Full Text: China's Energy Policy 2012

VIII. Deepening Institutional Reform in the Energy Sector

Reform constitutes a strong dynamic force in accelerating the transformation of the development mode. China will resolutely implement reform in the energy sector, strengthen top design and overall planning, accelerate the pace of building a system and mechanism for the scientific development of the energy industry, ameliorate the environment for energy development, bring about a revolution in energy production and utilization, and safeguard China's energy security.

-- Accelerating building of legal regime for the energy sector. China will improve its energy-related legal regime to regulate the energy market, protect the ecological environment and guarantee energy security. China attaches great importance to energy legislation and will press on with the improvement of the legal system related to the energy sector. Now, work has been going on an energy law, as well as a series of administrative regulations on oil reserves, protection of submarine oil and natural gas pipelines, and nuclear power station management. It has amended the Coal Industry Law, the Electric Power Law and other laws, and has been making efforts to promote the enactment of laws concerning oil, natural gas and nuclear energy.

-- Improving the market mechanism. China is actively promoting market-oriented reform in the energy sector by giving full play to the fundamental role of the market in the allocation of resources. All projects listed in the national energy program, unless forbidden by laws or regulations, are open to private capital. The Chinese government encourages private capital to participate in the exploration and development of energy resources, oil and natural gas pipeline network construction and the electric power industry, encourages the involvement of private capital in coal processing and oil refining, and supports the entry of private capital into the new energy and renewable energy fields. The Chinese government will intensify and regulate the administration of coal exploration and development rights, gradually eliminate the double-track price system for contracted coal supply and market coal supply, and create a mechanism to balance the development of coal and coal-bed gas. The government will press on with institutional reform in the power sector and steadily carry out trials to separate power transmission from power distribution. Proactive efforts will be made in the pricing mechanism of electricity to gradually let the market decide the prices of electricity generated and marketed, while the prices of transmission and distribution are to be decided by the government. The state will regulate the prices of coal for electricity generation and prices of electricity marketed, and explore ways to set up a renewable energy trading mechanism. It has successfully implemented the price, tax and fee reform of refined oil products and guides the public's rational energy consumption through tax means. It will continuously rationalize the refined oil price and form a pricing mechanism, and start the experimental reform of natural gas pricing mechanism. It will improve the market system for energy and develop more forms of trade, including spot trade, long-term contracts and futures trade.

-- Tightening administration of the energy sector. In order to increase the efficiency of energy development and utilization, promote the scientific development of the energy sector and safeguard the country's energy security, China is determined to strengthen administration in the energy sector. It takes strategic planning and macro-control for energy development, and carries out industry regulation by making use of plans, policies and standards. The Chinese government will reduce its intervention in specific matters and simplify administrative examination and approval, while intensify supervision over monopoly and unfair competition by establishing an open, fair, scientific and effective supervision mechanism. It will strengthen statistics collection and forecasts related to the energy sector, and establish a comprehensive system covering statistics, monitoring, forecasting and early warning in this regard.