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Keynote Speech of Ambassador Zhang Jun on the Issue of Energy at Groningen University

It gives me great pleasure to come to Groningen University again and exchange views with you on the issue of energy. In recent years, with the fast development of China's economy, its consumption of energy is also growing rapidly. This has attracted great attention from the international society, including some negative and distorted reports and comments from the western media. Taking this opportunity, I would like to share with you some of my thoughts, hope this will be helpful for you to have a better understanding of China's future development, especially China's policy and development strategy on energy.

. A comprehensive, objective and accurate judgment on the energy situation in China should be based on China's actual conditions, taking into account the general situation and environment the world is facing in its economic development. As a kind of important material for promoting human development, energy is closely connected with economic and social development. Accompanying its fast development, China does face growing energy challenges, among them the sharp increase of energy demand, irrational energy structure, low energy efficiency and increasing environmental pressure.

China has become the second largest energy producer and consumer immediately after the US and its energy demand is still going up. According to the Energy Outlook 2030 published by BP earlier this year, that in the next 20 years, energy consumption in the world will increase by 40%, the percentage of energy consumed by emerging economies will increase from the current 1/2 to 2/3 by 2030 and China's demand for energy will grow greatly. Meanwhile, China is heavily relying on coal, which consists of nearly 70% of its total consumption of primary energy, more than 30% higher than the world average, while its consumption of petroleum, natural gas and nuclear power is far below the level of the developed world. As a result, energy efficiency in China is relatively lower than other countries and it has to face more environmental consequences. Some unconfirmed statistics show that China only created 8% of the GDP of the world with 16% of the world energy consumption. Meanwhile, it should also be pointed out:

First, China is indeed a big energy consumer in total volume, but its per capita energy consumption is still below the world average level. As a developing country with the largest population in the world, China is now undergoing rapid industrialization and urbanization, which is also a stage of growth in energy consumption. In the past 100 years, developed countries, which accounted for 15% of world population, have consumed an enormous quantity of natural resources, especially energy resources in the process of their industrialization, and their energy consumption accounted for 60% of the world total. Even though China is the second largest energy consumer, its per capita energy consumption is still at a low level, which only equals 75 % of the world average and one fifth of the US. Its per capita consumption of petroleum only equals half of the world average and is far below that of the developed world. Not long ago, Mr. Richard Jones, deputy Executive Director of IEA stated that in terms of per capita consumption, China should not be regarded as a big energy consumer.

Second, China's demand for energy is not purely for its own development, but also for the common development of the whole world. As an emerging economy, China is now playing a growing role in the economic development of the world. In 2009, when the world economy was severely hit by the financial crisis, China's contribution to world economic growth accounted for 50% of the world total. Last year, its contribution to the world economic growth accounted for 20% of the world total. The rapid development of economic globalization further gave impetus to the industrial restructure and capital flow. As a result, more than 470 of the world top 500 enterprises have established their branches in China. While making great contribution to China's economic and social development, they also add to China's pressure in energy consumption and environmental protection. In other words, China is contributing to other countries' development at the sacrifice of its own energy and resources.

Third, China is making greater efforts in coping with the issue of energy and enormous achievements have been made in energy saving, emission reduction and development of clean and renewable energy. China has set achieving sustainable development as national strategy and building a resource conserving and environment-friendly society as the medium and long term target of its economic and social development. In 2006 the State Council formally launched energy saving and emission reduction plan which is contained in the 11th five-year plan period and a number of economic and legal policies and measures have been implemented since then. As a result, much progress has been achieved. During the 11th five-year plan period, China's GDP grew at an average rate of 11.2%, but its consumption of energy only increased at an average rate of 6.6%, and per GDP unit energy consumption was reduced by 19.1%. The emission of sulfur dioxide and chemical oxygen demand decreased by 14.29% and 12.45% respectively, the momentum of fast growth in energy consumption intensity and pollutant emission at the stage of rapid industrialization and urbanization was reversed. By raising energy efficiency, we have saved 630 million tons of standard coal and the emission of CO2 has decreased 140 million tons. At the same time, China also made great efforts in the development of renewable and clean energy and is now playing a leading role in this area. China is now the largest wind power producer and its total installed capacity of wind power reached 44. 5 gigawatts. China's total installed capacity of hydropower is 200 gigawatts, which ranks NO. 1 in the world. In the past 5 years, China's newly increased installed capacity of hydropower is 96 gigawatts, which is also No. l in the world. In 2010, China had 80% of the world's newly installed solar water heater and in all it has 65 % of the world's solar water heaters. China's efforts in developing renewable energy, as what we have seen, clearly demonstrate that it is adopting a responsible attitude in dealing with the issue of energy.

