INTRODUCTION

13.1 The energy industry is fundamental to the national economy, is of critical importance to socio- economic development and the improvement of people's living standards. In the environment of a rapidly expanding economy, China's energy industry is confronted with dual pressures for economic development and environmental protection. These are primarily evident in the following:

(a) The level of management and technology for the energy industry in China is under- developed. Both the efficiency of energy utilization and per capita energy consumption are very low. There is a big gap between the energy supply and demand. The wasting of energy is also common;

(b) China has a coal-based energy structure, with coal consumption amounting to 75% of total energy consumption. Cleaner energy constitutes only a small proportion of the total energy supply. Because of this, there are emissions of large quantities of pollutants, resulting in serious atmospheric and water pollution.

13.2 If the present pattern of energy production and consumption is maintained, China would be hard pressed to meet future energy demands due to shortages of resources, low financial inputs and inadequate transportation, combined with the need for environmental protection. Therefore, major components of China's strategy for sustainable development include changing present energy production and consumption patterns, diversifying energy sources and the structure of power production, and establishing an energy structure that is less or not at all harmful to the environment.

13.3 The overall objectives outlined in this chapter are to achieve sustainable development in the energy industry and meet the needs of socio-economic development through the following means: strengthening the planning and management of energy systems; formulating and implementing a policy and regulatory system appropriate for the market economy; developing and popularizing advanced, environmentally-sound energy production and utilization technologies; increasing efficiency; reducing environmental pollution.

13.4 The policies and regulations formulated by the Government of China for environmental protection, resource management, and energy management, such as the Environmental Protection Law, the Mineral Resources Law, the Regulations for Land Reclamation, and the Interim Regulations for Energy Saving, are of fundamental importance to this chapter. This chapter is closely related with Chapters 2, "Strategies and Policies for Sustainable Development"; 6, "Education and Capacity Building for Sustainable Development"; 7, "Population, Consumption and Social Services"; 10, "Development of Sustainable Human Settlements"; 11, "Sustainable Agriculture and Rural Development"; 12, "Sustainable Development of Industry, Transportation and Communications"; 18 "Protection of the Atmosphere" and 19, "Environmentally Sound Management of Solid Wastes".

13.5 This chapter includes four program areas:

PROGRAM AREAS

A. Comprehensive Energy Planning and Management

Basis for action

13.6 Establishing an energy supply and consumption structure tailored to the needs of economic development and environmental protection requires comprehensive energy, environmental, and economic planning, in order to provide the basis for formulating programs, policies and measures, as well as for management. Such planning is helpful when analyzing, studying, and addressing inter-sectorial problems spanning the energy, environmental, and economic fields, so that there can be unified standards to assess management policies for energy supply and demand, to assess the effects of environmental protection measures, and to coordinate the energy, environmental and economic sectors, and thereby harmonize activities.

13.7 Features inherent to China's energy system have determined the important requirement for comprehensive energy planning in the development of the energy industry. These features include:

(a) Total energy reserves are large, but the per capita share is small;

(b) Most of China's energy reserves are not of high quality, and their exploration, development, and utilization is rather difficult;

(c) The distribution of China's energy resources do not mesh with the distribution of economic activities, since nearly 80% of energy reserves are located in the western and northern parts of the country, while 60% of energy output is consumed by the economically advanced southeastern part of the country;

(d) The structure of China's energy production and consumption is irrational. The coal-based energy structure, which has not changed for a considerably long time, is placing increasingly greater pressure on the environment and transportation;

(e) Both a shortage and waste of energy exist at the same time. On one hand, the shortage of energy, particularly that of electric power, has already affected cost-effectiveness in the national economy and people's living standards; on the other hand, due to inefficient management, low levels of technology, and low energy prices, there is considerable waste in developing and utilizing energy resources.

13.8 As China experiences rapid economic expansion and is moving toward a market economy, existing management systems no longer are enough, and there is an urgent need for a shift towards a system of comprehensive planning and management, which makes use of economic instruments and policy guidance, adjusts energy prices, changes the mechanisms for distributing investments and benefits, and strengthens the management of energy production and utilization.

