China has set for itself two formidable strategic goals: doubling 2000 GDP by 2010 and reducing energy intensity by 20% over the next five years. The next steps in power sector reforms should help to achieve these objectives.

Following careful analysis, the International Energy Agency offers the following key messages:

■ The development of fully competitive power markets should remain the long-term goal. In the progression toward this goal, near-term priorities should be:

• To strengthen the institutional and governance framework.
• To review actions for tackling coal pollution.
• To develop and implement specific reforms for more cost-reflective, efficient pricing and investment, providing incentives for investment in energy efficiency and strengthening the grid and generation.

■ Near-term priorities should also include actions to lay a stronger foundation for the evolution of competitive markets across the country, and a first set of measures to stimulate basic competitive trading across China’s regions.

■ China needs to review and reaffirm its strategy for power sector reform, and to ensure that there are strong mechanisms for implementation of further reforms.

■ Greater transparency is the key that will help to unblock further reform progress across all fronts. This includes improving data collection and analysis on the power sector so as to improve understanding of supply and demand developments.

■ China has the opportunity to leapfrog other reformed jurisdictions by integrating, from the start, energy efficiency and environmental goals into its regulatory framework for competitive power markets.

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Paperback: 160 pages
Publisher: Organization for Economic Cooperation & Devel (July 2006)
Language: English
ISBN-10: 9264109811
ISBN-13: 978-9264109810

INTRODUCTION

The main objectives of this report are to identify next steps in the further reform of China’s power sector over the next 2-5 years, and to provide, for the government’s consideration, a set of practical recommendations in support of China’s strategic goals to boost economic growth and reduce energy intensity.

China has taken important and courageous steps to reform its power sector over the last two decades. In some areas, it has gone further than many other reforming countries, including some in the OECD. But the reform process needs to be reinvigorated. It is a dangerous illusion that China’s recurrent supply problem is solved because capacity looks reasonably comfortable once again, as this report goes to print.

For such a large country as China, which is engaged in a complex transition toward a socialist market economy, it would be impossible to cover all the issues related to the power sector. In particular, this report does not examine the issue of fuels and technologies for power generation. ...

INTERNATIONAL ENERGY AGENCY

The International Energy Agency (IEA) is an autonomous body which was established in November 1974 within the framework of the Organisation for Economic Co-operation and Development (OECD) to implement an inter national energy programme.

It carries out a comprehensive programme of energy co-operation among twenty-seven of the OECD thirty member countries. The basic aims of the IEA are:

• To maintain and improve systems for coping with oil supply disruptions.
• To promote rational energy policies in a global context through co-operative relations with non-member countries, industry and inter national organisations.
• To operate a permanent information system on the international oil market.
• To improve the world’s energy supply and demand structure by developing alternative energy sources and increasing the effi ciency of energy use.
• To promote international collaboration on energy technology.
• To assist in the integration of environmental and energy policies.

The IEA member countries are: Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Japan, Republic of Korea, Luxembourg, Netherlands, New Zealand, Norway, Portugal, Slovak Republic, Spain, Sweden, Switzerland, Turkey, United Kingdom and United States. Poland is expected to become a member in 2008. The European Commission also participates in the work of the IEA.

ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT

The OECD is a unique forum where the governments of thirty democracies work together to address the economic, social and environmental challenges of globalisation. The OECD is also at the forefront of efforts to understand and to help governments respond to new developments and concerns, such as corporate governance, the information economy and the challenges of an ageing population. The Organisation provides a setting where governments can compare policy experiences, seek answers to common problems, identify good practice and work to co-ordinate domestic and international policies.

The OECD member countries are: Australia, Austria, Belgium, Canada, Czech Republic, Denmark, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Japan, Republic of Korea, Luxembourg, Mexico, Netherlands, New Zealand, Norway, Poland, Portugal, Slovak Republic, Spain, Sweden, Switzerland, Turkey, United Kingdom and United States. The European Commission takes part in the work of the OECD.

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