IEEJ : June 2015. All Rights Reserved.

background &key findings
Release Speech
Xiaojie Xu
Chief Fellow

Institute of world economics andpolitics (IWEP)
chinese academy of social sciences

IEEJ : June 2015. All Rights Reserved.

About the Project2Nature - WECO is an interactive and long range researched
outlook currently focusing on China energy outlook and its
implications worldwide done on an annual basis.

Objectives - It provides independent insights and foresights with
our own database and independent investigation to energy
stakeholders.

WECO 2014-2015,


Focus on energy transition and policy options require for ecocivilization construction including tackling climate change;Prioritize energy trends and challenges around 2020 and theirimpacts on well-off (affluent) society as planned and the entire
world.

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Features and Methods
3

1. We emphasize systematic, holistic and synergetic approaches.
2. We emphasize new policy scenario in the outlook period (20112030) like the IEA does in its WEO.
3. However, new policy scenario is our current case, not central. We
do not follow IEA like current policy case and 450 case, instead,developing eco-energy strategy scenario based on our best
understanding of eco-civilization drive after the 18th CPC, whichfeatured by environmental counter-pressures. Climate
commitments are included.

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IEEJ : June 2015. All Rights Reserved.

New Policies
4A series of new and intensive policies, planning, regulations and plans for actions
combined were released in the second half 2013 and throughout 2014, in a larger
number than ever.
Most of these new policies are subject to unavoidable and growing environmental
concerns
Figure 24: New Energy Policies: 2013-2014

EnergyStrategic
Implementation

Plan for Action
against Emission
from Coal fired
Generation

Strategic
Planning
Plans for Action

Renewables
Emission Standards
for Thermal Power

Natural Gas
Coal

12/22/14

10/23/14

8/24/14

6/25/14

4/26/14

2/25/14

12/27/13

10/28/13

8/29/13

6/30/13

5/1/13

3/2/13

1/1/13June 5th 2015 Tokyo| Xiaojie Xu | China Energy Outlook｜xuoffice@vip.sina.com|

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Our comments on new policies
5

Key messages conveyed (a)Shift to cleaner energy mix by reducing dependency on coal, e.g.
diminishing burning coal and inefficient coal turbines.
(b)emphasize sustainable development through innovations. Enhancesavings and efficiency and reducing emission through recycling, hightech, policy incentives while developing new sources.
(c)Re-focus energy products as commodities through reform attempts
and enhance public interests.

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Eco-energy New Strategy Scenario
6

As our central scenario, eco-energy strategy in our research
indicates something new into the country.
1.Energy development serves but not limited to economic growth
2.Energy development means not only sizable spending and supplies,
enhanced employment and profit and tax resulted, but energy services
featured by multiple A, and clean, diverse and flexible and efficiency
utilization of all types of energy sources for the mankind.
3.Energy development is not only the business of the industry, butinterests of the state and the public, not only a matter of a country, but
the entire world. Therefore, multilateral and trans-regional and crossborder cooperation is required and a must.
Based on all the above mentioned, we build up our own database.

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Database 20147
The database 2014 version is the “ballast” of our energy outlook as awhole.



Our data are largely well-defined and streamlined based on our best
understanding and in-house research of the said issues together with aset of assumptions (population, GDP growth rates, urbanization,energy prices and relevant indicators and index calculations).



Therefore, our data are neither the same received from State Statistical
Bureau or energy administration, nor the industry.

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IEEJ : June 2015. All Rights Reserved.

Chapters for Outlook
8


















Chapter 1 Global Energy Trends
1. Global energy trends
2. China energy outlook
3. Global implications
Chapter 2 New Energy Policy
1. Energy policies in key EMs
2. Energy policy trends in China
3. Sustainable energy: needs vs.
features
4. Policy options for China
Chapter 3 Clean Coal and Policy
1. Global coal trends
2. Coal in China
3. Coal demand and supply
4. Policies towards clean coal
June 5th 2015 Tokyo

Chapter 4 Power Trends and Policy

1. Global power trends

2. Power sector in China



3. Power system and reforms



4. Power policy

Chapter 5 Nuclear and Policy

1. Global nuclear trends

2. Nuclear in China



3. Nuclear outlook for China



4. Nuclear policy options



Chapter 6 Energy Technology



1. Energy technology worldwide

2. Energy technology advances in China



3. Critical technological contributions tooutlook.

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Chapter on Energy Security9Chapter 7 Reframing Energy Security

