China Related Energy Issues & Quarterly Briefs on major China energy related trends/issues

 


China Related Energy Issues

 

 

China Weekly Energy Updates (1/11/2012-1/18/2013


IRENA Sets Goal to Double Global Renewable Energy Capacity by 2030, Welcomes China to Its Ranks (Renewable Energy World. January 14, 2013)

-          Earlier this week, China announced its intent to become a full member of the International Renewable Energy Agency (IRENA), the UN-sponsored organization based in United Arab Emirates;

-          IRENA aims to double global renewable energy capacity by 2030 from 15 to 30 percent, which require renewable power generation capacity to grow to 150GW from the current 110GW; The addition of China to the members’ list is considered a major boost toward this goal.

 

China economy rebounds in final quarter (Financial Times. January 18, 2013)

-          China’s GDP growth in the final quarter of 2012 rebounded to a 8-month high of 7.9 percent, according to the National Bureau of Statistics; this strong finish to 2012 was a result of increased infrastructure spending, slightly loosening of monetary policy, stabilizing exports, and momentum in the property sector;

-          Both industrial output and retail sales for December 2012 climbed from the previous month, while fixed asset investment slowed down by 0.1 percentage point from the first 11 months of the year;

-          While economists in China expect no major policy shift as the country is still in the middle of a generational leadership transition, the central government in Beijing did put a halt on irregular financing activities where loans are made through shadow bank institutions; the impact of this measure on investment will likely be felt later in 2013.

 

BUSINESS: Gas technology deals emerge from aggressive pursuit of partners in China (EnergyWire. January 14, 2013)

-          Synthesis Energy Systems Inc. (SES), a Houston-based technology developer, teamed up with Yima Coal Industry Co. Ltd. for the construction of a $250 million coal-to-methanol plant in Henan Province. The plant uses a gasification technology based on original research by GTI; SES and Yima hold 25% and 75% stake in the project, respectively; meanwhile Honeywell is heavily investing into sales of gas processing technologies to China and other Asian countries; other technology developers as well as oil & gas field service providers are also stepping of their efforts in China;

-          These companies have to bear with political uncertainties, changing attitude of local businesses, and weak IP right protection in China; it is critical that a foreign company find the “right” domestic partner, says Trevor Smith of GTI.

 

China Working to Cut Idled Wind Farm Capacity, Official Says (Bloomberg. January 11, 2013)

-          China plans to reduce idle wind power capacity to as low as 10 percent by the end of 2013, from 25 percent in 2011, by providing more economic incentives to grid companies who have been reluctant to take wind power for all the extra work required while seeing little financial gain;

-          China added 16.4 GW of wind capacity in 2012, and expects another 18 GW this year, in addition to a 10 GW solar capacity; efforts by local governments to rescue financially struggling solar panel makers would certainly help boost solar installation. However, analysts from Bloomberg New Energy Finance predict a somewhat slower growth for solar due to electricity trading restrictions, grid connection problems, and project quality issues, etc.

 

-          In a related piece from Financial Times, following two overseas acquisitions of thin film companies, Chinese energy company Hanergy is planning to buy more thin film developers, because the company believes it is where the future of global solar development lies, according to Hanergy’s chairman, Li Hejun; he expressed his confidence in this somewhat bold strategy which analysts remain skeptical of due to the thin film sector’s commercial failures in the past, the technology’s lack of competitiveness against crystalline silicon, as well as the fact that Hanergy and its newly acquired subsidiaries have little experience in the production of thin film.

 

China retakes renewables investment lead (Financial Times. January 14, 2013)

-          China regained the lead in global investment in renewable energy for 2012, according to BNEF research findings; the country spent a record $67.7 billion – a 20% increase from the previous year, despite a decline in global total investment from $302.3 billion to $268.7 billion; solar energy accounted for $142 billion while wind contributed another $19 billion;

-          Market uncertainty, the shale revolution in the United States, the Eurozone crisis, and the price slump in solar all contributed to renewable subsidy cuts;

-          Somewhat unexpectedly, new markets in Africa, the Middle East, Latin America and the less advanced Asian economies show faster growth than the traditionally strong performers such as China, the US, and Europe.

 

Cnooc Says Nexen Deal Will Wait a Quarter (The Wall Street Journal. December 28, 2012)

-          A CNOOC spokeswoman said that the proposed acquisition of Nexen Inc., a deal approved by the Canadian government last year, is still waiting for approval by the U.S. government and the decision most likely won’t arrive until the beginning of the second quarter of 2013;

-          CNOOC offered $27.50 a share in this all-cash bid in July 2013 – a 60% premium on the last trading day of Nexen’s share before the bid was submitted.

 

Construction of the World's First Gen-IV Nuclear Reactor Began in China (in Chinese. iFeng News. January 18, 2013)

-          The 200-MW Shidaowan project, which features indigenous high-temperature, gas-cooled (HTGR) modular reactor technology, has recently entered construction phase in Shandong province after a nearly two-year delay after the Fukushima incident; it is the world’s first commercial-scale HTGR modular facility with Gen-IV safety features;

-          The project is jointly developed by Huaneng Group, Tsinghua University, and China Nuclear Engineering Group (CNEC), with a total capital cost of over $500 million, and expected to enter service by the end of 2017. 

 

 

China Weekly Energy Updates (12/14/2012-12/21/2012)

Alstom wins EUR40m gas turbines contract in China (Energy Business Review. December 20, 2012)

-          Harbin Turbine Company (HTC), a subsidiary of the state-owned Harbin Electric Corporation (HEC) has awarded a $40 million contract to Alstom, who will supply two sets of GT 13E2 gas turbine generators for Huaneng’s Tongxiang 517MW combined cycle power plant in Zhejiang Province;

-          Alstom is already building turbines pursuant to an earlier contract with HTC – for a gas-fired power plant in Singapore and wholly owned by Huaneng Power International.

China to overhaul struggling solar panel industry (Fuel Fix. December 20, 2012)

-          In an attempt to rescue its stagnant solar panel industry ($17.5 billion in debt), the Chinese government announced that it will encourage mergers among producers, reduce public support, and block local officials’ efforts of bailing out the troubled panel makers for the sake of the local economies; in some cases, panel makers will be allowed to declare bankruptcy;

-          Shares of U.S.-traded Chinese producers rose on the announcement – Suntech’s share value increased by 17.8%, while Trina and Yingli gained 9.3% and 7.1%, respectively;

-          Excessive supply capacity, an ongoing price war, and the recently announced sanctions by the U.S. and EU on trade rule violation grounds compelled some privately-owned panel suppliers to sell assets to state-owned enterprises, which was viewed as the start of a wave of consolidation.

China to Pay $1.4 Billion in Subsidies for Renewable Energy (Bloomberg. December 18, 2012)

-          Through a statement on Ministry of Finance’s website, the NDRC has announced that a total of 8.6 billion yuan ($1.4 billion) in subsidies will be paid to renewable-generated electricity this year; wind power is expected to get 5.9 billion yuan, while 2 billion yuan has been earmarked for biomass projects, with the remaining going to solar energy;

-          China set a target of 100 GW of wind, 21 GW of solar, and 13 GW of biomass by 2015.

Chinese agency approves eight power transmission projects (Energy Business Review. December 12, 2012)

-          The NDRC has given approval to a total of eight T&D projects, with three each in Hunan and Shandong, and one each in Hebei and Fujian; the largest project among the eight in terms of investment, located in Changsha, the provincial capital of Hunan, has a transmission capacity of 500kV;

-          Just last week, six other T&D projects were approved with a total investment of $148 million; and since April this year, the total number of T&D projects approved has reached 24, at a cost of $1.23 billion.

IEA Boosts Global Oil Demand Forecasts on China Economic Rebound (Bloomberg. December 12, 20120)

-          Seeing signs of a rebound in Chinese oil demand, the IEA increased its world oil demand forecast for Q4 2012 and all-year 2013; it says that Q4 2012 consumption will be 435,000 barrels, or 0.5% higher than it was in Q3; in 2013, global demand will rise 865,000  barrels a day to 90.5 million;

-          The IEA cites market optimism about China’s economy and signs of the country’s return to more robust oil demand growth as the main reason for an expansion in its demand forecast; China will consume 9.9 million barrels a day, recording a 115,000 barrels increase compared to last month’s forecast; and it is expected to consume 9.8 million barrels a day in 2013;

-          China’s economy seems to be picking up speed from a seven-quarter slowdown: it is expected to grow 7.9% in Q4 2012; its net-crude imports in November registered a six-month high at more than 10 million barrels a day that were processed at its refineries.

 

 

China Weekly Energy Updates (12/1/2012-12/7/2012)

 

China Shale-Gas Auction Yields 'a Strange Result' (The Wall Street Journal. December 6, 2012)

-          China’s Ministry of Land Resources (MLR) has announced the result of the 2nd round shale gas auction; the top three bidders for each block were shortlisted, with the block going to the first bidder barring voluntary/involuntary disqualification or withdrawal;

-          The fact that none of the winners are related to the “big four” oil companies, and that only a handful of subsidiaries of the “big five” power companies were shortlisted, came as no surprise to people familiar with the industry: it is commonly understood that the major oil companies already own abundant shale resources within their existing oil & gas assets;

-          What is telling, though, is that a significant proportion of the winning bidders appear to have little to no experience in not just unconventional O&G exploration but the O&G industry in general – some of them sell consumer products and home alliances, as well as lighting tools and auto parts. This clearly demonstrates the level of immaturity of shale gas in China, said Simon Powell, an analyst; it is also quite disappointing that despite the auction was open to the private sector, very few non-state entities won the top spot.

-          The lack of expertise/experience of the winners may create business opportunities for U.S.-based oilfield service providers.

China tells grid to pay overdue renewables subsidies (Recharge. December 5, 2012)

-          The NDRC has ordered China’s grid companies to pay wind power producers a proportion of the long-overdue subsidies (retroactively from October 2010 to April 2011) within 10 days starting November 26; currently the total amount owed to developers stands at $3.7 billion, and about $640 million will be paid back this time; it is unclear whether and how the remaining $3 billion will be paid;

-          Overdue subsidies withheld by grid companies have been causing financial difficulties for both wind energy developers as well as their suppliers in the past 2 years; a new payment system currently being implemented will ensure that grid companies receive subsidies each month based on power generation estimates, which will facilitate the payment process to wind energy developers.

Russia, China sign deal to build two new reactors at Tianwan nuclear plant (Energy Business Review. December 7, 2012)

-          Under the intergovernmental agreement signed by Premier Wen Jiabao and Russian Prime Minister Dmitry Medvedev, the Russia-based Rosatom civilian nuclear power corporation will build the second phase (unit 3 & 4) at Tianwan nuclear power plant in Jiangsu; construction will be by the end of 2012;

-          The first phase of Tianwan station with two VVER-1000 reactors was delivered in 2007 by the Atomstroyexport corporation, also from Russia.

China seeks partnership to build Turkish nuclear plant (Energy Business Review. December 6, 2012)

-          China is in a bidding war with companies from Canada, Japan, and South Korea to build the second nuclear power plant in Turkey, located in Sinop on the Black Sea;

-          A significant advantage of China’s proposal, according to Turkish Energy Minister Taner Yildiz, is that China is offering financing without a Treasury guarantee.

Cnooc resubmits deal to US regulator (Financial Times. November 28, 2012)

-          CNOOC and Nexen have withdrawn and resubmitted their proposal for the $18 million takeover to the Committee on Foreign Investment in the US (CFIUS) by “mutual agreement”; less than 10% of Nexen’s assets are located in the United States, mainly in the Gulf of Mexico, where some sensitivities remain for CFIUS;

-          One explanation offered by Edward Rubinoff, a D.C.-based lawyer, is that CFIUS was reluctant to make a decision before its Canadian counterpart does, and a “mutually agreed” resubmission of proposal seemed to be the only sensible way as the 75-day limit was coming to an end.

 

China Weekly Energy Updates (11/4/2012-11/11/2012)

China's Sinopec Moves Into Small U.S. Town (Wall Street Journal. November 5, 2012)

-          The engineering arm of Sinopec has reached a deal with Houston-based DKRW Advanced Fuels to build a coal-to-liquid plant with CCUS in Medicine Bow, Wyoming; the project reportedly costs about $2 billion, which will use less pricey raw materials and components transported from China;

-          Chinese O&G companies generally lack expertise in upstream operations but have a lot to offer in refining, processing, and distribution businesses; it will benefit local economies by creating jobs and achieve cost-saving for the project owners; it also helps China open up new market for its ever-growing industrial capacity;

-          It is not clear whether there will be Chinese banks providing finance for the project; construction is expected to start in early 2013.

China's shale gas stocks buoyed by supports (China Daily. November 15, 2012)

-          China has announced that it is considering a set of policies that will support the development of shale gas, including market-based pricing mechanism, favorable tax policies, and measures that help lower exploration risks; the announcement was made at the China International Shale Gas Summit 2012 in Chongqing;

-          There will also be a subsidy of 0.4 Yuan per cubic meter from 2012 through 2015 for shale gas developers in China; it is expected that more tax exemptions and subsidies will be granted as companies that won their bids in the 2nd round auction start working on the shale blocks.