. China understands well that energy carries great weight in its future development; by transforming its economic development pattern, it is making relentless effort in pursuing sustainable and scientific development, so as to strike appropriate balance between easing the pressure of energy and maintaining the momentum of development. It can be assured that in a certain period of time, we will not foresee dramatic improvement of the grim situation China is facing on energy. We are fully aware of that. Based on that assessment, we have formulated a multifold energy strategy and its key elements are as follows: giving priority to thrift or energy saving, relying mainly on domestic resources, encouraging diverse patterns of development, relying on science and technology, protecting the environment and increasing international cooperation for mutual benefit. More importantly, China is accelerating its transformation of the economic development pattern, so as to improve the quality of its economic growth and lead the country's development to a new stage. The just concluded NPC of China adopted the 12th five-year plan which formulated the blueprint of China's economic and social development in the next 5 years, among which a very important guiding principle is to accelerate the transformation of economic development pattern, to save resource and energy, to reduce the emission of CO2, to vigorously develop the circular economy, to adhere to the concept of green and low carbon economy, to tackle climate change effectively, to promote the economic and social development on the one hand and giving more emphasis on population, resource and environment on the other so as to achieve long-term sustainable development. For this purpose, a lot have to be done and the following two aspects are of great significance:

Firstly, we will further improve and optimize energy structure so as to increase the proportion of clean and renewable energy. In China's energy structure, coal has always been a front runner and it consists of nearly 70 % of China's total consumption of primary energy. To change this situation, we have put the exploration and utilization of renewable and clean energy as the top priority of our energy development and fruitful outcome have been achieved in recent years. World famous accounting company Ernst&Young stated in its latest report Index of State Attractiveness in Renewable Energy that China has surpassed the US as the indisputable leader in the field of renewable energy. In the next 5 years, we will continue to develop new energy such as wind and solar power. We will speed up the construction of hydropower stations while protecting ecological environment. We will further develop nuclear energy on the basis of ensuring safety. Currently, there are 26 nuclear power reactors with installing capacity of 28.71 gigawatts under construction in China, which accounts for 40% of the world total. After the nuclear leakage incident of Japan, China is taking a more prudent approach in developing its nuclear power. However, to develop nuclear energy on the basis of ensuring safety is still a very important choice for China. Our target is that the proportion of non-fossil fuels in primary energy consumption to reach 11.4% by 2015 and 15% by 2020 from the current 8.3%.

Secondly, we will pursue energy saving and emission reduction in a strict manner. In general, China's mode of economic growth is extensive and we are determined to change that for the purpose of achieving sustainable development. We have done a lot already. For example, in the past five years, we have eliminated small and outdated thermal power units whose capacity amounted to 72 gigawatts, which equals the total installed capacity of UK or ROK. We will not stop here. Along with the implementation of the next five-year plan, we will continue to transform the development pattern, upgrade the industrial structure, encourage research and development of energy saving technology, and raise energy efficiency. With that, we wish to see an economic development pattern featured with 'low input, low consumption, less emission and high efficiency'. Our target in the next five years is also clear: energy consumption and CO2 emission per unit GDP to be reduced by 16% and 17% respectively, the release of major pollutants to be reduced by 8% to 10%. By 2020, CO2 emission per unit GDP should be reduced by 40 to 45% compared with that of 2005. In the past, our investment and construction were evaluated on the basis of their economic returns, now it is the environmental impact. Our determination and efforts in increasing energy efficiency and developing clean energy won widespread recognition from the international community. Recently, Mme. Connie Hedegaard, the European Commissioner for Climate Action, spoke highly of our targets and measures in the 12th five-year plan.

It should also be pointed out that China can only, and it must, solve the energy problem in the process of development. As the biggest developing country in the world, China is still at a preliminary stage of development, its per capita GDP is only 4300 US dollar which is a mere 10 % of the US and ranks around 100th in the world. According to UN standard, there are still about 150 million Chinese people living below the poverty line, namely 1 US dollar per day. More than 700 million people are living in the rural area. Economic development and poverty elimination is still China's top Priority, which is also an important responsibility China shoulders to promote peace and development in the world. We will not try to solve the issue of energy and environment at the sacrifice of development; on the contrary, we will do our utmost to solve these issues in the process of development so as to achieve sustainable development in both economic growth and energy consumption.

