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What is main challenge for China's energy sector?
The development of car culture in China has become one of the main driving forces in the country's growth. Though many people believe that car ownership in China is still in its infancy, there are growing concerns that must be addressed. One of these issues is that of the 150,000 cars imported in the first five months of last year, over 50% were high-emission cars.
P: China’s development over the past 20 years has so much closely modeled on the US way, at least transportation wise. Somehow everyone in our head that we think each household needs a car or actually this has somehow populated by the mass media as one of the standard of a good living condition. Is this wrong?
W: Somehow, I agree with your opinion that we have been influenced by the American style too much. We watched the Hollywood movies and the kind of successful life is one big apartment, one car and one dog, something like that. So we have been influenced too much. That’s why I think for China we need more environmental education. We have to also increase our environmental awareness, especially from the young generation.
P: Given China’s current level of development, how would you compare Chinese energy conservation effects or effectiveness to the international norms or standards?
W: In the eleventh five-year plan, the Chinese government commit that there should be a 20% energy reduction in terms of energy consumption and 10% reduction in the pollution emission. This is somehow very ambitious goal in the world. I always have some international conferences and I discuss with many international scholars and officers in the IEL, EIA. They always said that for China, they couldn’t imagine China can do such kind of things. They still have some suspicion about whether it is just on the paper or you will do really.
P: But are we on road to achieve these?
W: Yeah, also like now, for the evaluation system, for the regional officers, now they have a very strict evaluation system just based on these two objectives, whether you achieved 20% reduction and 10% reduction. It’s a very good point. Even though for the CDM, the Climate Change Mechanism, the IPCC, now the Chinese government don’t have many commissions to the international society. We have commission within country, within China. So I think this is a very important signal. Maybe, now due to the slowdown of the world economy, these 20% and 10% goals might not be achieved by the end of 2010. But I’m sure in the 12th five-year plan, the emission reduction and energy conservation should always be there, should be a very important goal. This is step-by-step.
P: What other policies should we expect to be followed in the near future if the government’s real intention of one of the bigger objectives is to push the economy towards more energy efficiency?
W: It is a very good question. Actually, for the deregulation, not deregulation of company, but a little bit deregulation of the pricing mechanism of petroleum sector is a good point. After that, the deregulation of the whole energy sector is very essential for China to achieve sustainable economy and energy economy. Now the problem with the China’s energy sector is the coal price has been based on the market competition, but for electricity, it has been highly controlled by the central government. The price is so low, so everybody can consume more, which means the market becomes not so efficient. The resources cannot be allocated to the most productive sectors. So this is the problem with the Chinese economy. I would like to expect the full reform and deregulation with the energy sector. That is very important.
P: But you said there is always a trade-off. The reason why we need to protect, need to have a little more state control in the energy economy is because the level of early industrialization, the infant industry will necessarily need amount of government subsidies. At which point do you think the trade-off is tipping towards more deregulation?
W: We should always remember that the environment is just a luxury good, not a normal good.
P: Sure.
W:…so which means that for China, still even though what we called scientific development, some strategies, like we should keep balance, we should develop the harmonious society. But still, what we have to keep in mind is that if there is no growth, there is no development. So growth means what? GDP. Development means what? Like environmental protection, income equity, something like that. The growth should be the priority and the development is the ultimate goal. You don’t have the growth. Then you can’t achieve the development. If you only pursue the growth, you don’t mind the development. Then even though you get very high GDP, in terms of the sense of satisfaction, it is very low.
With the implementation of new fuel taxes, questions will be asked in light of its impact on different sectors and industries. One sure thing is that the new system is intended promote energy conservation among car owners. This in the long run is seen to be the answer for China’s increasing demand and it will be a positive influence on the country's future energy consumption.