Jon Li: China will Accelerate Energy-conservation Industry Development in the Next 5 Years

(Agencies)
Updated: 2010-11-08
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[Abstract] China's energy conservation environmental protection industry will increase by over 40% in the next 3 years. Generally, China's total energy utilization is round 33%, 10 percentage point lower than developed countries, as a result, there are wide development space for China to develop energy conservation industry. Jon Li: China's energy conservation industry is focused on four fields: industry, building, transportation and life.

China's energy conservation environmental protection industry will increase by over 40% in the next 3 years. According to the data by Xie Zhenhua, Deputy Chief of NDRC, the gross output value of China's energy conservation environmental protection industry in 2012 will reach 2.8 trillion Yuan. Other data showed that the gross output value of energy conservation environmental protection industry will reach 5 trillion Yuan by 2015, or round 10% of GDP at the same period.

As a result, energy conservation environmental protection is a development trend whether from national level or market one.

However, behind the promising forecast data, what's the status que and prospect in China's energy conservation industry? What problems it will face in the future? How to improve the development of energy conservation market? To this end, reporter of "Science Times" interviewed Jon Li, CEO of IEEPA.

"Science Times": As top-importance development direction of seven strategic emerging industries, what strategic position does energy conservation environmental protection industry occupy? How big is the energy-saving space in China?

Jon Li: In my opinion, energy conservation environmental protection industry is one of the most important national strategies China has made in 21 century.

Along with China's economic development, energy consumption is inevitably increasing. To solve China's energy consumption demand, three channels shall be considered: 1. self reserve, import or overseas cooperation; 2. increase the proportion of renewable energy; 3. energy conservation, including energy conservation and improving energy utilization.

From the perspective of national object and actual condition, it is a long time to go before we can increase the proportion of renewable energy, and its market function. In the next 5-10 years, the energy consumption proportion it can assume is limited. As a result, renewable energy belongs to middle or long-term investment.

There are great potential or development space for renewable energy. Presently, China's total energy utilization efficiency is round 33%, 10 percentage point lower than developed countries.

From the perspective of governmental policy, China has set the goal of reducing per unit GDP energy consumption by 40%-45% by 2020 compared with 2005, among which the most principal channel is energy conservation and consumption reduction. According to expert estimation, energy conservation will contribute to 80% or 85% of reduction goal in total, or 90% by 2020.

"Science Times": What fields does China's energy conservation environmental protection industry cover?

Jon Li: Currently, China's energy conservation industry covers four fields like industry, building, transportation and life.

Industrial energy conservation was viewed as the largest field for investment potential, because 70% of energy consumption were focused on steel, nonferrous, building material, petroleum processing, coking, chemical and electric power fields, etc.

Building energy conservation, as a hotspot field, accounted for 27% of total energy consumption, and increased by 1 percentage point annually.

Statistics of the Ministry of Construction showed that: new building area annually reached 2 billion square meters, of which over 80% belonged to high energy-consumption building; existing building reached 40 billion square meters, of which 95% were high energy consumption building. Currently, new building has achieved energy-conservation design, with its proportion of 95.7%, while the proportion of energy-saving design during construction phase only accounted for 53.8%. Therefore, there are great space for energy conservation reconstruction and technology upgrading.

Concerning the transport energy-conservation, vehicle energy diversification and vehicle power electrification represent the technical change and transformation trend in transport energy power system.

Life energy conservation mainly focused on family life like home appliance and daily application.

Energy conservation environmental protection industry covers energy conservation, resource cyclic utilization and environmental protection, as well as technology and equipment, product and services and so on, which features strong extension, wide field. Along with the requirement of industrial upgrading, gradual improvement of energy conservation service system, and establishment of anti-driving mechanism of 2020 emission reduction objectives, China will face accelerated development period in energy conservation industry in the next 5 years.

"Science Times": What’s the problem China is facing in energy conservation industry?

Jon Li: I think there are eight problems to be considered.

1. Despite established laws system, the detailed rules concerned and administration mechanism are not sound, and coordination mechanism is deficient among government sectors in energy conservation work.

2. Relevant oversight mechanisms in many cities were just established, and faced incomplete system and insufficient staff arrangement; at the same time, numerous inspectors were lack of field practice experience, and in want of power-saving technology inspection means and capability.

3. Oversight and law enforcement force in energy conservation were insufficient. Currently, numerous energy-consumption enterprises, due to poor consciousness, turned their back upon watchdogs' orders to correct their irrational behavior. Furthermore, relevant laws did not place adequate restrictive force on such enterprises, and watchdogs had no further restrictive means to implement.

4. Insufficient oversight capability of local organs can not guarantee effective supervision to energy-consumption enterprises, and the coordination mechanism of oversight and execution had limitation. When problems emerged, enterprises took no modification timely and effectively.

5. Energy conservation talents are insufficient. Currently, fundamental personnel did not fit practical application, there were no professional human resources, and lack regular training to principal and managers by administrative means.

6. We shall further enhance to guide energy conservation service industry in practical work. Nowadays, government had no adequate fund support to energy conservation technical service, and was difficult to mobilize initiatives of energy-consumption enterprises. The power-saving technology services had difficulty to apply their technology; the drawbacks existed in pushing forward energy management contract, which had no got sufficient awareness, and gained limited support by financial institutions like banks, and lacked certified testing means and qualified organs and so on.

7. Energy-conservation financial system was not sound, which led to low-efficiency market operation, and can not give full play to market potential.

8. Publicity work was not popularized throughout the country.

The above is from government side. Of course, some cities have taken efforts to enhance the construction. For example, Beijing city is establishing supervision mechanism, and training third party and inspection organs to carry out work. and Shanghai city has taken the lead in this regard.

"Science Times": How to push forward the development of China's energy conservation industry?

Jon Li: 1. We shall enhance the force of energy conservation scientific achievements and advanced management means, and setup platform for the energy-consumption enterprises, clear off the obstacles, popularize the energy-conservation new products, new technology and new management mode.

2. We shall enhance energy conservation mechanism, especially for energy management contract, improve the capability of coordinated process from testing, design, financing, reconstruction to management.

3. Currently, we shall solve general problem facing energy-conservation service companies as soon as possible, establish third-party energy conservation testing and authentication organs, which played a key role in leading and standardizing energy conservation market.

In conclusion, in order to push forward energy conservation work, we shall lead energy conservation mechanism to make transition toward market direction: (i) boost government-level energy conservation construction; (ii) form sound market operation of energy management contracting ASAP, strengthen policy support; (iii) support integration capability construction of energy conservation services, namely energy management contracting.

source: http://www.chinadaily.com.cn/hqgj/jryw/2010-11-08/content_1159945.html

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