Will new national energy agency be just another toothless body?

PUBLISHED : Monday, 01 February, 2010, 12:00am
UPDATED : Monday, 01 February, 2010, 12:00am

After more than two years of bureaucratic wrangling, the mainland leadership last week announced the establishment of the National Energy Commission (NEC). Energy analysts and some overseas media have been quick to hail the significance of the supra-ministry agency, which reflects the high priority of the energy issue because of the mainland's thirst for oil and coal to fuel its economic expansion.

According to a State Council notice last week, the commission will be headed by Premier Wen Jiabao with Executive Vice-Premier Li Keqiang as the deputy head. Its members include ministers of the mainland's 21 most powerful agencies. According to the mainland hierarchy, such a high-level make-up of the commission denotes serious power and broad policy purview.

Some overseas media has highlighted the unusual fact that the commission has included a deputy chief of staff from the People's Liberation Army, the minister of state security, and the foreign minister. So, it appears that the mainland leadership intends to seek better co-ordination and strong overview of the government's efforts to secure energy supplies abroad.

Despite its powerful status, serious questions remain over the effectiveness of the commission.

According to the State Council notice, the commission will draft energy development strategy, review energy security and co-ordinate international co-operation.

This is not the first time that the mainland leadership have attempted to create a powerful agency to oversee energy but the previous attempts have produced little. As part of the economic reforms, the mainland leadership abolished the ministry of energy in 1993 and created three national energy conglomerates, leaving the regulatory power to a dozen government ministries.

For instance, the energy pricing and approval for major energy projects are the purview of the National Development and Reform Commission, and the Ministry of Commerce is responsible for approving the Sino-foreign energy deals. In 2003 the NDRC set up an energy bureau seeking to consolidate power over energy policies but it remained largely toothless due to resistance from other government ministries.

In 2005 the mainland leadership set up a national energy leading group headed by Premier Wen, to study major energy issues and seek better management of the energy industry. At that time it also sounded powerful enough with the team members including the foreign minister, minister of commerce and finance minister and with the top officials from the NDRC handling the detailed task.

But the leadership team appeared to focus more on discussing principles and guidelines rather than pushing for regulatory reforms. In 2008 the mainland leadership tried to create a new ministry for energy with broad regulatory powers but the attempt was successfully blocked by the NDRC which did not want to lose control of its energy bureau and other government ministries with vested interests.

Now the new National Energy Commission appears to be the enlarged version of the national energy leading group with more members, but still counting on NDRC officials to handle the liaison. So it is little wonder many energy analysts are concerned the new commission will be another toothless body.

Let's hope not. China is the world's second largest energy consumer after the United States. Internationally it is faced with more pressure over its aggressive energy quests and raising energy efficiency to reduce global warming. Its oil dependence on foreign imports is already over 50 per cent.

Domestically, energy supply has become a serious bottleneck for economic growth and has begun to seriously affect people's lives. Recently the mainland has experienced mini energy crises when power demand soared after major snow in the north or hot weather in the south. As usual, energy officials blame the unusual weather but the root of the problem lies with the mainland's weak energy planning and regulatory mess.


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