13.9 By the end of this century, China's strategy and policies for the development of energy and the environment will be primarily to: act in accordance with the principle of stressing both development and conservation; improve the energy structure and distribution of energy; develop the power industry with coal as the major source of energy, but focusing on the expansion of electric power; make vigorous efforts to tap new sources of petroleum, natural gas and hydro-electric power; develop nuclear energy to an appropriate extent; explore new and renewable sources of energy as local conditions allow; improve energy efficiency and the rational utilization of energy; reduce environmental pollution through the use of advanced technologies.

Objectives

13.10 Establish a set of methodologies for comprehensive energy, environmental and economic planning, which are appropriate to China's present conditions and which meet the needs of a socialist market economy, and popularize such methodologies amongst all levels of energy management authorities. By the year 2000, formulate comprehensive energy, environmental and economic plans and corresponding implementation measures at both national and sub-national levels.

13.11 Enhance the structure of energy management and the distribution of energy supply. Increase the proportion of clean energy and high-quality energy in overall energy production. Strengthen the development and utilization of technologies for energy production, distribution and consumption, which are more energy efficient. Supply more energy, while encouraging lower energy consumption and reducing environmental pollution.

13.12 Accelerate the development of new energy sources and expand electrification in rural areas, in order to end environmental degradation brought about by the excessive consumption of biological resources.

Activities

13.13 Strengthen the institutional framework for integrated energy, environmental and economic planning to promote capacity building in these areas and to coordinate integrated development programs at the state and regional levels.

13.14 Strengthen legislation governing energy production and consumption and the environment. Formulate and implement an energy conservation law. Amend sectorial and departmental rules and regulations for energy conservation. Improve the economic system for energy at all levels. Improve energy accounting in enterprises. Improve energy efficiency and energy conservation.

13.15 In accordance with the ranking priorities of the nation's socio-economic development and environmental protection, assess and select various energy production and utilization technologies, policy measures and development programs for sustainable development. Use cost-benefit analyses to evaluate the impacts of sustainable development on the environment and the economy. In particular, rely on national policies and regulations and market mechanisms to promote the application and extension of environmental-sound energy technologies.

13.16 Support the research, development, transfer, and utilization of various environmental-friendly energy systems, including new and renewable sources of energy.

13.17 Strengthen the development and exploitation of petroleum, natural gas and methane. Increase their use in energy production and consumption to improve the energy structure. In particular, have preferential policies for the exploration for natural gas, so as to improve its collection and potential for development.

13.18 Speed up the construction and modernization of the electric power industry. Increase the proportion of electric power in energy consumption. Alleviate shortages in electricity supplies. Formulate appropriate policies and regulations, deepen structural reforms, and encourage electricity capacity building through fund raising. Promote reforms in the price of electricity so as to enhance the ability of utility companies to develop and to facilitate technological innovation. Expand the construction of power networks. Improve automation levels in the power industry. Make great efforts to develop pithead power generation facilities to alleviate pressures for the transport of coal. Introduce large capacity, high-quality power generation equipment into newly built power plants. Popularize co-generation of heat and electricity, and the central supply of heat and the utilization of waste heat, in order to gradually phase out small boilers. Vigorously develop hydroelectric power. Build large hydroelectric power stations, including the Three Gorges Project. Enhance the development and utilization of our country's water resources.

13.19 Develop the use of nuclear power by expanding domestic production and by importing technologies. Continue with research on and development of the domestically produced 3000 MW and 6000 MW nuclear power plant equipment to make them commercially viable. Utilize foreign capital and equipment to build large nuclear power plants to meet electric power requirements in coastal and economically vibrant areas.

13.20 Make great efforts to expand rural electrification and integrated energy development at the county level. Establish demonstration sites for achieving the sustainable, coordinated development of the rural economy and the environment. Diffuse technologies for the use of firewood-saving stoves, bio-gas, charcoal, small hydro-plants, wind power, and solar energy.

