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Eleventh Five-Year Plan of Shanghai Municipality for Energy Sources Development

Energy source is the foundation of economic and social development. Taking both energy development and energy conservation into consideration, with priority being given to energy conservation, is the requirement for implementing the scientific viewpoint of development as well as the prerequisite for implementing Shanghai Municipality’s main strategy of invigorating the city through science and education, taking the lead in changing the mode of economic development and improving the city's competitiveness in the world. The present plan is formulated for the purpose of guaranteeing this Municipality’s supply of energy for its healthy and sustainable economic and social development and for continued improvement of people’s living standards, building Shanghai into an energy-conserving and environment-friendly city so as to ensure that energy sources shall develop in coordination with the economy, society and environment.

I. A Brief Review of This Municipality’s Energy Sources Development during the "Tenth Five-Year Plan" Period

During the "Tenth Five-Year Plan" period, this Municipality exerted great efforts to develop energy sources, continuously improved its capacity of energy supply, actively promoted energy conservation on a city-wide scale, and tried hard to ease the bottleneck effect caused by insufficient energy supply on the economic and social development of this city. We have made great achievements in energy sources work, and energy supply has met the basic needs of the fast economic and social development.

1. Considerable Increase in Energy Consumption

In the year 2005, total energy consumption in this Municipality reached the equivalent of 80.69 million ton of standard coal, which represents an average increase of 8% annually from 2000. The consumption of electricity reached 92.2 billon kwh, an average increase of 10.5 % annually; The peak load of power consumption increased by 9.9% annually on the average, in spite of measures to stagger demand and avoid use at peak hours. Statistics based on the population of permanent residents of this Municipality show that per capita electricity demand at peak hours is close to 1k.w; refined oil consumption reached 15 million ton, increasing by 11.9% annually; natural gas consumption reached 1.87 billion cubic meters, a six-fold increase compared with that of the year 2000.

2. Continued Development of Energy Sources

During the "Tenth Five-Year Plan" period, this Municipality successfully received hydropower generated by the Three Gorges Power Station, completed the two 900 MW supercritical power generation units of Phase II of the Waigaoqiao Power Plant project and the two 300 MW combined cyclic power generation units in Shanghai Chemical Industry Zone, thus, the overall installed electricity generating capacity in this Municipality reached 12,500 MW, and a main frame of power grid based on a 500 kv double-circuit looped grid has been formed. The expanded Pinhu oil-gas field in East China Sea has gone into operation, raising the annual supply capacity from 400 million cubic meters to 600 million cubic meters. Since the arrival of natural gas in Shanghai in January, 2004 from the western part, the gas-supply pattern of two sources has been formed. A network of high-pressure natural gas trunk pipes covering the whole city is basically complete.

3. Gradual Optimization of Energy Source Structure

During the "Tenth Five-Year Plan" period, energy structure readjustment was vigorously enhanced in this Municipality, a remarkable success has been achieved and the quality of atmospheric environment has been distinctly improved. The proportion of coal consumption in the Municipality's total primary energy consumption dropped from about 65% in 2000 to 52.8% in 2005; the supply of clean energy, such as natural gas and electricity generated out of the city, increased rapidly; the construction of renewable energy projects, such as solar energy projects and wind power projects, made some initial but substantial headway; the installed capacity of wind power generation reached 24.4 MW, electricity generated by solar photovoltaic technology reached 195 kw cumulatively and the area of solar heat collectors added up to over 40 hectare. Shanghai has taken the lead in implementing a mechanism of generating“green electricity”in China.

