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1 the national bureau of asian research nbr special report #47 | november 2014 PHILIP ANDREWS-SPEED is a Principal Fellow at the Energy Studies Institute of the National University of Singapore. He can be reached at . China’s Energy Policymaking Processes and Their Consequences Philip Andrews-Speed EXECUTIVE SUMMARY This essay examines the dynamics of China’s energy policymaking and how differences in the context and processes for various initiatives ultimately shape their implementation and potential for success. MAIN ARGUMENT China faces a number of severe energy challenges, relating notably to energy supply security and environmental cost, as well as to investment efficiency and social equity. With this in mind, the Xi Jinping government has inherited or launched several important policy initiatives that aim to reshape the country’s energy portfolio and that directly affect the energy sector. These initiatives include efforts to advance the continued reduction of energy intensity and carbon emissions, the radical reduction of air pollution, the reform of state-owned enterprises (SOE), and the reform of the pricing systems for energy products. Considered collectively, these policy initiatives involve quite different sets of strategies to achieve their ultimate goals. Such differences ultimately shape how various programs are implemented and suggest likely intended (and unintended) consequences based on observations of past efforts. POLICY IMPLICATIONS • China’s Action Plan for the Prevention and Control of Air Pollution outlines a series of ambitious goals for the industrial sector, and addressing air pollution is a high priority for the Xi government. To be successful, this plan will need to be supported by a number of measures, including strategies for the power sector, for identified industries, and for key regions. Yet success will also require longer-term structural and policy shifts inside China, which will be more challenging for policymakers to achieve. • To date, China’s energy sector reforms have had the desired consequences of raising money, transforming management incentives, improving technical and commercial performance, and creating the basis for international expansion. However, the government has undertaken only limited steps to develop competition within domestic oil and gas markets, which will be needed to further advance the sector’s reform. • While the Chinese government’s ambition to introduce carbon trading is to be applauded, effective implementation faces a number of serious obstacles. Ultimately, these trading experiments are unlikely to bring about significant emissions reductions without a concurrent loosening of state controls on SOE ownership and energy pricing. 3 CHINA’S ENERGY POLICYMAKING PROCESSES u ANDREWS-SPEED C hina faces a number of severe energy challenges, relating notably to energy supply security and environmental cost, as well as to investment efficiency and social equity. With this in mind, the Xi Jinping government has inherited or launched a number of important policy initiatives that aim to reshape the country’s energy portfolio and that directly affect the energy sector. These initiatives include efforts to advance the continued reduction of energy intensity and carbon emissions, the radical reduction of air pollution, the reform of state-owned enterprises(SOE),andthereformofthepricingsystemsforenergyproducts.Consideredcollectively, each of these policy initiatives involves quite different sets of strategies to achieve its ultimate goals. The initiatives also possess differing characteristics relating to the role of policymaking, methods of implementation, and likely intended (and unintended) consequences. This essay seeks to show how different types of energy policy initiatives in China emerge from different contexts and processes and assesses how these differences shape the initiatives’ implementation and their potential for success or failure. The first section examines the historical considerations that have shaped China’s energy policies, how these considerations are changing, and what views remain constant. The essay next outlines an analytical framework that parses Beijing’s energy strategies into four core types of programs. The following section then applies this framework to five high-level policy programs—focusing on air pollution control, oil and gas production, renewable energy, industry reform, and carbon markets—to better understand what we can expect to see in terms of future developments and prioritization. The essay concludes by arguing that our analysis of these select efforts suggests that the outcomes of ongoing policy programs to change the energy mix, reduce pollution, and reform the state-owned energy companies are extremely uncertain. The Prevailing Policy Paradigm and Changing Policy Priorities In China, as in many countries, the government formulates national energy policy in the context of a prevailing paradigm—that is, a set of shared beliefs, values, ideas, and principles relating to the world or to a particular sector...

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Additional Information

ISBN
9781939131362
Related ISBN
9781939131362
MARC Record
OCLC
903314494
Pages
76
Launched on MUSE
2015-02-12
Language
English
Open Access
No
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