At present, the goal of peaking carbon emissions and achieving carbon neutrality has put forward new requirements for energy transformation and development. The importance of energy security in the overall economic and social development is increasingly prominent, and the energy development during the 14th Five Year Plan period is facing many new challenges. The "14th Five Year Plan for Modern Energy System" (hereinafter referred to as the "Plan") is based on the new development stage, grasps the new development situation, and makes specific arrangements for energy development in the coming period. Based on the study and understanding of the 'Plan', the author believes that the energy development situation and tasks during the 14th Five Year Plan can be summarized as' eight major challenges and countermeasures'.

1、 Challenges and Countermeasures of Carbon Neutrality for Energy Innovation and Development

 

At present, more than 130 countries and regions have proposed the goal of net zero greenhouse gas emissions or achieving carbon neutrality, accounting for about 88% of the global carbon emissions. However, there is still no feasible systematic solution on how to achieve it. China has achieved certain leading advantages in clean energy technologies such as nuclear power, wind power, photovoltaic power, and hydropower. In recent years, it has effectively promoted the green and low-carbon transformation of energy, but it is far from enough to support future carbon neutrality goals. To achieve carbon neutrality, it is necessary to make disruptive breakthroughs in the field of green and low-carbon. These disruptive technologies cannot be obtained, bought, or obtained, and can only rely on independent innovation. These technological breakthroughs cannot be left for tomorrow to solve. On the contrary, a single step can lead to permanent backwardness. The demand for technological innovation has never been so urgent as it is today, which poses a huge challenge to the development of energy innovation during the 14th Five Year Plan period.

 

The 9th meeting of the Central Financial and Economic Commission emphasized the need to promote major breakthroughs in green and low-carbon technologies, accelerate the deployment of cutting-edge low-carbon technology research, and accelerate the promotion and application of pollution reduction and carbon reduction technologies. The "Plan" implements the relevant requirements of the Party Central Committee, adheres to innovation as the primary driving force for development, aims at the "dual carbon" goal, and deploys a series of scientific and technological innovation tasks. One is to strengthen cutting-edge technological breakthroughs in energy storage, hydrogen energy, carbon capture, utilization and storage, natural gas hydrates, and strive to gain a competitive advantage in the new round of energy transformation. The second is to continue to increase research and development efforts in wind power, solar power, advanced nuclear energy, etc., to consolidate China's advantages in the development and utilization of non fossil energy. The third is to further improve the technological level of green mining and clean and efficient utilization of coal, oil and gas. The fourth is to improve the energy technology and industrial innovation system, and implement demonstration projects for scientific and technological innovation.

 

2、 Challenges and Countermeasures of Carbon Peak Caused by the Growth of Fossil Energy Consumption

 

The carbon emissions in the energy sector are directly related to the consumption of fossil fuels. At present, the consumption of fossil fuels in China is still showing a sustained growth trend. During the "13th Five Year Plan" period, the consumption of fossil energy increased by about 370 million tons of standard coal, including about 40 million tons of coal, 100 million tons of oil and 135 billion cubic meters of natural gas. In 2021, the consumption of coal, natural gas, and crude oil increased by 4.6%, 12.5%, and 4.1% respectively year-on-year, and the growth trend of fossil energy consumption is still continuing. According to the demand forecast, the national oil and gas consumption will continue to grow rapidly during the 14th Five Year Plan period, and there are also great difficulties in curbing the growth momentum of coal consumption. The 14th Five Year Plan is a critical and window period for carbon peaking. One of the major challenges facing the 14th Five Year Plan is how to effectively control the consumption of fossil fuels while ensuring energy security, and lay a solid foundation for achieving carbon peaking before 2030.

 

The Opinions of the Central Committee of the Communist Party of China and the State Council on Fully, Accurately, and Comprehensively Implementing the New Development Concept and Doing a Good Job in Carbon Peak and Carbon Neutrality clearly state that we must strictly control the consumption of fossil fuels, implement actions to replace renewable energy, and ensure safe carbon reduction. The Plan implements the requirements of central documents, on the one hand, vigorously developing various non fossil energy sources such as wind power, solar energy, hydropower, nuclear power, biomass energy, geothermal energy, and ocean energy, accelerating the replacement of fossil energy, and on the other hand, resolutely curbing the blind development of high energy consuming, high emission, and low-level projects, strictly and reasonably controlling the growth of coal consumption, optimizing the direction of natural gas use, and promoting the transformation and upgrading of the refining industry. Realize structural adjustment and achieve carbon emission control goals through the balance between fossil and non fossil energy.