4. Marked Achievements in Energy Conservation and Consumption Reduction

This Municipality has aggressively pushed the integration of industrial policy and energy policy, and has made great efforts to improve the energy utilization efficiency. In 2005, the comprehensive energy consumption per ten-thousand yuan of GDP (hereinafter referred to as "energy consumption per 10,000 yuan GDP”) was 0.88 ton of standard coal, down by 16.5% from that of 2000. Among others, we phased out a number of inferior enterprises that are high in energy consumption and pollution but low in value added through stepping up upgrading of industrial structure, and energy consumption per 10,000 yuan industrial value added dropped by 29.9%. We also strengthened the administration of energy conservation in construction projects, promulgated and implemented "Procedures of Shanghai Municipality on the Administration of Energy Conservation in Construction Projects", promoted innovative mechanisms of energy conservation, and explored a contractual mode of energy sources administration.

5. Breakthroughs in Energy Technology

Through its application in construction of energy projects, energy technology has made some marked progress. The million kilowatt supercritical unit in Phase II of the Waigaoqiao Power Plant is a coal-fired power unit having the largest single-unit capacity of all power plants that have been completed and put into commercial operation in China, and representing the state-of-the-art in the world. The combined heat and electricity generation unit in Shanghai Chemical Industry Zone takes the lead in using the state-of-the-art 200 MW gas-steam combined cyclic electricity generation technology, thus achieving 80% in thermal efficiency. Considerable progress has also been achieved in the research, manufacture and application of advanced energy technology, such as fuel battery and photovoltaic electricity generation.

There are still difficulties and problems waiting for us to overcome and resolve in developing energy sources. At the top of the list are the insufficient capacity of energy supply, an inadequate energy security system, the big gap between our energy efficiency ratio and those of advanced countries in the world, the imperfect energy pricing system, and the inability of environmental protection measures to keep abreast.

II. Situation of Energy Development during the "Eleventh Five-Year Plan" in This Municipality

1. Energy Situation Both in China and the World during the "Eleventh Five-Year Plan" Period

During the "Eleventh Five-Year Plan" period, the global energy situation is relatively complicated and energy price will continue to remain at high levels. China’s energy supply will face multiple constraints of resources, environment, transportation and production safety. In the "Outline for the Eleventh Five-Year Plan", the State sets forth the guidelines for energy development: Persisting in giving priority to conservation, relying primarily on domestic supplies, relying on coal as the main energy source while developing other energy sources, optimizing energy production and consumption structure, building a stable, economical, clean and safe energy supply system. At the same time, energy conservation has been made a fundamental policy of the State, and a 20% reduction on energy consumption per 10,000 yuan GDP is set as a mandatory goal that must be met by the end of the "Eleventh Five-Year Plan".

2. Predictions of Basic Trends in Energy Development during the "Eleventh Five-Year Plan" Period in This Municipality

(1) The task of reducing energy consumption is an arduous one. The overall demand of energy in this Municipality will continue to increase considerably as a result of the fact that a number of big energy consuming projects, such as iron and steel works and petrochemical plants, will start commercial operation one after another and people's living standard will keep rising. In order to meet the goal of a 20% reduction on energy consumption per 10000 yuan GDP set in this Municipality's "Outline for the Eleventh Five-Year Plan", the rate of increase in energy consumption of this Municipality must drop to 5% during the "Eleventh Five-Year Plan' period from 8% during the "Tenth Five-Year Plan" period. This is a hard task but must be fulfilled within the time prescribed.

(2) The main contradiction between energy supply and energy demand will change. Before the completion of the LNG project, there will be a shortage of natural gas supply in this Municipality, which will be this Municipality’s major problem in energy supply and energy security during the "Eleventh Five-Year Plan" period. The tension between supply and demand will be further mitigated with the improvement in the power supply situation in the East China power grid and in the whole country and the completion of a number of energy projects in this Municipality. The key problems are to connect power sources from out of the city and to overcome the difficulty in the burying of municipal power grid.

(3) The task of coordinating energy development with environment protection will become more difficult. The State requires that by 2010, the total sulfur dioxide emissions in this Municipality be reduced from 513,000 ton in 2005 to 380,000 ton, of which, emissions from power plants be reduced from 306,000 ton to less than 134,000 ton. To successfully hold the World EXPO, this Municipality must further improve the environmental quality. In order to significantly reduce the discharge of pollutants, such as sulfur dioxide, at a time when the total energy consumption is on the rise constantly, forceful measures must be taken.