Shell to Start Chinese Shale Gas Project Development From 2014 (Bloomberg. November 15, 2012)

-          Royal Dutch Shell, in partnership with CNPC, are expected to make a final decision by the end of 2013 on whether to make “billions” in investment on their joint shale gas exploration project in China; the companies have so far drilled 24 test wells and plan to drill 14 more next year; some cost reduction has been achieved in the past few months, according to Shell’s director of international production Andy Brown;

-          Matthias Bichsel, Shell’s global director of projects and technology, said China will need to extend its gas pipelines as it pushes ahead the shale gas program, which could take longer than it did in the United States.

China Electricity-Output Growth Rebounds (Wall Street Journal. November 9, 2012)

-          Data released by China’s National Bureau of Statistics shows that electricity output for October grew by 389.8 kWh, up 6.4% from the same period in 2011; this is the highest growth rate in the last three months and indicates a moderate recovery of the country’s manufacturing sector;

-          The Chinese government has made a series of moves to stimulate investment on infrastructure, including new subway systems, highways, etc. which led to a year-on-year industry output growth of 9.6% -- 0.4% more than it was for September.

China Solar Energy Lifelines Defy Speculation of Forced Mergers (Renewable Energy World. November 13, 2012)

-          Chinese solar panel makers such as LDK Solar and Suntech are getting help from their local governments as they struggle to avoid entering bankruptcy; this is contrary to the central government’s effort to consolidate the country’s solar panel market, much similar to what has been witnessed in the steel and coal industries;

-          Share values of Suntech, LDK, and others alike continue to drop, while their debt to equity ratios have soared from a year earlier; Suntech and LDK together recorded a $987 million loss in 2012;

-          With vested interest in the survival of the panel makers and fear of social unrest caused by job cuts, provincial and local governments are helping them repay bank loans and essentially keep them on life support; in some localities, banks have threatened to seize lending activities until they get their money back;

-          Local support to the ailing panel makers are seen as the biggest obstacle to a more competitive solar market in China.

China to boost foreign access to markets (Financial Times. November 11, 2012)

-          Following a passing reference about reforming and opening up China’s financial system in Hu Jintao’s farewell speech as CPC General Secretary, Guo Shuqing, chairman of China’s Securities Regulatory Commission, said that foreign investors will be given greater access to the country’s capital markets;

-          Mr. Guo said that the cap under which the amount of RMBs can be brought into China as well as the limit of investment by both institutions and individuals from overseas will be lifted; the long-standing concerns about the stock market’s lack of transparency and weak corporate governance will also be addressed as part of the reform agenda.

For Sinopec, Team Ball Is the Way to Win the West (Wall Street Journal. November 13, 2012)

-          Chairman Fu Chengyu of Sinopec, while in London to receive his “Petroleum Executive of the Year” award, said Sinopec does not intend to fully acquire Talisman Energy Inc, with whom the Chinese oil giant just inked a deal to purchase $1.5 billion worth of asset in the North Sea; however he did not rule out the possibility of participating in an acquisition of Talisman in some way in the future, if and when it is up for sale;

-          Under Fu’s leadership, Sinopec has been working to reach foreign partnerships that only aim to boost production locally instead of bringing the resources back to China; this strategy both makes its proposals more appear friendlier to local stakeholders, and helps the company diversify its portfolio in an increasingly volatile global petroleum market.

 

China Weekly Energy Updates (8/31/2012-9/7/2012)

 

Datang is latest wind operator to feel pinch of Chinese grid (Recharge. August 31, 2012)

-        Datang Renewables has reported a 76% decline in net profits this year, which the company said was caused by grid curtailment in northern China where there is a gap created between overcapacity in wind power and “premature grid structure and insufficient peak-load modulation capability”; Datang’s average utilization hours have dropped to 880 hours as a result of grid curtailment;

-        To offset profit decline in northern China, the company is taking multiple measures such as shift of focus to southern China which is not subject to grid curtailment, heat generation from wind power units, development of distributed generation projects, and R&D in energy storage.

-        The renewable energy division of Huaneng is facing a similar situation – see here

 

Security fears shelved amid China nuclear bid (Financial Times. August 19, 2012)

-        Although the British government, led by Prime Minister David Cameron, has been asking for more Chinese investment into infrastructure projects in the UK, China’s controlling stake in the Horizon nuclear projects is nonetheless controversial among politicians and the public who fear that China’s involvement in such a sensitive industry could potentially breach Britain’s national security;

-        However, the stance of 10 Downing street remains that whoever controls the Horizon project is a pure business matter that would be decided by the owners, E-on and RWE; at the same time, it appears that there is no domestic party that is either capable or willing to make a bid at the project, which makes it all the more reasonable for the cash-rich Chinese state-owned enterprises to jump in.

 

Shell plans $1bn investment, refinery in China (Energy Business Review. August 22, 2012)

-        Royal Dutch Shell plans to commit at least $1 billion a year to its Chinese operations where they see enormous potential in shale gas and refining businesses;

-        The international oil and gas giant will build a $12.6 billion refinery and petrochemical complex in eastern China in later 2012, and also considers relocating its global headquarters for CBM to China, while building additional R&D capacity.

 

Petrochina 1H profit down 6 pct on refinery losses (Fuel Fix. August 23, 2012)

-        PetroChina, the largest publicly traded oil producer in the world after surpassing Exxon Mobil last year, registered a 6 percent decline in profit for the 1st half of 2012; the company attributes disappointing earnings to slowing global economy, which it warns will continue for a sustained period of time;

-        The company’s upstream division, which pumped less than 10 percent from overseas assets out of a total of 667.9 million barrels of crude oil and natural gas production for H1, recorded 113.8 billion yuan ($17.9 billion) and 53.4 billion yuan ($8.4 billion) in Q1 and Q2 profits, respectively;

-        Nevertheless, the downstream operations continue to observe net loss, which reached 28.8 billion yuan ($4.5 billion) for H1, due to China’s slowing economy, tight monetary measures, and heavily regulated prices for refined products;

-        In a related article from the Wall Street Journal, PetroChina also reported a 85 percent decline in profit margin from its natural gas and pipelines operations;

-        Worse-than-expected domestic performances, largely caused by the central government’s tight grip on energy pricing, compels PetroChina to go abroad – it plans to increase its overseas output to 50 percent of total production in 5 to 8 years from the current level of just 9 percent. It has earmarked $15.74 billion for overseas acquisition in 2012 alone, said the company’s Vice Chairman and President Zhou Jiping.

 

Cnooc hit by high costs and lower output (Financial Times. August 21, 2012)

-        Increased production costs and declining total output caused by the oil spill of its offshore oil field in Bohai Bay last year have led to a 19 percent drop in net profit in H1 for CNOOC, and have forced the company to make a downward adjustment on the expectations for the rest of 2012;

-        CNOOC had to cut its interim dividend by 40 percent to HK$0.15 per share to save cash for its purchase of the Canadian company Nexen, a deal yet to be approved by Ottawa. CNOOC is “partly relying” on the deal to boost production and access to oil reserves.

 

China Widens Renewables Lead Over U.S. In Ernst & Young Ranking (Bloomberg. August 28, 2012)

-        China’s lead over the United States in attractiveness to investors in solar and wind power projects widened, according a report by Ernst & Young; market uncertainties caused by the upcoming presidential election is one of the main factor, while China has further strengthened its position by announcing a renewed target of 21GW by 2015 and 50 GW by 2020 for solar installed capacity;

-        Germany is tied with the U.S. at second, followed by India, Britain, France (tied with Italy), Canada, Japan, and Brazil. The ranking and analysis can be downloaded here.

 

 

China Weekly Energy Updates (6/4/2012-6/11/2012)

 

China To Reform Gas Prices Gradually To Boost Use, Zhou Says (Bloomberg. June 7, 2012)

-        Zhou Jiping, president of PetroChina, told reporters that China will begin to reform its natural gas pricing mechanism as the promotion of the fuel has now become a national strategy; he also said that it is being studied whether the current pilot programs in the coastal Guangdong and Guangxi should be extended to other provinces;

-        China is reportedly planning to build two new cross-country gas pipelines to connect the gas resources in the west to the east where most of its economic activities are taking place. Gas consumption by 2030 is expected to reach 550 BCM in China.

 

China, India Lack Water For Coal Plant Plans, GE Director Says (Bloomberg. June 8, 2012)

-        GE’s global strategy director Peter Evans said that China and India have not taken full account of their lack of water in developing plans for increase in coal power generation capacity, and they will not be able to meet the capacity targets;

-        China’s demand for coal is expected to rise 70 percent to 3.71 billion metric tons of coal equivalent by 2035; and Evans suggested that the country will eventually switch to wind power, dry-cooled coal plants, and natural gas as they are all less water intensive then coal power generation.

 

China to spend $27 billion on emission cuts, renewables (Reuters. May 24, 2012)

-        The Ministry of Finance of China has announced that the country will spend 170 billion Yuan ($27 billion) to develop low- to zero-emission power generation technologies, especially solar and wind, as well as electric cars and other energy-saving products;

-        Despite registering a historical high in terms of total CO2 emissions in 2011, China’s CO2 emissions per unit of GDP fell by 15 percent from the 2005 level, indicating that the country may be already on the way to a less carbon-consuming mode of economic growth.

 

Unplugging from China (China Dialogue. May 22, 2012)

-        AES’s sale of its remaining assets in China marks the latest evidence that foreign power companies are fleeing the Chinese market as their operating and financial conditions deteriorate; AES’s departure would leave EDF of France the sole foreign player in the Chinese power sector;

-        China’s power sector welcomed foreign investment with open arms in the early 90’s as it was in dire need of cash and advanced technologies to build up its capacity; foreign companies at the time were offered fixed rate of return of up to 15% to 20%;

-        However, as the market gradually saturated, the policy shifted toward the less accommodating end and the NDRC started to remove incentives for foreign investors; at the same time the gap between surging coal prices and tightly regulated electricity rates began to reflect poorly on the companies’ balance sheets;

-        The double-standard between state-owned enterprises and private foreign investors in terms of access to state-controlled coal contracts and guaranteed funding was another factor that squeezed AES and alike out of the game.

 

Grid problems steer China's huge wind power industry into financial doldrums (ClimateWire. May 25, 2012)

-        The Chinese government has issued a succession of policies ordering local officials and wind power developers to shift their focus from building more, larger wind farms toward making wind power produced more grid-friendly; it has also made a downward adjustment for wind capacity addition and set regional targets of total wind power capacity that can be developed, while pushing for more distributed wind power generation;

-        These policies came amid increased concerns among top-level energy policymakers that China’s existing power grids lack the capacity to carry wind-generated electricity efficiently and safely. In 2011, wind power that was sufficient for nearly 3 million consumers for a year was wasted because the grid was to poorly equipped to take it;

-        Although these policy adjustments are said to be temporary, wind turbine manufacturers, especially those with smaller cash flows, are already seeing substantial losses and facing bankruptcy;

-        China’s plan to “smart up” its grid system with the aim to absorb 100 GW of wind power by 2015 is also likely to be faced with financial constraints as current subsidy levels are insufficient to offset the cost of extending and upgrading the grids and supporting devices; the grid companies and wind developers will have to swallow some of those costs themselves after all.

 

China Publishes Rio+20 Sustainable Development Report (The Climate Group. June 8, 2012)

-        China’s State Council has released the National Report on Sustainable Development ahead of the Rio+20 Earth Summit which Premier Wen Jiabao will attend; the report illustrates the progress that has been made in China’s endeavor for low-carbon economic growth;

-        Du Ying, one of the vice ministers of the National Development and Reform Commission (NDRC), said that China needs to keep transforming its growth model into one that relies on domestic consumption, the tertiary industry, and more environmental friendly ways of production and consumption.

 

China's once red-hot CDM market cools, but domestic trading may soon fire up (ClimateWire. June 6, 2012)

-        Consulting companies and other intermediaries in China that specialize in carbon trading through the CDM is facing uncertain future as the Kyoto Protocol is set to expire within the year; meanwhile, buyers of carbon credits are losing their appetite as a looming global economic recession caused businesses to emit far less carbon dioxide than originally forecasted; some of these buyers decided to simply breach the contract;

-        With Europe being oversupplied with carbon credits through 2020 and the Eurozone countries struggling to come to terms on the future of its fiscal union, it is suggested that consulting companies turn their attention back to the markets at home as China have recently announced seven carbon trading pilot programs, despite the fact that it may take years for the Chinese domestic market to fully mature and boost confidence.

 

China Mulls New Steps on Nuclear Energy (Wall Street Journal. June 4, 2012)

-        Electricity demand in China is expected to increase to 4700 TW in 2011 and 8500 TW in 2020 as the size of its middle class continues to grow and per capita income level rising. This has played  a major role in the central government’s decision to approve the 2020 nuclear safety strategy and the life of suspension on new nuclear build;

-        In addition to the power demand considerations, the nuclear plan is also in itself seen as an economic stimulus program when the sheer size of capital is taken into account. Such industry-specific support programs are thought to be healthier as it doesn’t result in overcapacity and bad debt for the state-owned banks, if managed carefully.

 

China Nuclear Company Plans I.P.O. to Help Fund Projects (New York Times. June 6, 2012)

-        China National Nuclear Corporation (CNNC), the state-owned nuclear giant, has received approval from the Ministry of Environmental Protection for an Initial Public Offering (IPO) plan that is expected to raise $27.26 billion for five projects. The plan has yet to be receive the go-ahead from the China Securities Regulatory Commission;

-        CNNC’s IPO has the potential to surpass Agricultural Bank of China’s Hong Kong-Shanghai dual listing and become the largest in China, if the share sale proceedings are used to fund the majority of its planned projects.

