GILLIAN WONG
BEIJING — China has set up a government agency headed by Premier Wen Jiabao to better coordinate energy policy, as the world's second-largest power consumer faces growing domestic demand and struggles with shortages.
The establishment of the National Energy Commission reflects the high priority that energy issues have taken in China and the frustrations Chinese leaders have had coordinating powerful bureaucracies and state-owned companies.
Leaders see growing reliance on imported energy as a potential strategic weakness. Heavy use of fossil fuels is also creating severe environmental damage, while rapid economic growth and poor policies have led to occasional fuel shortages.
The commission will draft energy development strategy, review energy security and coordinate international cooperation, according to a notice late Wednesday by the general office of the State Council, China's Cabinet.
Vice Premier Li Keqiang will be the commission's deputy head. Its 21 other members include the head of the National Development and Reform Commission, China's powerful economic planning agency, and the ministers of finance, environmental protection, land and resources, and foreign affairs.
It is the second time in two years that the government has tried to create a high-level body for energy. The National Development and Reform Commission resisted an attempt to set up an independent authority and kept control of the National Energy Administration in 2008. The need for Premier Wen, ranked No. 3 in the Communist Party, to take charge of the new body underscores the depths of bureaucratic infighting.
Such interagency competition has thwarted cooperation on various initiatives, including reduction of carbon emissions and raising energy efficiency to help combat global warming, experts said.
"It has been very hard to coordinate the different energy industries without an independent office at a higher level," said Qiu Xiaofeng, a petroleum analyst at China Merchant Securities. "Now the new office will definitely help to make some good changes."
To feed the demands of the rapidly growing economy, Chinese energy companies have signed a string of multibillion-dollar deals to import oil and gas from the Gulf, Africa, Central Asia and elsewhere.
"In the energy space, China is doing a large variety of things both domestically and globally. Its activities encompass both political and economic objectives, so to have a single ministry coordinating all these activities and forming a unified strategy seems long overdue," said Victor Shum, an energy analyst with consultancy Purvin & Gertz in Singapore.
China is the world's second-largest energy consumer after the United States. It faces widespread difficulties in ensuring smooth supplies of fuel, coal and natural gas, partly due to conflicts over pricing policies that have caused widespread losses for refiners and utility companies.
Earlier this month, authorities ordered rotating shutdowns of hundreds of factories in central China to ensure sufficient power to heat homes amid bitter winter cold. Power demand spiked after temperatures plunged and weekend storms dumped snow on northern China. Many homes, especially in the south, lack central heating and residents rely on electric space heaters.
The surge in energy consumption due to the cold snap is typical of the challenges the country is facing as it struggles to meet demand from consumers whose growing earning power enables them to adopt more modern lifestyles.
The potential weaknesses of China's energy planning were also highlighted in October 2007 when diesel supplies ran low, causing lines at filling stations and disrupting trucking services. Shortages cropped up after oil companies, barred by government controls from passing on record-high crude costs to consumers, responded by failing to expand refining to meet growing demand.
China supplied its own energy needs for decades from domestic oil fields. But it became a net importer in the 1990s as its economy boomed, and imports now supply nearly half of demand.
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