(4) There is pressure for energy prices to rise. Many factors will help push the energy price of this Municipality to a high level. Such factors include for instance, the high oil prices in the world market, the State’s reform of the pricing mechanism for refined oil products, the policy of linking electricity price to coal price and the increased proportion of imported energy. This will somewhat affect industries that are big energy consumers, but it will also help optimize and upgrade industrial structure.

(5) The development of new energy sources faces challenges as well as great opportunities. Due to factors such as cost and technology, new energy sources will not be able to replace the traditional source of fossil fuels during the "Eleventh Five-Year Plan" period. However, with the rises in energy price in the world markets and technological breakthroughs, the development of new energy sources and the related industries will face strategically significant opportunities. Shanghai has gained some cutting edge in research and development of fuel battery and core automobile technology. We must strengthen our efforts at research and development as well as their industrial application.

In the long-term view, this Municipality is short of primary energy sources, and its use of domestic and foreign energy resources is constrained by many factors. Energy will be one of the bottlenecks restraining this Municipality's economic and social development.

III. Goal of Energy Development for the "Eleventh Five-Year Plan" in This Municipality

1. Development Goals and General Guidelines

Development Goals: Keeping in mind the goal of building Shanghai into an essentially modern international metropolis playing the role of "Four Centers”by 2020, we will work for the sustainable development of energy so as to enhance the competitiveness of this Municipality in the world. By 2010, we will gain initial results in building up a diversified, safe, clean and efficient energy supply and consumption system, which will not only secure the successful implementation of the "Eleventh Five-Year Plan", but will also pave the way for the "Twelfth Five-Year Plan" in this Municipality.

General guidelines: to ensure energy security, intensify efforts at energy conservation, place emphasis on developing new energy sources and renewable energy sources and coordinate energy development with environment protection.

Ensure energy security. Energy construction should go somewhat ahead of demand. Energy shall be provided through multi-channels and by multi-suppliers. Primary energy sources shall be diversified, with coal as the basic source. Electric power projects shall be built both in and out of this municipality, with priority being given to the former. The construction of natural gas projects shall make use of both domestic and foreign sources, so as to diversify our sources. No time shall be lost in establishing an energy reserve system and plans for emergency needs should be improved.

Intensify efforts at energy conservation. A system of job responsibility shall be implemented for energy conservation. Energy conservation and consumption reduction shall be integrated with the optimizing and upgrading of the industrial structure, environmental protection, technology progress and the cultivation of a scientific way of life, so that the goal of energy conservation and consumption reduction will be achieved through a combination of legal, economic, technological, administrative and educational means.

Develop new energy sources and renewable energy sources. With an eye on the trend of the technological revolution in energy development in the future world, we must make the development of new energy sources and renewable energy sources the key area of our efforts at reinvigorating the city through science and education, and simultaneously promote the development and application of new technology, so as to make this Municipality one of China’s bases for research and development as well as industrialization of important new energy sources and renewable energy sources.

Coordinate energy development with environment protection. We must promote clean use of energy and expand the use of clean energy. As for coal, we must control the total amount of its consumption as well as optimize the structure of its consumption. Coal should be used primarily for large power generating units. Comprehensive de-sulfurization of smoke from power plants shall be completed, and scattered use of coal shall be replaced by natural gas so that the goal set by the state regarding sulfur dioxide control can be achieved.

2. Total Energy Consumption and Structure

During the "Eleventh Five-Year Plan" period, assuming that annual GDP will increase at the rate of over 9% and energy consumption per ten-thousand yuan GDP will fall by 20% or so, the energy consumption elasticity coefficient will drop to about 0.5 and by the year 2010, total energy consumed in this Municipality shall be kept at the level of around 100 million ton of standard coal. The total coal consumed will increase from 53 million ton at the end of the "Tenth Five-Year Plan" period to approximately 60 million ton, but its proportion in primary energy sources will drop to around 46%; the proportion of natural gas will increase from 3% to 7%; the proportion of electricity generated out of the city will increase from 7% to around 10%; the proportion of oil consumed will remain at about 37%; further development will be made in renewable energy.

