20 respectively) prove that the government values research during the early stages
of energy planning and seeks opinions from all
walks of life, striving to ensure that energy plans
are in the common interests of all stakeholders.
(4) Energy strategies are valued factors in
decision-making
China values energy strategies and considers
them an important basis for decision-making.
Both central and local government develop
strategies for each energy source and each part of
the energy value chain, as well as medium- and
long-term strategies for some key sectors. China’s Strategic Action Plan on Energy Development (2014–20) of the General Office of the State
Council describes the major actions and safeguards required to implement energy strategies.
(5) Energy reserves are valued and emergency response stocks have improved
Energy reserves are the responsibility of the
energy administration under the central government. Reserves of fossil fuels are mainly physical
(energy products) and cannot respond quickly to
ongoing events. In terms of energy source, China’s reserves are mainly oil and coal. The oil
reserve is of strategic significance. Due to China’s high self-sufficiency in coal, coal reserves
are not kept at strategic levels. In addition, natural gas reserves are mainly used for balancing
gas supply with demand, so natural gas storage
facilities are small and used for peak shaving.
National strategic oil reserves are the responsibility of the National Energy Administration
(NEA). China has built a national oil reserve
centre. The NEA is responsible for building and
430
S. Yaodong and A. Gillespie