 

 

 

 

China Weekly Energy Updates (4/23/2012-4/30/2012)

 

 

 

China tries to copy US success in shale (Financial Times. April 25, 2012)

-          Wang Yilin, chairman of CNOOC, is hopeful that the operating experience and deep technical expertise in shale gas exploration in the United States will help China achieve its ambitious shale gas production target of 60 BCM by 2020;

-          The complex geologic condition and composition of the shale deposits in China offer relatively poor economic prospects for shale gas development, according to engineers and policy makers in Beijing; there is also a lack of pipeline infrastructure, which may be less concerning given the speed and scale of infrastructure development in China;

-          The Chinese government has liberalized the market to a limited extent in an attempt to stimulate shale gas development; it has invited private enterprises to commercial biddings and has allowed market forces to dictate natural gas price in the coastal provinces of Guangdong and Guangxi.

 

China plans national wind plant monitoring to boost standards (Recharge. April 26, 2012)

-          Hu Runqing, a researcher with NDRC’s Energy Research Institute, pointed out that the lack of technical & operational standards as well as performance monitoring in China’s wind power industry is a major threat to its long-term prospects;

-          Hu said that China now aims to build a nationwide wind-power monitoring system that collects data on availability and average utilization hours of wind turbines; the system will also register information on equipment failures and accidents; the lack of transparency on availability has inadvertently lowered the barrier of entry in China;

-          An official from the Ministry of Science and Technology (MOST) acknowledged that China is lagging behind on core technologies for wind power.

 

China's government wants 10MW offshore wind turbines by 2015 (Recharge. April 25, 2012)

-          In its newly released Five-Year Plan for Wind Power, MOST encourages the industry to a build a total of 10MW offshore wind turbines by 2015, which will mark the end of the current FYP; it also asks to developers to “master the manufacturing of 3-5MW direct-drive wind turbines as well as 7MW wind turbines and components”;

-          The turbines that are currently being developed by top manufacturers such as Goldwind and Sinovel will be in large demand in South China Sea where the offshore wind farms are expected to be far away from the coast;

-          No details have been revealed about whether financial support from the government will immediately follow the release of the FYP, but the Plan is believed to drive “funding, focus and attention to targets”, according to Liming Qiao from the Global Wind Energy Council.

 

China Seeks to Develop Biofuels Industry Despite Production Difficulties (Renewable Energy World. April 24, 2012)

-          China has reportedly planned to produce five million tons of ethanol fuel using cellulosic ethanol as part of the energy technology 12th FYP, despite facing a lack of raw materials (sweet sorghum stalks) for commercial-scale biofuel production and application;

-          Li Shizhong of the New Energy Research Center at Tsinghua University claims that the biofuels industry is an integral part of the energy economy He says not only does advanced biofuel accelerate development in a variety of related industries, but it also drives economic growth, cuts emissions from the transportation sector, and reduces China’s dependence on foreign oil;

-          Li suggests that the government restrict production of first generation biofuel while vigorously promote 1.5-generatoin and second generation biofuels with tax discounts, production subsidies, and other supporting policies and tools; the Bohai Rim Region, together with Inner Mongolia and Xinjiang Uighur Autonomous Region are said to be the top choices to set up biofuel production bases.   

 

 

 

 

China Weekly Energy Updates (4/15/2012-4/22/2012)

 

 

China’s Problematic Coal Plan (The Diplomat. April 18, 2012)

-          NDRC released China’s 12th FYP for the coal industry, which aims to keep the country’s coal consumption and production at 3.9 billion tons by 2015, a 3.8% annual increase from 3.24 billion tons in 2010. This growth rate in coal production translates into an annual GDP growth rate of 6.5% by 2015, in line with the government’s earlier announced target of keeping growth at 7% for the next five years;

-          Two facts pose tremendous challenge to the coal production target: one is Beijing’s inability to executive the economic growth plan at the local level; the national target of 7.5% growth set in the 11th FYP was outperformed by the real GDP growth rate of 11.2%;

-          Another problem is the deteriorating state of China’s coal consumption statistical system. China’s total coal consumption in 2000 turned out to be 3.9 billion tons higher than originally reported after two revisions that took 10 years to complete.

 

Linc, Golden Concord In China Clean-Coal Venture (Fox Business. April 15, 2012)

-          Australia-based Linc Energy has signed an agreement with Hong Kong-based Golden Concord Ltd. which allows the Chinese energy developer to buy 5% of Linc Energy for a total of $125 million;

-          The two companies will also build a JV that develops UCG in China, for which GCL will provide $15 million working capital and own 67% of the assets; the partners expect to use the gas to produce liquid transportation fuel.

 

Yingli Gets $324 Million From China Development Bank (Bloomberg. April 18, 2012)

-          China Yingli Green Energy Holding Co., a leading Chinese solar module manufacturer, signed a framework agreement for a $324 million loan from China Development Bank, which acts as one of the country’s three policy banks and specializes in large infrastructure projects;

-          Since 2010, CDB has offered China’s renewable energy developers a total of $47 billion in credit lines, which drew much complaints from Western solar and wind producers who accuse China of dumping and illegally subsidizing its own businesses.

 

CNPC, Total to produce gas at Sulige field in May - report (Reuters. April 19, 2012)

-          CNPC signed an agreement with Total SA to jointly produce natural gas from the Sulige South field located in northern China next month. This agreement is in line with a 30-year production-sharing contract signed in 2006 to develop the gas block covering 2390 km2;

-          CNPC and Total will own 51% and 49% of the project, respectively. Annual production is expected to reach 3 billion cubic meters in three years.

 

 

Sinopec's China Gas Partner Is a Drag (Wall Street Journal. April 17, 2012)

-          The joint bid for China Gas by Sinopec and ENN, which seemed a sure bet last December as the target company’s founder behind bars and its share value dropping, is now stalled as situation at China Gas is picking up;

-          Meanwhile, the bidders are faced with their own challenges: Chinese antitrust regulators have yet to sign off on the bid and there are serious questions about whether ENN could sustain a raised offer while avoiding a downgrade due to its capital constraint. It has been suggested that Sinopec drop ENN, which would put the state-owned oil giant in a better position to complete the acquisition.

 

 

 

 

China Weekly Energy Updates (4/7/2012-4/14/2012)

 

  

U.S. Clean Energy Policies Risk Losing Lead Over China (Bloomberg. April 12, 2012)

-          Although the United States is again ranked the first in clean energy investment in 2011 according to a report by Pew Charitable Trusts, it is expected to lose the privilege to China as the production tax credits are set to expire by the end of 2012. Analysts attribute this to the lack of long-term, strategic planning and government support to the renewable energy industry, while China is using everything in their arsenal to become the world’s renewable energy hub;

-          Potential Chinese investors in the U.S. are receiving discouraging signals as the U.S. renewables industry are trapped in a boom-and-bust cycle.

 

China edges ahead in Turkey nuclear race (Financial Times. April 8, 2012)

-          China is reportedly the lead contender in a bid to develop a nuclear station on the Black Sea coast of Turkey; it has been confirmed by a Turkish official that one of the advantages that China holds over the competitors is their ability to finance and build the project without the necessity of attaining any support or approval from Beijing;

-          One potential problem that faces Chinese nuclear project developers is “the limited range of reactors they are able to build overseas” because domestically built reactors are older and less advanced than the Westinghouse AP1000 units and alike, which China is prohibited from marketing abroad due to the lack of copyright ownership; but China is catching up quickly in developing indigenous next-generation nuclear reactors.

 

CNNC announces installation of reactor at Chinese nuke plant (Energy Business Review. April 9, 2012)

-          China National Nuclear Corporation (CNNC) announced that it has installed a new 650MW pressurized water reactor at the Qinshan nuclear power plant in Zhejiang province; the unit has an expected annual generation volume of 34TWh;

-          The new reactor is indigenously designed and manufactured, and is one of the two units in a expansion project at the plant beginning in 2006; the other 650MW reactor entered operation in October 2010.

 

China's Sinovel signs 600MW wind project deal in Turkey (Recharge. April 11, 2012)

-          During Turkish prime minister Tayyip Erdogan’s visit to Beijing this week, Sinovel, China’s no.2 wind turbine manufacturer, has signed an agreement which would allow it to supply a total of 600MW of wind turbines to over 10 projects in Turkey; 60% of the project financing will come from China Development Bank;

-          The recent upheavals caused by fierce domestic competition and a lawsuit, in which the Chinese company was accused of intellectual property theft, have made it increasingly important for Sinovel to push for more overseas projects.

 

L&L strikes sales deal with Chinese utilities firm (Energy Business Review. April 12, 2012)

-          The U.S.-based coal company L&L Energy has signed an agreement with China Guodian Corporation’s subsidiary Yongfu Power Generation Company based in Guangxi province; the deal involves L&L supplying 20,000 tons of thermal coal per month to Yongfu over the next eight months with a possibility for an extension; Yongfu owns and operates over 180 coal-fired power plants and has total assets of $100 billion in China.

 

Huaneng Power wins approval for wind power project (Energy Business Review. April 13, 2012)

-          A subsidiary of China Huaneng Group, Rudong Wind Power Generation Company, has received approval from NDRC for its 48MW Wind Farm Phase I Project in Jiangsu province;

-          Huaneng Rudong will provide 25% of a total of $71 million project investment, with the rest provided by bank loans and other project owners.

 

 

 

Brief on major China energy related trends/issues in the 4th Quarter of 2011 

Kexin Liu, Research Associate, Clean Air Task Force

 

Solar PV antidumping & countervailing case

On October 19, 2011, SolarWorld Industries America Inc., a U.S. subsidiary of German-based producer of crystal silicon solar cells and panels and a founder of the seven-member industry group Coalition for American Solar Manufacturing (CASM), filed a petition with the United States Department of Commerce (DoC) and the International Trade Commission (ITC) which alleged that Chinese solar product manufacturers had been dumping solar cells into the U.S. market with margins over 100 percent, and that they had been receiving massive export subsidies from the provincial as well as the central government in the form of contract awards, trade barriers, financing breaks, and supply chain subsidies, to name a few.[1] The petitioners requested that tariffs leveling up to 250 percent on Chinese solar product imports be imposed.[2]

CASM’s statistics show that a trade surplus of US solar trade with China of $250-540 million in 2010 was reversed to a trade deficit of $1.635 billion in 2011, which translates into an increase in volume of Chinese shipment of solar cells to the US of 303% and solar modules of 309%.[3] CASM claims the reversal was caused by a massive surge in dumping activities and subsidies on the Chinese side, which has helped increase total export from $1.2 billion in 2010 to more than $2.8 billion in 2011. CASM says that the subsidies include cash grants, discounted land, power and water, preferential loans and directed credit, tax incentives and rebates, export assistance grants, and so on. China’s domestic solar manufacturing is allegedly suffering from an overcapacity – it is projected to grow by 3.5 GW in 2012 when global demand is only expected to increase by 1.2 GW. CASM warns that US solar manufacturers are at the risk of being squeezed out of the marketplace if this trend continues.[4]

After ITC reached its preliminary determination regarding injury to domestic solar manufacturers on December 5, 2011, DoC announced its affirmative preliminary determination in the countervailing duty (CVD) investigation on March 19, 2012. According to DoC, the rates of subsidies received by Chinese manufacturers were a small fraction of what CASM alleged: 2.90% for Wuxi Suntech Power Co., Ltd., 4.74% for Changhou Trina Solar Energy Co., Ltd., and 3.61% for other Chinese producers/manufacturers. DoC has subsequently proceeded to instruct US Customs and Border Protection to collect cash deposits or bond based on those aforementioned preliminary subsidy rates. The preliminary determination in the antidumping (AD) investigation will be announced on May 17 this year.[5]

In response to the CASM petitions, China’s Ministry of Commerce announced the launch of its own investigation on November 25, 2011 into U.S. renewable energy (wind, solar, hydropower, etc.) programs for possible trade barriers and illegal subsidies in the states of Washington, Massachusetts, Ohio, New Jersey, and California. The investigation was requested by China Chamber of Commerce for Import and Export of Machinery and Electronic Products (CCCME) and the new energy chamber of All-China Federation of Industry & Commerce (ACFIC), two eminent industry associations in China.[6] Companies that petitioned for the investigation claimed, “U.S. measures violated the United States commitments under World Trade Organization rules, and are an unreasonable barrier and restriction on China's renewable energy industry, reducing the competitiveness of Chinese products in the U.S. market.”[7] U.S. export of polysilicon to China, which is believed to have reached 60,000 tons in 2011, was a particular focus in the probe, as China alleged that U.S. manufacturers of polysilicon received substantial subsidies from the government, which resulted in injury to Chinese competitors.[8]

The AD and CVD investigations by DoC are also fiercely opposed by a U.S.-based solar industry group called the Coalition for Affordable Solar Energy (CASE), which claims to represent 97-98% of the U.S. solar manufacturers.[9] CASE claims that the tariffs are detrimental to the U.S. economy and particularly to its solar industry as price will be forced to go up which then drives down demand, let alone the economic and employment impact if China chooses to retaliate. Commissioned by CASE, the Brattle Group, a U.S.-based economic research firm, produced a report which examined the economic impact of DoC’s tariffs on imported Chinese solar products. The report concludes that a tariff rate between 50% and 100% will result in net job loss between 43,000 and 60,000 in the U.S., when factoring in potential impacts from China’s retaliatory actions; it also shows a net revenue loss between $621 million and $2.6 billion.[10]

