(ShanghaiDaily, Apr 12, 2007) TOPICS such as energy efficiency, investment opportunities and the future outlook dominated the MIT Forum on the Future of Energy in China, which ended last week in Shanghai.

This coincided with China missing its 2006 target to cut energy consumption per unit of gross domestic product by four percent, as part of a five-year plan to reduce energy intensity by a fifth through 2010.

Shanghai Daily listened and talked to government officials, industry experts and investors at the forum, bringing highlights from speakers' remarks in today's insight special.

The world's oil demand

could rise to 95 million barrels a day in 2010, 105 million barrels a day in 2020 and 120 million barrels a day in 2030, against some 84 million barrels in 2005.

The Asia Pacific region could account for more than half of the world's energy consumption by 2030.

In China, oil consumption may rise to 18 million barrels a day in 2030 from the current level of about six million barrels. And China's electricity use could be on a par with that of the European Union in 2030.

China still has to rely on coal as its primary energy resources although renewable sources are set to be developed fast in the country.

"Energy security, a better environment and a new energy strategy are common goals for US and China."

Steve Papermaster Co-chair of Energy Committee, US President's Council of Advisors on Science & Technology

Both China's indicators for

energy consumption per unit of gross domestic product and carbon dioxide emission were not performing well last year, indicating that its effort to reduce energy is at a "tough stage."

One reason that led to the situation is lack of financing channels. The market is big regarding energy efficiency improvement, while the scale in specific projects is often not that big.

There is a barrier for small companies to get financing from domestic commercial banks for such loans on economic feasibility concerns.

The World Bank has launched a pilot program in China to help small firms secure loans for such projects under a method called loss-sharing financing. The program is designed to prove the feasibility and opportunity in the energy-saving market.

The bank is expected to finish the first-phase task to help companies to get 1.2 billion yuan (US$155 million) of loans within the coming 12 months. A second-phase effort is to help secure five billion yuan.

Calvin Xu Program Manager, China Utility-Based Energy Efficiency Finance Program, International Finance Corp, World Bank

Based on a projected

population of 1.5 billion, China would have to need 4.5 billion tons of crude oil a year in 2020 if energy use reaches the same level as the United States, where oil consumption is three tons per capita a year.

This is unacceptable because China couldn't consume more than half of the global crude, even if the world's oil supply can be doubled to eight billion tons a year in 2020 from the current four billion tons. Also, only about 1.6 billion tons of the current supply is for trade.

"So China won't follow the US energy consumption model and must build up a clean, efficient and sustainable energy-use system on its road towards industrialization."

Xu Dingming Deputy Director-General, Office of the National Energy Leading Group

China's energy demand

growth will accelerate, and 4.4 percent is our estimate of how fast energy demand will grow from 2003 through 2020, compared to about 3.9 percent during the 1980-2003 period.

The rate for 2003-2020 might slow to about 2.8 percent, if China captures the potential opportunities in improving its energy efficiency. Most of the opportunities are in the residential and industrial sectors.

The potential reduction in energy demand through 2020 could enhance China's energy productivity.

"The United States is home to a lot of interesting demonstrations and pilot projects, but they don't have scale ... In China we have scale, so we can take ideas from the US."

Jonathan Woetzel Partner, McKinsey & Co China's Energy Practice

to reduce energy consumption per unit of GDP by 20 percent in five years through 2010, providing the economy can keep a growth pace of around nine percent.

"A reasonable economic growth pace benefits the energy saving target. Too quick or too slow could lead to excessive consumption of energy."

A too-strong economic expansion could trigger overinvestment, while the consumption/GDP ratio could also be affected if economic growth slows.

China also has to start levying a fuel tax in one or two years. If not, its goal of cutting energy intensity by a fifth by 2010 couldn't be realized. Other resource taxes should also be optimized to avoid waste.

"A tighter energy policy would benefit China's effort to improve its energy efficiency."

Yang Fuqiang Vice President & Chief Representative, Energy Foundation (Beijing)

Growth in China's apparent

oil consumption may slow to six percent this year, versus a 10 percent increase in 2006.

Demand for transport fuels and kerosene will keep growing strongly while the needs for liquefied petroleum gas are set to slow. Oil use in the industrial sector could remain flat.

On the natural gas front, demand could double in every five years, with sources coming from both onshore and offshore China as well as imports of liquefied natural gas.

More cleaner-burn gas could be used to partially substitute for LPG, fuel oil and naphtha, a product of petroleum distillation.

China will also optimize its gas price guidance on a national level.

Ridwan Rusli Co-Head of Energy Asia, Credit Suisse
source:ShanghaiDaily