13.21 Improve existing statistical methodologies and systems. Collect and extrapolate data related to the energy, environmental and economic sectors. Establish energy, environmental and economic information systems at both national and local levels.

13.22 Study methodologies and technologies for comprehensive energy, environmental and economic planning, including methodologies and processes for decision-making analyses and policy formulation. Establish energy, environmental and economic assessment indicator systems. At research institutes, reinforce the training of management personnel for integrated energy planning. Continue preparatory work for the study of China's 2050 energy strategy.

13.23 Be involved in extensive international cooperation and exchanges. Learn from the advanced foreign experience in comprehensive planning and management. Conduct research on comprehensive planning methods, management practices, and policy instruments appropriate to China's actual conditions. Use various channels to introduce advanced foreign technologies and processes to improve technological levels for the domestic energy production and utilization. Strive to acquire bilateral or multilateral international assistance. Strengthen the development of the Chinese energy industry and reinforce academic exchanges and personnel training.

B. Improving Energy Efficiency and Energy Conservation

Basis for action

13.24 Energy requirements are continuously growing as the economy expands rapidly and the population increases. The per capita sources of energy are limited and energy shortages are increasingly common, therefore, China's future economic development will inevitably shift from its previous inefficiencies towards efficiency, and focus on energy conservation. In addition, the environmental problems associated with the development and utilization of energy are becoming increasingly serious and are directly affecting both people's quality of life and development; consequently, the improvement of energy efficiency and conservation are also valid approaches to preventing and treating pollution, and lessening the greenhouse effect.

13.25 Energy consumption per unit output in China is 3-4 times that in developed countries. Energy consumption for manufacturing major industrial products is 40 percent higher than that in foreign countries. The average energy utilization rate is only around 30 percent, while in developed countries, it is over 40 percent. Therefore, there is a great potential for energy conservation in China.

13.26 The structure of China's industry is not very rational, with the low-energy consuming service sector constituting only a small proportion, about 27% of the 1992 GNP, and the high-energy consuming industrial sector constituting the largest proportion. Only a small number of enterprises have achieved economies of scale. With adjustments and optimization of the structures of industry and production, energy utilization will become more rational and there is great potential for energy conservation.

13.27 China has already done a lot of work regarding the management of energy conservation and the development of energy-saving technologies. With the shift towards a market economy, the existing energy conservation management system and policies are no longer appropriate in the new situation. There is an urgent requirement for a new system for planning energy conservation and for managing energy demand under a market economy.

Objectives

13.28 Establish or improve the procedures, approval systems, and corresponding policy regulations for energy conservation so as to manage energy conservation throughout the entire process of energy production, transport, processing and utilization. Through technological improvements, raise energy efficiency, reduce energy consumption per unit of output, adjust the industrial structure and value structure, optimize the configuration of energy, and improve energy utilization.

13.29 By the year 2000, the annual energy conservation rate will be above 2.2%, and over 50% of the incremental energy demands will be met through energy conservation. Strengthen leadership and management of energy consumption to reduce the energy requirements.

Activities

13.31 Formulate and implement an Energy Conservation Law and corresponding policies, regulations and standards. Gradually eliminate irrational subsidies. Increase energy prices to reflect actual economic and environmental costs. Use economic measures to promote energy conservation.

13.32 Formulate industrial policies that promote the development of the tertiary industries. Increase the ratio of low energy consuming, technology- intensive industries. Place restrictions on the development of small enterprises which will have high-energy consumption.

13.33 Develop and disseminate advanced conservation technologies. Carry out the technological renovation of industrial furnaces and kilns. Improve the utilization rate of end-use facilities. Provide preferential tax treatment and loans to programs, which are particularly effective in conserving energy:

(a) Upgrading old coal-fired power plants to reduce coal consumption at coal-fired power plants from 427 g/kW.h in 1990 to 365 g/kW.h in 2000;

(b) Expand the construction of power grids, upgrade urban power grids and reduce transmission line losses;

(c) Popularize co-generation of heat and electricity; establish experimental projects in some residential areas to demonstrate the use of efficient district central heating systems and energy- efficient indoor air conditioning systems;

(d) Enhance the efficiency of fans and pumps which currently use over one third of electricity generated.