Despite the highly politicized nature of the investigations, the actual rates of the countervailing tariffs announced by DoC (which is dramatically lower than requested in the petition) is a clear indication that landscape of U.S.-China solar trade relationship is unlikely to shift significantly. The low tariff rates are widely interpreted as an effort by the DoC to accommodate both sides in the case, and to avoid setting a precedent for further investigation by the EU or extensive retaliatory actions by China.[11] A compounding factor is that DoC has explicitly excluded cells manufactured in third countries from the scope of its investigation, even when those cells contain modules, laminates and panels produced in China.  Consequently, Chinese manufacturers can avoid the tariff by moving part of their production line to places like Taiwan. The economics of this practice, commonly referred to as “tolling”, would prove to be more attractive if the still pending decision on the rate of AD tariff is significantly higher than the CVD tariffs.[12] Moreover, it is believed by some that the market potential in the U.S. itself is simply too promising to resist from the perspective of Chinese and other overseas suppliers even when the cost of tariffs are taken into account.[13]

 

 China’s carbon trading pilot programs

On November 22, 2011, the National Development and Reform Commission (NDRC) of China announced that it had approved a proposal to establish separate pilot carbon emissions rights trading programs in seven provinces/municipalities, including Beijing, Tianjin, Shanghai, Chongqing, Shenzhen, Hubei, and Guangdong.[14] These regions, which are experiencing skyrocketing growth in both prosperity and CO2 emissions, have held multiple trial programs without much success. Guangdong, the wealthy southern coastal province, was particularly ambitious in setting up a fully-functional carbon market. It aimed to establish by March 2013 China’s first regional trading platform[15], in addition to efforts that is being made to set up a total emissions cap which will be allocated to cities and industrial sectors, as well as to build a separate trading platform within the booming Pearl River Delta.[16] Meanwhile, extensive efforts have been made in exploring the potential of nationwide, sector-based cap-and-trade programs, including one for the power sector where participation from SOEs will be mandatory; moreover, more than 100 entities across the country are attempting to set up independent carbon markets as they learn about the economic opportunity imbedded in these market-based programs.

The rationale for China to engage with market-based emission reduction approach is plain: The country has made a pledge to cut carbon intensity by 40-45 percent by 2020 using 2005 level as the baseline, with provincial targets already allocated. Nevertheless, the administrative approach (i.e. imposing emission caps on provinces with little regard for demand management or economic incentives as well as forcing smaller, inefficient thermal power plants to shut down) in the past few years has failed rather miserably as city and township governments all scrambled to the last resort of cutting power supply to small businesses and residential buildings in order to meet the emissions cap; the economic and social impacts from man-made blackouts and job cuts at closed power plants were dreadful. China has now determined that a carbon market is a much more promising policy-based tool that can make emission reduction sustainable without undermining economic growth.[17] In fact, Chinese policy makers learned their lesson partly by being on the selling end of CDM credits for years.  While benefiting significantly from this market-oriented scheme in which they hosted clean energy projects that brought in technical expertise and investment ($1.3billion in 2009 alone), the Chinese government and its enterprises had also grown increasingly uneasy with the inherent constraints; the CDM transactions were dominated by credit buyers, which were the developed economies; entities from China that participated in CDM felt that they were in a disadvantageous position in negotiations with overseas credit buyers as a result of information asymmetry, thus were stuck at the bottom of the carbon value chain with the least to gain.[18] This was a situation that was to a large extent caused by the lack of the institutional infrastructure of developing countries like China in carbon trading, including financing, verification, governance, and so on.[19] 

The prospect of nationwide carbon trading is encouraging but quite a few obstacles remain. Rachel Kyte, Vice President of Sustainable Development at the World Bank, thinks that if China can achieve the goal of having a national carbon market by 2015, it will have serious potential to influence carbon prices on the global level.[20] Nevertheless, Yang Fuqiang and Alvin Lin of the Natural Resources Defense Council (NRDC) contend that a hard emissions cap must be in place as early as possible in the building of a carbon market, with the aim of steering the country away from an energy-hungry, high-carbon path of development, and avoiding increased emission reduction cost at later stages.[21] They also urge China’s local governments participating in the current trial programs to be more forthcoming in enacting legislation and leading the on-the-ground development of carbon trading systems. Meanwhile, Dr. Jiang Kejun of NDRC’s Energy Research Institute expressed concern about the potential commodity price shock as well as cost associated with additional capital and labor investment at power plants that carbon trading could create.  Jiang suggested that temporary carbon tax on high-emission entities may be an effective tool to smooth out price and avoid transfer of cost to electricity end-users during the transitional period.[22] Most importantly, argues the Climate Group, if China is to become a heavyweight in global carbon trading, it must address its tightly regulated wholesale and retail electricity prices, as well as the lack of institutional capacity in financing, data collection, and MRV,[23] the lack of a relevant legal framework and regulatory enforcement, and the lack of technical and market standards.[24]



[1] Coalition for American Solar Manufacturing. “U.S. Manufacturers of Solar Cells File Dumping and Subsidy Petitions Against China”. 10/19/2011. [Online]. Available: http://www.americansolarmanufacturing.org/news-releases/10-19-11-casm-files-illegal-dumping-subsidy-petition.htm

[2] The Brattle Group. “The Employment Impacts of Proposed Tariffs on Chinese Manufactured Photovoltaic Cells and Modules”. 01/30/2012. [Online]. Available: http://coalition4affordablesolar.org/wp-content/uploads/2012/01/TBG_Solar-Trade-Impact-Report.pdf

[3] Reuters. “China Solar Firms Seek U.S. Polysilicon Imports Probe”. 11/22/2011. [Online]. Available: http://www.reuters.com/article/2011/11/22/china-solar-probe-idUSL4E7MM0MQ20111122

[4] Coalition for American Solar Manufacturing. “The United States Suffered a Dramatic Reversal in Solar Trade Balance for 2011, Resulting in Significant Trade Deficits with China and the World”. [Online]. Available: http://www.americansolarmanufacturing.org/news-releases/casm-export-report-3-1-12.pdf

[5] International Trade Administration, U.S. Department of Commerce. “Fact Sheet: Commerce Preliminarily Finds Countervailable Subsidization of Crystalline Silicon Photovoltaic Cells, Whether or Not Assembled into Modules from the People’s Republic of China”. [Online]. Available: http://ia.ita.doc.gov/download/factsheets/factsheet-prc-solar-cells-adcvd-prelim-20120320.pdf

[6] “Announcement No. 69 (2011) of Ministry of Commerce of the People’s Republic of China: MoC launches trade barrier investigation into U.S. renewable energy support and subsidy programs”. 11/25/2011. [Online]. Available: http://www.mofcom.gov.cn/aarticle/b/c/201111/20111107848496.html

[7] Reuters. “Now China to Probe U.S. Renewable Energy Support”. 11/25/2011. [Online]. Available: http://www.reuters.com/article/2011/11/25/us-china-usa-energy-idUSTRE7AO05I20111125

[8] Reuters. “China Solar Firms Seek U.S. Polysilicon Imports Probe”. 11/22/2011. [Online]. Available: http://www.reuters.com/article/2011/11/22/china-solar-probe-idUSL4E7MM0MQ20111122

[9] Coalition for Affordable Solar Energy. 12/20/2011. [Online]. Available: http://coalition4affordablesolar.org/wp-content/uploads/2011/12/letter-to-solar-world-12_20.pdf

[10] Berkman, M., Cameron, L., Chang, J. “The Employment Impacts of Proposed Tariffs on Chinese Manufactured Photovoltaic Cells and Modules”. The Brattle Group. 01/30/2012. [Online]. Available: http://coalition4affordablesolar.org/wp-content/uploads/2012/01/TBG_Solar-Trade-Impact-Report.pdf

[11] Montgomery, J. “Seven Questions Answered About the U.S.-China Solar Trade Case”. Renewable Energy World. [Online]. Available: http://www.renewableenergyworld.com/rea/news/article/2012/03/eight-questions-answered-about-the-us-china-solar-trade-case?cmpid=rss

[12] Ibid

[13] Ibid

[14] Xinhua News. “China to pilot carbon trading scheme: NDRC”. 11/23/2011. [Online]. Available: http://www.chinadaily.com.cn/bizchina/2011-11/23/content_14145909.htm

[15] China New Energy. “Guangdong aims to establish a carbon market in two years”. 10/17/2011. [Online]. Available: http://www.newenergy.org.cn/html/01110/10171143019.html

[16] Reuters. “FACTBOX-China’s carbon market plans”. 11/10/2011. [Online]. Available: http://af.reuters.com/article/energyOilNews/idAFL3E7L41ON20111110?sp=true

[17] Scientific American. “Will China Start Carbon Trade?”. 1/10/2011. [Online]. Available: http://www.scientificamerican.com/article.cfm?id=will-china-start-carbon-trade

[18] China5E.com. “Discussion of challenges facing China’s energy enterprises participating in carbon trade”. 12/9/2011. [Online]. Available: http://www.china5e.com/show.php?contentid=202391

[19] Zhang, F., Guo, Y., and Chen, X. (2011). Research on China’s Power Sector Carbon Emissions Trading Mechanism. Proceeding at International Conference on Smart Grid and Clean Energy Technologies 2011. [Online]. Available: http://www.sciencedirect.com/science/article/pii/S1876610211018443

[20] Wei Tian. “Chinese Carbon Market Has ‘Potential’”. China Daily. 11/17/2011. [Online]. Available: http://www.chinadaily.com.cn/bizchina/2011-11/17/content_14111575.htm

[21] Lin, A., Yang, F. “Design Tips for a Carbon Market”. 3/8/2012. China Dialogue. [Online]. Available: http://www.chinadialogue.net/article/show/single/en/4797-Design-tips-for-a-carbon-market

[22] China New Energy. “As Carbon Trade Pilot Programs Unfold, the Power Sector is Faced with both Opportunities and Challenges”. 4/12/2012. [Online]. Available: http://www.newenergy.org.cn/Html/0124/4121245472.Html

[23] China5E.com. “Discussion of challenges facing China’s energy enterprises participating in carbon trade”. 12/9/2011. [Online]. Available: http://www.china5e.com/show.php?contentid=202391

[24] The Climate Group. “Prospects for Carbon Trading in China”. January 2010. [Online]. Available: http://www.theclimategroup.org/_assets/files/Prospects-for-Carbon-Trading-in-China.pdf

 

 

 

China Weekly Energy Updates (3/28/2012-4/6/2012)

Country focus: China faces difficulties in shale gas production (Financial Times. March 28, 2012)

-          The Chinese government has given strong indication to fully engage in the development of the country’s domestic shale gas resources as Premier Wen Jiabao alluded to it in the annual work report presented to the People’s Congress in March; it is telling that it is the technical challenges rather than potential that Wen seems to be more concerned with;

-          In addition to the lack of experience in fracking as well as horizontal drilling, China’s uniquely complex geologic conditions as well as the largely missing pipeline infrastructure also pose daunting challenges, all of which make the economic prospects of shale gas in China very limited with existing capacity;

-          The water consuming nature of shale gas drilling operations and the potential of water pollution seems to be a secondary concern to China; but the latest work plan on mid-term shale gas development did lay out basic measures to prevent environmental damages.

L&L Energy signs coal sale agreement with Datang Utility in China (Energy Business Review. April 6, 2012)

-          US-based L&L Energy has signed a long-term sales agreement with China’s Datang International Power Generation, which allows L&L’s DaXing subsidiary to supply 20,000 tons of thermal coal per month over 12 months to Datang’s HeShan power plant in Guizhou province.

Sun Spots (Caixin Online. April 5, 2012)

-          The Obama Administration has done a good job in keeping both sides happy in the ongoing solar trade dispute with China by only announcing symbolic tariffs, which is said to have only increase the price of solar systems assembled with Chinese panels by 10 dollars per unit;

-          Regardless of the implications of the penalties imposed by Department of Commerce, the staggering amount of debt carried by China’s solar manufacturers and the massive cash-burning campaign have indeed force price to fall sharply and to some extent made it difficult for other companies to innovate;

-          Nevertheless, most U.S. solar manufacturers recognize the fact that solar power generation is still in a disadvantageous position against thermal power, and can only catch up with the help of large subsidies; this can be demonstrated by First Solar’s recent decision to idle production lines and cancel expansion projects in Germany where subsidies and feed-in tariffs are being eliminated.

Chinese Plan Indicates Fewer Wind Farm May Win Approval (Bloomberg. April 6, 2012)

-          China’s National Energy Administration (NEA) plans to approve 16.76GW of wind power projects in 2012 (excluding projects in Heilongjiang, Jilin, Inner Mongolia, Ningxia, Gansu, and Xinjiang), a drop from the 26.83GW approved last year, mainly due to overcapacity or failure of grid connection; the slowdown is believed to be short-term;

-          The plan for 2012 includes 836MW of distributed generation wind farms

-          Turbine manufacturers in China are expected to get hit by this temporary policy adjustment as installation will fall by about one GW in 2012

Sinopec: Overseas Acquisition Will Continue (Financial Times Chinese Edition. March 27, 2012)

-          Despite significant loss from its downstream operations, Sinopec has seen huge profit from its other business divisions, which prompts the oil giant to expand its overseas portfolio;

-          It has invested over $35 billion overseas since 2009, and has now set a target of RMB 78.2 billion ($12.4 billion) for domestic & overseas drilling and exploration for 2012; this would be a 33 increase from last year;

-          Chairman Fu Chengyu has told reporters in Hong Kong that Sinopec will continue to invest in overseas assets with particular focus on unconventional natural gas

China's state-owned oil companies registered new highs in net profit (Financial Times Chinese Edition. March 30, 2012)

-          CNOOC and Sinopec reported increase in net profit of 29% and 2%, respectively, while PetroChina’s profit dropped by 5% from 2011 due to significant loss in its refinery division; the Big 3 have spent over $90 billion on overseas acquisition in the last five years, while facing the common challenge of developing successful shale gas operations;

-          Combined loss of Sinopec and PetroChina’s domestic refinery businesses has reached $15.5 billion in 2011 because of the government’s price control in fear of greater inflation and potential social unrest; the increasingly autonomous state-owned oil companies are pressing the government to speed up reform of the pricing mechanism for refined oil products.