. China is fully aware of the important responsibility it shoulders and will make even greater efforts to safeguard energy security and promote common development of the world in a constructive manner. The issue of energy is rather old than new. Since the beginning of industrialization, energy has been an outstanding issue in the process of human development. It has been a global issue the world has faced long before China's reemerging. While being challenged by the issue of energy, the world has also undergone development in the process of meeting these challenges. China did not, does not and will never pose any threat to the world's energy security. Here, I would like to highlight three points:

First, China is willing to conduct open and constructive dialogue with other countries for the purpose of finding solutions to global energy challenges. China believes that only by working together we can find solutions to these challenges. In this process, each and every country should demonstrate understanding, trust and cooperation. It is with this spirit that we participated in the dialogue and consultation in the framework of the energy working group of the APEC, ASEAN plus China, Japan and ROK Energy Cooperation, International Energy Forum and World Energy Conference. We also maintain close relations with such international organizations as the International Energy Agency and OPEC. In the just concluded BRICS summit held in Hainan, China, leaders of the five BRICS countries also exchanged views on the issue of global energy security and reached important consensus. As for bilateral cooperation, China has established mechanism of dialogue and cooperation in the field of energy with a number of energy consuming and producing countries, such as the US, Japan and Russia. With these mechanisms, countries concerned not only exchange policy views and data information, but also conduct cooperation in fields such as energy exploration, utilization, technology, environmental Protection, renewable energy and new energy. A conference on energy between China and EU has been organized on a regular basis since 1994.

Second, China is willing to participate in international energy cooperation in a responsible manner and it will continue to play a constructive role in promoting international energy exploration and safeguarding global energy security. China has always been a responsible player in international affairs. China encourages Chinese enterprises to participate in international energy cooperation, overseas energy infrastructure construction and technological service cooperation in accordance with international practice and market regulations and rules. In recent years, cooperation between China and African countries in the field of energy caused uneasiness and anxiety among some people. It should be pointed out that Sino-African cooperation covers areas such as politics, economy, trade, technology, education, people-to-people exchanges, to name but a few, not merely focusing on energy or natural resources. It is true that our cooperation also includes energy and natural resources. However, China falls far behind Europe and the US when it comes to investment and cooperation in energy and resources in Africa. Our import of Africa's oil takes up only 13% of Africa's oil export. China's investment in Africa's oil and natural gas accounts for less than 1/16 of the global investment in this field. CNPC, China' largest petroleum company, has an annual turnover in Africa less than 1/3 of ExxonMobil. I also want to emphasize that being part of Sino-African cooperation, our energy and resources cooperation has always followed international patterns and market regulations. China buys the resources against market price from Africa, giving Africa rights to make equal choices and therefore the position to negotiate prices, and ultimately help Africa turn the resources edge into development edge, with African people the beneficiary. This is totally different from what the colonists did in Africa. China never seeks for the so-called 'sphere of influence' in Africa nor has any intention to start malicious competition with other countries in Africa.

Third, China is willing to strengthen cooperation with other countries in the field of research, exploration and utilization of clean energy and renewable energy, so as to seek new development opportunities and more space for cooperation in the process of tackling energy challenges. China's energy demand brings not only pressure, but also opportunities. China's steady increase in energy demand not only facilitates the development of its native energy industry, but also brings about huge opportunities and space for international energy market, which is helpful for a more rational allocation of international energy resource and the prosperity and stability of international energy market. More importantly, by accelerating the transformation of development pattern, upgrading industrial structure, encouraging science and technology innovation, China also brings new opportunities for other countries in developing clean and renewable energy. According to the latest US statistics, by the end of 2010, China has replaced the US as the world No.1 investor in clean energy, the total amount of power generating from clean energy consists of 25 % of that ofthe world total. In coming years, China will continue to have huge investment in, and demand for, clean and renewable energy. Without any doubt, this means new opportunities. Western countries including the Netherlands are quite advanced in this area and we can complement each other in many ways. By seizing this opportunity, we can explore new potentials, deepen and broaden our cooperation.

Thank you.


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