1. Energy security, a global perspective

2. Energy security under EES scenario

3. Get energy security measurable



Chapter 8 Cooperation with Central Asia



1. Cooperation advances

2. Oil & gas developments in Central Asia



3. Cooperation policies

4. Prospects and outlooks
Chapter 9 Cooperation with ASEANs



1. Resources potential in ASEANs



2. Cooperation status quo

3. Destinations
June 5th 2015 Tokyo

Chapter 10 Cooperation with
Africa

1. Resources, production andexports

2. Oil & gas policies

3. Advances and natures

4. Prospects and directions



Chapter 11 Energy BRICS



1. Definition and analyses

2. Energy BRICS analyses

3. Multilateral cooperation andrepercussions



4. Playing fields and roles

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Executive Summary
10

I. World Energy Trends and Changing Framework into 2030
II. Basic Trend of Energy Development: China vs. the World
III. Energy Policy Trend in 2014-2015
IV. Sector Policy Trends
V. Technological Contributions
VI. Reframing Energy Security
VII. Energy BRICS
VIII. Recommendations for 2015 and the 13th Five-Year Plan
Snapshots of key points on energy outlook on China

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I. Energy D/S Outlook into 2030
11

1. Energy demand continues to grow upward into 2020 and will level off
thereafter.
Energy D/S will continue to grow at 3.79% vs. 2.72% driven by economic growth,
new Four Drives and the environmental pressures, combined. However, both slow
down to 1-2% thereafter. Energy demand could be 3373 million toe while energy
supply could reach 2855 million toe by 2020. These data could be expanded if…


Meanwhile, energy mix will be reshaped obviously that is critical to the country in thenext 5 years to come (i.e., the 13th Five-Year Plan).


4000

Figure 6: Energy Supply in China

Figure 5: Energy Demand in China

3500

3000
222
171
18.7%

225
207
18.5%

7.9%
10.5%
16.7%

8.9%
14.2%

3500
Others
Bio

2500

Hydro

2000

Nuclear

1500

1500

Gas

1000

1000

Oil

500

2500
2000

193
151
18.9%

65.7%

65.1%

62.6%

58.4%

16.5%

50.4%

500

Others

3000

Coal

8.2%
4.4%
8.8%

2013

2014

2015

June 5th 2015 Tokyo

2020

9.0%
5.6%
8.4%

73.1%

67.4%

Bio

10.5%
7.9%

Hydro
Nuclear
Gas

76.0%

74.3%

59.6%

Oil
Coal

0
2013

0

9.1%
4.9%
8.6%

9.3%
7.7%
7.8%

10.5%

2014

2015

2020

2030

2030

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II. Coal Demand Growth12

2. Coal demand witness near-zero growth in 2014 and will be upward
steadily until 2020 when reaching peak plateau (below 2000 million
toe). The peak plateau could be lower if new policy could fully implemented
and expanded. Coal demand share will reduce from 65% in 2014 down
below 50% in 2030, remaining the King of energy mix in China. Near-zeroemission (SO2, NOx and ash) is possible. Clean coal is our future of choice.
Figure 7: Coal Demand & Supply and Share
2000

70%

1950

60%

1900

50%

1850

40%

1800
30%

1750
1700

DemandOutputCoal Share

20%

1650

10%

1600

0%

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III. Oil Outlook
13

3. Oil demand will grow steadily while output increase at snail pace.
Foreign dependency will be around 60% or lightly higher.
Oil demand will be 636 million tones to
production 250 million tones in 2030,
well below some projections to 750, 800
or 936 million tones.
We believe an incremental demand of oil
could be substituted by non-oil fuels andconstrained by oil saving and upgradedtransporting system from substitution
drive and technology advances view.
E.g., new energy vehicles will be one ofsubstitution, even EV/HEVs are far fromsatisfying our targets at present but
could be boosted by new policy. At least,
100 mt of oil could be substituted.

Figure 8: Oil Output & Demand andForeign Dependency

700

64%

600

62%

500

60%

400

58%

300

56%

200

54%

Oil Demand
Oil Production
Foreign Dependency

100
0

52%
50%

2013 2015 2017 2019 2021 2023 2025 2027 2029

EV/HEV Growth 5mm@2020
40
EV/HEV

V

30
20
10
0
2016

June 5th 2015 Tokyo

2017

2018

2019

2020

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IV. Gas Outlook
14

4. Natural gas demand will continue to grow at two digital rate(although slow down a bit in 2014) driven by price reform,
technology advances and clean energy policy. Surplus of supply
is impossible.