China will subsidize grid companies (China Realtime Report. April 6, 2012)

-          China’s Ministry of Finance said that new subsidies will be provided to the power grid operators in an effort to push for grid capacity expansion for higher level of renewable energy penetration; hydropower is excluded from the program; the amount of subsidies provided will depend on s series of factors, including the distance between the main grid and the actual location of the project;

-          Distributed generation sources will also receive subsidies if operating and management costs exceed local electricity price;

-          It was reported by China Daily that more than half of China’s wind capacity was in idle because of the lack of capacity to connect them to the grid.

 

China Weekly Energy Updates (3/19/2011-3/26/2012)

A Measured Rebuttal to China Over Solar Panels (New York Times. March 20, 2012)

-          The Department of Commerce announced that it will impose tariffs on solar panels imported from China, but with much smaller rates (2.9 to 4.73 percent) than what was originally petitioned for; additional tariffs could be imposed in May when a decision is made on the dumping case;

-          The political implication in the domestic theater is certainly going to be two-way – supporters of the current administration seeing it as a sign of being tough on trade issues with China, and opponents seeing the level of penalties as being insufficient;

-          Executives from some U.S. solar power suppliers expressed their relief with the relatively low tariff rates;

-          While the official line of the Chinese government and the majority of Chinese solar companies have denied the existence of massive export subsidies, a few of the beneficiaries of the alleged programs have admitted receiving help from the local governments in land purchasing and bank loan provisions.

 

 

China Sunergy Company Ltd. (CSUN) Signs Key Agreement With DuPont (Seeking Alpha. March 23, 2012)

-          China Sunergy Company, a specialized manufacturer of solar cell and module, has teamed up with China Electric Equipment Group (CEEG) to sign a 3-year cooperation agreement with Dupoint China Holdings;

-          The parties are expected to collaborate on solar technologies and materials, power transformers, insulation, and aircraft composite materials; Sunergy hopes that the partnership will help it reach grid parity sooner by advancing technological development and system cost reduction.

 

 

Shell Reaches Chinese Shale-Gas Deal (Wall Street Journal. March 21, 2012)

-          Royal Dutch Shell and China National Petroleum Corp. (CNPC) have signed the first production-sharing contract to explore and produce shale gas in the Fushun-Yongchuan block within Sichuan Basin;

-          According to the agreement, Shell will do its part by applying its "advanced technology, operational expertise and global experience" to the joint venture.

 

 

Total Extends Its China Ties (Wall Street Journal; March 18, 2012)

-          Total SA has reached agreements with Sinopec on shale gas and refining operations in China, part of which will allow China’s State Administration of Foreign Exchange to own 2 percent of the French corporation;

-          Details related to the refining operations are still being negotiated, but Total in principle has agreed to participate in a 300,000 barrel per day complex developed by Sinopec and two Kuwait companies;

-          Total has expressed willingness to have fresh investments into the company, possibly including sovereign wealth funds such as China Investment Corp.

 

 

UPDATE 2-China may miss new target to cut coal output growth (Reuters. March 22, 2012)

-          China is likely to surpass its annual coal production growth target of 2 percent for the next four years due to rising demand and the lack of mandates; the total output target for 2015 is set at 3.9 billion tons, up from 3.52 billion tons in 2011; the government has been attempting to boost coal import to lower growth rate in domestic production;

-          China’s coal import could rise to over 200 million tons in 2015, from 182.4 million tons this year; other industrial estimates have given 300 million tons as a possibility by 2015;

-          The need to reduce pollution, address transport bottlenecks, and the deteriorating quality of domestic coal supply make it very difficult for NDRC to set binding targets; it instead only provided the 3.9 billion tons production target in 2015 as a general guideline.

 

 

China grabbing up uranium to secure nuclear lead (SmartPlanet. March 19, 2012)

-          China’s Guangdong Nuclear Power Corporation is reportedly in advanced negotiation with Rio Tinto to jointly develop a major uranium project the company recently acquired in Namibia, the fourth largest uranium exporter; Rio Tinto owns a massive uranium mine about 4 miles away from the project site;

-          China already buys about 95% of its uranium supply from Kazakhstan, Namibia, Australia, and Uzbekistan, and has received positive confirmation that Canada will soon start provide it with the nuclear material; China’s massive uranium procurement scheme will certainly push the market price to a new high after a slump caused by Fukushima; it will also have an impact on the long-term import strategies of other countries that include nuclear power in their energy portfolios.

 

 

China now world's third-largest PV market, says industry study (Recharge. March 19, 2012)

-          Domestic solar PV installation has soared 470 percent in China while Europe’s share of the global market has shrinked from 62 percent to 68 percent;

-          Industrial analysts believe that as the global PV market inevitably shrinks, China will need to decide whether it is determined to stimulate domestic consumption in order to support its massive supply base.

 

 

Vestas wins 50MW turbine order from China's Longyuan (Recharge. March 19, 2012)

-          Danish wind power manufacturer Vestas will supply 25 units of its V90-2.0MW turbines to Longyuan Corporation in Fujian province;

-          The turbines are said to be able to “deliver high output under low wind conditions and durable during strong gusts”;

-          Power backup will also be equipped along with the turbines in order to minimize power supply disruption and potential damage to the units.

 

China Weekly Energy Updates (3/12/2011-3/18/2012)

 

CLP/China Grid may pay $2.8b for Exxon power stake (Reuters. March 16, 2012)

-          Hong Kong-based power utility CLP Holdings have partnered with China Southern Power Grid Co. in negotiation with ExxonMobil for purchasing a 60 percent stake in Castle Peak Power Co. Ltd. The consortium is expected to pay around $2.8 billion if the deal goes through;

-          ExxonMobil has long sought to sell assets such as Castle Peak in an effort to focus on its core oil and gas business. Castle Peak owns three coal-fired power plants with a total generation capacity of 6908MW;

-          This deal would be the first major acquisition by Southern Grid, the smaller one China’s two state-owned power transmission corporations that occupies five provinces in southern China since its creation in 2002;

-          CLP has been facing difficulties negotiating gas supply deals with mainland China-based companies such as CNOOC and PetroChina, which is something the company tries to solve by forming a partnership with Southern Grid.

 

China Forecasts Soaring Shale-Gas Output (Wall Street Journal. March 16, 2012)

-          China’s National Development and Reform Commission (NDRC) released the country’s first development plan for shale gas resources this Friday, which sets production target at 6.5 billion cubic meters by 2015 and at least 10 times (60 – 100 BCM) that by 2020; the plan also encourages Chinese companies to form partnerships with foreign businesses and research institutions;

-          The plan also set out a total of 200 BCM of exploitable reserves and 600 BCM of proven reserves by 2015; the 6.5 BCM production target would reduce emission of CO2 by 14MMT, SO2 by 115,000 tons and NO by 43,000 tons;

-          The Norwegian state-owned Statoil is reportedly in negotiation with Shenhua Geological Exploration in China to jointly develop shale gas resources.

 

 

A Cleantech Trade War with China? (The Energy Collective. March 14, 2012)

-          Two major challenges facing equipment suppliers for the renewable energy sector: Intention of the U.S. to seek assistance from the WTO to lessen Chinese restrictions on rare earth export, and the imminent trade war between the U.S. and China over solar panels and wind turbines;

-          It’s unlikely that the U.S. government won’t be able to make a stronger case against government support to Chinese domestic solar firms which constitutes violations of international trade rules, but the U.S. solar industry is no exception when it comes to substantial government assistance;

-          The trade disputes are in essence “a symptom of the larger problem of global overcapacity in wind and solar equipment manufacturing” that was created through a set of policies that represent strong local and national political-economic interests; these policies are largely insufficient to deal with the boom-bust cycle it inevitably resulted in, compounded by the recent financial crisis and the continuing recession;

-          It is equally important to point out that trade disputes are far from being the most productive approach to address the issue of overcapacity.

 

 

China's Guodian has first wind turbines operating in US market (Recharge. March 14, 2012)

-          Following a cooperation agreement signed in 2010 between China Guodian United Power (a subsidiary of Guodian Corp. that specializes in wind power) and U.S.-based Revolution Energy, a $20 million, 1.5MW Harbor Wind project is now fully operating in the Port of Corpus Christi, TX;

-          This is the first overseas project of Guodian, which is ranked number three in China based on total installation. It does not own equity in the project but its role is more than providing turbines, according to Revolution General Manager Tibor Hegedus.

 

 

China appears ready to expand nuclear power (ClimateWire. March13, 2012)

-          President of China’s State Nuclear Power Technology Corp Wang Binghua told reporters that the safety inspection on China’s nuclear power project had been completed and the approval process on new projects will resume this year. A new installation target is being drawn up which is certainly going to be bigger than the previously set 40GW goal;

-          A majority of the proposed project seem to be inland, a concept that has drawn heavy opposition from the science community for concerns over water shortages which main result in failure to cool down reactors during droughts; Wand dismissed these concerns and reaffirmed the plan to develop more project in central China where there is scarcity of energy resources but electricity demand is surging.

 

 

Emerson automates two new 1000MW power-generating units in China (Energy Business Review. March 13, 2012)

-          Two new 1000MW, ultra-supercritical generation units at Jiangsu Xinhai power plant are being automated by Emerson using its Ovation technology which will result in lower emissions and higher generating efficiency than traditional units;

-          One of the two new units is expected to enter commercial operation phase in late 2012; the other one is scheduled to begin service the year after; the turbines and boilers are supplied by Shanghai Electric Group.

 

 

China Power signs agreement With Duke Energy on nuclear power technology (Energy Business Review. March 12, 2012)

-          Following a preliminary agreement signed by Duke Energy and China Guangdong Nuclear Power Group to collaborate on nuclear investment and operations, China Power Investment Corp, one of the five largest state-owned power companies in China, has entered a similar agreement with Duke. No details about the agreement have been provided by either party.

 

 

China Weekly Energy Updates (3/4/2011-3/11/2012)

 

CNOOC to expand energy portfolio with new U.S. shale stakes (ClimateWire. March 6, 2012)

-          CNOOC’s chairman Wang Yilin said that the company “plans to invest in more North American shale projects to expand reserves and acquire technology critical to developing domestic fields”; he did not mention any potential targets;

-          Wang said that CNOOC may produce as much as 95 million barrels of oil from oversea drilling operations out of its total projected output of 330 to 340 million barrels for 2012; offshore project are responsible around 80% of the company’s 2011 output;

-          Since early 2011 CNOOC has made its bid on at least $4.5 billion worth of foreign assets;

-          Wand said that CNOOC has no plan to participate the next round of shale gas auction in China, but “will look out for future opportunities”.

 

 

China ditches double-digit growth (Financial Times. March 5, 2012)

-          At the opening ceremony of the annual National People’s Congress meeting in Beijing last week, Premier Wen Jiabao announced that China’s economic growth target for 2012 was 7.5 percent, which would be the first time that the figure drops below 8 percent since 2004;

-          Wen stressed the pressing need for China to transform its current growth pattern to one that is more coordinated, sustainable, and balanced. This would be done mainly by encouraging domestic consumption and prioritizing health care as well as the service sector;

-          Eswar Prasad from the Brookings Institution said that the revised growth target sends a strong signal to provincial governments and industry monopolies that long-term sustainability rather than high GDP figures is now the focus of economic and social policymaking.

 

 

Premier says China to curb 'blind expansion' in wind and solar (Recharge. March 5, 2012)

-          Premier Wen Jiabao emphasized that the central government will “put a stop on the blind expansion in industries such as solar energy and wind power”; this is interpreted as a direct response to the oversupply of renewable energy equipment in the domestic market, which has driven down the cost by 20 percent in each of the last three years; major vendors have reported significant drop in profits for 2011;

-          Further details on the government’s support for the renewable energy sector will be released after the People’s Congress closes.

 

 

China Giant Tested at Home (Wall Street Journal. March 5, 2012)

-          A $2.15 billion deal that is jointly pursued by Sinopec and ENN for up to a 75 percent stake in China Gas has seen fierce opposition by the stakeholders of the privately owned gas supplier to more than 6 million consumers, claiming that the offer “failed to reflect fundamental value” of the company;

-          The Ministry of Commerce has been unusually silent in determining the deal’s status in relation to China’s antimonopoly laws; analysts from UBS said that the deal was unlikely to proceed;

-          The regulator’s rule on this matter will be read as a major political test for the expansion-centered strategy of Chairman Fu Chengyu of Sinopec; it is also believed by the international business community to be a reflection of the intertwined relationship between China’s growing fleet of private enterprises and the government.