13.34 Establish quotas and standards for energy consumption. Implement energy auditing and energy management in enterprises. Investigate the conditions for energy conservation in enterprises to identify gaps and shortcomings, and to tap the energy conservation potential of enterprises.

13.35 Gradually establish energy conservation information and technical service centres in all cities and appropriate departments.

13.36 Use the mass media, publications and teaching materials at the primary and middle school levels to improve education about energy conservation and increase public awareness of energy conservation.

13.37 Strengthen international collaboration in the field of energy conservation. Acquire advanced foreign conservation technology and equipment. Expand scientific research and exchanges in the study of energy conservation. Send study tours to technologically advanced countries. Attract foreign capital and technology for the construction of demonstration projects and personnel training.

C. Disseminating Less Polluting Coal Mining and Clean Coal Technologies

Basis for action

13.38 China has rich coal resources. For a long time in the future, coal will continue to be China's main source of energy. Both the output of coal and the sulphur content in coal resources will increase. Environmental problems are associated with the entire process of coal extraction, processing and consumption.

13.39 During the last ten years, China has improved its technology and equipment for coal extraction, processing, and utilization and for reducing environmental pollution. These improvements include:

(a) Promulgating the Regulations for the Reclamation of Land, improving extraction techniques, reducing the destruction of land due to mining, and achieving a standardization and systematization of land reclamation by the coal industry;

(b) Collecting and dissipating coal seam methane, encouraging the comprehensive utilization of coal mine wastes;

(c) Beginning to deal with coalmine explosions and mine wastes;

(d) Encouraging the co-generation of heat and electricity and the domestic utilization of central heating networks and briquettes, improving small and medium-sized boilers, developing high capacity power generating units, developing various types of gas fuels.

13.40 In comparison with developed nations, China still has a long way to go in terms of developing low-polluting techniques for coal extraction and for high efficiency, clean utilization. Main areas for attention include:

(a) In 1991, the land reclamation rate at the coal extraction sites was only 16% and the coal pit water utilization rate was 15%;

(b) Only 17.6% of the total raw coal produced in 1990 was washed, so that total amount of fly ash and sulphur content in coal used remained rather high;

(c) Low efficiency in the utilization of coal energy with the national average utilization rate being only 22%;

(d) Low rate of conversion from coal to electricity, and the coal consumed for power generation is 26% of the total coal output;

(e) Inefficient coal combustion technologies and equipment and a lack of strict pollution emission controls.

13.41 China is a party to the U.N. Climate Change Framework Convention, therefore, developing low-polluting coal extraction and clean coal technologies, controlling the emissions of methane, carbon dioxide, and other greenhouse gases, and protecting the atmosphere are an important components of China's efforts to fulfill its international obligations, as well as being integral parts of China's strategy for shifting its coal-based energy system to an environmentally-friendly, sustainable energy system.

Objectives

13.42 Reinforce the development, application, and popularization of low-polluting coal extraction and clean coal technologies. Encourage the transformation of traditional coal extraction, processing, and utilization techniques in environmentally friendly directions. Improve coal utilization rates. Reduce environmental pollution. Enhance China's ability to meet its environmental challenges.

Activities

13.43 Formulate and improve policies and regulations that are conducive to the development of low- polluting coal extraction and clean coal technologies. Improve the supervising of both land reclamation and amend coal utilization standards. Adjust coal and electricity prices. Use economic levers to promote the utilization of coal pit water and methane in the process of coal extraction. Promote highly effective and clean use of coal.

