UPDATE 1-China to cap total energy use at 4 bln T coal equivalent by 2015

Wed Jan 23, 2013 10:37pm EST

* China aims to restrict 2011-2015 energy growth to 4.3 pct
    * Target not binding, economy still likely to be priority

 (Adds details, quotes, table)
    By David Stanway and Nick Edwards
    BEIJING, Jan 24 (Reuters) - China will aim to limit total
annual primary energy consumption to 4 billion tonnes of coal
equivalent by 2015 as it tries to improve efficiency and reduce
emissions of greenhouse gases and pollution, the government
said.
    China, the world's biggest energy consuming country, has
promised to cut energy intensity -- the amount used per unit of
GDP growth -- by 16 percent over the 2011-2015 period as it
tries to address crucial issues such as pollution, waste and a
growing dependence on overseas oil and gas supplies.
    But the government, in its five-year energy plan published
late on Wednesday, said the gross energy target will not be
binding and analysts said Beijing's priority in the next few
years will remain economic growth.
    "I can hardly imagine they would sacrifice growth just for
this. It is very unlikely," said Wei Yao, China economist at
Societe Generale in Hong Kong.
    Curbing energy use, especially coal, will help prevent a
repeat of the smog that enveloped Beijing earlier this month.
The pollution was the worst on record and triggered widespread
public anger and rare media criticism.
    Environmentalists and analysts highlight lax enforcement of
pollution laws, an addiction to coal and a slew of incentives
for local officials to promote growth at all costs as some of
the causes of heavy pollution.
    In the plan, China said it would aim to reduce the share of
coal in total energy consumption to around 65 percent, and raise
the share of natural gas to 7.5 percent. 
    It has also made a binding commitment to raise the share of
non-fossil fuel energy to 11.4 percent of the total by 2015.   
    Total primary energy consumption stood at 3.48 billion
tonnes of coal equivalent in 2011, up almost 7.1 percent
compared to 2010. To stay within the cap, the average economic
growth rate from 2012 to 2015 needs to fall to around 3.5
percent, much lower than the 8.1 percent target for this year.
    
    NOT BINDING
    The much delayed scheme has been subject to rigorous
behind-the-scenes horse-trading by local governments and big
state-owned enterprises. The final cap is higher than the
original 3.8 billion-tonne figure proposed in 2010, but lower
than the 4.1 billion-tonne rate submitted for approval last
year.
    Improving efficiency throughout the whole economy is the
main challenge, but any attempt to impose the energy cap could
highlight the difficulties posed by vested interests, said Yao.
    "They have to do more consolidation in heavy industry to
deal with all this excess capacity in the steel sector, the
chemicals sector, but there are a lot of interests in these
sectors from local governments and state enterprises," she said.
    The document said the energy cap will not be legally
binding, with the government still struggling to determine how
the target will be allocated to individual provinces and
industries, which are already facing mandatory carbon and energy
intensity targets.
    "It would make more sense to having only binding targets for
energy types like coal and oil, but not renewables or natural
gas, where they need much more," said Yang Fuqiang, senior
energy advisor at the Natural Resources Defense Council.
    "But if they have binding targets for coal it is difficult
because the data is not accurate," he said.             
    China has already set mandatory targets to reduce energy
intensity and carbon intensity is also set to fall by 17 percent
over the period.
    It has promised to introduce more "market mechanisms" to
allow provinces and industries to meet the targets, saying it
does not want to see a repeat of late 2010, when local
governments forced enterprises to shut down in a last-gasp
effort to cut 2006-2010 energy use.    
    With growth the overriding priority, China has usually
struggled to rein in spiralling energy consumption growth, which
has exceeded most predictions in recent years.
    A 2006 government plan forecast total consumption to stand
at 2.5 billion tonnes of coal equivalent by the end of 2010,
significantly below the actual figure of 3.2 billion. 
    China's former top energy official, Zhang Guobao, said in
late May that China's total energy consumption was likely to
reach at least 5 billion tonnes of coal equivalent by 2020.
    Following is a table showing China's major energy targets
for 2015, as detailed in the five-year plan.  
                  2010        2015        Av growth   Status
 Primary energy   3.25 bln    4 bln TCE   4.3 pct     forecast
 consumption      TCE                                 
 Non-fossil fuel  8.6 pct of  11.4 pct                binding
 energy           total       of total                
 Civil power      4.2 trln    6.15 trln   8.0 pct     forecast
 consumption      kWh         kWh                     
 Unit GDP energy  0.81        0.68        -16 pct     binding
 consumption      TCE/10,000  TCE/10,000              
                  yuan        yuan                    
 Primary energy   2.97 bln    3.66 bln    4.3 pct     forecast
 production       TCE         TCE                     
 capacity                                             
 Coal production  3.24 bln T  4.1 bln T   4.8 pct     forecast
 capacity                                             
 Natural gas      94.8 bln    156.5 bln   10.5 pct    forecast
 production       cu m        cu m                    
 capacity                                             
 Power capacity   970 GW      1,490 GW    9 pct       forecast
 
   Source: State Council Twelfth Five-Year Plan on Energy
Development  

 (Editing by Tom Hogue and Miral Fahmy)
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