new round of institutional reforms to
implement responsibilities relating to
publicly owned natural resources;
(ii) defining the boundary between government and the market, standardising and
simplifying approval procedures, and
reducing the administrative burden on
companies subject to these approvals;
(iii) addressing grid integration of renewable
power and the need for inter-provincial and
interregional power transmission and distribution under the national energy strategy; as well as fully deregulating the power
generation sector and ensuring all regions
purchase and use the legally binding minimum number of hours of wind and solar
power generation annually; and
(iv) improving peak shaving and the backup
auxiliary service market mechanisms,
upgrading thermal power flexibility and
increasing energy storage power sources.
The energy regulatory system should be
improved by:
(i) promoting policymaker-regulator separation, setting up independent, unified and
specialised regulatory authorities, and
improving the regulatory system at the
national and provincial levels;
(ii) defining
regulatory
responsibilities
(mainly for economic regulation), and
strengthening social regulation to ensure
competitive outcomes in natural monopoly
segments such as network infrastructure
(mostly pipelines); and
(iii) improving regulatory capabilities, innovating regulatory approaches, improving
regulatory effectiveness and maintaining a
fair and competitive market.
A modern energy legal system should be
accelerated by:
(i) developing the Energy Law to provide a
basis for the creation and revision of other
laws and regulations in the energy sector;
(ii) revising the Electric Power Law, developing the Oil and Gas Law, improving the
Coal Law as soon as possible, and clarifying the basis for the creation, implementation, assessment, supervision and
adjustment of plans and strategies for
electricity, coal, oil and gas;
(iii) implementing the Energy Conservation
Law and the Renewable Energy Law, and
establishing consistent regulatory, coordination, decision-making and social participation mechanisms; and
(iv) developing energy regulations and establishing and improving existing energy
rules, requirements, approaches and
procedures.
4.2 Create a Nationally Unified
and Dynamic Carbon
Trading Market
China has announced the launch of a nationally
unified carbon trading market, covering key
carbon-emitting industries such as steel, electricity, chemicals, building materials, paper and
non-ferrous metals. From the progress of ongoing pilot programmes, the following challenges
were observed.
First, the failure to achieve market-based
electricity pricing is preventing the carbon trading market from working effectively. China
hasn’t yet established a new mechanism that
enables the market to determine electricity prices.
Electricity price control limits the power sector’s
potential to tap low-cost emissions reduction.
Second, current regulations on carbon emissions are not sufficiently advanced to support the
creation of an effective carbon trading market, as
there are no uniform standards yet on assessment
and approval, trading and settlement, and their
effective supervision is not possible.
Third, the regional carbon trading mechanisms are immature. Domestic products are isolated from the international carbon trading
market. It is still under discussion whether China’s future national carbon trading market should
Overview: High-Quality Energy for High-Quality Growth …
29
implement responsibilities relating to
publicly owned natural resources;
(ii) defining the boundary between government and the market, standardising and
simplifying approval procedures, and
reducing the administrative burden on
companies subject to these approvals;
(iii) addressing grid integration of renewable
power and the need for inter-provincial and
interregional power transmission and distribution under the national energy strategy; as well as fully deregulating the power
generation sector and ensuring all regions
purchase and use the legally binding minimum number of hours of wind and solar
power generation annually; and
(iv) improving peak shaving and the backup
auxiliary service market mechanisms,
upgrading thermal power flexibility and
increasing energy storage power sources.
The energy regulatory system should be
improved by:
(i) promoting policymaker-regulator separation, setting up independent, unified and
specialised regulatory authorities, and
improving the regulatory system at the
national and provincial levels;
(ii) defining
regulatory
responsibilities
(mainly for economic regulation), and
strengthening social regulation to ensure
competitive outcomes in natural monopoly
segments such as network infrastructure
(mostly pipelines); and
(iii) improving regulatory capabilities, innovating regulatory approaches, improving
regulatory effectiveness and maintaining a
fair and competitive market.
A modern energy legal system should be
accelerated by:
(i) developing the Energy Law to provide a
basis for the creation and revision of other
laws and regulations in the energy sector;
(ii) revising the Electric Power Law, developing the Oil and Gas Law, improving the
Coal Law as soon as possible, and clarifying the basis for the creation, implementation, assessment, supervision and
adjustment of plans and strategies for
electricity, coal, oil and gas;
(iii) implementing the Energy Conservation
Law and the Renewable Energy Law, and
establishing consistent regulatory, coordination, decision-making and social participation mechanisms; and
(iv) developing energy regulations and establishing and improving existing energy
rules, requirements, approaches and
procedures.
4.2 Create a Nationally Unified
and Dynamic Carbon
Trading Market
China has announced the launch of a nationally
unified carbon trading market, covering key
carbon-emitting industries such as steel, electricity, chemicals, building materials, paper and
non-ferrous metals. From the progress of ongoing pilot programmes, the following challenges
were observed.
First, the failure to achieve market-based
electricity pricing is preventing the carbon trading market from working effectively. China
hasn’t yet established a new mechanism that
enables the market to determine electricity prices.
Electricity price control limits the power sector’s
potential to tap low-cost emissions reduction.
Second, current regulations on carbon emissions are not sufficiently advanced to support the
creation of an effective carbon trading market, as
there are no uniform standards yet on assessment
and approval, trading and settlement, and their
effective supervision is not possible.
Third, the regional carbon trading mechanisms are immature. Domestic products are isolated from the international carbon trading
market. It is still under discussion whether China’s future national carbon trading market should
Overview: High-Quality Energy for High-Quality Growth …
29