3. Energy Planning and Distribution

(1) Distribution of Electric Power. As it is planned, electricity generated in the city and out of the city will account for two thirds and one third of the total amount of electricity respectively. The electricity generation pattern in the plan of this city is 5+X: namely, five key power stations (Waigaoqiao, Shidongkou, Wujing-Minhang, Caojing and Lingang) plus a number of peak-shaving and thermo-electricity plants, which will enable the development of distributive power supply. The pattern of electricity from out of the city is 2+ X: namely, the coal-fired electricity generation base in Anhui province belonging to East China power grid, and the hydropower from southwest China outside East China power grid, such as the Three Gorges hydro-power station and the Jinshajiang hydro-power station, plus participation in the construction of nuclear energy and pumped power storage station. During the "Eleventh Five-Year Plan" period, as far as construction of power projects within this Municipality is concerned, efforts shall be focused on Phase III of the Waigaoqiao power plant and the moving of coal-fired power plants along the Huangpu River to Caojing; as for out-of-the-city power, emphasis shall be placed on improving the channels of electricity transmission and increasing the amount of electricity generated in Anhui province and transmitted to East China. A safe and reliable fortified city power grid shall be essentially completed.

(2) Natural gas layout. A long-term plan shall be made to form a pattern of natural gas supply with natural gas coming from multiple sources, such as West China, Sichuan province, and the East China Sea, as well as imported LNG. Natural gas emergency supply stations will be set up in Wuhaogou and Caojing. During the "Eleventh Five-Year Plan" period, we will complete Phase I of imported LNG project, receive natural gas transmitted from Sichuan province to the east, and expand the emergency supply station in Wuhaogou. At the same time, a natural gas high-pressure trunk pipe network that covers the whole city shall be basically formed

(3) Coal and petroleum layout. Coal storage facilities shall be integrated with the layout of coal-fired power plants, and the coal piers and stockyards along the Huangpu River shall be moved to the mouth of Yangtze River and Hangzhou Bay. Caojing shall be the key area for oil refining facilities, and the main oil storage facilities shall be placed in Waigaoqiao, Caojing and Yangshan Port Area.

(4) Renewable energy sources layout. Wind power stations shall for the most part be located on three islands and in two districts (i.e., Chongming, Changxing, Hengsha islands and Nanhui and Fengxian districts), with emphasis on the sea. The use of solar energy shall mainly be realized through integrated design of construction projects, while at the same time model projects of generating power by recovering methane from the disposal of urban garbage shall be built. Chongming Island and the World EXPO Park shall be built into model areas in the integrated use of new energy sources.

IV. Main Tasks of Energy Development during the "Eleventh Five-Year Plan" Period in This Municipality

1. Step up Energy Development and Ensure Energy Supply and Security

(1) Increase natural gas resources

We shall spare no effort in increasing the supply of natural gas. While trying to increase the amount of natural gas transmitted from the west, we shall ensure steady production of natural gas from the East China Sea. We shall also speed up the construction of projects for imported LNG and actively prepare for the arrival of gas from Sichuan. Efforts shall be made to ensure that Phase I of the imported LNG project shall be finished and put into commercial operation by 2009, so as to form a pattern of natural gas supply with the gas coming from multiple sources, such as West China, Sichuan province, the East China Sea, as well as imported LNG.. We shall also ensure that the expansion project of LNG emergency supply station at Wuhaogou shall be completed as planned, so that it will be a temporary gas supplier in emergencies. By 2010, the amount of natural gas supply in this Municipality shall reach 5.5-6 billion cubic meters. In order to satisfy this Municipality’s demand of energy in the "Twelfth Five-Year Plan" period, we shall start Phase II of the LNG expansion project during the "Eleventh Five-Year Plan" period, and at the same time start selecting a site for the second LNG receiving station.

