The end of the oil era is only a matter of time

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This post was last edited by wlf1234 on 2019-10-21 at 10:48. Recently, a meeting on the plans and policies for controlling the total consumption of petroleum in China was held in Beijing. Fu Chengyu, former chairman of Sinopec Group, delivered a speech at the meeting and offered his comments on the oil consumption control initiatives. Magazine “Energy” has compiled the main points of these contents for its readers. 　　Regarding the China Petroleum Consumption Control Project (hereinafter referred to as “Oil Control”), the first issue is one of conceptual consensus. 　　First, the end of the oil era is only a matter of time, but its end does not mean no oil will be used at all; in the future, chemistry may play a major role. The oil control report suggests that by shifting oil from a fuel to a raw material, global oil consumption will decrease relatively. 　　Environmental protection and climate change are pushing the entire international community to accelerate the energy transition, and China is moving in this direction. However, many people believe that this transition will not happen quickly, and that oil will remain the dominant energy source for a long time to come; this may be due to the mindset and path dependence resulting from our long-term existence in a stable environment. 　　The end of the Stone Age was not because there were no more stones. The former Saudi oil minister said that the end of the oil era is not due to the absence of fossil fuels, but rather because environmental protection issues and climate change require changes in human living conditions and ways of life. The oil-producing countries in the Middle East are developing new and alternative energy sources, and their pace of development is no slower than ours. They had foreseen earlier that this change was inevitable. 　　Furthermore, we have also seen that thanks to technological advancements, the costs of wind power and solar energy (3.180, -0.02, -0.63%) have dropped significantly in recent years. In 2018, the feed-in tariff for photovoltaic projects in Qinghai was 0.02 yuan lower than the local benchmark tariff for desulfurized coal. 　　So, it’s not just a matter of controlling oil production; what’s more important is **how, in the context of pursuing high-quality development and building a modern economic system as outlined by the authorities, we can address the issues related to the modern energy structure and system. 　　In the future, in which fields can China take the lead globally and influence or lead a particular industry? 5G is already ahead in this regard, but the area with the greatest potential for China is likely to be new energy, given the large scale of new energy initiatives in China and the strong momentum behind them. If new energy takes the lead in the world, then it’s not just oil control that will be relevant; first and foremost, we will be able to get rid of energy geopolitics. 　　China is a large country with a population of 1.4 billion, and the driving force behind all of our economic development, whether during the First, Second, Third, or Fourth Industrial Revolutions, remains a core issue. Using new energy sources to drive the Fourth Industrial Revolution is an area where China should be able to take the lead. 　　Secondly, to truly break free from the influence of energy geopolitics, given the current trade tensions between China and the United States and all the potential consequences that could arise, as major powers we must achieve a basic level of energy self-sufficiency. 　　In terms of the world’s energy supply, energy is not in short supply. However, the world is now in a period of turmoil, unlike the past two or three decades when trade, investment, and economic development could be facilitated merely through WTO rules. At least in the next ten to twenty years, conflicts will arise in various fields, and these conflicts will be quite severe. From this perspective, energy security is closely linked to **economic security, and the issue of oil control goes far beyond the oil industry itself. 　　China is largely self-sufficient in energy, with renewable energy being the most important source. There is no lack of hope in this area – rather, there is great hope. **It needs to be promoted as a long-term strategy. 　　The report proposes three key approaches and five major areas. Among the five key areas, the first one is energy conservation. Energy conservation is an area where we have abundant resources, as our energy consumption is high, and there is a lot of waste in the processes of energy production, conversion, and consumption. Another reason is that the technical standards are too low; the report also points out that only environmental protection standards are being focused on at present, but there are no technical standards in various fields. For example, in the oil industry, it was the standard from the Oil Ministry era in the 1980s and 1990s. 　　In the field of oil production, the central government attaches great importance to energy security, and central leaders have issued multiple directives calling for increased exploration efforts. Every year, the Ministry of Geology and Mines records oil reserves of no less than 1 billion tons, but this does not represent 1 billion tons that can be extracted; international standards refer only to the extractable reserves, with everything else not being counted. If we have 1 billion tons of recoverable reserves per year, we can already achieve a production level of 400 million tons. 　　To help the Chinese economy transition into the new economic system of the future, we should not consider things from just a single aspect, point, or perspective; instead, we must focus on the **overall competitiveness of the economy and energy in the future**. 　　*It is proposed that for high-quality development and the establishment of a modern economic system, as well as for building a beautiful China – where lush green landscapes represent wealth – we should follow this concept, with the most fundamental step being to transform the mode of production. **It has already been promoted at the macro level; can we, in the field of energy, work together to achieve **high-quality development and the creation of a modern economic system, as well as a modern energy system, so as to enhance China’s competitiveness in the overall economy over the next twenty years and enable it to truly reach the forefront of the world? 　　In terms of methods, from energy conservation to structural adjustment and clean development, ensuring a basic supply of energy is not a problem. Currently, 70% of our needs are met through external sources; in the future, this figure is set to drop to 70% being met from domestic sources. By developing new energy sources and making cleaner use of coal, as well as utilizing shale gas and LNG, China is capable of achieving this. What needs to be done is to develop a **development strategy and implementation plan, and then carry it out annually.