Chinese energy in the midst of intensive adjustment

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In a government work report, Chinese Premier Li Keqiang stated that it was necessary “to expand international cooperation in production capacity”, and the Thirteenth Five-Year Plan calls for low-carbon cycle development and an energy revolution. Undoubtedly, energy is one of the focal points of this year’s “Two Meetings”. In short, China will accelerate technology innovation and establish a clean, low-carbon, safe and efficient modern energy system. The country will increase the proportion of non-fossil fuel energy and promote the clean and efficient utilization of coal and other such fossil fuel energy; accelerate the development of wind power, solar power, biomass power, hydropower, geothermal power and the safe and efficient development of nuclear power; strengthen energy storage and smart grid development; develop distributed energy; promote energy-saving low-carbon power dispatching, etc. With the new plan, China’s energy industry is facing a bout of intensive adjustment and change.

Wang_Jihong
王霁虹 Wang Jihong

Restrictions on the domestic development of coal-fired power, and seeking development abroad. Notwithstanding the fact that thermal power remains the major power supply source in China, coal-fired power generation is gradually being restricted due to the environmental pollution associated with it. With the exception of thermo-electric cogeneration, China has now prohibited the approval of new coal-fired power generation projects.

In contrast with coal-fired power generation projects essentially being at a standstill, Chinese enterprises, taking advantage of the “One Belt, One Road” strategy, are increasingly involved in the construction of power projects in neighboring countries. The current largest coal-fired build-operate-transfer (BOT) project in Mongolia invested in by a certain nuclear power enterprise, in which the author participated, will double Mongolia’s power output once completed. Additionally, cases of domestic enterprises establishing plants abroad that use local coal resources and ship the electricity to China have arisen.

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Wang Jihong is a partner at Zhong Lun Law Firm. She can be contacted on +86 10 5957 2288 or by email at wangjihong@zhonglun.com.

Liu Ying and Wang Zhenhua, both associates at Zhong Lun Law Firm, also contributed to this article

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