We shall balance natural gas supply and demand, get connected with new gas sources in time to ensure a safe and stable gas supply. First, we shall strengthen our management at the demand end, optimize gas consumption structure, so as to ensure that enough gas is available for the daily needs of the people and the normal operation of the city. Second, we shall schedule the construction of gas-fired power plants rationally. The existing gas-fired power units shall be mainly used for peak shaving. Third, we shall keep the capacity of man-made gas at the present level until the completion of the imported LNG project. Fourth, we shall raise the price of natural gas price to a reasonable level so as to encourage people to use natural gas more rationally and sparingly.

(2) Promote clean use of coal

In compliance with the requirements of energy conservation, environmental protection and optimized layout of energy resources, we shall speed up the renovation of the old coal-fired power units along the Huangpu River, such as those in the power plants of Nanshi, Wujing, Minhang, Yangshupu and the Baozhen Power Plant on Chongming Island. Pursuant to the policy of launching big power projects to phase out small ones, and replacing the old with the new, we shall make a significant readjustment to the layout of coal-fired power plants. The Nanshi Power Plant shall be demolished to make room for the World EXPO Park; the Wujing power plant will have two 300 MW high-efficiency heat-generating units after renovation, and the Minhang and Yangshupu power plants will be removed and combined into one at Caojing with two supercritical coal-fired power units of 1,000 MW capacity; the Baozhen Power Plant on Chongming Island will be rebuilt in another place with a clean and high-efficiency power unit of appropriate capacity. We shall also vigorously probe into the feasibility of building an Integrated Gasification Combined Cycle (IGCC) model unit.

The project of desulphurization of smoke in coal-fired power plants shall be implemented across the city, so as to ensure that by 2010, sulfur dioxide emissions from the power plants of this Municipality shall reach the discharge reduction objective set by the State. Corresponding pollution control measures shall also be taken to manage other uses of coal. Where natural gas is available, people shall be encouraged to use natural gas in stead of scattered burning of coal.

(3) Speed up the construction of power transmission channels for electricity from out of the city and urban power grid

We shall loss no time in building power transmission channels when there is ample supply from out of the city. We shall go all out in cooperating with the State to build channels for transmission of power produced in Anhui Province to the East, and the 800 KV direct current UHV transmission line for electricity generated in Jinshajiang and supplied to Shanghai. By 2010, Shanghai will have the capacity to receive over 10 million kw from out of the city, thus paving the way for receiving the hydropower from Southwest China during the "Twelfth Five-Year Plan" period.

In building a power grid in the city, emphasis shall be laid on the construction of the 500 kv grid structure around half of the city’s outer ring, and the six 500 kv transformer substations in the World EXPO Park, Hongyang, Nanhui, Sanlin, Liantang and Caojing, and a batch of 220 kv power transmission and transformation projects, as well as on speeding up the burying of overhead power lines. Energy and land conservation technologies shall be adopted in constructing power transmission and transformation facilities.

(4) Secure oil supply

We shall continue to give full play to the State-owned oil companies as the main oil suppliers, keep in step with the opening up of the domestic retail and wholesale market of refined oil, set up an oil trading market, and attract the inflow of oil products from various domestic and international channels, so as to secure an ample and stable supply of oil on the market. At the same time, we shall increase our oil storage capacity by building aviation oil piers and oil storage facilities in the Wuhaogou area.

