\"Leak\" of 13th Five-Year Energy Plan: Delay in coal chemical projects that haven’t started yet?

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\"Leak\" of 13th Five-Year Energy Plan: Delay in coal chemical projects that haven’t started yet? Author/Source: Date: 2016-03-22 Clicks: 5 “The energy plan for the 13th Five-Year Plan period is being formulated at full speed; a draft has already been prepared. Comments will be sought soon, and it will be submitted to the State Council in March or April, with the aim of releasing it in the first half of the year. ”**He Yongjian, deputy director of the Development Planning Department of the National Energy Administration, revealed this at the \"2016 Economic Situation and Power Development Analysis and Forecasting Meeting\" held by the China Electricity Council on March 19. 　　 According to the baseline scenario of the 2020 energy demand forecast, the total energy consumption amounts to 4.85 billion tons of standard coal, of which 4.05 billion tons comes from coal, 0.59 billion tons from oil, 350 billion cubic meters from natural gas, and 0.75 billion tons of standard coal from non-fossil fuels. In terms of installed power capacity, the target for nuclear power in 2020 was 58 million kilowatts, for conventional hydroelectric power 340 million kilowatts, for pumped storage power 40 million kilowatts, for wind power 210 million kilowatts, for photovoltaic power 110 million kilowatts, for concentrated solar power 15 million kilowatts, and for biomass power 15 million kilowatts. Among these measures, the coal deep-processing industry is to be developed in a prudent manner: during the 13th Five-Year Plan period, the production capacity for coal-to-oil conversion is to be kept at 13 million tons, while that for coal-to-gas conversion is to be 18 billion cubic meters. Projects that are already under construction will be completed, while those that have received approval or are in the planning stage will be put on hold for now. “At present, natural gas receiving stations are under monopoly; this situation must be changed during the 13th Five-Year Plan period through full opening up. Meanwhile, there is still room for a reduction in the prices of gas transported via branch lines, and China’s basic gas prices are likely to decline further in the future. ”He Yongjian revealed. 　　 It is worth noting that the primary policy focus of the 13th Five-Year Plan is to address overcapacity; for traditional energy sectors where severe overcapacity already exists, no new projects are to be approved in the first three years of this plan period. At the same time, it was explicitly proposed for the first time to allow appropriate curtailment of wind power generation, as well as to actively promote demonstrations of concentrated solar power generation. Furthermore, one of the highlights of the plan is the proposal to establish an integrated and complementary terminal energy supply system with hierarchical utilization, for which relevant demonstration projects will be carried out. 　　 The current development of global energy is characterized by five trends: a relaxation in the supply-demand balance, a multipolarization of the supply-demand landscape, a shift toward a lower-carbon energy structure, intelligent production and consumption patterns, and diversified focuses in international competition. In China as well, energy development has entered a new normal – growth in energy consumption is slowing down, the transformation of the energy structure is accelerating, and the driving forces behind energy development are shifting from high-energy-consuming methods to new business models. The energy system is also at a turning point, moving away from centralized development toward more intelligent and distributed forms. Furthermore, international cooperation in energy is advancing to a higher level. 　　 “However, there are also some problems and challenges; there is severe overcapacity in traditional energy sectors such as coal, thermal power, oil refining, and coal chemical industry. At the same time, the power system has a low capacity for flexible adjustment of the power source mix, and its peak-shaving capability is severely insufficient. In some areas, there is significant waste of water, wind energy, and solar energy; in the first quarter of this year, wind energy was still wasted in large amounts in the northern regions. ”He Yongjian admitted that the price mechanisms designed to accommodate the energy transition also need to be improved; it is difficult to develop the natural gas consumption market, and it is challenging to continue promoting clean and efficient cooking appliances as well as clean coal. 　　 Under these circumstances, the policy orientation of the 13th Five-Year Energy Plan is to give greater emphasis to improving the quality of development, focusing on optimizing existing capacity and enhancing new capacity while reducing excess production capacity. For traditional energy sectors that already suffer from severe overcapacity, no new projects should be approved in the first three years of the 13th Five-Year Plan; similarly, in areas where the rates of wind and solar power curtailment exceed reasonable levels, no new projects should either be approved. 　　 “At the same time, greater emphasis is placed on improving the operational efficiency of the system, focusing on addressing weaknesses, innovating models, and establishing an efficient and intelligent energy system. The top priority is to significantly enhance the capacity of power systems to manage peak loads and incorporate renewable energy, allowing for a certain level of wind energy to be discarded – a level of up to 5% is considered acceptable. At the same time, by fully tapping into the potential of existing power systems and reducing the construction of new thermal power plants as well as inter-regional power transmission, electricity prices can be reduced significantly. ”He Yongjian explained. 　　 In his view, the biggest highlight here is the development of an integrated and complementary terminal energy supply system that makes use of resources at different levels. Action plans for integrating energy supply facilities are implemented in key areas such as new towns, newly built industrial parks, and logistics centers, with coordinated construction of infrastructure for electricity, gas, heat, and cooling. This requires innovation in business models. Given the current reforms in the electricity sector, it is possible to compete with the power grid through joint supply arrangements as part of these reforms, which would give an advantage; accordingly, relevant pilot projects will be included in the planning. 　　 In addition, greater emphasis is placed on the strategic adjustment of the energy structure, with efforts to accelerate the progress toward green and low-carbon development. Hydroelectric power is promoted actively, and key hydroelectric power stations are developed first. Progress in the construction of coastal nuclear power plants shall be made steadily: 58 million kilowatts will come online during the 13th Five-Year Plan period, while 30 million kilowatts will start construction. Adopting a combination of centralized and decentralized approaches, we will vigorously develop renewable energy. In the eastern and central regions, development will be primarily decentralized, while in suitable areas of the western region, development will be carried out on a more centralized basis. We will develop offshore wind power in a manner suited to local conditions, accelerate the development of solar power generation, and actively promote demonstrations of rooftop photovoltaic and solar thermal power generation. Promote the implementation of renewable energy quotas and market trading systems, actively develop markets for carbon emissions and pollutant emissions, and explore the introduction of an environmental protection tax or carbon tax at an appropriate time. 　　 As for fossil fuels, coal power generation needs to be developed in a cleaner manner; different regions have varying requirements – the eastern regions should prioritize the construction of combined heat and power plants, while the western regions should focus on building large-scale coal power bases and power plants located directly at the mines. At the same time, the share of natural gas consumption is to be significantly increased, the gas pricing mechanism is to be reformed to reduce the prices for transporting gas over shorter distances, and the prices for importing and selling gas are to be gradually made market-based.