Gas fired generation is
encouraged from 15% to 20%.
Domestic output driven byunconventional gas sources while
multiple import sources areample.
Gas surplus could be possible but
not understandable andimpossible if absorbed andmanaged well.

June 5th 2015 Tokyo

Figure 9: Gas Outputs and Imports in China
7000

55%

6000

50%

5000

45%

Conventional Gas

4000

40%

CBM

3000

35%

2000

30%

1000

25%

0

Imports

Shale Gas Output
Foreign
Dependency

20%
2013

2014

2015

2017

2020

2030

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V. Nuclear Outlook
15

5. China is a lower nuclear power user (1% in its energy mix) with big
potential to expanded.








The next decade will be seen a rapid
growth of nuclear electricity generation
averaged at 12.8% from 2013 to 2030
(compared with 4.2% of electricity growthnationwide and 2% of energy demand).
Nuclear electricity generation will be 867
TWh based on 112 GW installed capacity,
accordingly, both shares in energy mix will
be 8% and 4.35% in 2030.
Why 112 GW? Lower than some expected
because of our conservative view of
nuclear sector and its constraints inindustrial chains, HR and public
acceptance.
Acceptable size and growth rate are criticalto nuclear policy making moving forward.
June 5th 2015 Tokyo

Figure 10: Nuclear Installed Capacity

GW
120

12.00%
Nuclear Installed Capacity
Nuclear share100

10.00%

80

8.00%

60

6.00%

40

4.00%

20

2.00%

0

0.00%
2013

2014

2015

2020

2030

Figure 11: Nuclear Power Generation

TWh
1000
800

10.00%
Nuclear Power Generation
Nuclear share

8.00%

600

6.00%

400

4.00%

200

2.00%

0

0.00%
2013

2014

2015

2020

2030

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VI. Renewables Outlook
16

6. Modern renewables will be witnessing rapid growth while hydropower increases steadily. Non-fossil fuels including nuclear, geothermal and bio-fuels will surpass oil in energy mix (16%) in 2020.


However, renewables encountereduncertainties. Besides higher costs
and lower transfer rate, unstableutilization hours, not to mention
management of wind and solar PV
are distinguished from thermal
powers. CSP and bio-energy areless developed.
There exist wastes in wind, solar PV,
even hydro sources being subject topolicy innovation and marketization.

June 5th 2015 Tokyo

Figure 12: Non-fossil fuels Growth

Mtoe
800

24.0%

700

21.0%

600

18.0%

Bio

500

15.0%

Hydro

400

12.0%

300

9.0%

200

6.0%

100

3.0%

0

0.0%
2013

2014

2015

2020

OthersNuclearNon-fossil fuels
share* geo-thermal and bio-fuels
included

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VII. Electricity Outlook
17

7. Electricity Generation has reached 5540 TWh based on installedcapacity 1338 GW. Shares of coal and hydro installed capacities will
be decreased because of increases in nuclear, gas and renewables.

Coal power capacity reduced from 65% down to 48.7%; gas used for
power generation will increase from current 15% up to 20% if gas fired
turbine facilities nationalized, gas price rationalized, plus policy renewed.
GW
3000

Figure 13: Power Installed Capacity

2500

TWh
12000

Solar

10000

Wind

2000

Figure 14: Power Generation

Hydro

1000

Nuclear

64.5%

62.7%

61.0%

55.1%

48.7%

0

Gas

Coal

2013

2014

2015

June 5th 2015 Tokyo

2020

2030

Others
Solar
Wind

8000

Bio

Bio

1500

500

Others

6000

Hydro

4000
2000

75.6%

72.8%

71.9%

2013

2014

2015

68.1%

60.1%

Nuclear
Gas

0

Coal

2020

2030

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VIII. Carbon Emission
18

8. Under the EES scenario, carbon emission target would be
met and surpassed.


CO2 emission from fossil fuels
could reach 8000 mt in 2015
and 9200 mt or higher in 2020
before leveling off thereafter.