2. Step up Efforts in Energy Conservation and Improve Energy Utilization Efficiency

(1) Speed up the industrial restructuring process

We shall further push the industrial upgrading, quicken the building of an industrial structure with the service industry as its main component, vigorously develop industries that are low in energy consumption and high in value added, reduce the proportion of industries with high energy consumption in our GDP and speed up the pace to raise the value- added rate of industry. We shall phase out, at an increasing pace, those processes, technologies, equipment and products that are high in energy consumption, and close down, suspend the production of, and reorganize, step by step, enterprises that are high in energy consumption and pollution and low in cost-effectiveness, while at the same time control the market access of projects that are high in energy consumption and low in value added. We shall implement a strict system of energy consumption assessment in approving construction projects, with energy consumption per 10,000 yuan value added as an important criterion for such examination and approval, which is to be strictly enforced.

(2) Speed up the development and application of energy-saving technology

We shall redouble our efforts at research and development of energy-saving technologies, and the independent research and development, and the importation, assimilation and renovation of energy-saving technologies shall be made the key areas for government investment to promote the industrialization of new and high technologies. Enterprises shall be encouraged to invest in research and development, so that we may be able to make new breakthroughs in the fields of new lighting apparatus, energy-saving air conditioners, hybrid-power automobiles, high-efficiency motors, refrigerating and heat storage, and improve energy-saving technologies. We shall exert ourselves in promoting the application of energy-saving technologies, energy-efficient equipment, energy-saving processes and materials, in preparing and implementing industry-specific plans for renovation of energy saving technology, and in implementing the ten key projects for energy conservation, including energy conservation in industrial equipment, in construction projects, in communications by utilizing residual heat and pressure, renovation of furnaces and kilns for energy conservation, using energy-saving air conditioners and household appliances, green lighting equipment, energy system optimization, combined heat and electricity generation and distributed supply of energy as well as practicing energy conservation in government organs.

(3) Strengthen the administration of energy conservation

We shall make great efforts to conserve energy in major enterprises and the production of key products, and do a good job of energy conservation in industries with high energy consumption, such as iron and steel, electricity, petrochemical, chemical engineering, and construction materials. Entities with annual energy consumption equivalent to over 5000 ton of standard coal shall be taken as key units in energy-conservative administration. The energy efficiency marking system shall be strictly carried out for widely-used products with high potentials for energy conservation, such as automobiles, air conditioners, refrigerators, air-blowers and water pumps. Management of energy conservation at the supply end shall be strengthened, and efforts shall be made to reduce the ratio of electricity use, line losses and the difference between fuel gas production and sale; power distribution shall be optimized and this Municipality’s coal consumption for electricity generation shall be reduced. At the same time, management of energy conservation at the demand end shall also be attended to. In achieving this end, we shall combine economic measures with administrative measures, and by relying on technological progress, and optimizing power load characteristics, and continue in our efforts in peak load avoiding and staggering, so as to ease the tension between peak and valley load. We shall also strengthen our efforts at management of fuel gas at the demand end, and make the use of gas and electricity complementary to each other. .

(4) Innovate energy conservation mechanism

We shall take full advantage of the superiority of large energy enterprises in technology, talent and capital, and let them take the social responsibility of providing energy conservation services to consumers. We shall vigorously promote the management of energy by contract, support the development of energy service company (ESCO), which shall provide such professional services to consumers as energy conservation diagnosis, design, financing, reconstruction and management. We shall encourage the construction of "Energy Efficient Power Plants", research and design a rational and practicable electricity pricing system and an energy investment and financing mechanism, so as to make investment on energy conservation as profitable as investment in new power plants. We shall also strengthen international exchanges and cooperation, and learn from the experiences of foreign countries in successful energy conservation.

(5) Strengthen public education on energy conservation

We shall vigorously carry out a campaign for building up energy conserving institutions, enterprises, communities and schools, etc., and strengthen the role of the media in guiding public opinion. Wasteful acts shall be exposed to criticism so as to foster a culture in which energy conservation is taken as a merit and energy waste as a shameful act. Training on energy conservation shall be carried out, focusing on districts/county and major energy-consuming enterprises; education in the state of our country’s energy resources and energy conservation shall be carried out in schools of all types and at all levels; energy conservation knowledge and measures shall be popularized to the general public by using such platforms as communities, so as to guide the residents in cultivating a habit of using energy scientifically, and using energy conservation products while improving the quality of their life at the same time. In this way, a good atmosphere shall be created for the whole society to work together to conserve energy.

