In its "alternative oil strategy," which is part of the 2006-2010 Five-Year Plan, Beijing has called for a doubling in renewable energy generation to 15% of the country's needs by 2020.
The target is in line with a new renewable energy law requiring grid operators to purchase resources from renewable energy producers. The law, which came into effect in January, also offers financial incentives to foster renewable energy development, including discounted lending and a range of tax breaks.
Of the main renewables, wind power is tipped to have the most potential. Professor Wang Weichang, an energy expert at Tsinghua University in Beijing, predicted wind was on course to supplant hydro as the country's second-largest electricity source, behind coal. Wang said China has the ability to generate up to 100 gigawatts, or 20% of current national capacity.
Beijing also plans to use other alternative energy sources as part of a drive to cut coal dependence from 73% of total generation today to 68% by 2010 and 60% by 2020. Vast investments in new technologies to turn coal into synthetic oil have been announced, and ethanol production will be boosted to create hybrid fuel by mixing it with regular gasoline. With China nearing a deal with Australia on uranium supply, nuclear power is also in the picture, with generation expected to rise 400% by 2020.
But a report released last month by consultancy firm Capgemini suggests China has underestimated future demand, putting its target at risk. The report estimated an additional 280GW of electricity will be required by 2020 on top of the 950GW already planned, meaning coal-fired power plants would still provide 71% of China's electricity needs by 2010 and 65% by 2020.
This is good news for energy efficiency proponents, as a reduction in demand will help the government meet its targets. Beijing has said it is looking to relax its tightly controlled energy-pricing system to encourage conservation and energy efficiency plans have also been put in place. The construction ministry announced pans to increase energy-efficient floor space by 2.16 billion square meters by 2010, saving 101 million tonnes of coal.
International energy talks
China is increasing international cooperation with the world's heavyweight energy producers to address growing demands. The country's top oil refiner, Sinopec, signed a memorandum of understanding last month with India's second biggest state-run oil company, Hindustan Petroleum Corp, for energy projects in China, India and other countries. Meanwhile, China National Petroleum Corp (CNPC) was also expected to sign a gas supply agreement with the world's biggest gas producer, Moscow-based OAO Gazprom. In the US, the chairman of the Senate foreign relations committee said there needed to be greater international co-ordination on energy issues, especially with China and India, to address concerns about growing global competition for energy resources.
Strategic oil reserve ready
The National Development and Reform Commission said that filling of China's strategic oil reserves at its 16-tank Zhenhai facility in the eastern province of Zhejiang was on schedule to begin by the end of this year. It is the first of four strategic oil reserves to be completed. Reserve facilities in Daishan, Zhejiang province, Huangdao, in Shandong province southeast of Beijing, and Xingang, in northeastern Liaoning province, are due to be completed in 2007 and 2008. Beijing plans to stockpile up to 100 million barrels of petroleum, or the equivalent of almost a month's national consumption, to cushion against possible disruptions to supplies coming from abroad.
Gas field talks planned
Talks between China and Japan over the disputed gas fields in the East China Sea ended without resolution last month, but the two sides agreed to meet again. Japanese officials hoped to use the two-day negotiations to elicit a response from China on an earlier Tokyo proposal for joint development of the gas fields. However, Japan's chief envoy, Kenichiro Sasae, was not positive. "I think there was a desire to move forward through cooperation, but whether that desire will be reflected in actual content is a separate issue," he said. "Japan's proposal remains on the table as it was." The two nations have long been in dispute over the sovereignty of the area.
Power shortfall to ease
The country's power-generating capacity will reach a record high this year when new generators producing an additional 75 million kilowatts come on line in 2006. But China Electricity Council secretary-general Wang Yonggan said shortages would still persist in the first half of 2006. Power shortages affected seven provinces at the end of 2005, down from 26 at the beginning of the year, as China's power supply increased by 66.02 million kW to more than 500 million kW.
CAO boss pleads guilty
The former chief executive of China Aviation Oil (Singapore), Chen Jiulin, pleaded guilty to six of 15 charges relating to his role in the jet fuel trader's US$550 million derivatives trading scandal in 2004. Chen admitted to insider trading, failure to disclose losses, making false financial statements and conspiring to deceive Deutsche Bank into managing a share sale in the company. The judge will take the other nine charges into consideration before sentencing. Chen resigned earlier this month. Three of the company's senior executives were earlier fined between US$90,000 and US$150,000 and its former finance head Peter Lim was jailed 2 years and fined $150,000.
Iran top oil source
Iran replaced Saudi Arabia as China's top oil source in January, customs figures showed. Crude imports from Iran reached 447,300 barrels a day in January, up 75% from a year earlier. Imports from Saudi Arabia rose 39%. More than 14% of China's 97 million barrels imported in January came from Iran.