China sets up national energy commission

BEIJING, Jan. 28 (UPI) -- China has established a national energy commission headed by Premier Wen Jiabao aimed at improving the country's energy strategy and planning development.

The National Energy Commission, announced on Thursday, will be responsible for drafting national energy development plans, reviewing energy security and coordinating international cooperation.

The NEC will be composed of 21 ministers and directors from different departments, including the National Development and Reform Commission, the National Energy Administration and the central bank.

China's Economic Observer News reports that although China established the NEA in 2008, the central government has lacked the ability to implement a unified energy policy, as responsibility for the energy sector is currently dispersed among a number of departments.

In 1993 China's Energy Industry Ministry was dissolved during a round of departmental restructuring, leaving China without a unified energy ministry for 16 years.

Guan Qingyou, an energy expert at Tsinghua University, told the Global Times that an energy strategic planning office, which considers development, security and diplomacy, is crucial to China, whose foreign-market dependence is above 50 percent.

According to statistics released by the NEA on Friday, net crude oil imported by China was 199 million tons compared with 189 million tons produced domestically. That translates into 51.3 percent of China's crude oil coming from overseas.

Guan noted that China is also under heavy diplomatic pressure due to its unbalanced energy structure in which high-polluting coal consumption accounts for 60 to 70 percent.

Industry analysts say China's announcement means that energy is recognized as paramount to the future development of the country, now the world's second-largest energy consumer.

"The establishment of the NEC shows the government has raised energy issues to an unprecedented level," said Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University, China Daily reports. "Such a super ministry, which centralizes the powers of different ministries, can help China make better use of its energy resources."

A research report by accounting firm KPMG shows that electricity consumption in China grew 12.5 percent annually between 2000 and 2008. The high growth rate is expected to continue through 2020.

China's demand for gasoline also continues to skyrocket. Last year for the first time China surpassed the United States as the world's largest auto market, with a 59 percent year-on-year sales increase.

Zhang Jianyu, China program manager for the Environmental Defense Fund, told China Daily the NEC will provide a better mechanism for China's energy sector, optimizing the country's energy portfolio as well as coordinating supply and demand.