3. Speed up Energy Technology Innovation and Ensure the Sustainable Development of Energy Sources

(1) Vigorously develop new energy sources represented by hydrogen

Hydrogen as a source of energy shall be made the strategic focus of our long-term strategy for energy sources development. We shall further sharpen our competitive edge by developing hydrogen-driven automobiles. By using the by-product hydrogen produced in Wujing, Caojing and Baosteel, we shall increase our investment in research and development of hydrogen technology and its industrialization, aiming at a production capacity of 10,000 hydrogen-driven automobiles. We shall exert ourselves in the construction of hydrogen infrastructure, formulating technical specifications of hydrogen storage, transportation and filling so as to form a safe and reliable hydrogen supply chain. We shall also adopt various measures to encourage the production and use of hydrogen-driven products and the application and industrialization of hydrogen technology.

(2) Vigorously develop renewable energy sources and alternative energy sources

We shall focus on the development of wind power and solar energy, and launch such wind power projects as the 100 MW Donghai Bridge Wind Power Project and the wind power projects in Lingang, Chongming and Changxing, etc. By 2010, wind power generation shall reach 200-300 MW. The use of solar energy shall be integrated with the construction of buildings; solar water heaters shall be promoted vigorously; and by 2010, photovoltaic power-generation shall reach 7-10 MW. By availing ourselves of the overall advantages in science and technology, industry and capital supply, we shall strengthen our efforts in bio-fuel energy R & D and industrial application of bio-fuel technology. We shall also exert ourselves in researching the feasibility of using coal-based fuel, such as dimethyl ether, to replace petroleum products. Efforts shall be devoted to solution of key problems in critical technologies, and their connection to the layout of the city’s infrastructures.

(3) Develop energy equipment industry

We shall speed up the R & D on energy equipment technology and its industrial application, and work hard to make Shanghai China’s biggest industrial base for energy equipment. Stress shall be laid on promoting the research and development of coal liquefaction and gasification technology, IGCC technology, and key technologies in nationalizing the manufacture of LNG vessels and gas turbines, and improving the manufacturing technologies of supercritical thermal power, nuclear power, and de-sulfurization and de-nitration, and great efforts shall be made to develop the industry of renewable energy equipment.

(4) Foster the development of energy technology innovation centers

We shall make full use of the convergence of R&D potential in Shanghai Zhizhu Science Park, focus on the technologies of new energies such as clean coal, renewable energy sources, nuclear power and hydrogen energy, speed up autonomous innovations and bring about technical breakthroughs. We shall also encourage the concentration of R & D institutions and talents in energy technology, and strive to make Shanghai a new energy technical innovation base at the state level.

V. Policies and Supportive Measures

1. Strengthen the Organization and Leadership in Energy-related Work

We will set up a leading group in charge of energy-related work in this Municipality, such as the formulation of major policies concerning energy development and conservation, energy-related security problems and international cooperation on energy projects and the overall planning and coordination in connection therewith. All relevant administrative departments shall work in close cooperation with each other to form a unified force, so that the energy related work will be further strengthened. Energy research institutions shall be set up to provide consulting services in connection with the government’s policymaking.

2. Implement the Job Responsibility System for Energy Conservation and Consumption Reduction

We shall establish a job responsibility system for energy conservation and consumption reduction under which responsibilities for economic and social development are combined with those for reduction of energy consumption, the forces of the competent departments of industries are combined with those of the enterprises, and the various departments of this Municipality work hand in hand with district/county governments. The Municipal Development and Reform Commission and the Municipal Economic Commission shall take overall responsibility and provide overall coordination for the work of energy conservation, and the various administrative departments and the districts/county shall take charge of the work of energy conservation within their respective jurisdiction or area. The goals of energy conservation shall be broken down into sub-goals and the responsibility for and achievements in energy conservation shall be incorporated into the goal-related responsibility system and the annual performance assessment of governments and departments at all levels as well as leading cadres. Forces for collection of energy statistics shall be further strengthened and the statistics collection system shall be perfected, and a system of public announcement with respect to energy consumption, as well as a system of information circulation with respect to energy related work, shall be set up.

