World Energy Outlook 2007

way that is more equitable, more environmentally sustainable and, therefore,
less energy-intensive than has so far been the case.
Chinese leaders have long recognised the importance of reducing energy intensity.
Technical efficiency improvements have been sought through many channels, but
big changes in energy use relative to economic output may require major changes
in the structure of the economy. Despite rapid transformations within sectors, the
share of industry, and especially of heavy industrial activities such as iron, steel,
cement and, increasingly, aluminium production, has not diminished. In the
meantime, migration to cities, the growth of rural centres into new cities and
gradually rising incomes in rural areas have led to much greater household energy
use. Rising aspirations, a policy of further urbanisation and greater personal
mobility are setting the foundation for even higher demand in the future. The
major energy policy challenges and uncertainties which arise and the potential
impact on energy trends are described below. Our energy demand and supply
projections are set out in detail in Chapters 9 to 13.
Security of Energy Supply
China is generously endowed with energy resources, particularly coal and
renewables like hydropower, wind, biomass and solar. However, while China
possesses significant oil and gas resources and continues to enjoy some success in
exploration within its territory, its reserves are insufficient to match
the projected growth in demand through to 2030. The prospect of a continuing
rise in oil imports has led the government to seek to curb the growth in demand,
through measures to promote energy efficiency and conservation (see below),
to diversify geographic supply sources and to secure preferential access to foreign
resources. Measures to use energy more efficiently will also contribute to meeting
environmental goals. The government has encouraged its national oil companies
to invest in developing oil resources abroad – a policy referred to as “going out”.
Today, those companies have investments in several countries, including Sudan,
Kazakhstan, Nigeria and Angola, though the effectiveness of this
means of enhancing energy security is open to debate – see, particularly,
Chapters 4 and 10.
In addition, the government, with the encouragement of the IEA and its member
countries, is enhancing its ability to respond effectively to a major supply
disruption, notably through the development of an emergency oil reserve. China
has begun filling the first phase of the reserve, though how the system will be run,
including the roles of both government-owned and commercial stocks, has yet to
be decided. Recent statements indicate that the government intends to have
reserves equivalent to 30 days of net imports by 2010 – an ambitious goal,
particularly if oil prices remain at current, let alone higher, levels.
272 World Energy Outlook 2007 - CHINA’S ENERGY PROSPECTS