 

 

China reportedly to resume nuclear projects (MarketWatch. March 7, 2012)

-          Wang Yuqing, Deputy Director of the Committee of Population, Resources and Environment of the Chinese People’s Political Consultative Conference (CPPCC) National Committee, was quoted as saying that about construction of about 10 nuclear plants in China will soon be given the green light to resume, as a new comprehensive nuclear safety plan has been submitted for the State Council’s approval;

-          Following the news, shares of Chinese power suppliers like Shanghai Electric Group and nuclear equipment vendors such as Dongfang Electric Corp. all gained value.

 

 

TEXT: Fitch: China Energy Plan Favourable for Grid, Nuclear Companies (Reuters. March 6, 2012)

-          Fitch Ratings pointed out that Premier Wen’s formal report to the NPC sent a clear signal of the central government’s strong support to the development of the energy sector, and it is particularly good news for China’s oil, grid, nuclear and city gas suppliers;

-          It is believed that Beijing will continue to favor highly centralized nuclear power and oil producers over increasingly fragmented thermal power suppliers such as Huaneng and Datang; favorable adjustments have been made to nuclear on-grid pricing to maintain a steady cash flow;

-          On the other hand, tighter emission control targets and a 4 percent CPI target mean that thermal power suppliers are facing increased level of financial burden in the form of capital expenditure and limited on-grid tariff increases.

 

 

Despite setbacks, China says it will meet CO2 reduction goals for 2015 (ClimateWire. March 6, 2012)

-          Chairman of NDRC Zhang Ping acknowledged that hydropower fell short of its production target last year due to severe drought which led to China’s inability to reach its emission reduction goal – it missed the 3.5 percent target by 1.49 percentage point;

-          In spite of this, China did not scale back the original target for 2015 – it is sticking to the 16 percent reduction target per every RMB 10,000 (US $1584.56) of output.

 

 

China Foothold in U.S. Energy (Wall Street Journal. March 6, 2012)

-          Chinese oil companies have come up with a new recipe for successful acquisition of oil/gas stakes in the United States; they now only bid for minority, non-operating interest and do not have Chinese personal on the drilling sites. These measures have greatly reduced U.S. domestic political oppositions;

-          Since 2010, Chinese oil companies have poured more than $17 billion into the North American oil and gas industry;

-          Ming was quoted as saying that “Buy a portion of that company, work together with that company, and that company is your strongest ally in the U.S.” in referring to Chinese companies M&A activities overseas;

-          Chinese energy companies are now trying to negotiate with FTS International, a company based in Forth Worth, TX that specializes in fracking. The company, owned by Chesapeake Energy and an Asian investment consortium, are reportedly actively seeking opportunities internationally;

-          Chairman Fu Chengyu of Sinopec has indicated that the current global economic recession provides Chinese energy corporations with good opportunities to expand their business beyond national boundaries and gain technical and management expertise.

 

 

 

China Weekly Energy Updates (2/24/2011-3/2/2012)

 

China sets up first renewable-energy think tank (China Daily. February 24, 2012)

-          With financial and technical support from Denmark, China has established its first national think tank, The China National Renewable Energy Center, that focuses on scientific research and policy development in renewable energy; the new entity will also help draft industry standards and participate in international cooperation projects;

-          Wang Zhongying, deputy head of the Energy Research Institute under NDRC, said that the creation of a national think tank will serve the interest of the country as policymakers will be better informed and advised;

-          In addition to the management and steering committees, the center also has a consultant committee that consists of experts from Demark, United States (NREL), Spain, and China. It will focus on four aspects in renewable energy development: wind, solar, biomass, and grid integration.

 

 

China unveils its shale gas potential (ClimateWire. March 2, 2012)

-          The Ministry of Land and Resources (MLR) of China announced that the country has discovered nearly 16 TCM of extractable shale gas resources in 880,000 square km of exploration blocks, with total exploitable potential reaching 25.1 TCM;

-          On top of the 1st round of tender held in 2011 which raised nearly $132 million investment from two SOEs, China plans to launch another one or two rounds this year to attract additional investment and technical know-how into the sector;

-          China has designated shale gas as an “independent resource” which opens the market for private companies; it has also selected Guangdong and Guangxi provinces to implement pilot liberalized wholesale gas market programs. Shale gas is expected to be a game changer in China if output could exceed 100 BCM by 2020.

 

 

China is ready to release Five-Year Plan for its nascent shale gas industry (Wall Street Journal Chinse. March 1, 2012)

-          China is reportedly drafting a 12th Five-Year Plan exclusively for shale gas development, which is expected to be released soon; a MLR official, speaking in anonymity, said that the production target by 2015 is 6.5 BCM; this however will only increase China’s total domestic gas production by slightly more than 6 percent;

-          China Huadian Corp. has recently signed an agreement with the provincial government of Hunan to develop shale gas resource within its territory.

 

 

Dart Energy signs Chinese coal bed methane and shale gas deals (Energy Business Review. March 2, 2012)

-          Australian-based Dart Energy has signed a letter of intent (LOI) with the state-owned Henan CBM (HCBM) and largely private Hong Kong Prosperous Energy Company (HPEC) to develop four CBM blocks in Henan and one shale gas block in Sichuan; the four CBM blocks cover a total area of 2000km2;

-          The parties will conduct technical evaluation, followed by negotiations that would hopefully lead to foreign cooperation production sharing contracts (PSCs); the parties intend for the PSCs to receive government approval no later than  the Q4 of 2012;

-          Dart and HPEC will also work together to build and operate downstream assets associated with the projects.

 

 

China may be most appealing market for clean energy investors -- report (ClimateWire. February 29, 2012)

-          China is ranked no.1 in Ernst & Young’s global renewable energy Country Attractiveness Indices report, thanks to government subsidies for its rapidly growing solar and wind power industries as well as the planned investment into hydropower;

-          Mature markets are dropping in the ranking “due to continued liquidity constraints and the ongoing withdrawal of government incentives” while emerging markets, led by China, shows increased government commitment in driving growth in the renewable energy sector out of concerns over energy security and raising domestic job demand.

 

 

HPI wins approval for combined-cycle co-gen plant in China (Energy Business Review. February 29, 2012)

-          Huaneng Power International, a subsidiary of the state-owned China Huaneng Group, has received approval from the Yunnan provincial government for the construction of a combined-cycle, co-generation project in Yunnan; the project consists of two 300MW combined-cycle gas turbine co-gen units;

-          Huaneng will fund 20% of the $420.6million project, with rest of the cost funded by bank loans.

 

 

China needs clean technology and free markets to sustain economic growth -- study (ClimateWire. February 28, 2012)

-          A lengthy report jointly produced by the World Bank and China’s Development Research Center under the State Council put market-driven energy development at the top of list if the country is to become a high-income economy by 2030;

-          The report warned that sustainable economic growth won’t become a reality in China until it “stops distorting the price of energy and cuts its dependence on ‘heavy handed’ government action to reduce GHG emissions”.

-          The authors argued that long-term market incentives such as pollution taxes, regional carbon trade mechanisms and royalties paid by mining companies must replace export tax rebates, subsidies for resource- and pollution-intensive industries and other inefficient, market-distorting government practices.

 

 

China's State Grid in talks to buy AES' U.S. wind assets: sources (Reuters. February 27, 2012)

-          State Grid Corp of China is in negotiation with AES Corp in an attempt to take a controlling stake in the U.S. power producer’s wind business division. The deal being considered involves a wind capacity of around 1100MW and could be worth around $1.65 billion, which translates into roughly 80 percent stake in the business;

-          Although State Grid has heavily established its presence in the Philippines, Brazil, and Portugal, it would be the power transmission giant’s first foray into the United States if the deals were to go through;

-          It is speculated that one of the drivers of State Grid’s move is the limited profitability in China’s tightly regulated domestic wind power market;

-          China Investment Corp, the country’s sovereign wealth fund, holds 15 percent stake of AES.

 

 

Chevron to explore shale gas in China (Energy Business Review. February 24, 2012)

-          Chevron confirmed that it has started seismic operations in July 2011 to explore shale gas in China’s Qiannan Basin after signing a joint study agreement with an unidentified Chinese partner in April;

-          The oil company will begin the first phase of its plant in Southwestern Sichuan province later this year; while the second phase at the Chuandongbei field, jointly developed by Chevron and PetroChina, had started in 2011.

 

 

China Weekly Energy Updates (1/20/2011-1/27/2012)

 

China hits back at US wind turbine import investigation (BusinessGreen. January 23, 2012)

-          Following the recent announcement by the Commerce Department to launch an investigation into possible breach of trade rules by China and Vietnam as a response to a complaint made by a group of American wind turbine manufacturers, China has criticized the decision and offered a “thinly veined” threat of retaliatory measures;

-          China’s reaction to the probe almost precisely mirrors the way it responded to the decision by Commerce to investigate alleged dumping and illegal subsidies in China’s solar power industry last October, when it announced to initiative its own probe into subsidies American clean energy companies received from the federal government.

 

ConocoPhillips Reaches Settlement in China Spill (Wall Street Journal. January 25, 2012)

-          ConocoPhillips and CNOOC have reached an agreement with China’s Ministry of Agriculture to settle the case by paying 1 billion yuan ($159 million) for damages caused by oil spills in Bohai Bay; a total of 3,343 barrels of oil and mud used in drilling leaked through the seafloor near platforms at the field;

-          The field, with an average 56,000 barrels/day production capacity, was ordered by the Chinese government to halt operation, and is still offline today;

-          In addition to the compensation, ConocoPhillips has set up a fund to “help address the challenges of those who have been affected and promote the environmental sustainability of Bohai Bay”.

 

UPDATE 3-China overtakes Japan as world's top coal importer (Reuters. January 26, 2012)

-          Data from IEA showed that Japan had held the top position since 1975; it fell behind China mainly because of robust Chinese demand of coal and last year’s earth quake which damaged some of the coal-fired power plants;

-          China imported 182.4 million tons in 2011 with a 10.8 percent yearly growth rate, while Japan’s import fell 5.1 percent to 175.2 million tons; a Reuter’s poll showed that China’s import will stabilize in 2012 “as domestic demand moderates and home production rises”.

 

Solar CEOs See Boom in China Will Ease Glut in 2012: Energy (Bloomberg. January 27, 2012)

-          Suntech Power Holdings Co. CEO Zhengrong Shi estimated that China may add 4 GW or more of panels in 2011, and Trina Solar Ltd. (TSL) CEO Jifan Gao expects 5 GW. These figures are more optimistic than the forecast of 3 GW by Bloomberg New Energy Finance;

-          The views of Chinese solar companies show that growing demand in China will drive a global solar recovery; prices of polysilicon rose in four of the past five weeks after falling 65 percent last year;

-          Gao of Trina said that solar panel prices had fallen so low that grid parity was almost reached between solar and fossil fuels at a competitive price. He showed confidence in seeing solar reach grid parity in three or four years in China.

 

Guangdong Carbon Program to Be China’s Largest, New Energy Says (Bloomberg. January 25, 2012)

-          Bloomberg New Energy Finance reports that Guangdong province is seeking to cut the amount of carbon emitted per unit of production in its economy by 19.5 percent in the five years through 2015;

-          The pilot programs in Guangdong are likely to fit alongside non-market policies, which will effectively prevent a fully-fledged cap-and-trade scheme; the implementation plans will be submitted to Beijing this year;

-          Asia Development Bank will help fund one of the seven pilot carbon trade programs in China.

 

Cnooc Targets Assets, Unconventional Energy to Boost Output (Bloomberg. January 19, 2012)

-          According to Li Fanrong, CEO of CNOOC, the company “will maintain a goal of boosting production by 6 to 10 percent” by the end of 2015, after reporting an output that came in at the low end of a reduced target for 2011; it has planned to increase capital spending by as much as 63 percent in 2012 for new field development;

-          A Hong Kong-based analyst pointed out that “unconventional energy is strategic to CNOOC’s long-term growth but may not contribute to production immediately since it takes years for commercial output to start’; The company’s CFO made it clear that it favors investment and development of assets that can yield long-term growth over those that boost production in the short run; the energy producer also prefers to position itself as developer and operator than as equity investor in overseas projects;

-          Both CNOOC’s share value and production output have lagged behind those of its main domestic rivals Sinopec and PetroChina, an issue compounded with the oil leak in Bohai Bay and South China sea;

-          A high-level official with CNOOC said that as useful as the learning outcomes from stakes acquired from Chesapeake are, they cannot simply be copied and applied to China as the geology there is very different.

 

 

China Weekly Energy Updates (1/14/2011-1/20/2012)

China AP1000 nuclear plant on track after delay-Xinhua (Reuters. January 15, 2012)

-          China’s first third generation pressurized water reactor (currently under construction in Sanmen, Zhejiang province), which is based on Westinghouse’s AP1000 technology, is expected to come online in 2013 as scheduled, according to Wang Binghua, chairman of the board at the State Nuclear Power Technology Corporation (SNPTC);

-          SNPTC and Westinghouse have reportedly reached the consensus that the new reactors will be able to survive shocks at the same level as the one that struck the Fukushima reactors last year;

-          China is also developing its own variation of AP1000, named CAP1000, as well as an updated CAP1400, for which the initial design was completed last year. Wang from SNPTC says the indigenous technology will go through government examination in May this year.