Figure 16: Energy Instensity and Carbon Intensity

Oil Equivalent Ton/10K RMB
1.00

0.90

June 5th 2015 Tokyo

3.50

41% reduction between 2005 and 2020

0.80

Because of coal demand peakin 2020, CO2 emission could
fall around 9500 mt. Therefore,
CO2 emission target for 45%
reduction to that in 2005 will be
met in 2019 and 48% in 2020,
well higher than committed.

CO2 Ton/10K RMB
4.00

Growth

3.00

0.70
0.60

2.50

0.50

2.00

0.40

1.50

48% reduction between 2005 and 2020

0.30

1.00

0.20

Energy Intensity

0.10

Carbon Intensity

0.50

0.00

0.00
2005

2010

2015

2020

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IX. Differences (IEA vs. IWEP)
19

9. Comparison between IEA and IWEP on China’s energy
Energy Demand
18000
17000
16000
15000
14000
13000
12000
11000
10000

Electricity
Generation

IEA
IWEP

35000
30000
25000

Carbon Emission
2029

2027

2025

2023

2021

2019

2017

2015

2013

2011

20000

38000
36000
34000
32000
30000
28000

2011
2013
2015
2017
2019
2021
2023
2025
2027
2029

26000

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IX. Differences (IEA vs. IWEP)
20

IWEP energy mix vs. that of IEA:
- Our coal share is lower while gas share higher than those by the IEA
in energy mix
Figure 18: IEA Energy Demand in China Mix

Figure 17: Energy Demand Mix in China
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

OthersBio
Hydro
Nuclear
Gas
Oil
Coal

2012

2020

June 5th 2015 Tokyo

2030

100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%

OthersBio
Hydro
Nuclear
Gas
Oil
Coal

2012

2020

2030

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X. Global Impacts
21

10. Against the global energy demand mix, we believe China
under EES scenario would facilitate global energy
transformation into 2030




IEA: Global energy demand will growfairly steadily and see snail growth from
2% in 2025 down to 1% in 2030.

Figure 4: World Energy Mix
100%

However, shares of clean energy sources(gas, nuclear and renewables) will
increase from 40% up to 46% in 2030
globally indicating a greater optimizationin energy mix.

80%

This trends could be seen earlier becauseof changes taking place in OECD and
Non-OECD (China mainly).

0%June 5th 2015 Tokyo

Others
Bio
Hydro

60%

Nuclear
Gas

40%

Oil

20%

Coal

2012

2020

2030

资料来源：IEA，WEO 2014

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XI. Energy Transformation - China
22

11. There are evident transformation seen in OECD countries and nonOECD.
De-couple of energy demand and economic growth in OECD while the ties between the
two are tightly indexed in Non-OECD. Energy efficiency, saving and innovation play key
roles in both types of energy transformation.

Greater energy transformation will be seen in China around 2020 featured by reduction
in energy use, enhanced energy efficiency, technology innovation.
Figure 2: Urbanization and Energy Use

Figure 1: Industrial Structure and Energy Use
Tce/10k GDP

100%

1.50

1.00

2010

2013

2015

June 5th 2015 Tokyo

2020

2030

Primary
Industry

90%

3.0

80%

2.5

70%
Secondary
Industry

60%

0.50

Tertiary
Industry

40%

0.00

Energy Use by
the secondary
Industry50%0%Toe/person

2.0

50%

1.5

30%

Urbanization

1.0

Energy use per capita

20%

0.5

10%

0%

0.0
2015

2020

2025

2030

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Key Data for Well-off Society
23
Unit

2015
Planning

2015
EES

2020
EES

2020
Industry

100 mtce

40

41.9

48.9

52.7

Electricity

Coal shareNon-fossil fuelsElectricity
Energy Intensity
Coal use by thermal Power
Installed capacity
Coal fired
Hydro
Nuclear%%TWh
Tce/10kRMB
Grame/kwh
GW
GW
GW
GW

—
11.4
6150
0.68
323
1490
960
290
40

63.6
11.1
6000
0.71
318.6
1420
880
310
33.37

57.3
14.8
7390
0.59
308.6
1830
960
380
59.45

60.4
13.7
8610
0.64
308.6
2030
1210
400
61.6

Ecosystem
protection

Gas fired
Wind
Solar
CO2 emission intensity
Reduction of CO2 cimmited

GW
GW
GW
Tone/10kRMB
%

56
100
21
—
—

50
100
35
1.43
33.3

90
210
100
1.12
47.8

77.88
200
50
1.23
42.5

tce
kwh

—
—

3.0
4364

3.4
5133

3.7
5986

kwh

620

574

737

1172

100 million

2.5

2.9

??