13.44 Popularize and introduce the utilization of the following technologies or processes in coal mining and establish sites to demonstrate their use:

(a) Improve coal extraction processes. Reduce the production of coal mine wastes through refilling and using wastes to produce building and chemical materials. Develop new processes for combining coal extraction and land reclamation. Introduce biological land reclamation measures;

(b) Improve the management of water resources. Control the discharge of coal pit water. Treat coal pit water to bring it up to industrial and potable standards. Develop technologies for treating acidic water, salt water and wastewater with high concentrations of suspended substances;

(c) Develop and utilize coal seam methane resources. Import or develop pit and surface direct extraction and utilization technologies, so as to control the emission of greenhouse gases from coalmines;

(d) Apply integrated techniques to deal with coal mine explosions and mine wastes.

13.45 Popularize the use of coal washing technologies. Develop or import high-efficiency, clean combustion technologies. Establish demonstration sites:

(a) Increase the proportion of raw coal washed. Conduct research on and the development of desulphurization technology for processing coal with high sulphur content, to decrease fly ash and sulphur content;

(b) Expand the production of coal briquettes for industrial or household use and increase the proportion of thermal power plants;

(c) Develop or import large scale circulating fluidized bed combustion technologies;

(d) Develop or import highly effective, low-polluting pulverized coal combustion technologies;

(e) Develop or import coal-water slurry preparation and combustion technologies;

(f) Develop or import coal gasification and integrated gasification combined cycle technologies;

(g) Conduct research on and promote the development of coal mud, non-bituminous and brown coal combustion and utilization technologies.

13.46 Increase the proportion of coal converted to electric power, heat, gases or other forms of clean secondary energy. Reduce direct and non-concentrated terminal utilization of coal.

13.47 Utilize large power generating units at newly built coal-fired power plants to reduce coal consumption, and to develop and expand clean coal combustion technology. Establish large-scale pit-head power conversion projects to shift from the traditional transport of coal transport to the transport of clean, secondary energy, such as electricity and coal gas, thereby reducing pressure on the transportation system and reducing environmental pollution resulting from the transport of coal.

13.48 Develop or introduce advanced, high-efficiency fly ash cleaning technologies and installations, that focus on the cleaning of flue gases, desulphurization and denitrification. Establish up demonstration projects.

13.49 Develop data and information systems on the following areas: land destruction caused by coal extraction, land reclamation, discharge and integrated utilization of coal mining wastes, management of coal mine water resources, management of methane at coal seams, and coal mine explosions. On the basis of the coal resources database, gather and study coal desulphurization to establish clean coal technology information systems and to provide information to support decision-making in the popularization and utilization of clean coal technologies.

13.50 Develop the utilization of coal cinders, thermal power wastes. Formulate appropriate policies to improve the marketing of wastes.

13.51 Actively participate in international exchanges and cooperation related to the Climate Change Framework Convention. Import and assimilate advance foreign technologies for low-polluting extraction of coal and clean coal, for coal combustion magnetic fluid generation, and for the production of fuel cells. Introduce foreign capital and technology for the technological transformation of the Chinese coal industry. Establish projects to demonstrate the reduction of pollution.

D. Development of New and Renewable Energy Resources

Basis for action

13.52 China's existing energy structure is based on non-renewable fossil fuels, which inevitably leads to the continuing depletion of energy resources. This approach cannot be sustained and China must find a way to develop sustainable energy resources.

13.53 Renewable energy resources include water, biomass, wind power, solar energy, geothermal energy, and ocean-based energy, which can be replenished after depletion and produce very little or no pollutants, thus providing the basis for energy structure of the future.

