China puts tighter cap on energy use growth

Central government aims to cut consumption and reliance on imports amid higher fuel costs and worsening pollution on the mainland

PUBLISHED : Friday, 25 January, 2013, 12:00am
UPDATED : Friday, 25 January, 2013, 4:56am


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Beijing aims to slow growth in energy use in a drive to contain its rising dependence on imported fuel.

The central government seeks to cap average annual growth in overall energy consumption at 4.2 per cent between 2011 and 2015, down from 6.6 per cent between 2006 and 2010, according to the 12th five-year energy development plan released yesterday by the State Council.

Its goal is to control "consumption intensity and volume" through changes to economic development designed to create an "energy-efficient society".

The rising cost of fossil fuels and pressure to cut pollution have also driven Beijing to raise the target for non-fossil fuels' share of total energy consumption to 11.4 per cent in 2015 from 8.6 per cent in 2011.

The government wants to see a 16 per cent drop in energy consumption per unit of gross domestic product over the period.

The overall energy development plan came after five-year plans were released for the coal industry in March last year, for the wind and solar sectors in September and for the natural gas industry last month.

"Given it's now already 2013, the late release implies debates over development targets for various types of clean energy," said Peter Yao, BOC International's head of utilities and renewable energy research.

The 2015 targets of 21 gigawatts for installed solar power capacity - up from 0.86GW in 2010 - and 100GW for wind power - up from 31GW in 2010, are the same as those released last year.

But owing to rapid growth in solar panel installations, spurred by Beijing's expanded subsidies in the past half-year, the 21GW target looks conservative.

Beijing was considering raising the 2015 installation target to as high as 40GW, mainland media quoted China Renewable Energy Society deputy secretary general Meng Xiangan as saying.

In conventional energy, Beijing has planned for coal output capacity to rise 4.8 per cent between 2011 and 2015, down from 6.6 per cent growth in the previous five years. Growth in electricity generation will fall to 8 per cent from 11 per cent for the same period.

Oil output growth is to be zero, compared with 2.1 per cent previously, as the industry struggles to find enough economically extractable reserves to replace depleted ones, while the goal for cleaner-burning natural gas falls to 10.5 per cent from 14 per cent.

By replacing some oil demand for transport fuel with gas, Beijing hopes to contain the country's dependence on oil imports to within 61 per cent of consumption in 2015, compared with 2011's goal of 57 per cent.

"We believe gas' destiny in China is to break oil's monopoly on transport fuel, as the world does not have enough oil for the Chinese to drive en masse," a Jefferies research note said.