Li Zhidong is a professor at Graduate School, Nagaoka University of Technology, Japan, a visiting researcher at the Institute of Energy Economics, Japan (IEEJ), and a visiting professor at the Energy Research Institute, National Development and Reform Commission, China (ERI/China). He graduated from the China People’s University (Renmin University) in 1983 and received a PhD in Economics from Kyoto University, Japan, in 1990. He worked as a professional economist at the IEEJ from 1990 to 1995, mainly focusing on econometric analysis of the world energy outlook and world oil market modelling. He has been a major contributor to a joint Chinese–Japanese study project focusing on China’s economy, energy and environment from 1999 to 2003. He is the author/co-author of a number of published books, as well as several articles published in academic and professional journals.
1. In your view, how does the SIEW 2016 theme “New Energy Realities” apply to energy developments in China and the region?
China, as one of the largest players in global energy market, experiences the opportunities and challenges driven by new energy realities. For example, lower oil prices reduce the cost of oil imports, presenting an opportunity for China to increase its national strategic oil stocks. However, these prices also put a lot of pressure on our domestic oil producers.
Overall, these global new energy realities make it easier for China to promote an energy revolution in terms of consumption, supply, technology and management systems. It also makes it easier for us to strengthen international cooperation. In the Northeast Asia region, opportunities for China are greater in energy importing countries such as Japan and South Korea, but fewer in energy exporting countries like Russia.
2. In relation to these new realities, how do you see energy companies and the industry evolving in the future?
Competition will become more intense in the future, not only in the oil or gas industries, but also among the fossil fuel and renewable energy industries. As a result, innovations in technology and management systems would be some of the best ways for energy organisations to increase their competitiveness.
3. In face of the global push for cleaner, more sustainable power generation, how could China effectively transit to a more low-carbon energy system?
China submitted its Intended Nationally Determined Contributions (INDCs) to the United Nations in June 2015 – offering to reduce CO2 emissions per unit of GDP by 60-65% from 2005 levels, raise the share of non-fossil fuels in primary energy consumption to around 20% by 2030, and achieve peak CO2 emissions around 2030, if not earlier. To develop a low-carbon system, China has strategically promoted three major initiatives: (1) energy conservation and expansion of non-fossil energy use, (2) stable energy supply and (3) development of low-carbon industries.
The Xi Jinping and Li Keqiang leaderships have enhanced these initiatives by switching to the so-called New Normal strategy, which prioritises economic growth quality and efficiency, promoting an energy revolution and strengthening international cooperation. In 2015, China had reduced the CO2-GDP intensity by 37.1% from 2005 levels, and increased the share of non-fossil energy consumption from 7.5% to 12%. In the "13th Five-Year Plan on National Economic and Social Development", released in March 2016, China set binding targets of reducing energy-GDP intensity by 15% between 2015 and 2020, lowering CO2-GDP intensity by 18%, and raising non-fossil energy share to 15%. The efforts to transition towards a low-carbon energy system will continue in the future. For example, in April 2015, the achievements of the "China 2050 High Renewable Energy Penetration Scenario and Roadmap Study" – a three-year project involving more than ten organizations initiated by Energy Research Institute of China, were announced. The study estimates that by 2050, 86% of power generation will be from renewable electricity.
Ambitious targets combined with market-oriented measures, including emissions trading market and carbon tax, may make the transition more effective and efficient.
4. In your view, what are the key catalysts and policies driving China’s energy transition?
China’s INDCs have stated that tackling climate change is the intrinsic requirement of China’s sustainable development. It is also the international obligation of a responsible major country. Nothing can stop China’s efforts towards low-carbon society.
Enforcing the Paris Agreement as early as possible, sharing best practices and successful models, and international cooperation may help China quicken their steps towards a low-carbon society.
Domestically, the immediate priorities will be to allocate energy consumption quotas to regions, deciding whether to put an emissions target into a global warming prevention plan, and designing energy consumption quotas and the emissions trading system.
5. How will China’s proposed global electricity network bring about a low-carbon energy future?
One of the best leaders of the global electricity network, Mr. Liu Zhenya, the chairman of “Global Energy Interconnection Development and Cooperation Organization (GEIDCO),” pointed out that the key to making clean energy the world’s dominant energy is the development of a global energy interconnection that has an ultra high voltage (UHV) grid as the backbone.
China is expanding its low-carbon and energy cooperation under the One Belt and One Road initiative. The “Visions and Actions on Jointly Building Silk Road Economic Belt and 21st Century Maritime Silk Road” states that China will proactively cooperate in constructing cross-border power transmission networks, in developing regional power transmission networks and in enhancing cooperation in developing non-fossil energy and traditional resources.
Traditionally, international cooperation has centered on technology transfer, technical assistance and financial aid from developed countries to developing countries. At present, however, developed countries have been losing technological advantages.
In solar power generation, hydro power generation and many other areas, China is very competitive globally and is now rivaling developed countries in fundraising capacity. China has taken the initiative to establish the $100 billion Asia Infrastructure Investment Bank, the $40 billion Silk Road Fund, the $46 billion China Insurance Investment Fund and the $10 billion China-Africa Production Capacity Cooperation Fund.
The promotion of cooperation around low-carbon energy under the One Belt and One Road initiative is likely to contribute much to preventing global warming. This energy community of developed countries can be progressively formed to address future trends.