Cablegate: China/Energy: New Energy Commission Aims To

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PP RUEHCN RUEHGH
DE RUEHBJ #0291/01 0350945
ZNR UUUUU ZZH
P 040945Z FEB 10
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC PRIORITY 7919
INFO RUEHOO/CHINA POSTS COLLECTIVE PRIORITY
RHEBAAA/DEPT OF ENERGY WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHDC PRIORITY
RUCPDOC/DEPT OF COMMERCE WASHDC PRIORITY
RUEAEPA/HQ EPA WASHDC PRIORITY
RHEHNSC/NSC WASHDC PRIORITY

UNCLAS SECTION 01 OF 03 BEIJING 000291

SENSITIVE
SIPDIS

STATE PASS USTR
STATE FOR EAP/CM-BRAUNOHLER
STATE FOR EEB/ECS
STATE FOR OES, OES/EGC, and OES/ENV
USDOE FOR INTERNATIONAL
USDOC FOR 4420
EPA FOR INTERNATIONAL/MKASMAN

E.O. 12958: N/A
TAGS: ECON ENRG EINV SENV CH
SUBJECT: China/Energy: New Energy Commission Aims to
Coordinate National Policy

SENSITIVE BUT UNCLASSIFIED: NOT INTENDED FOR
INTERNET DISTRIBUTION

1. (SBU) Summary: China's State Council announced
January 27 the creation of a new National Energy
Commission (NEC) headed by Premier Wen Jiabao, with
Vice Premier Li Keqiang serving as NEC deputy.
According to the State Council's announcement, the
NEC aims to strengthen China's energy policy
formulation and coordination, oversee an energy
development strategy, examine energy security issues,
and synchronize overall planning for large-scale
domestic and international energy projects. Energy
industry observers told us there would be few
changes to current energy policies and viewed the
NEC as a compromise step that fell short of the
elusive goal of establishing a true energy ministry.
A review of the NEC's members indicates China
remains focused on energy supply and energy security
issues, with less weight placed on energy efficiency,
conservation or climate change. End Summary.

NEC A "POSITIVE STEP FORWARD"...
--------------------------------

2. (SBU) The January 27 State Council announcement
of the creation of a new, 21-member National Energy
Commission headed by Premier Wen Jiabao and Vice
Premier Li Keqiang was a "positive step forward" and
demonstrated the importance Chinese leaders place on
energy issues, according to a longtime Beijing
energy analyst. While our contact doubted it would
succeed in pushing through major reforms, he
predicted the NEC could successfully coordinate
energy policies across China's sprawling bureaucracy.
He said the National Energy Administration (NEA),
which was created in March 2008 to formulate and
implement energy policy, did not have the authority
to carry out this mandate, particularly vis-a-vis
China's powerful state-owned energy companies.

3. (SBU) A government relations official at an
American energy company agreed, saying the NEC would
provide NEA with greater clout in dealing with other
ministries and large state-owned energy firms.
Based on his conversations with Chinese officials,
he said NEA would act as the NEC's secretariat and
be charged with implementing policy decisions
reached by the new commission.

...BUT ONLY AN "INTERMEDIATE STEP"...
-------------------------------------

4. (SBU) The local industry analyst viewed the
creation of the NEC as a compromise decision that
reflected the difficulty in managing different
interests in China's energy sector. He said many
officials believed China needed to establish a true
ministry of energy to oversee strategic energy
issues, especially the development of national oil
companies (NOCs) such as CNPC and Sinopec. A
researcher at the State Council's Development
Research Center (DRC) echoed this view, noting that
under the current system, China's NOCs were
supervised by SASAC but energy policy was set by NEA
and NDRC which allowed the NOCs to effectively
ignore both bodies. He said the NEC should enable
the government to improve coordination across all
ministries and state-owned energy companies.

... BUT BUREAUCRATIC HURDLES REMAIN
-----------------------------------

5. (SBU) An official of a Chinese government energy
association, who previously worked in the Ministry
of Industry and Energy before it was dissolved in
1993, said the NEC would continue to face

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bureaucratic obstacles despite its high-profile
leadership. He said China's energy issues touched
upon many different ministries and agencies, and it
would be difficult to reach agreement on contentious
issues such as energy price reform. He said he
believed the only workable solution would be for the
eventual creation of an energy ministry.

WHO'S IN...
-----------

6. (SBU) Industry contacts were struck by the
composition of the NEC (see para 8 for full list of
members) which includes the Minister for State
Security (MSS) and the deputy chief of the PLA's
General Staff office. An industry contact said this
reflected China's focus on energy supply and energy
security questions which have received greater
attention as China becomes more dependent on
overseas energy resources.

...WHO'S NOT
------------

7. (SBU) A clean energy consultant told us February 3 the
NEC's makeup appeared to minimize the importance of
energy efficiency, conservation and climate change issues.
For example, the NEC does not include the Ministry of
Housing and Urban-Rural Development (MoHURD) which sets
important energy efficiency standards for housing and the
construction sector. Also, the Ministry of Agriculture
was not included suggesting less interest in biofuels.
The DRC researcher said it was also unclear how the NEC
would interact with the Leading Working Group on Climate
Change, which is headed by Premier Wen, with Vice Premier
Li as deputy. NDRC Vice Chairman Xie Zhenhua, China's
lead climate change negotiator who has ministerial rank,
was conspicuously absent from the list of commission
members. Beyond climate change, Xie is also responsible
for energy efficiency.

NEC COMPOSITION
---------------

8. (U) According to the State Council's Chinese-
language January 27 announcement, the NEC will be
led by Premier Wen Jiabao as NEC Chairman and Vice
Premier Li Keqiang as NEC Vice Chairman. The 21
commission members include:

-- You Quan, State Council Deputy Secretary General;

-- Zhu Zhixin, Central Leading Group on Economic and
Financial Affairs and NDRC Vice Chairman;

-- Yang Jiechi, Minister of Foreign Affairs;

-- Zhang Ping, NDRC Chairman;

-- Wan Gang, Minister of Science and Technology (MOST);

-- Li Yizhong, Minister of Industry and Information
(MIIT);

-- Geng Huichang, Minister of State Security (MSS);

-- Xie Xuren, Minister of Finance;

-- Xu Shaoshi, Minister of Land and Resources;

-- Zhou Shengxian, Minister of Environmental Protection;

-- Li Shenglin, Minister of Transport;

-- Chen Lei, Minister of Water Resources;

-- Chen Deming, Minister of Commerce;

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-- Zhou Xiaochuan, Chairman of People's Bank of China;

-- Li Rongrong, Chairman of State-owned Assets
Supervision and Administration Commission (SASAC);

-- Xiao Jie, Director of State Administration of Taxation;

-- Luo Lin, Director of State Administration for Work
Safety;

-- Liu Mingkang, Chairman China Banking Regulatory
Commission;

-- Wang Xudong, Chairman of State Electricity Regulatory
Commission (SERC);

-- Zhang Qinsheng, Deputy Chief of the General Staff; and

-- Zhang Guobao, NDRC Vice Chairman and NEA Administrator.

9. (U) NDRC head Zhang Ping serves as the director of
the NEC office and NEA Administrator Zhang Guobao serves
as the NEC office vice director.

HUNTSMAN

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