 

China report spells out "grim" climate change risks (Reuters. January 17, 2012)

-          In a recently published report titled “Second Assessment Report on Climate Change”, the Chinese government warns that the country’s economic prosperity and social stability face imminent threat from climate change, which reduces agricultural output, exacerbates water scarcity, and increases the likelihood of severe natural shocks;

-          Under one scenario about the potential impact of climate change on water availability, it is estimated that eight out of China’s 31 provinces and municipalities will face severe water shortage – which means less than 500 cubic meters of water for each resident; 10 additional provinces/municipalities could face less dire but still serious chronic shortages.

 

ALTERNATIVE ENERGY: China revises policy and pricing to boost shale gas production (ClimateWire. January 16, 2012)

-          On December 31, Beijing made shale gas an independent mining resource, a decision which essentially opens up its exploration business to private companies in China as well as foreign contenders through joint ventures;

-          In addition, China has recently started a reform program on pricing for unconventional gas in the coastal provinces of Guangdong and Guangxi, both of which are major regional natural gas markets. The new scheme allow gas producers to charge more for their output;

-          Among wave of acquisitions of US shale gas assets by cash-rich Chinese energy companies, MIE Holdings Corp, an independent upstream oil company based in Beijing and with operations in all major oil fields in China, have acquired 50% stake in oil and gas leases in the Niobrara formation in Colorado.

 

China proposes global energy governance, development (SmartPlanet. January 16, 2012)

-          During the World Future Energy Summit in Abu Dhabi, Chinese premier Wen Jiabao proposed that a G-20 equivalent international body should be established to ensure “fair, reasonable and binding” global rules to stabilize natural gas and oil supplies;

-          Wen also advocated for new policies that encourage development of innovative renewable energy technologies and higher energy efficiency measures; he called out to developed countries to be more open in sharing technologies with their less advanced counterparts.

 

Wen Jiabao: Chinese renewable energy share tops 11 per cent (BusinessGreen. January 16, 2012)

-          Premier Wen of China presented a series of accomplishments China has made in 2011 in the expansion of its renewable energy sector: the share of non-fossil energy now accounts for 11.4 percent in China’s total energy supply; capacity addition for wind and solar reached 47GW and 3 GW, respectively; and coal consumption per kWh of power generated was cut by 10 percent;

-          Wen also stressed that fossil fuels will continue to be the dominant resource for power in the foreseeable future, and called for increased effort in accelerating low-carbon demonstration projects in advanced nuclear, natural gas, and other areas.

 

Possible mechanisms to solve the mismatch between prices for coal and electricity (Lin Boqiang. January 6, 2012)

-          With the Chinese New Year’s holiday closing in and winter peak in electricity demand approaching, 17 provinces in China are facing power shortage; as an ad hoc measure, NDRC has adjusted prices for electricity as well as coal supply; the so-called progressive power pricing scheme is also being applied to the residential sector;

-          In the mid- to long-term, the most urgent issue to address for power sector regulators is the limited capacity in existing coal transportation infrastructure; it is imperative that the government either boost capacity in railroad transportation, or build generation units near coal mines, combined with new electricity grids; it is equally important to lower the percentage of fossil energy in China’s overall energy portfolio;

-          Last but not least, China must find new ways to solve the mismatch between highly liberalized price in coal and tightly regulated price in electricity. More market oriented approaches that closely associate market signals with pricing regulation are most desirable in the long run.

 

China Weekly Energy Updates (1/4/2011-1/13/2012)

 

Cnooc Starts Its First Shale-Gas Project, in Eastern China (Bloomberg Businessweek. January 12, 2012)

-          CNOOC started drilling at its first shale-gas project in the country on Dec. 29 in the Wuhu city, Anhui province. The project covers a n area of 4,800 square km (1,853 square miles);

-          A Hong Kong based energy analyst said that more than five years will be needed before this project turns into real production, but it signals a new strategic direction for CNOOC;

-          CNOOC has bid for at least $16 billion of assets overseas since the beginning of 2010, including stakes in Chesapeake’s Niobrara and Eagle Ford shale projects.

 

China: Energy 'super-ministry' is under consideration in Beijing (ClimateWire. January 9, 2012)

-          Despite being the world's top energy consumer, China has no unified body to regulate energy, hindering many of the nation's goals. The State Council, may vote to create a new ministry to replace the NEA; The new ministry would absorb duties that are presently scattered across other government bodies, and also set prices on oil, gas, coal and electricity, which are now responsibilities of the NDRC;

-          The massive and mighty NDRC will probably be the largest obstacle in the restructuring plan, according to a government official directly involved in Chinese energy policy, who said the "NDRC should be dismantled and its authorities dispersed to different government ministries."

China moves to reform energy taxes (Financial Times. January 9, 2012)

-          China is set to start a major reform on its resource tax scheme, shifting from volume-based taxes, which was set years ago and generally very low, to value-based taxes that will fluctuate alongside commodity prices; the new system already applies to oil and gas and will include coal and other commodities by 2015;

-          On November 1 the resources tax for oil and gas moved from volume-based (between RMB 8 ($1.30) and RMB 30 a ton for crude oil) to a value-based tax set at 5 per cent of the value of the oil and gas produced; the impact on state-owned oil companies is balanced out by changes made to the windfall profits tax;

-          Analysts say that the implementation of a value-based tax on coal will have a huge impact on coal and energy prices, which is why opposition to such a move (essentially a RMB 20 per ton increase in resource tax on coal) has been so strong out of concern that it would trigger a macroeconomic fallout.

 

China Increases Target for Wind Power Capacity to 1,000 GW by 2050 (Renewable Energy World. January 5, 2012)

-          A recently-issued roadmap by the China’s central government for the country’s wind power industry shows that China’s wind power capacity will reach 200 GW, 400 GW and 1,000 GW by 2020, 2030 and 2050, respectively. By 2050 China’s investment in the wind power sector is expected to reach RMB 12 trillion (approx. US$1.9 trillion) and help address 17 percent of electricity demand;

-          To take full advantage of the opportunities brought about by the roadmap, major Chinese wind power equipment manufacturers are set to shift their focus to research and development of high-capacity units, which are subject to a variety of uncertainties, due to their narrow applications, out-of-date support facilities and unproven quality.

 

Clean Energy Investment Hits Record In 2011 As U.S. Reclaims Lead From China (Forbes. January 12, 2012)

-          Renewable energy investment rose 33% in the U.S. to $55.9 billion in 2011, overtaking China’s $47.4 billion;

-          Global investment in renewable energy reached a record $260 billion in 2011, with solar growing 36 percent from 2010 to $136.6 billion, and $74.9 for the wind industry. Energy-smart technologies such as smart grid, energy storage, efficiency grabbed $19. 2 billion in investment while biofuels attracted $9 billion, geothermal $2.8 billion and marine power $0.3 billion;

-          Analysts have called the investment spike “particularly striking” because they were achieved during a turbulent year for the world economy in general and for the clean energy sector in particular.

 

Shell China E&P to buy Ivanhoe's stake in Zitong tight gas (Oil & Gas Journal. January 11, 2012)

-          Shell China Exploration & Production Co. Ltd. And Ivanhoe Energy Inc. have agreed on a deal in which Shell would acquire Ivanhoe’s stake in a production-sharing contract for Zitong block in China’s Sichuan basin for $160 million; the deal is expected to close by the end of 2012, pending approval by the Chinese government;

-          Sunwing, a subsidiary of Ivanhoe which owns a 90% stake in the block involved in the deal, discovered gas at two wells. Mitsubishi Gas Chemical Co. Inc. owns the remainder.

 

Chinese regions prepare for carbon trading as state mulls coal cap (BusinessGreen. January 13, 2012)

-          In preparation of a nationwide carbon trading scheme, NDRC has demanded that the cities of Beijing, Tianjin, Shanghai, Chongqing and Shenzhen, and provinces of Hubei and Guangdong set "overall emissions control targets";

-          The cities and provinces were also required to submit proposals explaining how these targets will be allocated, establish a dedicated fund to support the nascent market and draw up detailed implementation plans;

-          Data from NEA shows a rise of 47GW of wind energy capacity, a trebling of solar power to 3GW and the completion of an additional 12.6GW of hydropower, with almost twice that amount scheduled to start producing in 2012; however, China also burned an extra 95 million tons of coal last year.

 

China: CO2 emissions soar, despite advances in renewables (ClimateWire. January 13, 2012)

-          Despite remarkable gains in the renewable energy industry, carbon dioxide emissions in China surged, driven by a 95-million-ton increase in the country's use of coal;

-          Chinese state planners are currently wrestling with provincial governments over a proposed cap, which would set a limit on the country's coal consumption at 4.1 billion tons by 2015. Provincial governments have instead pushed for a higher threshold of between 4.25 billion and 5 billion tons.

 

China Weekly Energy Updates (12/29/2011-1/3/2012) 

 

Sinopec, Devon in $2.2 billion shale deal (Reuters. Januray 3, 2012)

-          China's Sinopec will invest $2.2 billion for a third of U.S. oil and natural gas producer Devon Energy Corp's interest in five developing fields as part of a long-term partnership;

-          The deal includes a $900 million cash payment upon closing and another $1.6 billion in the form of a drilling carry;

-          Gas fields covered in the deal include: Tuscaloosa Marine Shale in Alabama and Mississippi, the Niobrara in Colorado, the Mississippian, the Utica Shale in Ohio and the Michigan Basin, with totally area of 1.2 million acres.

Canadian Solar, Ningxia Electric complete 10MW project in China (Energy Business Review. January 5, 2012)

-          A 10MW ground mounted solar power project in Hongsibao, Ningxia Hui Autonomous Region has been completed and connected to the grid by Canadian Solar and the Ningxia Electric Power Group;

-          The project features an 8MW fixed system and a 2MW tracking system; it is expected to generate about 13.51 gWh of electricity and reduce CO2 emissions by 18,900 tons per year.

 

China to levy carbon tax before 2015 - report (Reuters. January 5, 2012)

-          Chinese state news agencies report that a direct carbon tax scheme is likely to be in effect by 2015 pending review and approval by the Ministry of Finance (MoF). The tax will begin at a rate of 10 yuan ($1.59) per ton of carbon dioxide, and will be levied against major industrial consumers of coal, crude oil and natural gas;

-          The National Bureau of Statistics (NBS) started developing a system that measures industrial carbon emissions which serves as a prerequisite for a nationwide carbon tax program.  

 

American Heads in the Shale About China (The Wall Street Journal. January 5, 2012)

-          CNOOC and Sinopec are in a bidding war for a 30% stake in the American shale gas service company FTS International; recent moves by Chinese corporations as such has fallen under the radar of Congress; this inaction is allegedly costing potential opportunities for U.S. investments into China as the level of political pressure places on them is minimal at best;

-          It is speculated that Chinese companies effectively downplayed their moves by only acquiring minority stakes and remaining behind their operating American partners;

-          It is also possible that politicians in the U.S. have been advised not to make so much noise that it undermines the efforts by companies like Chevron and ConocoPhillips to break into China’s own shale gas market.

 

China aims to triple coalbed gas output by 2015 (Reuters. January 3, 2012)

-          As part of the energy science and technology Five-Year Plan, China has set the production target of coalbed methane (CBM) in 2015 at 30 billion cubic meters (1.06 trillion cubic feet), representing a more than triple growth from the 9 BCM (0.32 TCF) production in 2010; about half of the target will be produced in ground development projects with the other half pumped from coal mine projects;

-          China is determined to find 1 TCM (35.31 TCF) of proved coal seam gas reserve by 2015, an ambitious increase from the current level of 273.4 BCM (9.65 TCF).

 

China Shenhua to make alumina from coal ash-Xinhua (Reuters. December 18, 2011)

-          A senior executive at Shenhua Group revealed that the company is spending $21.4 billion to build a facility in Ordos that produces alumina from coal ash;

-          The facility includes a 6,600 MW power plant, an alumina plant and a gallium plant, all utilizing materials recycled from coal burning. Once this project is in operation, the city of Ordos will be able to produce 3 billion tons of alumina.

 

China Seeks $536 Billion of Investments to Protect Environment (Bloomberg. December 21, 2011)

-          The State Council of China released a blueprint on pollution reduction which shows that about $536 billion will need to be invested for environmental protection (including cutting Sulfur Dioxide emissions and lowering the percentage of fossil fuel in the energy mix) in the next five years; local governments and the private sector are responsible for raising the fund;

-          As China tries to shift its growth model and to curb deteriorating environmental conditions, the central government has set up companies at the local level to bypass rules barring them from directly taking bank loans or selling debt, out of fear that excessive local borrowing may create repayment risks;

-          Total amount of investment in the 11th FYP (2005-2010) is 40 percent less than the amount planned in its successor; local governments have been encouraged to expand their funding channels for projects related to environmental protection.

 

Beijing Lets Natural-Gas Prices Rise in Two Areas (The Wall Street Journal. December 27, 2011)

-          China will start testing natural gas price reforms in the coastal provinces of Guangdong and Guangxi, where cost of natural gas will be tied more closely to the market. The government’s long-existing practice of artificially keeping the price below market value has discouraged the development of the country’s natural gas industry and increased its dependence on cheap gas;

-          The two chosen provinces are major importers of LNG because of their lack of land-based pipelines, which keeps gas prices higher than most in-land regions; average per Btu price of gas in China is roughly $5, compared to just above $3 in the United States.

