EETD Evaluates China's Energy-Strategy Options
During the last two decades of the twentieth century, China quadrupled its gross domestic product (GDP) and pulled 50 million people out of poverty even though the nation's energy consumption only doubled during this period (see Figure 1).
Chinese leaders hope to repeat this achievement during the next 20 years, but continuing to increase GDP and reduce poverty without sparking an enormous rise in energy consumption will be challenging. Energy use in China has grown faster than GDP during the past three years, and oil use is rising as well.
In 2004, the Development Research Center of China's State Council concluded the National Energy Strategy and Policy Report (NESP). Researchers Jonathan Sinton, Rachel Stern, Nathaniel Aden, and Mark D. Levine from the China Group of the Environmental Energy Technologies Division (EETD) at Lawrence Berkeley National Laboratory analyzed the policy options, presented in the report. Their report, "Evaluation of China's Energy Strategy Options," published by The China Sustainable Energy Program, proposes ways for the Chinese government to connect high-level policy goals—energy security, economic growth, equity, and improved citizen well-being—with specific changes in energy investment, supply, and efficiency. The report stresses increased investment, restructured incentives, and strengthened institutions to help maintain efficient and equitable development of the expanding energy sector.
One of the most important factors is efficiency. The influence of strong state-owned energy-supply companies has kept attention focused on fossil fuel supplies and conventional generation technologies; however, simply increasing supply without also focusing on efficiency will undermine China's future development.
NESP recommends several proposals that form part of a development strategy. These proposals include: elevating energy conservation to a state policy, raising public awareness, establishing economic incentives to save energy, enacting efficiency standards and labeling, and establishing a resources-savings office. EETD researchers support this last measure and propose the establishment of a Chinese Ministry of Energy (MOE). The MOE could be responsible for such areas as finance, regulation, and advocacy, but its primary goals would be to increase energy supply, cut energy demand, and seriously pursue environmental strategies.
One key element of reshaping China's energy sector would be to restructure incentives, for example by competitively pricing natural gas and renewables and well as restructuring oil and hydropower prices. Changing the price of energy to reflect national priorities will require strengthening institutions. A strong MOE would formalize the government's commitment to energy issues and, acting as a clearinghouse, would help set policy to balance supply and demand policies with environmental protections.
For more information, contact:
- David Fridley
- (510) 486-7318; Fax (510) 486-4247