Promote the energy transition first, and take multiple measures to ensure energy security

(The author of this article is Sun Chuanwang, a professor at the School of Economics, Xiamen University)

On July 11, 2023, the second meeting of the Central Committee for Comprehensively Deepening Reform emphasized: "It is necessary to deepen the reform of the power system, accelerate the construction of a clean, low-carbon, safe and abundant, cost-effective, supply-demand coordination, flexible and intelligent new power system, better promote the revolution of energy production and consumption, and ensure national energy security." Since the 18th National Congress of the Communist Party of China, China has put green, low-carbon, energy conservation and emission reduction in a prominent position, effectively promoting a significant improvement in energy utilization efficiency and a continuous decline in carbon dioxide emission intensity, providing a solid energy guarantee for high-quality economic and social development in the new era. This puts forward higher requirements for the high-quality leapfrog development of China's energy in the new era. On the one hand, in the process of promoting modernization, China's energy demand will remain rigidly rising, on the other hand, the reality of energy conservation and emission reduction needs to further restrict the development of fossil energy, the contradiction between the two means that only to achieve energy transition, in order to fundamentally achieve economic, efficient and low-carbon development.

To achieve the "dual carbon" goal, energy transition is an important starting point, and energy security is a prerequisite constraint. Based on long-term overall planning, China's energy transition should start from five aspects, and strive to solve the problems of total shortage, supply and demand mismatch, high cost, lack of stamina, and extensive utilization in energy development, so as to ensure energy security in an all-round way.

The first is to solve the problem of total energy shortage and ensure security of supply. The report of the 20th National Congress of the Communist Party of China emphasized: "Based on China's energy and resource endowment, adhere to the principle of establishing first and then breaking down, and plan to implement the carbon peak action step by step". A complete and accurate understanding of China's energy resource endowment is the key to promoting energy transition. Traditionally speaking, "rich in coal and poor in oil and gas" is China's national condition, but according to the current level of exploitation, China's coal reserve-production ratio is only 37 years, oil reserves-production ratio is only 18 years, and natural gas storage-production ratio is only 43 years. It can be seen that the energy utilization mode dominated by fossil energy is not only not conducive to the realization of energy independence, but also easy to cause long-term energy shortage. Different from fossil energy, under the traction of the demand for sustainable economic and social development and the realization of the "double carbon" goal, China's renewable energy has achieved leapfrog development, and the grid-connected installed capacity of wind power and solar energy has ranked first in the world for many years. Therefore, it should be correctly recognized that abundant renewable energy is also an important part of China's energy resource endowment, and the rational development of renewable energy is not only in line with the trajectory of energy development, but also can effectively reduce environmental pressure, which is an important strategic choice to alleviate the shortage of energy supply and ensure energy demand. At the same time, it should also be recognized that the "first establishment and then breaking" has a long-term and phased nature, and the decline of fossil energy is based on the safe substitution of renewable energy, and the strong stability of fossil energy and the lack of intermittency and volatility of renewable energy can form a coordination and complementarity, so as to improve the resilience of the energy system, better respond to emergencies, and ensure long-term energy security.

The second is to solve the problem of mismatch between energy supply and demand and ensure the safety of allocation. The uneven spatial distribution of traditional and renewable energy resources in China has caused a long-term mismatch between energy supply and demand. From the perspective of resource distribution, 76% of China's coal power resources are distributed in the northwest region, 70% of the hydropower resources are distributed in the central and southwest regions, wind power generation and solar power generation are also mainly distributed in the northwest region, and 70% of the power demand occurs in the eastern coastal areas and the central region, and the reverse distribution characteristics are very prominent. Solving the problem of large-scale energy allocation depends on the development of ultra-high voltage transmission technology. By the end of 2022, the State Grid and China Southern Power Grid had built a total of 36 UHV lines with 16 interchanges and 20 straights, which greatly promoted the consumption of renewable energy and improved the flexibility of the transmission system. However, due to the "weather-dependent" and intermittent nature of renewable energy generation, failure may lead to the risk of large-scale supply outages. Therefore, while solving the problem of long-distance transmission of renewable electricity, it is also necessary to build a safe and reliable new power system through technologies such as multi-energy complementarity, source-grid-load-storage, and commercial energy storage. At the same time, it is also necessary to break the previous inter-provincial power grid development pattern, form a stronger power grid platform with closer ties, and improve the level of interconnection between inter-provincial power grids and mutual assistance between surplus and shortage.

