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China to slow energy project construction, shifts to capacity cuts: Xinhua

[BEIJING] China will ban the construction of new coal-based chemical facilities and coal-fired power plants until 2018 and continue to shed overcapacity in coal mining and oil refining, state news agency Xinhua reported on Monday.

As part of China's 2016-2020 energy plan, expected to be officially unveiled soon, the new measures will cap total national energy consumption at 5 billion tonnes of standard coal equivalent by 2020, and put a ceiling on coal consumption at 4.1 billion tonnes, Xinhua reported.

Coal equivalent measures the energy given off by different fuels in a standardised way regardless of type, such as coal, oil or natural gas.

The ban on projects should cut coal's share of the overall mix to 58 per cent from 64 per cent currently, and help achieve the government's target to phase out 500 million tonnes of coal production by 2020.

"The government's control over coal and refineries with severe over-capacity will be tougher. The extent of new plant approvals in 2019-20 will depend on the results of the capacity elimination," said an unnamed official involved in the planning cited by Xinhua.

Energy consumption in the world's second-largest economy rose at a record low rate of 1.5 per cent in 2015, while coal consumption declined by 1.5 per cent.

China's oil refineries are operating at a utilization rate 15 per cent lower than the global average, and only new refineries that replace eliminated capacity will be approved, the official said.

The government will cap overall coal-fired power plant capacity to about 1,050 gigawatts (GW) by 2020, compared to 880 GW of capacity in 2015. The production of coal-to-oil and coal-to-gas will be around 13 million tonnes and 18 billion cubic meters respectively by 2020, said Xinhua.

The world's biggest renewable energy producer will also slow the pace of new wind and solar plants as inadequate grid transmission lines waste a large amount of the power produced. Upgrading the national grid to improve overall transmission will be a priority, said Xinhua.

The installation of wind power plants will be around 250 GW by 2020, and solar installation will be 150 GW.

The installation of conventional hydro power projects will reach 340 GW by 2020, while power from nuclear plants will reach 58 GW by 2020, with another 30 GW approved for construction, Xinhua reported.