which was formed at the end of the 20th century,
has remained relatively stable, and China’s current regulations and administration reinforce this
situation.
First, the unequal status of different market
participants makes access difficult for
non-state-owned investors, so it is hard to create
a fair market environment. This is not conducive
to improving the overall efficiency of the oil and
gas sector or sharpening the competitiveness of
oil and gas enterprises, nor does it help increase
the exploration and development of domestic oil
and gas resources.
Second, local monopoly markets form
between upstream, midstream and downstream,
and within each part of the oil and gas value
chain, which leads to market separation and
makes it difficult to establish a consistent and
open market system.
Third, various market structures—a national
oil and gas exploration and mining rights trading
market, a pipeline capacity trading market, a
reserves market and a futures trading market—
are all yet to be established. As a result, the
market has very little scope to play a role in
allocating resources; resource use efficiency
could therefore be improved. As a large oil and
gas consumer, China does not have enough say
in international oil and gas pricing.
(2) Many interrelated problems hinder the
development of the electricity market
The Opinions is just a guideline. If the requirements stated in the Opinions are truly to be
implemented and the reform goals achieved, then
support policies and regulations, along with
implementation documentation, are needed.
Problems to be solved in the power sector
include: (i) the relationship between power grid
enterprises and relatively independent electricity
trading institutions urgently needs to be defined;
(ii) power transmission and distribution tariffs
need to be set independently; (iii) market-oriented power generation and sales prices,
other than those for public goods, need to be
phased in; (iv) cross-subsidies for electricity
prices need to be gradually decreased; (v) the
bilateral trading market needs to be kick-started
by increased market participation and a
cross-provincial market mechanism; (vi) power
sales reform needs to be steadily promoted and
power distribution and sale services need to be
deregulated to admit private capital in an orderly
manner; and (vii) the results of reform need to be
safeguarded by legislation.
(3) Barriers in the coal market and severe
decentralised administration remain
Of all the energy sectors, coal has the most
relaxed administration. However, despite the
substantially reduced level of government intervention in the coal market, there are still many
problems in the sector. First, the involvement of
multiple departments in its administration and the
complexity of coal circulation results in high
costs. Second, there are acute transport bottlenecks, such as poor allocation of transport
capacity. Third, coal logistics management is
inadequate, and there are still no emerging coal
circulation companies and logistics centres.
Fourth, supervision of the coal circulation process is poor and there is a serious problem with
pollution. In addition, poor quality control is
holding back the sustainable development of the
coal market.
There are still many obstacles in coal circulation. First, coal logistics generally divides into
west-to-east and north-to-east coal transport, and
any imbalance in economic transformation may
reinforce such supply and demand differences.
Second, rail transport plays a more important role
in the coal logistics system, which is of greater
significance for coal transport in Xinjiang and
eastern Inner Mongolia. Third, water transport is
an important method of north-to-south coal
transport. The coal volume transported by water
increases year by year, and the established
directions of coal flow are undergoing change.
The coal sector features the loosest administration of all primary energy sources. Central
government, local government and coal associations all play a role in the administration of coal.
Although administrative streamlining has
allowed some tasks to be erased or delegated to
Special Report 4: China’s Energy System Revolution
437
has remained relatively stable, and China’s current regulations and administration reinforce this
situation.
First, the unequal status of different market
participants makes access difficult for
non-state-owned investors, so it is hard to create
a fair market environment. This is not conducive
to improving the overall efficiency of the oil and
gas sector or sharpening the competitiveness of
oil and gas enterprises, nor does it help increase
the exploration and development of domestic oil
and gas resources.
Second, local monopoly markets form
between upstream, midstream and downstream,
and within each part of the oil and gas value
chain, which leads to market separation and
makes it difficult to establish a consistent and
open market system.
Third, various market structures—a national
oil and gas exploration and mining rights trading
market, a pipeline capacity trading market, a
reserves market and a futures trading market—
are all yet to be established. As a result, the
market has very little scope to play a role in
allocating resources; resource use efficiency
could therefore be improved. As a large oil and
gas consumer, China does not have enough say
in international oil and gas pricing.
(2) Many interrelated problems hinder the
development of the electricity market
The Opinions is just a guideline. If the requirements stated in the Opinions are truly to be
implemented and the reform goals achieved, then
support policies and regulations, along with
implementation documentation, are needed.
Problems to be solved in the power sector
include: (i) the relationship between power grid
enterprises and relatively independent electricity
trading institutions urgently needs to be defined;
(ii) power transmission and distribution tariffs
need to be set independently; (iii) market-oriented power generation and sales prices,
other than those for public goods, need to be
phased in; (iv) cross-subsidies for electricity
prices need to be gradually decreased; (v) the
bilateral trading market needs to be kick-started
by increased market participation and a
cross-provincial market mechanism; (vi) power
sales reform needs to be steadily promoted and
power distribution and sale services need to be
deregulated to admit private capital in an orderly
manner; and (vii) the results of reform need to be
safeguarded by legislation.
(3) Barriers in the coal market and severe
decentralised administration remain
Of all the energy sectors, coal has the most
relaxed administration. However, despite the
substantially reduced level of government intervention in the coal market, there are still many
problems in the sector. First, the involvement of
multiple departments in its administration and the
complexity of coal circulation results in high
costs. Second, there are acute transport bottlenecks, such as poor allocation of transport
capacity. Third, coal logistics management is
inadequate, and there are still no emerging coal
circulation companies and logistics centres.
Fourth, supervision of the coal circulation process is poor and there is a serious problem with
pollution. In addition, poor quality control is
holding back the sustainable development of the
coal market.
There are still many obstacles in coal circulation. First, coal logistics generally divides into
west-to-east and north-to-east coal transport, and
any imbalance in economic transformation may
reinforce such supply and demand differences.
Second, rail transport plays a more important role
in the coal logistics system, which is of greater
significance for coal transport in Xinjiang and
eastern Inner Mongolia. Third, water transport is
an important method of north-to-south coal
transport. The coal volume transported by water
increases year by year, and the established
directions of coal flow are undergoing change.
The coal sector features the loosest administration of all primary energy sources. Central
government, local government and coal associations all play a role in the administration of coal.
Although administrative streamlining has
allowed some tasks to be erased or delegated to
Special Report 4: China’s Energy System Revolution
437