China Energy Production Trends

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How The Energy System Is Structured

The energy policy of China is a policy decided on by the Central Government. Ensuring adequate energy supply to sustain economic growth has been a core concern of the Chinese government since 1949.

China has been taking action on climate change for some years; on June 4, 2007, China’s first National Action Plan on Climate Change was published.

The National Action Plan includes increasing the proportion of electricity generated from renewable energy sources and from nuclear power, increasing the efficiency of coal-fired power stations, the use of cogeneration, and the development of coal-bed and coal-mine methane.

Since 2005, the Chinese government has intensified its efforts to privatize parts of the energy sector. Whereas the transmission and distribution of electricity remained under state control, the power generation market was partly opened to private and foreign investors. The main reason for this change in direction was the need to operate the system more cost-effectively and to attract clean technologies for power generation.

China currently lacks a national grid. There are currently 6 wide area synchronous grids. The lack of a single grid frequently creates power shortages.

Leading Sources of Energy

China’s sources of energy include coal (69%), oil (18%), natural gas (4%), nuclear (1%), hydroelectric (6%), and renewable (wind, solar, etc.) (1%).

China has abundant energy with the world’s third-largest coal reserves and massive hydroelectric resources. But there is a geographical mismatch between the location of the coal fields in the northeast (Heilongjiang, Jilin, and Liaoning) and the north (Shanxi, Shaanxi, and Henan); hydropower in the southwest (Sichuan, Yunnan, and Tibet); and the fast-growing industrial load centers of the east (Shanghai-Zhejiang) and south (Guangdong, Fujian).

In the industrial sector, six industries—electricity generation, steel, non-ferrous metals, construction materials, oil processing, and chemicals—account for nearly 70% of energy use.

International criticism regarding China’s energy mix, with its heavy reliance on coal as main source
for electricity generation, was joined by the populace’s rising concerns over heavy CO2 and particle pollution measures. In 2015, China’s leaders committed to seeing carbon emissions starting to peak at 2030, which requires adding as much as 1,000 gigawatts of capacity from low-carbon emitting energy sources.

In 2014 China led the world by adding 56 gigawatts of clean energy. Almost one out of every three wind turbines in the world and about 17% of the world’s solar capacity is in China.

Apart from renewable energy sources, China has put a focus on the development of nuclear power over the past years. The Chinese government expects to reach 58 gigawatts of nuclear capacity by 2020. (Japan had about 50 gigawatts of nuclear capacity before the Fukushima accident.)

Profiles of Leading Energy Production Companies

China’s biggest crude oil companies are state-owned energy conglomerates with sprawling international operations in oil and gas exploration and production; petroleum and chemical processing; storage and transportation; and many other energy production functions. Examples of such companies include the following:

China Petroleum and Chemical Company

China Petroleum and Chemical Company, known as Sinopec, is an oil, gas, and chemical giant with more than $440 billion in consolidated revenues. The company produced 361 million barrels of crude oil in 2014. Sinopec maintains vast operations along the full length of the oil supply chain, from exploration and drilling to retail sales at more than 30,000 gasoline stations.

China National Petroleum Corporation

China National Petroleum Corporation or CNPC is the second biggest Chinese crude oil producer. In 2014 the company reported more than $425 billion in consolidated revenue and production of nearly 1.2 billion barrels of crude oil. Like SINOPEC, CNPC operates businesses along the full length of the oil supply chain, from initial exploration to retail. Most CNPC operations are organized under a subsidiary company, PetroChina.

China National Offshore Oil Corporation

China National Offshore Oil Corporation, known as CNOOC, was established in 1982 to focus on oil and gas exploration and production in China’s offshore waters. It has since developed into an international company with operations in more than 40 countries.

Submitted by Climate Scorecard Staff


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