Two Centenaries.
13 Energy planning is less scientific, authoritative and actionable than it should
be, and the alignment between different plans is
poor. Project approval tends not to be aligned
with implementation.
Even though reforms have been carried out in
the energy industry, progress in some areas is
slow. The boundary between administration and
business is less clear than it should be, and the
government
intervenes
too
much
in
energy-related economic activities. Other concerns to be addressed include the impossibility of
achieving fair competition between market participants of different legal status, the absence of
consistent
market
access
criteria,
the
over-representation of state-owned capital, and
the lack of efficient market-led pricing mechanisms. In 2002 China replaced the examination
and approval system with the verification system,
with the aim of clarifying the obligations of the
government and business, streamlining the process, and regulating investment. However, in the
real world, the verification system looks very
much like administrative approval, which, compared with practices in other developed countries
still has several flaws. In addition, project verification is usually more favourable to large
state-owned enterprises, while setting higher
entry barriers for privately run businesses.
4.2.4 Imperfect Regulation
by Government
The regulatory system for energy is still not
independent, and the regulatory responsibilities
for market entry, pricing, investment, costing and
transaction management are spread across different authorities, including the development and
reform commissions and the energy administrators. The regulatory function is still weak, and
the regulation of oil, gas, coal, new energy and
the Energy Internet is clearly inadequate. There
is no effective rules-based regulation of the
market. Industry regulation of oil and gas pipeline safety, the transfer and assignment of mining
rights, fair third-party access, scientific resource
development, clean production and reasonable
energy consumption is incomplete. In addition,
the competence of professional regulators is
poor. In particular, regulation of technical matters and of compliance with standards and specifications barely meets the needs of conventional
and new energy, nor of the energy transition.
There is a lack of independent and professional regulators. The existing decentralised
regulatory system, characterised by the integration of administration and regulation, fails to
achieve the results expected, especially in market
regulation.
The level of coordination and alignment
between different regulatory departments is poor
—regulatory goals, effectiveness and speed
across different departments and between central
and local government are inconsistent. Decentralisation results in some regulatory functions
being absent or inadequate. Another concern is
the focus on market access approval without
attaching sufficient importance to post-access
regulation. In other words, the government
focuses its regulatory efforts on project identification and approval, not on regulating project
execution and post-project delivery. In addition,
the government addresses economic aspects,
such as investment approval, product and service
price, and production scale, but fails to regulate
externalities like resource conservation, safety,
the environment and quality. Other challenges
include an inadequate legal foundation and a lack
of strict and scientific energy regulatory
standards.
Monopolies in midstream transmission are not
clearly identified, and their regulation is inadequate, especially of power grids and gas pipelines. Grid operators monopolise power purchase
and sale. The building of a regional power market has progressed slowly, power tariff reform is
sluggish, and the separation of transmission and
distribution and the bidding mechanism for grid
connections have yet to be implemented. Gas
transmission still awaits effective regulation and
13
The Two Centenaries mark the founding of the
Communist Party of China (in 2021) and the People’s
Republic of China (in 2049). The goals are to build a
moderately prosperous society in all respects by 2021 and
transform China into a modern socialist country that is
prosperous, strong, democratic, culturally advanced and
harmonious by 2049.
450
S. Yaodong and A. Gillespie
13 Energy planning is less scientific, authoritative and actionable than it should
be, and the alignment between different plans is
poor. Project approval tends not to be aligned
with implementation.
Even though reforms have been carried out in
the energy industry, progress in some areas is
slow. The boundary between administration and
business is less clear than it should be, and the
government
intervenes
too
much
in
energy-related economic activities. Other concerns to be addressed include the impossibility of
achieving fair competition between market participants of different legal status, the absence of
consistent
market
access
criteria,
the
over-representation of state-owned capital, and
the lack of efficient market-led pricing mechanisms. In 2002 China replaced the examination
and approval system with the verification system,
with the aim of clarifying the obligations of the
government and business, streamlining the process, and regulating investment. However, in the
real world, the verification system looks very
much like administrative approval, which, compared with practices in other developed countries
still has several flaws. In addition, project verification is usually more favourable to large
state-owned enterprises, while setting higher
entry barriers for privately run businesses.
4.2.4 Imperfect Regulation
by Government
The regulatory system for energy is still not
independent, and the regulatory responsibilities
for market entry, pricing, investment, costing and
transaction management are spread across different authorities, including the development and
reform commissions and the energy administrators. The regulatory function is still weak, and
the regulation of oil, gas, coal, new energy and
the Energy Internet is clearly inadequate. There
is no effective rules-based regulation of the
market. Industry regulation of oil and gas pipeline safety, the transfer and assignment of mining
rights, fair third-party access, scientific resource
development, clean production and reasonable
energy consumption is incomplete. In addition,
the competence of professional regulators is
poor. In particular, regulation of technical matters and of compliance with standards and specifications barely meets the needs of conventional
and new energy, nor of the energy transition.
There is a lack of independent and professional regulators. The existing decentralised
regulatory system, characterised by the integration of administration and regulation, fails to
achieve the results expected, especially in market
regulation.
The level of coordination and alignment
between different regulatory departments is poor
—regulatory goals, effectiveness and speed
across different departments and between central
and local government are inconsistent. Decentralisation results in some regulatory functions
being absent or inadequate. Another concern is
the focus on market access approval without
attaching sufficient importance to post-access
regulation. In other words, the government
focuses its regulatory efforts on project identification and approval, not on regulating project
execution and post-project delivery. In addition,
the government addresses economic aspects,
such as investment approval, product and service
price, and production scale, but fails to regulate
externalities like resource conservation, safety,
the environment and quality. Other challenges
include an inadequate legal foundation and a lack
of strict and scientific energy regulatory
standards.
Monopolies in midstream transmission are not
clearly identified, and their regulation is inadequate, especially of power grids and gas pipelines. Grid operators monopolise power purchase
and sale. The building of a regional power market has progressed slowly, power tariff reform is
sluggish, and the separation of transmission and
distribution and the bidding mechanism for grid
connections have yet to be implemented. Gas
transmission still awaits effective regulation and
13
The Two Centenaries mark the founding of the
Communist Party of China (in 2021) and the People’s
Republic of China (in 2049). The goals are to build a
moderately prosperous society in all respects by 2021 and
transform China into a modern socialist country that is
prosperous, strong, democratic, culturally advanced and
harmonious by 2049.
450
S. Yaodong and A. Gillespie