China Boosts Renewables Investments, Considers Carbon Cap. U.S. Could Lose Opportunities Due to Lack of Investments and Investment Plan

Energy
China Considering 10-Year, $738 Billion Energy Plan, Ceiling on Coal Production
SHENZHEN, China—China's National Energy Administration has drafted a 5 trillion yuan ($738 billion) development plan that focuses on tapping non-fossil fuel energy sources such as nuclear, wind, solar, and hydropower in the next two five-year planning periods, according to reports from state media.

Jiang Bing, director general of the agency's Policy Planning Department, told Chinese reporters July 20 that the agency has finalized its planning documents for the energy portion of the 12th Five-Year Plan (2011–2015) and has drafted an energy planning document up to 2020 with a major emphasis on renewable energy and reductions in carbon dioxide emissions, the newspaper People's Daily reported July 21.

The “New Energy and Industrial Development Plan 2011-2020” was drafted and approved by the National Development and Reform Commission and was sent to the State Council, China's top executive body, for approval, the report said.

The 12th Five-Year Plan period will be “critical” for increasing energy efficiency, adopting cleaner technology, and increasing the use of natural gas and other non-coal energy sources, Jiang said.

By 2015, natural gas will account for about 8.3 percent of the energy used in China, according to Jiang. By that same year, hydropower and nuclear together will contribute about 9 percent and other renewable energy sources, such as wind, solar, and biomass, will make up about 2.6 percent, Jiang said.

15 Percent Renewables Goal for 2020
The central government has set a national goal of producing 15 percent of its energy from non-fossil fuel energy sources by 2020, and Jiang estimated that by 2015 this ratio would be about 11 percent.

China's reliance on coal will continue, but the government would like to reduce it from its current 70 percent share of energy produced to about 63 percent by 2020, according to Jiang.

The energy development plans also call for investment in clean coal, smart grids, energy efficiency, and clean energy vehicles and they address “reform of the current electricity price market mechanisms,” he said.

Jiang estimated that about 5 trillion yuan ($738 billion) in direct investments and 15 million new jobs will result from the plans.

Caps on Coal Production Possible
To reduce carbon emissions and to ease its reliance on coal, China could impose a ceiling on coal production by the end of the 12th Five-Year Plan, a National Energy Administration official told China Energy News, a newspaper affiliated with People's Daily, on July 26.

Deputy director Wu Yin told the paper that “after extensive research, we are increasingly aware that there must be a coal production limit in the future” to help consolidate the coal industry and lead to “better coal production and consumption.”
Wu said the industry has overcapacity and that smaller producers could be encouraged to consolidate over the next decade. He estimated that coal's share of the national energy mix could drop to 65 percent in the next 10 years.

According to Securities Daily, a newspaper under the direction of the China Securities and Regulatory Commission, a researcher from the China Coal Industry Development Research Center said July 6 that integration of “small, scattered, and irregularly distributed” coal companies would be a major focus of energy planning for the next five-year plan.

Earlier in the year, China's State Council developed plans to reduce the country's energy intensity, with possible closure of smaller utilities and lower production targets for the steel, cement, and other industries (87 DEN A-6, 5/7/10).