China Reducing Energy Consumption per RMB10,000 GDP by 5.6%

China Energy Research Society issued the Annual Report on China's Energy Development (2016) recently, and the report indicated that the total energy consumption is 4.3 billion tons of standard coal in 2015, which is 0.9% higher than that of 2014; the growth rate is 1.3% lower than that of 2014 and is the lowest one since 1998. Meanwhile, China has achieved outstanding effects in energy saving, energy consumption reduction, and ecological construction. The energy consumption has been greatly reduced, with the energy consumption per RMB10,000 GDP being reduced by 5.6%.

The report showed that the total investment in energy industry of China in 2015 is RMB3.25 trillion, with a year-on-year growth of 4.1%. The investment in coal mining and preparation has suffered from negative growth for three consecutive years, with a year-on-year decline of 14.4%; petroleum and gas extracting industry and gas production and supply industry experience some growth, with the growth rate of 4.0%; the investment in petroleum and gas extracting industry and in petroleum processing, coking and nuclear fuel processing industry is reduced by 5.7% and 20.9% respectively compared with that of 2014; the investment in electricity and heat production and supply is increased by 15.7% compared with that of 2014; and the total investment in clean energy is increased by 17% compared with that of 2014, making China become the No. 1 in terms of the investment in clean energy in the world for four consecutive years.

It should be noted that with the deepening of market-oriented reform, the relation between energy price and the supply and demand in China becomes closer in 2015. When the international petroleum price continues to fall, the energy price is lowered to some extent.

During the 13th Five-Year Plan period, reform and development of energy industry will face many challenges and problems that need special attention. According to the opinions of experts, China is now facing the following four situations:

First, coal industry of China had entered the hard times that the demand growth is low, advanced production capacity and inventory are waiting for consumption, environmental constraint is strengthened, and structural adjustment is made. It is very hard the change the situation that the supply of the coal market exceeds the demand. Such associated problems as hard operation of enterprises, low industrial concentration and poor scientific and technical innovation capability will restrict the development of coal industry in an environmentally-friendly, clean, and high efficient manner.

Second, affected by the factors such as slow economic growth, warm weather, and low competitiveness of nature gas price, the growth in natural gas demand in China obviously slows down, the supply of natural gas market exceeds the demand, and the consumption is extremely deficient. Increasing the consumption of gas for residential purpose is an important breakthrough to increase the natural gas consumption, while the price of gas for residential purpose is not mentioned recently. Moreover, the price of gas for residential purpose is much lower than that for other purposes, so cross-subsidization may be a problem.

Third, electric power development is facing severe challenges in China. Energy resource constraints become more serious, eco-environmental problems become prominent, and the environmental carrying capacity has reached at or near its upper limit; per capita electricity consumption of China is obviously lower than that of developed countries and the energy utilization efficiency is low; there are no overall plans and rigid constraints for power generation by use of clean energy.

Four, during the 12th Five-Year Plan period, non-fossil energy generally experienced rapid growth. However, under the “new normal” economy, many contradictions against development become prominent. For example, the growth in power demand is generally low, and energy mechanism constraints become more prominent. The problem that wind power generation and photovoltaic power generation are abandoned becomes more serious, growth in construction investment takes on a downward trend, and the pricing mechanism is unreasonable.