tight. Market players and traded products need to
be diversified into futures, options and other
allowance derivatives. The starting price should
not be high. The policies should be progressive,
which may strengthen investors’ trust in the
market and emissions reduction policies. More
carbon asset management training should be
made available for the companies controlled.
Violations of regulations should be penalised.
42
Carbon allowances should be traded in a fair
environment with fluidity. To this end, risk
control during trading, and supervision and
management of market participants and staff,
should be improved. Carbon exchanges play a
unique role in building the national carbon
market. Every pilot province and municipality
should set up its own exchange. We know that
other regions have expressed interest in building
exchanges. Maintaining more than one exchange
in an existing market encourages fair competition
and improves services. But too many exchanges
will reduce average profitability, which might
lead to cut-throat competition and fragmentation
of the national carbon market, resulting in local
protectionism. We should pay attention to these
problems when building the national carbon
market.
43
9 Strategic Transition
and Structural Reform of Energy
Companies
In the context of the global energy transition,
international energy companies and China’s
state-owned companies are undergoing a series
of significant strategic transitions that affect their
decision-making, organisational structure, priorities, global planning, business models, finance
and asset strategies, and digital platforms. In
previous sections of Special report 4 we said that
international oil and gas companies like BP,
Shell and Total have adapted their strategies to
changing market conditions. However, international energy companies are not the only ones
doing this: global electric utilities, especially grid
companies, are also changing their strategies.
This section begins with the findings of research
on power grids in transition by Vivid Economics, a
UK-based consultancy. The section will then discuss the reform of China’s state-owned energy
enterprises (SOEs), since they are a key part of
China’s energy administration system reform. In
the context of China’s slowing economic growth,
severe overcapacity, mounting environmental
pressures, and adjustment of the energy mix, the
reform of China’s SOEs is an important element in
the larger reform of state-owned assets. SOE reform
focuses on optimisation, improving efficiency and
unlocking dynamism. Both central energy enterprises and local state-owned energy companies
have begun their reforms. Given its initial difficulties, the reform programme needs to be pushed
continuously.
9.1 Structural Reform of Global
Energy Companies—
Electricity Grids
in Transition
44
Decarbonisation, decentralisation and intelligent
technologies pose challenges to the global energy
transition. As a result, structural reforms must be
accelerated to ensure energy resources are allocated in a more efficient, safer and more sustainable way, especially renewables like wind
and solar power, thus delivering the strategic
goal of low-carbon energy. The structural
reforms and institutional changes designed to
address the challenges have significant implications for the market-oriented low-carbon reform
of China’s power network.
42
Fai Li, Clear Our Mind: Make Full Preparation for the
National Carbon Market, in Energy Conservation and
Environmental Protection, 2014, pp. 32–33.
43
Zhang Xin, Promoting the National Carbon Market
through Effective Policies and Useful Actions, in Zhejiang
Economy, 2016, pp. 24–26.
44
The main ideas and content in this section are taken
from Electricity Grids in Transition, a research report
prepared for the DRC-Shell Markets Revolution Work
Stream by UK-based Vivid Economics, October 2017.
Special Report 4: China’s Energy System Revolution
555
be diversified into futures, options and other
allowance derivatives. The starting price should
not be high. The policies should be progressive,
which may strengthen investors’ trust in the
market and emissions reduction policies. More
carbon asset management training should be
made available for the companies controlled.
Violations of regulations should be penalised.
42
Carbon allowances should be traded in a fair
environment with fluidity. To this end, risk
control during trading, and supervision and
management of market participants and staff,
should be improved. Carbon exchanges play a
unique role in building the national carbon
market. Every pilot province and municipality
should set up its own exchange. We know that
other regions have expressed interest in building
exchanges. Maintaining more than one exchange
in an existing market encourages fair competition
and improves services. But too many exchanges
will reduce average profitability, which might
lead to cut-throat competition and fragmentation
of the national carbon market, resulting in local
protectionism. We should pay attention to these
problems when building the national carbon
market.
43
9 Strategic Transition
and Structural Reform of Energy
Companies
In the context of the global energy transition,
international energy companies and China’s
state-owned companies are undergoing a series
of significant strategic transitions that affect their
decision-making, organisational structure, priorities, global planning, business models, finance
and asset strategies, and digital platforms. In
previous sections of Special report 4 we said that
international oil and gas companies like BP,
Shell and Total have adapted their strategies to
changing market conditions. However, international energy companies are not the only ones
doing this: global electric utilities, especially grid
companies, are also changing their strategies.
This section begins with the findings of research
on power grids in transition by Vivid Economics, a
UK-based consultancy. The section will then discuss the reform of China’s state-owned energy
enterprises (SOEs), since they are a key part of
China’s energy administration system reform. In
the context of China’s slowing economic growth,
severe overcapacity, mounting environmental
pressures, and adjustment of the energy mix, the
reform of China’s SOEs is an important element in
the larger reform of state-owned assets. SOE reform
focuses on optimisation, improving efficiency and
unlocking dynamism. Both central energy enterprises and local state-owned energy companies
have begun their reforms. Given its initial difficulties, the reform programme needs to be pushed
continuously.
9.1 Structural Reform of Global
Energy Companies—
Electricity Grids
in Transition
44
Decarbonisation, decentralisation and intelligent
technologies pose challenges to the global energy
transition. As a result, structural reforms must be
accelerated to ensure energy resources are allocated in a more efficient, safer and more sustainable way, especially renewables like wind
and solar power, thus delivering the strategic
goal of low-carbon energy. The structural
reforms and institutional changes designed to
address the challenges have significant implications for the market-oriented low-carbon reform
of China’s power network.
42
Fai Li, Clear Our Mind: Make Full Preparation for the
National Carbon Market, in Energy Conservation and
Environmental Protection, 2014, pp. 32–33.
43
Zhang Xin, Promoting the National Carbon Market
through Effective Policies and Useful Actions, in Zhejiang
Economy, 2016, pp. 24–26.
44
The main ideas and content in this section are taken
from Electricity Grids in Transition, a research report
prepared for the DRC-Shell Markets Revolution Work
Stream by UK-based Vivid Economics, October 2017.
Special Report 4: China’s Energy System Revolution
555