China

CN-6:Energy Development Plan of the 12th Five Year Plan

Policy Description

On January 1, 2013, China’s State Council released the 12th Five Year Energy Development Plan, focusing on the future development of energy supply in China. The plan mentions the existing binding intensity and non-fossil energy targets, in addition to providing detail on China’s aspirations with regards to limiting energy consumption and growing China’s energy production and distribution infrastructure.

 

 

Description

On January 1, 2013, China’s State Council released the 12th Five Year Energy Development Plan, focusing on the future development of energy supply in China. [1] The plan addresses a growing amount of concerns facing China internationally and domestically, and aims to put China on a course to achieve a more secure and environmentally friendly energy supply situation.

The main international concerns it addresses in the plan are:

1) increasing international competition for energy resources;

2) major shifts in energy supply globally (the energy plans specifically points out the rise of shale gas and shale oil, as well as the Fukushima Daiichi nuclear reactor accident);

3) the maintained or increasing volatility of energy markets; and

4) the “complex game” of climate change.

The domestic concerns it addresses are:

1) a difficult energy security situation (57% reliance on foreign oil), whereby national production will be difficult to increase (for instance, the plan notes that the new natural gas production that is currently planned will only meet 30% of forecasted new demand);

2) increasing pressure on the ecological environment, including air, land, and water resources;

3) a continued state of economic development;

4) a lagging energy infrastructure;

5) lack of energy innovation (the energy industry is “big but not strong”); and

6) institutional constraints becoming increasingly apparent, highlighting the need for deepened reform in the energy industry.

 

12th Five Year Plan – Energy Development Plan goals [1]

Category

Indicator

Units

2010

2015

Avg. annual change (cum. change)

Nature of goal

Energy consumption and efficiency

Total primary energy consumption

mtce

3250

4000

4.3%

Expected

Proportion of non-fossil fuels

%

8.6

11.4

〔2.8〕

Binding

Total electricity consumption

TWh

4200

6150

8.0%

Expected

Energy intensity

tce/10000 CNY

0.81

0.68

〔-16%〕

Binding

Thermal power coal consumption

gce/kWh

333

323

-0.6%

Expected

Power line losses

%

6.5

6.3

〔-0.2〕

Expected

Energy production and supply

Domestic energy production

Mtce

2970

3660

4.3%

Expected

Coal production capacity

Mtce

3240

4100

4.8%

Expected

Crude oil production capacity

Mt

200

200

0

Expected

Natural gas production capacity (including conventional gas, coal bed methane, and shale gas)

bcm

94.8

156.5

10.5%

Expected

Non fossil energy production capacity

Mtce

280

470

10.9%

Expected

Electricity development

Electricity capacity

GW

970

1490

9.0%

Expected

Coal-fired power

GW

660

960

7.8%

Expected

Hydropower

GW

220

290

5.7%

Expected

Nuclear power

GW

10.8

40

29.9%

Expected

Natural gas-fired power

GW

26.4

56

16.2%

Expected

Wind power

GW

31

100

26.4%

Expected

Solar power

GW

0.86

21

89.5%

Expected

Environmental protection

Carbon intensity

 

 

 

〔-17%〕

Binding

Coal-fired power sulfur dioxide emissions index

g/kWh

2.9

1.5

-12.4%

Binding

Coal-fired power nitrogen oxide emissions index

g/kWh

3.4

1.5

-15.1%

Binding

Livelihood improvement

Per capita electricity consumption

kWh

380

620

10.3%

Expected

Green energy demonstration counties

Number

108

200

13.1%

Expected

Population using natural gas

Million

180

250

6.8%

Expected

 

 

With these concerns in mind, the plan lays out a series of principles and goals. For principles, the plan will prioritize energy conservation, reduce reliance on foreign energy supply as much as possible, diversify development of energy supply sources, emphasize environmental protection, deepen the reform of energy pricing and market mechanisms, increase innovation and international cooperation, and improve people’s livelihoods. The high-level binding goals in the plan include energy intensity, carbon intensity, non-fossil fuel energy, and coal-fired power emissions index targets. The table below outlines the binding goals outlined in China’s Energy Development Plan as well as its “expected” goals that China sets as important benchmarks for its energy economy.The first expected target is a proposed cap on total primary energy consumption. The Chinese government has been discussing the idea of an energy cap has been for some time now. In 2007, when the National Development and Reform Commission (NDRC) released its 11th Five Year Plan for Energy, it suggested a 2010 primary energy consumption target of 2,700 million tons of coal equivalent (mtce), which would have meant an average annual growth in energy consumption of 4%. [2] This target was well overshot with energy consumption reaching 3.247 mtce in 2010, and an average annual growth in energy consumption of 6.6%. [3] After discussion between National Energy Administration (NEA) officials and provincial energy officials, an expected energy cap target was set for the 12th Five Year Plan at 4,000 mtce in the context of an average GDP growth of 8% and a binding energy intensity target of 16%. [4]

