Agenda: Day 1  | Day 2  |

China's environmental policy and the continued search for energy security

China's economic growth has been fuelled by rapid industrialisation, backed on the one hand by overseas demand for its manufactured goods and on the other by the requirements of its own market and accelerated urbanisation. One outcome is that China is now the world's single biggest producer of greenhouse gases. The government has promised tough action on polluters, and is setting increasingly ambitious targets for use of renewable energy sources. Ahead of the Copenhagen climate conference however, China has not yet set a target for cutting emissions, and is asking that rich countries help finance emission reduction schemes in poorer nations. What domestic and international policies are needed to spur environmental progress in China? Given that China's demand for electricity will continue to increase substantially in coming years, how can those policies be reconciled with the country's need for energy security?

Wind power -- can it reach its full potential?         

China is the world's fastest growing wind energy producer. According to various estimates, up to 120GW of wind-power capacity could be installed in China by 2020, more than 10 times the current level and accounting for around 3 per cent of its total power generation. While the increased demand for wind power has spurred a boom in turbine production and plant investment, regulatory and operational obstacles remain. The power grid must be expanded and upgraded and technical standards need to be introduced to improve turbine efficiency and quality. Will the market reach its full potential and will there still be room for foreign turbine manufacturers as domestic companies become increasingly dominant?

Clean coal -- will carbon capture and storage become viable for China? Can coal-bed methane and coal liquefaction become key energy sources?

While the official policy is for a move away from coal-fired power plants, which provide more than 70 per cent of China's energy, over 50GW of new coal generation will be installed this year and next. Mitigating the impact of carbon emissions from such plants has become a priority in the U.S. and is also on the agenda in China. But while pilot projects for carbon capture and sequestration are being planned in China, there are already concerns over the high cost of the capture technology, the very limited carbon recycling market, and most importantly the difficulty in identifying suitable storage locations in China's relatively unstable geology. Is CCS a viable long-term solution in China? The carbon impact from coal is made worse by the methane released into the atmosphere during the mining process. Capturing that methane and turning it into gas for heating and powering vehicles is a potentially major new source of energy for China, and the government is encouraging development with subsidies and tax breaks. Coal liquefaction -- the conversion of coal into liquid gasoline or diesel -- is a more expensive process that could potentially cut China's oil import bill but will also increase its carbon emissions. How will innovation in the coal industry develop in coming years given China's need for energy security?

Gas -- an increasing part of the mix, but how should it be priced? 

Gas currently accounts for only around 3 per cent of China's energy consumption but is expected to become a much more important part of the country's energy mix as both natural gas production and imports rise sharply over the next few years. China aims to more than double its annual gas output to 160 billion cubic meters by 2015, but according to various sources, continued demand growth means the country will still be dependent on imports for one third of its gas consumption, with pipeline capacity and the receiving capacity of China's liquefied natural gas terminals also expected to grow sharply. The potential of this clean energy resource however is being constrained by pricing issues, with the regulated price of locally produced gas remaining lower than imports, and also varying depending on its final use. A number of different price reforms are being studied. What is the optimal outcome, given the need to incentivise producers and allow China to secure imports, while also avoiding potentially painful price rises for consumers and industry?

Nuclear energy -- can it have a major impact?

The role of nuclear power in China's energy mix is expected to increase markedly, backed by the National Energy Administration. Twenty-two reactors, double the number currently in operation, are reportedly under construction, and the government is likely to revise its target for installed capacity to 60-70GW by 2020 from the original 40GW and just over 9GW now. However the programme faces several hurdles, including a shortage of uranium, continued dependence on foreign technology and expertise, and the need for more storage capacity for nuclear waste. Nuclear power accounts for only 2 per cent of China's total energy output, compared with 78 per cent for France. Given the country's future energy demand, can nuclear power expand quickly enough to have more than a marginal impact on supply?

Clean technology financing -- the role of banks, green funds, venture capital and the carbon markets

Environmental projects in China depend on bank and venture capital financing as well as state funding. The number of clean technology funds in China is multiplying. How can clean technology become sufficiently secure as an investment to attract the larger investors and institutions? How ready are banks in China to integrate environmental, social and corporate governance objectives into their business? Are they sophisticated enough to overhaul their risk assessment systems and properly evaluate the financial opportunities of sustainability? What changes are required for carbon trading to work efficiently in China?