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New Projects to Satiate Country's Soaring Energy Demands

A host of infrastructure projects in China's energy sector are being pushed forward to satiate the country's soaring energy demands, a senior official from the National Development and Reform Commission (NDRC) said yesterday.

Addressing the Higher-level Forum on China's Energy Strategy at the Eighth China Beijing International High-Tech Expo yesterday in Beijing, NDRC Vice Minister Zhang Guobao said the central government has planned a raft of projects to ensure continued energy supplies by promoting and developing nuclear power, hydropower, and the liquefied natural gas (LNG) sectors, as well as other forms of renewable energy.

"We have completed the blueprint to build large scale LNG facilities across the country," said Zhang, referring to the LNG projects in Guangdong and Fujian in south China currently under construction.

Many gas companies, both foreign and domestic, such as Sinopec, PetroChina, China National Offshore Oil Corp (CNOOC), BP and Shell, have shown interest in China's LNG sector and have submitted proposals to the top policy maker, the NDRC, to build LNG terminals close to China's coastal cities.

China will also put an intensified focus on developing nuclear and renewable forms of energy to generate power, Zhang indicated.

"The renewable energy law passed earlier this year has set a target of generating 20 million kilowatts of power using renewables by 2020," said Zhang.

Wind power will be the focus of much development, said Zhang, given China's huge land mass which has great potential for application of the technology. The world's second largest energy consumer after the United States will offer public tenders to global wind power equipment vendors to build several 1,000 megawatt wind power plants across the country, said Zhang.

These wind power plants will be located in China's wind-rich areas such as Jiangsu in the east, Guangdong in the south, Inner Mongolia in the north and Jilin in northeastern China.

On the nuclear power front, the State Council has recently approved projects to extend the Ling'ao plant in South China's Guangdong Province and the Qinshan plant in Zhejiang Province.

Two 1,000-megawatt nuclear reactors will be added to the second phase of the Ling'ao project, said Zhang.

A further two 650-megawatt reactors will be installed at the Qinshan plant.

China has vowed to increase nuclear power generation four-fold to 40,000 megawatts by 2020. It will eventually account for 4 percent of the country's installed capacity -- which means at least 30 new nuclear plants will need to be built within 15 years.

According to industry insiders, more reactors are planned for Liaoning, Shandong and Guangdong.

The bidding process was recently concluded for the construction of 12 hydropower generation units for the plant on the right bank of the Three Gorges Project, Zhang added. The plant is expected to be operational in two to three years.

Surging energy demand and hefty investment in the energy sector have boosted rapid growth in China's equipment manufacturing industry and raw material production, said Zhang.

The fast expansion of the gas and power industry have provided a large number of orders to steel makers, ship builders and electric power equipment suppliers both in China and abroad.

China's large industrial producers such as Baosteel, Dalian Shipyard Co Ltd and other foreign power transmission and generation equipment makers such Alstom are competing to supply the market, Zhang said.

Also speaking at the high-tech expo, Wang Gongli, president with China Oil and Natural Gas Designing Institute, said that about 50 percent of China's oil and natural gas supply is expected to come from foreign resources by 2020. This is due to the gap between domestic demand and production.

China produced 175 million tons of crude oil in 2004, but maximum annual output is not likely to exceed 200 million tons in the future, said Wang.

According to Wang, China now produces 40.8 billion cubic meters of natural gas a year, and the gap between domestic demand and supply would reach eight billion cubic meters by 2020.

Experts also estimate that China will consume 2.2 billion tons of coal by 2010, causing a shortage of 330 million tons.
Wang Xianzheng, vice director of the State General Administration of Work Safety, also speaking at the expo, that China's current coal production capacity, with all types of coalmines included, is about 1.67 billion tons. Of the total, only 1.2 billion tons were produced by mines that meet national safety production standards. By 2010, China's coal output might reach 1.87 billion tons, he said.
Coal is China's fundamental energy resource, accounting for 87.4 percent of the country's energy reserves. China's coal sector, however, is plagued by problems such as an irrational industrial structure, expensive operation costs and higher production risks, Wang said.
In a bid to remedy the situation, the Chinese government has diversified its energy supply structure, tightened safety controls on coalmines, and is trying to optimize its utilization of coal products, Wang noted.

In related news, north China's Shanxi Province, the country's leading coal producer, will suffer a power supply shortage of 3 million kilowatts this summer, the worst in history. This is according to Shanxi Electric Power Company.
The electricity generated by local power stations can only meet 70 percent of the demand, General Manager of Shanxi Electric Power Company Li Yuanchao told Xinhua.
The increase in generating capacity falls behind rapid industrial growth rates, which requires an annual surge of 20 percent of current capacities, said Li.
To lessen the impact of a power shortage on agriculture and daily life, businesses, enterprises and some factories have been asked to stagger their operation hours, Li said.
Electricity supplies in the province have been under a lot of strain since 2003.

(China Daily, Xinhua News Agency May 25, 2005)

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