 

3、 The challenge and countermeasures of energy security posed by the increasing dependence on oil and gas exports

 

China's oil and gas resources are relatively scarce, with oil and natural gas reserves accounting for only 1.5% and 4.5% of the global total, while consumption accounts for as high as 16.7% and 8.6% of the global total. At present, China's external dependence on oil and natural gas has reached over 70% and 40%, and during the 14th Five Year Plan period, with the increase in oil and gas consumption, external dependence will continue to rise. In terms of crude oil import channels, about 70% of the crude oil import volume needs to pass through the Strait of Malacca, which poses a significant safety risk to the transportation chain. Compared with crude oil, although natural gas has a relatively low degree of external dependence, it requires higher stability in upstream supply. Once there is a supply shortage, it will have a greater impact on people's livelihood needs such as winter heating. Therefore, in the current and future period, oil and gas will be the main shortcoming of China's energy security.

 

According to the requirements of the "14th Five Year Plan" outline, which includes "focusing on domestic development, addressing shortcomings, providing diversified support, and strengthening reserves", the plan focuses on improving oil and gas security capabilities from the following aspects. One is to increase domestic oil and gas exploration and development efforts, and promote the increase of oil and gas reserves and production. The second is to improve the reserve system, enhance natural gas reserves and regulation capabilities, and strengthen safety strategic technology reserves. The third is to promote the substitution of oil consumption, accelerate the development of new energy vehicles, biofuels, port electricity, etc. The fourth is to enhance import diversification and security capabilities, and diversify security risks.

 

4、 Challenges and Countermeasures of Seasonal Fluctuations in Demand for Energy Supply Security

 

During the 13th Five Year Plan period, China's energy supply and demand were generally loose, but there were regional and temporary supply shortages in electricity, coal, and natural gas. The main reason was the sharp increase in cooling demand during peak summer and heating demand during winter, making it difficult to meet the peak load demand. Recently, extreme weather events have occurred frequently worldwide. In December 2020, a cold wave hit the central and eastern regions of China, and power loads in Hunan, Jiangxi, and other areas broke records, prompting the adoption of orderly electricity consumption measures. In February and July 2021, regions such as Texas and California in the United States experienced severe cold and extreme high temperatures, causing disruptions to some energy facilities and crises in electricity and natural gas supply. How to ensure energy supply security during seasonal peak loads and extreme weather is a global challenge.

 

The Plan takes into account both system security and economy. On the basis of reasonably arranging the scale of production capacity construction, firstly, it comprehensively strengthens the construction of energy reserve capacity. In addition to oil and gas reserves, it also establishes a sound coal reserve system and diversifies the development of safe and efficient energy storage; The second is to tap into the potential of demand side regulation, increase the elasticity of energy demand, and focus on improving the responsiveness of electricity demand side; The third is to strengthen bottom line thinking, develop emergency plans for possible extreme situations, and improve emergency safety control and accident recovery capabilities.

 

5、 The challenges and countermeasures brought by the rapid development of new energy to the power system

 

With the proposal of carbon peak and carbon neutrality targets, the development of new energy will further accelerate. The Plan proposes to accelerate the development of wind and solar power generation. Research predicts that under the carbon neutral scenario by 2060, the proportion of new energy generation such as wind and solar power will exceed half, becoming the main source of electricity supply. Wind and solar power generation have the characteristics of randomness and volatility, with uncontrollable output and low moment of inertia. Power electronic devices are widely used, and the difficulty of real-time balance and safe and stable operation of power supply and demand has greatly increased, posing great challenges to power system planning, design, and operation.

 

The 9th meeting of the Central Financial and Economic Commission proposed the construction of a new type of power system, which is an inevitable way to ensure the rapid and high-quality development of new energy and a long-term systematic project. The Plan proposes phased arrangements for the construction of a new power system, aiming to achieve substantial results by 2035. During the 14th Five Year Plan period, the proportion of new energy should gradually increase, and specific measures for building a new power system are proposed from four aspects: source, grid, load, and storage. On the power side, we will promote the flexibility transformation of coal-fired power and the construction of peak shaving power sources such as gas-fired power, pumped storage power stations, and thermal storage solar thermal power generation, in order to improve the flexibility of power regulation capabilities. On the power grid side, actively develop intelligent distribution networks, active distribution networks, intelligent microgrids, flexible DC grids, etc., innovate the structure and operation mode of the power grid. On the load side, vigorously enhance the elasticity of power load and promote bidirectional interaction between supply and demand. On the energy storage side, actively developing new types of energy storage with various technological routes and application scenarios to provide support for the development of new energy.

 

6、 The challenges and countermeasures brought by the increasingly large and complex system to optimize operation

 

China's energy system is vast and constantly expanding, with total energy production and consumption, installed power generation capacity, and electricity consumption ranking first in the world. It has built the world's largest national interconnected power grid. At the same time, with the development and growth of wind and solar power generation, energy storage, hydrogen energy, electric vehicles, etc., the operating characteristics of energy systems have become more complex, and the bidirectional flow of energy between energy storage and electric vehicles is obvious. Distributed energy gradually blurs the boundary between the supply side and the consumption side, and the difficulty and challenges of safe and efficient optimization of system operation are increasing. The traditional management and operation mode can no longer meet the needs of energy system transformation and upgrading.

