for power, coal, oil and gas. This will support
national energy security and sustainability, and
address existing problems, such as the lack of
unified fundamental principles that underpin
legislation, and the lack of coordination, consistency and cohesion in the current energy legal
system.
4.3.4 Strategic Priorities
(1) Creating a modern energy market system
Natural monopoly segments will be separated
from competition-based segments, and the market access mechanism will be improved to
encourage diversified participants to invest in
different segments of the energy industry in an
orderly manner. Trading regimes for the energy
market will be introduced or improved, and a
modern hierarchical energy market system,
including links between the national market and
multiple regional markets, will be formed. Power
system operators capable of performing dispatching and transactions independently will be
established to separate the power transmission
and distribution businesses. Oil and gas and coal
exploration and mining rights will be acquirable
only through bidding and market competition.
Oil and gas pipeline operators will be encouraged
to gain exclusive rights, pipeline transport services will be completely separated from sales,
and fair third-party access to pipelines and other
infrastructure will be allowed. Deployment of a
global Energy Internet that connects everything
and comprehensive energy service markets will
be accelerated. An energy system that facilitates
neutral peer-to-peer interconnection between
centralised and distributed energy sources, as
well as between energy storage and load devices,
will be deployed.
(2) Reshaping the energy market pricing
mechanism
A scientific pricing mechanism for monopoly
segments will be created, combining constraints
and incentives, and based on cost supervision
and audits. By introducing scientific, transparent
and consistent regulation, monopoly segments
will be encouraged to undertake healthy and
sustainable development and to reduce their
costs. Prices in competition-based segments will
be deregulated and shift to a market-led pricing
mechanism. Performance-based, complete, independent and incentive-guided power transmission and distribution pricing systems will be
created. Pricing reform in inter-provincial and
local power transmission will be introduced.
Studies will be conducted to determine the correct tariffs for regional distribution grids, and the
formation of a complete power transmission and
distribution regulatory system will be accelerated. Studies will be conducted on methods that
can be used to publish power transmission and
distribution fees and price information, as well
as methods to determine and distribute voltagebased costs. The price of oil products and gas
will be deregulated and determined by market
competition. Apart from the gas distribution
network, charging for the use of other oil and gas
pipeline infrastructure will be decided by the
market. Subsidy and assistance mechanisms will
target people in need and industries serving the
public good. Cross-subsidies will be eliminated
and an energy price regulation regime will be
perfected to establish a reasonable price ratio
between different types of energy.
(3) Creating an efficient energy administration regime
A central regulatory body for state-owned natural
resources and the environment will be formed to
oversee land use, environmental conservation
and recovery, pollutant emissions and enforcement. Planning, policy, standards and incentives
will be used to administer energy industry
development in a holistic manner. The boundary
between government and market will be clarified,
and complete lists defining powers and duties
will be created. Approved plans will be carried
out effectively, approval criteria clearly defined,
approval procedures streamlined and administrative approval powers revoked or delegated, all
of which will reduce government intervention on
specific issues. Renewable energy integration
Special Report 4: China’s Energy System Revolution
453
national energy security and sustainability, and
address existing problems, such as the lack of
unified fundamental principles that underpin
legislation, and the lack of coordination, consistency and cohesion in the current energy legal
system.
4.3.4 Strategic Priorities
(1) Creating a modern energy market system
Natural monopoly segments will be separated
from competition-based segments, and the market access mechanism will be improved to
encourage diversified participants to invest in
different segments of the energy industry in an
orderly manner. Trading regimes for the energy
market will be introduced or improved, and a
modern hierarchical energy market system,
including links between the national market and
multiple regional markets, will be formed. Power
system operators capable of performing dispatching and transactions independently will be
established to separate the power transmission
and distribution businesses. Oil and gas and coal
exploration and mining rights will be acquirable
only through bidding and market competition.
Oil and gas pipeline operators will be encouraged
to gain exclusive rights, pipeline transport services will be completely separated from sales,
and fair third-party access to pipelines and other
infrastructure will be allowed. Deployment of a
global Energy Internet that connects everything
and comprehensive energy service markets will
be accelerated. An energy system that facilitates
neutral peer-to-peer interconnection between
centralised and distributed energy sources, as
well as between energy storage and load devices,
will be deployed.
(2) Reshaping the energy market pricing
mechanism
A scientific pricing mechanism for monopoly
segments will be created, combining constraints
and incentives, and based on cost supervision
and audits. By introducing scientific, transparent
and consistent regulation, monopoly segments
will be encouraged to undertake healthy and
sustainable development and to reduce their
costs. Prices in competition-based segments will
be deregulated and shift to a market-led pricing
mechanism. Performance-based, complete, independent and incentive-guided power transmission and distribution pricing systems will be
created. Pricing reform in inter-provincial and
local power transmission will be introduced.
Studies will be conducted to determine the correct tariffs for regional distribution grids, and the
formation of a complete power transmission and
distribution regulatory system will be accelerated. Studies will be conducted on methods that
can be used to publish power transmission and
distribution fees and price information, as well
as methods to determine and distribute voltagebased costs. The price of oil products and gas
will be deregulated and determined by market
competition. Apart from the gas distribution
network, charging for the use of other oil and gas
pipeline infrastructure will be decided by the
market. Subsidy and assistance mechanisms will
target people in need and industries serving the
public good. Cross-subsidies will be eliminated
and an energy price regulation regime will be
perfected to establish a reasonable price ratio
between different types of energy.
(3) Creating an efficient energy administration regime
A central regulatory body for state-owned natural
resources and the environment will be formed to
oversee land use, environmental conservation
and recovery, pollutant emissions and enforcement. Planning, policy, standards and incentives
will be used to administer energy industry
development in a holistic manner. The boundary
between government and market will be clarified,
and complete lists defining powers and duties
will be created. Approved plans will be carried
out effectively, approval criteria clearly defined,
approval procedures streamlined and administrative approval powers revoked or delegated, all
of which will reduce government intervention on
specific issues. Renewable energy integration
Special Report 4: China’s Energy System Revolution
453