??

Field

Items
Energy Consumption

EnergyConsumption &Efficiency

Well being

Energy use per capita
Electricity per capita
Electricity per capita forresidential
Population using gas

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XII. Energy Security Reframed
24

12. Today we are facing interlinked landscape of energy security. To
make the concept measurable and manageable is required.
In our report, we reframe energy security by a set of relevant aspects covering
energy industry, regulators, environmental concerns, biological care, societal
relation, public expectation, international relations, infrastructure and future
development before indexed.
Figure 25: Energy Security Evaluation

Security Indicator
Industrial Stability & Sustainability
Market sustainability
Energy efficiency
Supply self sufficiency
Foreign dependency
Transportation satisfaction
Chokepoint security
Stockpile and supply datesLong term cooperation with exporters
Exporting capability & stability
Bi/multi cooperation mechanisms
Price
FX employed for security
Policy Synergy with relevant countries
Corridor security
Ecological threats
Non-traditional threats

Evaluation

June 5th 2015 Tokyo

0

2

4

6

8

10

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XIII. Energy Cooperation25

14. Such an energy security is also
subject to multilateral cooperation
arrangements:

Multilateral cooperation objectives:
build up mechanisms to enhanceenergy demands, efficiency,
technology advances with intent toreframe an open, inclusive andsustainable energy government atregional, trans-regional level.

Energy BRICS was proposed tostrengthen multilateral cooperation
with emerging economies.

- China-Russia-Central Asia
- China-ASEANs- North Indian Ocean- North Pacific- Sino-Europe- Partner with Intl Institutions

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Conclusions
26

1

There are some big gaps between new energy policies witnessedand studied and our EES scenario, which leaves a set of questions tobe answered in the coming five years.

2

The year 2020 will be critical milestone for energy transformation in
China before its moving to next one/new heights aiming at
sustainable development. We believe this milestone 2020 could be
the last chance to the country to build up its well-off society as
expected.

3

Obviously, there are new requirements and efforts deserved to cometo deal with shortages and laggards and pave way ahead in policy
making from EES scenario points in the 2nd half 2015 and 2016 (weare closely watching, investigating and advising)June 5th 2015 Tokyo| Xiaojie Xu | China Energy Outlook｜xuoffice@vip.sina.com|

IEEJ : June 2015. All Rights Reserved.

Top 10 Outstanding Issues
27①

Coal fired generation <50% while coal used for power >50%②

Oil demand and its substitution prospects③

Gas “supply surplus” and utilization④

Nuclear issues (size, growth rate and inland deployment)⑤

Wind and solar power utilized⑥

Continue to build up energy storage capacity⑦

Intra-regional power grid connections⑧

Near zero emission and its economics⑨

Near zero emission and energy savings⑩

Urbanization and energy services

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IEEJ : June 2015. All Rights Reserved.

Advices28

1.

For Policy makers - Policy refocus, enhancement in line withgovernmentally smarter role together with integration, inclusiveness andimplementation are advised

2.

For the Industry – We encourage the industry to be more open and resilient
to market competition and upgrade energy supply oriented strategy towards
energy services oriented strategy (indicating the importance of stability ofsupply, public acceptance, fairly accessible, more mobile facilities, smarter
grid, and inclusive development).

3.

For the public: A direct dialogue between the public, industry and thegovernment is required and indispensible because joint efforts for better
energy services, energy saving and emission reduction are imperative to
unlock the benefits of the energy transformation worldwide.

4.

For the rest of the world: A better understanding of Chinese energy policy
deserves not only high level dialogues but also an exchange of data, analysis
along with the outlook like today we’ve attempted.

June 5th 2015 Tokyo| Xiaojie Xu | China Energy Outlook｜xuoffice@vip.sina.com|

IEEJ : June 2015. All Rights Reserved.

Thanks & Closer Cooperation
29

Thanks for your listening Thanks to IEEJ plus Mr. Masuda Tatsuo for yourinvitation and arrangements.
 We are seeking a closer cooperation with IEEJ on theenergy outlook program.
 We are also seeking closer cooperation under the flag of
CICA energy security roundtable panel I chair as well.
Contact : report@tky.ieej.or.jp

June 5th 2015 Tokyo| Xiaojie Xu | China Energy Outlook｜xuoffice@vip.sina.com|