 

In recent years, the Internet, big data, cloud computing, artificial intelligence, blockchain and other technologies have accelerated innovation and increasingly integrated into the whole process of economic and social development in all fields. General Secretary Xi Jinping pointed out that the digital economy is the fulcrum for transforming and upgrading traditional industries. It is necessary to promote the deep integration of digital technology and the real economy, and empower the transformation and upgrading of traditional industries. The Plan regards accelerating the digital and intelligent upgrading of the energy industry as an important means to promote system optimization. Firstly, it aims to promote the digitization of energy infrastructure, improve the flexible perception and efficient production and operation capabilities of the energy system, and achieve intelligent regulation and management; The second is to build smart energy platforms and data centers, leveraging the service support role of energy big data in industry management and social governance; The third is to implement a batch of smart energy demonstration projects and explore replicable and promotable development models.

 

7、 The challenges and countermeasures brought by the need for a better life for the people to promote shared development

 

Improving people's livelihood and well-being is the fundamental goal of development, and energy development is no exception. Energy security supply is to ensure people's production and living needs, and green and low-carbon transformation is to improve people's living environment. In recent years, the level of energy and livelihood services in China has been continuously improved, and the problem of electricity consumption for the population without electricity has been solved throughout the year. Rural power grid renovation and upgrading, as well as photovoltaic poverty alleviation projects, have been implemented, resulting in a continuous decrease in energy pollutant emissions and a significant improvement in air quality. At the same time, the people's demand for energy development for a better life is constantly increasing, such as the requirement for the convenience of electric vehicle charging facilities, the requirement for clean heating in winter economy in northern rural areas, and the requirement for warm winters in some areas south of the Huai River. The sense of gain of the people in energy development needs to be enhanced, and the benefits brought to the people by energy development are not enough.

 

 

The Plan adheres to the principle of prioritizing people's livelihoods and promoting shared development. One is to focus on improving the level of universal energy services, enhancing the supply capacity of clean energy in rural areas, promoting balanced development of urban and rural energy infrastructure, optimizing the layout of charging infrastructure, and meeting the development needs of electric vehicles. The second is to improve the level of clean energy consumption in people's daily lives, enhance the reliability of power supply, strengthen the guarantee of gas supply for residents, continue to promote clean heating in winter in northern regions, and promote the replacement of clean energy consumption in rural areas. The third is to improve the level of energy development and sharing, actively promote the construction of distributed photovoltaics and decentralized wind power such as rooftop photovoltaics, complementary agricultural photovoltaics, and complementary fishery photovoltaics, develop and utilize biomass energy and geothermal energy according to local conditions, and promote the formation of new energy industries to enrich the people.

 

8、 Challenges and Countermeasures of Energy Green and Low Carbon Transformation to Institutional Mechanisms

 

In recent years, China has focused on the fields of electricity and oil and gas, continuously promoting energy system and mechanism reform, and has achieved certain results, but it still cannot fully adapt to the needs of energy transformation and change. In the field of electricity, the mechanism for the coordinated and mutually beneficial development of new energy and traditional power sources is not yet sound, the enthusiasm of users to consume new energy has not been effectively stimulated, the market dominant position and price mechanism of new energy storage are not clear, and new models and formats such as comprehensive energy services, incremental distribution business, and multi energy complementarity have not made satisfactory progress due to incomplete supporting management mechanisms. To achieve the "dual carbon" goal, the pace of energy transformation will be further accelerated in the future. How to overcome institutional barriers and safeguard the green and low-carbon development of energy is an urgent issue that needs to be addressed during the 14th Five Year Plan period.

 

The Plan insists on deepening reform, fully leveraging the decisive role of the market in resource allocation, better playing the role of the government, and clarifying the direction of improving the energy system and mechanism. In promoting the green and low-carbon transformation of energy, firstly, we need to improve the market system, innovate power dispatch and trading mechanisms that are conducive to the consumption of non fossil energy generation, guide and support energy storage facilities and demand side resources to participate in power market transactions, and expand the space for new energy consumption through market-oriented means. Secondly, we will deepen the reform of the pricing mechanism, improve the pricing mechanism for wind power, photovoltaic power generation, and pumped storage, and establish a new type of energy storage pricing mechanism. The third is to support the development of new models and business models, and to break down institutional barriers in market access, investment and operation, and participation in market transactions.

 

Conclusion

 

The Opinions of the Central Committee of the Communist Party of China and the State Council on Fully, Accurately, and Comprehensively Implementing the New Development Concept and Doing a Good Job in Carbon Peak and Carbon Neutrality, the Action Plan for Carbon Peak before 2030, and the 14th Five Year Plan for Modern Energy System have made systematic deployments for future energy development and transformation paths. The goals and tasks have been clearly defined, but the difficulties are unprecedented. Only by identifying the problems, facing the challenges, being down-to-earth, and putting in hard work can we continuously achieve new results in the construction of the modern energy system.

 

 

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