13.54 China has abundant energy resources. Through efforts made over a long period of time, China has achieved remarkable progress in the development and utilization of renewable energy resources, particularly with respect to the following:

(a) China's total exploitable resources for hydropower are estimated to be 378 GW; currently only 9.5% of these resources are being developed. In 1990, the generation of hydroelectricity comprised 19% of total power generation. There is much potential to be tapped;

(b) Biomass resources include crop residues, firewood and various kinds of organic wastes which are the main energy sources in rural areas. The volume used is equivalent to 260 million T.C.E.s, and supplies 70% of rural energy. At present, most of the biomass is directly burned but with low efficiency. There are a total of 5 million biogas pits, providing 700,000 T.C.E.s;

(c) On 6 million square kilometers of the China's territory, annual sunshine is over 600,000 joules per square centimeter. Solar energy is currently mainly used in solar water heaters, solar stoves, and passive solar houses. Solar cells are also being popularized;

(d) Wind power resources are estimated at 1600 GW, 10% of which is exploitable. Currently installed wind power generator units have a total capacity of 28 MW;

(e) The use of geothermal resources is yet to be developed. Known reserves are equivalent to 3 billion T.C.E.s and currently utilization is equal to over 300,000 T.C.E.s;

(f) There are abundant ocean energy resources in China. The exploitable resources are equivalent to over 20 GW. Some tidal and wave power stations have established for experimental purposes.

The widespread and integrated utilization of renewable energy resources requires further technological development and cost reductions.

Objectives

13.55 Reinforce the development and utilization of new and renewable energy resources. Improve the efficiency of energy conversion. Reduce costs. Increase the proportion of renewable energy resources in the overall energy structure.

13.56 By the year 2000, hydroelectric power plants will have an installed capacity of 80 GW, solar energy facilities will provide 2-3 million T.C.E.s, wind power will have an installed capacity of 200 MW, geothermal plants over 800,000 T.C.E.s, and biomass utilization will be improved for the production of bio-gas and clean liquid fuels.

Activities

13.57 Give priority to the development of renewable energy resources in the national energy development strategy. Adopt appropriate financial incentives and market mechanisms to increase national financial inputs into the development of renewable energy resources and to encourage the participation of local governments and end-users:

(a) Expedite the development of water-based energy resources. Conduct full-scale scientific assessments of the economies of various technologies and the environmental impacts of hydroelectric power projects. Adopt effective measures to reduce adverse environmental impacts. Speed up the development of small- and medium-scale sources of hydroelectric power, which have less impact on the environment and which are conveniently located near end-users, and which, with design guidance and capital inputs by governments, can be built by local people;

(b) Reinforce the development and utilization of biomass energy. Develop and exploit technologies for using biomass energy to produce alcohol or other clean liquid fuels. Popularize technologies for utilizing biomass to produce biogas for daily life and commercial use. Develop the production of biomass energy. Reduce the proportion of biomass used directly for energy production;

(c) Develop technologies for both the direct and indirect use of solar energy. In the near term, stress the development of photovoltaic devices, so as to improve conversion rates and reduce costs. Over the long term, establish large-scale solar power stations;

(d) As appropriate to natural conditions, expand the scope of utilization of wind power so as to provide electric power in remote areas. In the near term, emphasize research on and the development of large wind power generating units and the reduction of costs. Over the long term, emphasize the development of large wind power generating stations;

(e) Conduct a nationwide investigation and assessment of geothermal resources. Build geothermal stations. In the process of developing geothermal resources, protect the environment against adverse impacts;

(f) Develop ocean energy resources, particularly in areas of energy shortage and there is a potential for the use of tidal energy. Develop and build small- and medium-scale tidal power stations to maximize benefits in power generation, aquaculture, and land reclamation. Continue to develop technologies for utilizing wave, tidal, temperature and salt disparities for power generation and establish demonstration stations.

13.58 Keep up with scientific and technological advances in the world. Strengthen research on technologies for utilizing new and renewable energy resources. Conduct research on safety systems and fast breeder reactors, controlled nuclear fusion, hydrogen energy systems, super-conducting power generation and fuel cells. Strengthen the development of optic materials, opti-chemical materials, and other special materials and equipment. Introduce advanced foreign technology, improve research conditions, and enhance the research capabilities of scientific researchers.

13.59 International cooperation in this program area will include the use of foreign capital and technology to conduct research on and build demonstration projects for the development and utilization of new and renewable energy resources.