The third is to solve the problem of high energy costs and ensure price security. As a major oil and gas importer, China is very sensitive to fluctuations in energy prices in the international market. According to customs statistics, crude oil and natural gas account for 66% of China's energy imports, which are the main energy import varieties. Affected by the continuous rise in oil and natural gas prices in the international market, although the number of crude oil and natural gas imports in China in 2022 decreased by 0.9% and 9.9% compared with last year, the import value increased by 48.1% and 30.1% respectively. It can be seen that when the power of energy pricing is sidelined, price fluctuations in the international market will cause the country to bear more energy costs. Ensuring energy price security requires speeding up the process of energy independence, reducing energy dependence on foreign countries, and seeking energy prices through market mechanisms to ensure affordable energy supply. With the continuous increase in the proportion of renewable energy power generation, the orderly promotion of new energy to participate in market-oriented transactions needs to start from both the government and the market, forming a dual support model of "effective market + promising government". On the one hand, electricity trading should gradually shift from the traditional unified purchase and sales model to the market economy thinking mode, and gradually establish a market-oriented mechanism of "medium and long-term transactions as the leading + spot transactions as supplements", control the middle, let go of the two ends, give more choices to power buyers and power generators, and determine electricity prices by supply and demand. On the other hand, the government should also guide key links and key areas, regulate the market and stabilize the market by formulating price policies, so as to promote the large-scale development of renewable energy and further release the development potential of renewable energy.

Fourth, it is necessary to solve the problem of long-term energy development and ensure strategic security. In order to achieve the second centenary goal and carbon neutrality commitment, China's economy and society will undergo long-term and profound changes, and energy security will be a long-term issue. In line with the green and low-carbon energy system, the high-carbon industrial structure and infrastructure system based on fossil energy are also facing reconstruction. In the context of carbon neutrality, the industrial structure should gradually transform to low-carbon and green, which not only requires low-carbon transformation of existing backward production capacity, but also requires the development of emerging industries and embarks on the road of low-carbon development at a lower cost. At the same time, while economic development and urban expansion bring about the demand for new infrastructure, it also requires the acceleration of green infrastructure, especially the new infrastructure represented by 5G, charging piles, UHV, etc., which is not only a strategic resource to empower future development, but also a key area that needs to save energy and reduce consumption in the process of carbon neutrality.

The fifth is to solve the problem of extensive use of energy and ensure ecological security. The report of the 20th National Congress of the Communist Party of China proposed to "promote the clean, low-carbon and efficient use of energy", "improve the regulation and control of total energy consumption and intensity, focus on controlling fossil energy consumption, and gradually shift to the 'dual control' system of total carbon emission and intensity", which means that while retaining the status of fossil energy "ballast", it is necessary to achieve clean and efficient energy utilization while retaining the status of fossil energy, and do a good job in energy conservation with higher quality. On the one hand, it is necessary to innovate and develop coal-fired power technology, actively promote the "three reforms" of coal-fired power energy-saving and carbon-reduction transformation, flexibility transformation and heating transformation, and promote coal to shift from a single fuel attribute to a "raw material + fuel" development model, so as to reduce carbon emissions generated by coal utilization from the source. On the other hand, the balance between carbon emissions and carbon absorption should be considered, and CCUS (carbon capture, storage, utilization)/CCS (carbon capture and storage) technology and natural carbon sink functions should be used to store and fix the emitted carbon dioxide, so as to reduce carbon dioxide emissions in the atmosphere.

The views expressed in this article are solely those of the author

(Sun Chuanwang is a professor at the School of Economics, Xiamen University)