As seen in the table above, the plan also outlines a number of expected production targets for overall primary fuels (coal, oil, and gas) production, as well as the various types of electricity production. Within coal, there is a focus on consolidating the coal supply industry, while within gas, the focus is on expanding the role of coal-bed methane and shale gas. China plans to have 1 trillion cubic meters of proven reserves for coal-bed methane and 600 billion cubic meters of proven reserves for shale gas by 2015. The annual commercial production levels for these two gases should also reach 20 billion cubic meters and 6.5 billion cubic meters, respectively, by 2015. The plan also highlights five “energy bases” and a number of infrastructure improvements. The five energy bases (Shanxi, Ordos, Inner Mongolia East, Southwest China, and Xinjiang) will account for 70% of the country’s domestic energy production. As for the energy that China will need to import, it is planning to scale up imports via new oil and natural gas pipelines from Kazakhstan, Russia, and Myanmar, as well as a liquefied natural gas receiving capacity of 50 million tons. For the new pipelines, China is planning 8,400km of new crude pipeline, 21,000 km of new oil products pipeline, and 44,000 km of natural gas pipelines. For electricity, China is planning to install 200,000 km of ≥320kV power lines with up to 200 GW of interprovincial electricity exchange capacity.

Beyond supply consolidation and infrastructure expansion, China highlighted in the plan its intended initiatives in increasing energy efficiency, improving structural intensity, and increasing the use of energy management systems. China also plans to expand natural gas and renewable energy-based distributed generation, and to improve the policy environment needed to properly support these types of power generation. China has a target of 1,000 natural gas-based distributed generation demonstrations by 2015 (industrial parks were highlighted as an application), as well as 10 GW of distributed solar PV projects. There will 100 “new energy city” demonstrations where the majority of energy comes from distributed renewable energy.  For new energy vehicles, China expects to have domestic production and sales reach 500,000 electric vehicles by 2015.

Policy Information Expand this section for information on the key features of the policy, such as its date of introduction, categorization, main objective(s) and linkages with other policies.

Policy Categorisation

Policy Instrument Type: Administrative

Position in the Pyramid

About Us

Participation: Mandatory

Period

Start Date: 2013

End Date: 2015

Policy Linkages

Supported By Energy and Carbon Intensity Targets of the 12th Five Year Plan Effort Defining

Agencies Responsible

State Council
National Development and Reform Commission
National Energy Administration

Primary Objective: Energy

Objective

To continually meet China growing energy demand while minimizing environmental impact and maximizing energy security.

Target Group

Energy production companies (oil/gas/coal), utilities (State Grid)

Driver of energy consumption or emissions affected by policy: Total energy use, total emissions, carbon intensity

Implementation Information Expand this section for information on targets, monitoring, verification and enforcement regimes, and implementation requirements and tools.

Coverage

This energy development plan is focused on the supply sector, including oil/gas/coal production and distribution companies, as well as electric generators and utilities.

Quantitative Target? yes

Target: While many of the targets put forth in the plan are expected targets for production and distribution of fuels and electricity, a number of the targets are binding, including the energy intensity, carbon intensity, non-fossil fuel energy, and coal-fired power emissions index targets. An overall energy consumption cap is also included, although it is also only a notional/expected target.

Time Period: January 1, 2013 - December 31, 2015

Progress Monitored? yes

Verification Required? yes

Enforced? yes

Requirements on the Target Group

Energy supply and utility companies will strive to meet China’s expected capacity targets in fuel production, electricity generation, and energy supply infrastructure.

Support by Government

Implementation Toolbox

China will emphasize the following strategies in its energy development plan:

­    Prioritize energy conservation

­    Decrease reliance on foreign energy supply as much as possible

­    Diversify development of energy supply sources

­    Emphasize environmental protection

­    Deepen energy supply reform including price reform

­    Increase innovation and international cooperation

­    Improve people’s livelihoods.

Impacts, Costs & Benefits Expand this section to find information on policy effectiveness and efficiency.

Impact Quantitative Estimate Qualitative Estimate
Estimated effect on energy consumption or emissions Decrease energy intensity by 16% and carbon intensity by 17%, while increasing the amount of non-fossil fuel energy up to 11.4%. Energy consumption should slow to around 4 billion tons of coal consumption in 2015, though this is not a binding target.
Estimated costs/benefits for industry
Estimated cost for government
Other Benefits
General Benefits Increased energy security for China

References & Footnotes

References

[1] State Council. Energy Development Plan of the 12th Five Year Plan. Chinese text http://www.gov.cn/zwgk/2013-01/23/content_2318554.htm

[2] NDRC. Energy Development Plan of the 11th Five Year Plan. Chinese text. 能源发展《十一五》规划 http://www.ccchina.gov.cn/WebSite/CCChina/UpFile/File186.pdf

[3] China Climate Change Info Net The outlook on controlling overall energy consumption in China http://www.ccchina.gov.cn/Detail.aspx?newsId=17481&TId=57

[4] China Climate Change Info Net Energy consumption to be controlled in 12th FYP Energy Development Plan (Chinese) http://www.ccchina.gov.cn/Detail.aspx?newsId=39176&TId=57