 

Wind capacity in China surpasses 45GW as 2011 closes (Reuters China. December 29, 2011)

-          State radio reports that on-grid wind capacity in China is set to register a 14GW growth from the previous year to a total of more than 45GW by the end of 2011, signaling a more stable trajectory in the development of the wind power industry, in comparison with the over 100 percent annual growth rate during the period of 2003-2009;

-          To achieve the target of 100GW installed wind capacity by 2015, China will need to close the gap between growth in capacity and development in power grids; this gaps left about 13GW of capacity sitting in idle in 2010. Actions have been taken to tighten up the review and approval process for new wind projects.

 

Quarterly Briefs on major China energy related trends/issues

Brief on major China energy related trends/issues in the 3rd Quarter of 2011

Kexin Liu, Research Associate, Clean Air Task Force

 

The reality of China’s much anticipated energy-specific 12th FYP targets

The preliminary targets in China’s upcoming energy-specific 12th Five Year Plan were revealed in September, pending review and approval by the State Council. Most importantly, it was announced that 470 million metric tons (MMT) of standard coal equivalent will come from non-fossil sources by 2015 (11.5% of total energy consumption). Among those, nuclear power will account for 90 MMT, hydropower will take up 280 MMT, while other renewables (wind, solar, biomass, etc.) will be responsible for the remaining 100 MMT. 3.63 billion MT of standard coal equivalent is targeted for fossil energy. Coal consumption will be capped at 2.63 billion MT and it will be 31 MMT for natural gas. By 2015, the percentage of coal in China’s entire energy consumption mix will shrink to 63.6% from 70.9% in 2010. In addition, the annual growth rate for energy consumption is set at 4.8% for the period of 12th FYP, down by one percentage from the 5.8% in the last FYP period. With fossil and non-fossil sources combined, China appears set to make an approximately 10 percent cut in energy consumption in the next five years.[i]

 

There are nevertheless daunting challenges to the actual implementation of such ambitious plans. The most notable of which is the irreconcilability (at least for now) between the seemingly unshakable resolve of the local heads for sustained GDP growth and the attempt by the central leadership to keep the country’s energy consumption under control. Total amount of energy consumption proposed by individual provinces has reportedly exceeded the national target by 1 billion MT standard coal equivalents. This in and of itself shows that provincial and local officials simply do not back down very easily when the core economic interests of their constituencies run in conflict with Beijing’s tall orders. Several provinces set double-digit growth target in their own 12th FYPs which are obviously not in harmony with the central government’s 7% growth target published earlier this year. Strong local resistance to the national energy plan makes it very difficult to hold provinces accountable when it comes to the monitoring, reporting, and verification (MRV) of reduction outcomes.[ii]

 

An equally tough nut to crack is the lack of equitability of China’s current mechanism in allocating reduction targets among provinces with dramatic difference in per capita GDP, an issue very similar to what stalled the Copenhagen climate negotiation in 2010 – that economically less advanced regions/countries feel that they are unfairly asked to make as big cuts in energy consumption as their wealthy counterparts while their need for GDP growth is dire. While lacking power when it comes to negotiations at the People’s Congress, poorer provinces are not without means to shy away from top orders for their own economic good. This impasse is further compounded by the fact that interest groups representing different fossil and non-fossil energy sub-sectors are also fighting for bigger stakes in the game.[iii]

 

The overall political reality has two key implications. First, it is crucial to recognize that the most promising tools for China to foster sustainable economic growth are a set of innovative, reliable low-carbon technologies on the supply side with strong government support in the medium term[iv], followed by a gradual overhaul of the growth model in the longer run; to simply put a ceiling on absolute energy consumption is both economically questionable and politically counterproductive. Second, as it stands for now, it makes more sense to give up on the hope that the targets will somehow be legally binding and instead more efforts should be devoted to treat them as a signal from China’s top leadership that the country’s economic vehicle is being slowly steered onto a new path of sustainable development that would take decades to shape up.

 

China’s feed-in tariff for solar power

The National Development and Reform Commission (NDRC) announced on August 1st that it was setting a feed-in tariff (FiT) for China’s domestic solar power producers. More specifically, on-grid solar power price of RMB1.15/kWh (about $0.18/kWh) is set for utility scale projects approved before July 1, 2011 and completed by year's end; RMB1.0/kWh (about $0.16/kWh) is set for projects approved after July 1, as well as those not completed in 2011. Projects covered by the Golden Sun[v] program or set up through competitive bidding processes are excluded from the feed-in tariff.[vi]

 

This long-awaited FiT in general received very positive reactions from the industry as well as market analysts. It is expected to serve a major boost to China’s domestic solar manufacturers to whom the overseas market is becoming increasingly insufficient, as various countries in Europe have recently started their own solar subsidies programs. Optimistic forecasts from industrial analysts suggest that total installed solar capacity in China reach 1.3 – 2 GW by the end of 2011, 3 GW in 2013, and up to 10 GW in 2015, when China will rise to a top-three solar market globally.[vii] Manufacturers in the sun-rich areas such as Inner Mongolia and Ningxia are said to benefit the most with solar electricity fast approaching grid parity and a medium-term (15 – 25 years) return up to 10%.[viii] This is leading to a surge in installed solar capacity in those provinces. What is more, the new FiT will also keep China on track with its ambitious 11.4% non-fossil energy target laid out as part of the 12th Five-Year Plan earlier this year, while development in nuclear power is temporarily slowed following the Fukushima disaster. Another benefit that the FiT is expected to bring about to China’s solar industry is cost reduction – the EIA estimates that cost for PV-generated electricity will fall by 15 percent as solar capacity doubles.[ix] 

 

Still in its infancy, the FiT program nonetheless draws criticism for failing to embrace the differences in cost factors between China’s economically prosperous coastal regions and the poorer inland areas. The flat rate of RMB1.15/kWh or 1/kWh across the country is certainly not as helpful to solar power producers in eastern China as intended, as the region gets much less sunlight and is notorious for its sky-high land prices.[x] Analysts say that an RMB1.15/kWh rate could give power producers in western China more than 300% in return during a 25-year cycle, while their counterparts in eastern China can only get a mere 100% return.[xi] Some producers in Beijing have already started complaining about not being able to make a profit even with the FiT in place. It is speculated that as the problem manifests itself, the NDRC would eventually be compelled to follow what was done for China’s wind power two years ago and adjust rates based on geographical and socio-economical differences.

 

Another major concern, unsurprisingly, is related to grid integration, as electricity consumption still concentrates in the economically more advanced east coastal regions. Although China has been reportedly putting big money into upgrading and building its massive power transmission lines into what is called “smart grids”, it remains unclear who is eventually responsible for the cost. It is argued that China’s solar dream will not truly materialize until the technical and cost distribution issues are fully solved between stakeholders from the industry and the mighty State Grid Corporation.

 

Recent development in China’s nuclear power planning post-Fukushima

Eight months after the Fukushima disaster that shocked much of the world, China is anxiously getting back on track with its own nuclear development plan. Some senior energy officials have expressed concern that the current impasse will hurt China's long-term aim to become a global leader in the nuclear sector.[xii] Li Yongjiang, vice president of the China Nuclear Energy Association (CNEA), indicated that the scaling-back of the 80 GW target by 2020 is only temporary - the 10 GW that was initially perceived as being permanently “cut” from the overall target is in fact only delayed.[xiii] Jiang Kejun of NDRC’s Energy Research Institute, who is regarded as one of China’s eminent thinkers on energy policy, said that the government was sticking to its target of 50 GW of nuclear power by 2015; he and some other experts, including former NEA chief Zhang Guobao, have tried to portray the Fukushima incidents as something that is of strategic value to the planning of the nuclear power industry, a view seldom heard elsewhere.[xiv] China has been attempting to create economies of scale by building dozens of reactors at the same time, and with contracts awarded to companies from a variety of countries with the condition that they provide detailed technical documentations. This is a clear signal that China is not satisfied with using nuclear power to meet up with domestic demand for electricity but they intend to establish an advanced industry that will serve their economic and strategic interests in the long run as well.

 

With the safety inspections on both existing and unfinished reactors completed, the suspension on planned reactors is expected to be lifted very soon.[xv] In the meantime, the development of a national plan on nuclear safety is said to start in the foreseeable future, which would further justify the construction of a “nuclear city” in the coastal city of Haiyan, some 118 kilometers (70 miles) southwest of Shanghai and close to the cities of Hangzhou, Suzhou and Ningbo.[xvi]

 

The International Atomic Energy Agency (IAEA) conducted a round of review of China’s nuclear safety infrastructure and expressed concerns that the country’s regulatory bodies are lacking flexibility and resources in both financial and human terms.[xvii] This is echoing concerns by others that China does not have an independent nuclear regulatory body.



[i] China Economic Net. “十二五能源规划量化指标首次透露 (Energy-Specific 12th FYP Targets Revealed for the First Time)”. Retrieved 9/21/2011. [Online]. Available: http://www.ce.cn/cysc/ny/hgny/201109/06/t20110906_21038041.shtml

[ii] Damien Ma. “Can China Manage Its Energy Consumption?” The Atlantic. Retrieved 9/21/2011. [Online]. Available: http://www.theatlantic.com/international/archive/2011/09/can-china-manage-its-energy-consumption/244861/

[iii] Hexun. “‘十二五’能源规划胶着 (Energy Planning for 12th FYP Stalled)”. Retrieved 9/21/2011. [Online]. Available: http://news.hexun.com/2011-08-15/132460377.html

[iv] CSPO and CATF. “Innovation Policy for Climate Change: A Report to the Nation”. Retrieved 12/20/2011. [Online]. Available: http://www.catf.us/resources/publications/view/102

[v] The Golden Sun Program was initiated by NDRC in 2009. The program applies to grid connected rooftop, building-integrated PV (BIPV), and ground mounted systems, as well as off-grid systems in rural areas. Minimum peak capacity of systems covered is 300KW. The program offers subsidies at 50% of total cost for on-grid systems and 70% of total cost for off-grid systems. The program is effective between 2009 and 2011. More information about the program can be found at: http://www.climate-connect.co.uk/Home/sites/default/files/Golden%20Sun%20Programme%20Overview%20Climate%20Connect.pdf

[vi] National Development and Reform Commission. “国家发展改革委关于完善太阳能光伏发电上网电价政策的通知 (Notice from the NDRC on the finalization of the feed-in tariff for solar power.” Retrieved 9/21/2011. [Online]. Available: http://www.gov.cn/zwgk/2011-08/01/content_1917358.htm

[vii] Montgomery, L. “China Stamps Solar FIT, But What Does It Mean?” Renewable Energy World. Retrieved 9/21/2011. [Online]. Available: http://www.renewableenergyworld.com/rea/news/article/2011/08/china-stamps-solar-fit-but-what-does-it-mean

[viii] Coco Liu. “China uses feed-in tariff to build domestic solar market”. ClimateWire. Retrieved 9/21/2011. [Online]. Available: http://www.eenews.net/climatewire/2011/09/14/archive/1?terms=coco+liu

[ix] Preonas, L. “China’s Solar Feed-In Tariffs: One Technology’s Moment in the Sun?” Resources for the Future. Retrieved 12/06/2011. [Online]. Available: http://www.rff.org/wv/archive/2011/09/06/chinas-solar-feed-in-tariffs-one-technologys-moment-in-the-sun.aspx

[x] People.com. “上网电价落地开启国内光伏市场 专家建议分区域设定电价 (Experts suggest region-specific ratemaking for China’s solar FiT program.” Retrieved 09/21/2011. [Online]. Available: http://energy.people.com.cn/GB/15303226.html

[xi] www.china-esi.com. “太阳能光伏上网电价政策背后存在隐忧 (Cautions against China’s solar FiT program).” Retrieved 09/21/2011. [Online]. Available: http://www.china-esi.com/Power/11404.html

[xii] Reuters. “China needs to act fast to develop nuclear sector – official”. Retrieved 12/06/2011. [Online]. Available: http://af.reuters.com/article/energyOilNews/idAFL4E7JU0LS20110830

[xiii] Reuters. “REFILE-China nuclear targets to be cut after Fukushima – industry”. Retrieved 12/06/2011. [Online]. Available: http://www.reuters.com/article/2011/10/21/china-nuclear-growth-idUSL3E7LL0EM20111021

[xiv] Bradsher, K. “China Marches On With Nuclear Energy, in Spite of Fukushima”. The New York Times. Retrieved 12/06/2011. [Online]. Available: http://www.nytimes.com/2011/10/11/business/energy-environment/china-marches-on-with-nuclear-energy-in-spite-of-fukushima.html?_r=2&pagewanted=all

[xv] Biello, D. “China’s Nuclear Power Plans Unfazed by Fukushima Disaster”. Yale Environment 360. Retrieved 12/06/2011. [Online]. Available: http://e360.yale.edu/feature/chinas_nuclear_power_plans_unfazed_by_fukushima_disaster/2432/

[xvi] Yurman, D. “China Restarts Progress On Its Nuclear Energy Program.” The Energy Collective. Retrieved 12/06/2011. [Online]. Available: http://theenergycollective.com/dan-yurman/64559/china-restarts-progress-its-nuclear-energy-program

[xvii] World Nuclear News. “IAEA team reviews Chinese regulatory system.” Retrieved 12/06/2011. [Online]. Available: http://www.world-nuclear-news.org/RS-IAEA_team_reviews_Chinese_regulatory_system-0208104.html

 

 

 

 

China Energy Quarterly Issues

 

 

Brief on majot China energy related trends/issues in the 4th Quarter of 2011

 

 

Brief on major China energy related trends/issues in the 3rd Quarter of 2011