China to Boost Energy Supply to Ensure People's Basic Living Needs, Stable Economic Performance

China will take further steps to ensure electricity and coal supply this winter and next spring, to ensure people's basic living needs and keep economic performance stable, the State Council's Executive Meeting chaired by Premier Li Keqiang decided on Friday.

With surging prices of energy products on international markets since the start of the year, the domestic supply of electricity and coal has been tight, and some places had to ration electricity supply recently. In response, competent departments have taken a raft of measures to shore up energy supply.

Given the considerable strains in meeting the electricity and coal demand this winter and next spring, the meeting required putting people's well-being first by prioritizing energy supply for people's daily use and winter home heating.

Coal supply for power generation and residential heating, especially winter coal and electricity supply in northeast China, must be ensured. Gas supply for household use will be enhanced, and natural gas transmitted as appropriate from south China to the north to increase gas-powered residential heating in the north.

While ensuring workplace safety, coal mines with the potential to increase output will be urged to tap into their production capacity as soon as possible; approved and basically completed open-pit coal mines will be encouraged to enter into operation and run at full capacity at a faster pace; coal mines that have ceased operation for problems detected will be helped to advance the rectification process pursuant to laws and regulations and resume production as early as possible. The transport departments should give priority to coal transportation, to see that coal is sent to where it is needed most in a timely manner.

"Electricity and coal supply is crucial to people's lives and a stable economic performance. It must be guaranteed. Ensuring energy security and keeping industrial and supply chains stable are among the six priority areas where protections are needed," Li said, "We must approach this issue from an overarching macro perspective. There mustn't be any let-up in our efforts."

Coal-fired power plants will be supported to increase electricity supply. A temporary tax deferral policy will be implemented in response to the difficulties these power plants face. Financial institutions will be encouraged to meet the reasonable financing needs of coal-fired power plants for coal purchase and other purposes.

The market-oriented pricing mechanism for coal-fired power will be improved. On the basis of maintaining stable electricity prices for household, agricultural and public good use, all coal-fired power will be incorporated into the electricity market in an orderly fashion. The floating band of the market-based electricity transaction prices, which was between a no more than 10% ceiling and a no lower than 15% floor from the benchmark price, will now be adjusted in principle to a range of 20% fluctuation in both ways. Localities will be encouraged to implement time-limited preferential policies on electricity use for micro and small businesses and self-employed individuals.

"We must strengthen and improve the regulatory policies for coal and electricity. The mechanism for coordinated supply of coal, electricity, oil, gas and transportation services will be better leveraged, and market-based methods and reform measures effectively employed, to ensure electricity and coal supply. Adjustments will be made in a category-based way. For high energy-consuming industries, electricity prices can be shaped through market transactions and don't have to be subject to the ceiling of 20% upward fluctuation. There is much that we can do as far as market-oriented methods are concerned," Li said.

The construction of key large-scale wind and photovoltaic power bases in desert and Gobi areas will be accelerated, and faster progress is needed in the building of power generation facilities for emergency response and peak load management. Reserves and storage capacity for coal, natural gas and crude oil will be enhanced.

Ill-considered development of projects with high energy consumption and heavy carbon emissions will be resolutely curbed. Local mechanisms will be improved to control total energy consumption and energy intensity. Newly added renewable energy consumption will not be included in the total energy consumption within a certain period of time. Revamp will be promoted in key areas for energy conservation and carbon reduction purposes, and energy conservation in major coal-consuming industries vigorously advanced.

The responsibility of all stakeholders for energy supply and safe production will be fully enforced. A fact-based and holistic approach must be pursued. Sub-national governments should fulfill their responsibility within their jurisdictions. Efforts will be made to ensure orderly management of electricity consumption. Practices such as halting or limiting production in a cookie-cutter approach or launch radical carbon emission reduction campaigns should be rectified. Inaction or arbitrary behaviors will be deterred.

Major coal-producing provinces and key coal enterprises should meet their tasks of output and supply increases as required. Electricity producers managed by the central government must ensure full operation of their coal-fired power units. Power grid enterprises should step up power distribution and safety management. Those who fail to meet their due responsibility for energy supply will be held to account.

"We must carefully summarize experience and lessons. We should follow a holistic approach and make our work more forward-looking, to ensure national energy security," Li said.