China Environmental Law

We commented last week on staff increases for the National Energy Bureau (NEB) and some symbolic moves it was taking to indicates some independence from its parent agency, the National Development and Reform Commission (NDRC).  A little more detail is emerging about the structure and goals of China’s energy regulatory apparatus and the draft Energy Law. 

The NEB, as noted by an article in yesterday’s China Daily, currently “consists of nine departments in charge of energy policy, project planning and approval, electricity, coal, oil, nuclear power and alternative resources and international cooperation.”  It does not, however, control such important issues as “energy conservation, oil reserves and energy price management.”

As to NEB priorities, China Daily reports that

In addition to increasing oil and coal supplies, the national bureau has decided to tap the potentials of nuclear power and renewable energy. Zhang said recently that the country will accelerate the construction of nuclear power plants, particularly in the coastal regions, to ease mounting pressures on coal transportation from the northern regions and electricity transmission from west China.

The move, which could see nuclear power making up a minimum of 5 percent of the country’s total energy mix in 2020, from the current level of less than 2 percent. That is higher than a previous target by 2020 of 4 percent set in 2005.

The bureau has also announced that the Inner Mongolia Autonomous Region, Gansu and Jiangsu provinces will be the site of the country’s first wind power clusters, designed with an electrical capacity of 10 million kW each. This is compared with about 18 million kW from the Three Gorges electrical power generators in the Yangtze River.

Again, there was little news as to the structure of the National Energy Commission (NEC) “which is designed as a strategic consultation body independent from the NDRC.”  The article states that “[t]he executive office of the national committee is expected to be part of the national energy bureau,” but I suspect they simply mean that the NEC will share office space or executive staff with the NEB. If the NEC were administratively part of the NEB, it would lose its intended independence.

If you were expecting China’s new Energy Law be passed this year, think again

A draft is finished, but the central government has still not decided when to read it, despite the fact that it took two years to complete.

“We haven’t discussed it so far,” Dong Chaojie, a deputy department director of the State Council’s Legislative Affairs Office said earlier in an interview. In line with China’s law-making process, Dong’s office is entitled to decide when to submit the drafts to the National People’s Congress to for consideration and voting.

She said it would be “complicated” for the drafters and legislators to weigh the diverse interests of stakeholders and parties governed by the energy law. The biggest challenge is the consolidation of separate responsibilities in various governmental departments.

Ye Rongsi, deputy head of drafting group under National Energy Leading Group, also said “it will take further time” to absorb public input to improve the draft.

“I think 2009 would be the earliest possible date for the legislative body to read and vote on the draft,” Ye says.

The draft is written in such vague and aspirational language that it is hard to imagine significant opposition to it.  While it contemplates some centralization of the management of the country’s energy affairs, it does not mandate the creation of an Energy Ministry.

Perhaps among its most controversial provisions in the draft is found in Article 6 which provides that

The nation shall actively foster and standardize the energy market, make full use of the market’s basic role in resources allocation, and encourage all entities of various ownerships to legally engage in the activities of developing and utilizing the energy.

You may recall that recent reports suggested a similar provision in the draft Circular Economy Law was stricken during deliberations of the Standing Committee of the NPC.

My guess is that there is significant behind the scenes jockeying at the State Council among the various affected ministries to get a commitment before the passage of the law as to how the national energy regulatory function will be structured post-enactment. No ministry is willing to give its final sign off on the law until it knows what it will win and what it will lose by its passage.