3. Perfect Energy Pricing Mechanism

We shall use price as a basic leverage in resource distribution, and lose no time in setting up a pricing mechanism that will truthfully reflect the supply and demand situation of the energy market, reflect the seriousness of energy shortage, help attract the inflow of quality energy sources, contribute to energy conservation and reduction of consumption, and help form a energy security system..

We shall set up a mechanism that links the price of energy with the price of up-stream resources. The prices of refined oil and natural gas shall gradually be in keeping with the world market. A system of price differentiation shall further be perfected under which the price of energy will differ from peak hours to valley hours and from season to season, thus reducing peak load and increasing valley load. Price incentives shall be given to the use of clean energy and renewable energy. The irrational factors in the energy pricing system shall be gradually eliminated.

We shall implement the policy of price differentiation, and place caps on energy consumption per ten-thousand yuan value added (output value) for each specific industry or on energy consumption per product. Progressive pricing shall be applied to energy consumption that exceeds the cap. For energy consumed by industries that should be gradually phased out under the municipal plan for excessive energy consumption, a surcharge shall be imposed. An escalated pricing management policy shall be improved under which the price of energy for basic needs in every-day life shall be kept at a relatively stable level, and for energy consumed for non-essential needs, a progressive pricing policy shall be implemented.

We shall also adopt and improve appropriate supporting measures. A strict supervision and control mechanism shall be implemented for monopoly industries, a rational regulatory mechanism shall be established for the proceeds from price adjustments, and subsidies shall be given to non-profit undertakings for public good, such as public transportation, and the poor and needy shall be protected by social welfare. In this way we will ensure that the price reforms will be carried out in a steady manner.

4. Strengthen the Supportive Role of Fiscal and Tax Policies

We shall invest more money on energy conservation, and implement the preferential fiscal and tax policies of the State for energy conservation and the development of renewable and new energies, and increase the government’s financial support for administration of resource conservation and energy-conservation renovation in government institutions. We shall have further studies on the feasibility of using the proceeds from energy price adjustments to ensure energy security, to balance supply and demand, and to support the development and application of energy conservation technology and the development and use of renewable and new energies. In government procurements and construction projects supported by public finance, energy saving products, technologies and materials shall be given priority, and use of renewable energy shall be aggressively promoted.

5. Promote the Implementation of Planning

We shall integrate energy planning with the municipal zoning plan, and the municipal planning authority shall make a unified plan with respect to land reserved for energy pathways and energy projects, and each district/county shall incorporate major energy facilities, such as power sources, transformer substations, natural gas gate stations, energy pathway corridors and energy storage yards, into the district/county’s general plan, and place such facilities under strict control, and actively provide support and cooperation for the construction of energy projects.

6. Strengthen the Legal Regime of Energy

We shall amend the "Regulations of Shanghai Municipality on Energy Conservation" in accordance with statutory procedures, strengthen our efforts at enforcement of energy conservation laws, and strengthen the building of energy conservation law enforcement contingents and their law enforcing capabilities. We shall speed up the establishment and perfection of the system of energy conservation standards in buildings that fit the characteristics of Shanghai city, formulate "Regulation of Shanghai Municipality on Renewable Energy" and relevant regulations, formulate and perfect regulations and rules on the supervision of energy markets, so as to strengthen the government’s role in supervising energy markets. We shall also formulate and implement procedures for the safe storage and management of energy reserves in order to offer legal support for the establishment of an energy reserve system in which the government and enterprises are combined in operation.