China Pushes Major Energy Projects Despite Economic Downturn

http://www.energytribune.com/articles.cfm?aid=1299

Posted on Feb. 10, 2009

By Lee Geng

Although the rest of the world is slowing down, China is increasing its investments in major energy projects. During a speech last week at a national energy conference in Beijing, vice premier Li Keqiang told attendees that the spending will occur in the gas, electric power, coal, oil refining and petrochemical sectors. In additon, Li called for increased investments in renewable projects such as hydropower, wind and solar power.

The energy conference marks the first time in 17 years that China has convened a national meeting on energy. The conference underscores the importance that China’s leadership is placing on energy, and it is occurring at the same time that demand is slowing. Since October, China's power generation has declined for three consecutive months, indicating a slowdown in industrial activities nationwide as export demand has plummeted. Last year, China’s coal consumption growth rate fell by 1.6 percent and power demand was down by 9.57 percent. Crude oil consumption fell by 2 percent compared to 2007 levels.

Although energy growth has slowed, “we can’t stop building energy projects because of that,” said Zhang Guobao, head of the National Energy Administration. Zhang told conference attendees that over the long run, China’s energy demand will grow. Although the global financial crisis has slowed the need for energy, it has not changed the fundamentals of China’s economic development, as the country is still in the process of urbanization and industrialization.

Zhang also called on China to take advantage of the current demand contraction to adjust the energy structure by closing small coal-fired power plants in favor of larger ones. He also wants renewed emphasis on nuclear power. China currently operates 11 nuclear reactors with a combined capacity of about 9 gigawatts, which supply about 1 percent of the country's electricity. By 2020, the country hopes to have as much as 70 GW of nuclear capacity. Zhang said that China will begin building nuclear power plants with a total capacity of 8.4 GW in 2009, part of a plan to invest some $84.8 billion in the power industry. The nuclear plants to be built will be located in Zhejiang, Shandong and Guangdong provinces. China will use third-generation nuclear power technologies, such as the AP1000 developed by the United States-based Westinghouse Electric Co, industry officials said.

On the wind power front, Zhang said that over the next decade, China will build several wind farms with capacity of over 10 GW in Gansu, Inner Mongolia, Hebei and Jiangsu provinces. China has repeatedly raised the target for wind power, with the latest adjustment calling for boosting the capacity to 100 GW, up from the earlier target of 30 GW.