Energy use to be regulated by central system

China will set up an integrated system to control national energy use during the 12th Five-Year-Plan (2011-2015), a senior official said on Tuesday.

There has been some progress at the provincial level, and the central government will focus more on top-down planning for energy consumption, Liu Tienan, head of the National Energy Administration (NEA), said during the agency's annual work conference.

The NEA started planning last year for a total energy consumption limit, which would regulate use by each province.

According to one industry insider who declined to be identified, the move might increase the pressure on local governments, which are focused on economic growth.

The insider said that China might limit energy consumption to less than 4 billion tons of standard coal during the 12th Five-Year Plan.

During the 11th Five-Year Plan (2006-2010), China used 3.25 billion tons of standard coal, or 300 million tons more than planned.

"It is a great step and a positive trend to complete the system," said Lin Boqiang, senior researcher at the China Center for Energy Economics Research at Xiamen University.

"It's possible to establish such a system, but making sure that local governments follow it is still a hard task.

"For local governments, to control energy consumption equates to limiting their economic development and growth," he said. "For the new system to take effect may take longer than we expect."

Lin said that in the past, many local governments used power curbs to reduce coal consumption by factories, which wasn't a wise solution.

In the future, provincial governments could trade energy consumption shares among themselves, which could lead to a more rational development of the energy sector.

According to the NEA, China will raise its coal production capacity to 200 million tons by the end of this year and its total installed power capacity by 70 gigawatts (gW).

Liu said that 16 gW of wind capacity was connected to the grid in 2011, bringing the total to 47 gW, while solar power capacity reached 3 gW, three times higher than in the previous year.

New hydropower capacity will reach 20 gW in 2012 and the country will develop the nuclear power sector "efficiently" in line with safety standards, said Liu.

Liu also said that the country will increase natural gas supplies in the coming years, and it will bring the number of residential natural gas consumers to 250 million, up 100 million, by the end of 2015, which is when the current five-year plan ends.