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Energy and Natural Resources

Q1: How is the Natural Gas treated in China?

A1: China has recently committed to a significant expansion of its natural gas use, highlighted by a series of interrelated state-mandated development plans and the construction of coastal LNG import and regasification facilities. Currently, Chinese LNG import capacity stands at approximately 18.8 million tonnes or 26 billion m3 (BCM), by 2015 it is expected that China will possess LNG import capacity of more than 47 million tonnes or 64.8 BCM per year.

Q2: Due to the big quantity of the import demand, what kind of companies would involve in managing the LNG use?

A2: China's state-owned oil and gas companies, including CNOOC (the China National Offshore Oil Corporation), Sinopec (China Petroleum & Chemical Corporation) and CNPC (China National Petroleum Corporation) will participate in managing the use of LNG.

Q3: What is the guideline for the natural gas development in China?

A3: The National Development and Reform Committee (NDRC) issued its 12th Five-Year (2011 to 2015) Plan for natural gas development (the Natural Gas Plan) to central and local governments in October 2012, which calls for a marked expansion of natural gas utilization at both the industrial and residential levels. This was followed by the issuance by the State Council in January 2013 of its 12th Five-Year Plan for Energy Development (the Energy Plan).

Q4: According to the Energy Plan, would Chinese domestic natural gas production satisfy the need of its annual consumption?

A4: No. It seems that China will need to import at least 73.5 BCM of natural gas annually (or 32% of its annual consumption) by 2015 to meet its domestic demand.

Q5: What are the main channels in China for importing the natural gas and LNG?

A5: There are four ways: (1) the Central Asian Gas Pipeline in its northwest region which brings natural gas to China from Turkmenistan, Uzbekistan, and Kazakhstan, (2) the Sino-Russian Pipeline in its northeast region which brings natural gas to China from Russia, (3) the Sino-Myanmar Pipeline in the southwest region which brings natural gas to China from Myanmar, and (4) overseas shipments importing LNG from international markets into China.

Q6: What is the strategy to reduce the import of LNG?

A6: The likely strategy depends on the plan for shale gas development during 2011 to 2015 (the Shale Gas Plan). It set goals for shale gas reserve assessments and the advancement of technical expertise, with a long-term goal of producing 60 to 100 BCM of shale gas by 2020. While the Shale Gas Plan may boost shale gas production in China and therefore to some extent reduce the import demand of LNG.

Q7: What is the most recent governmental plan towards the solar resource in China?

A7: In January of 2013, China raised its solar target for the fourth time in two years to 35GW of solar by 2015. At around the same time, China also announced a 10GW installation goal for 2013.

Q8: What kind of solar programs could get the China’s governmental subsidies?

A8: For example, PV Building Demonstration Program, the Golden Sun Program and the Feed-in-Tariff.

Q9: What are the current strategies for improving the solar market?

A9: The State Council’s policy on improving the Chinese solar PV industry has been issued in July 2013, while various central government departments have intensively promulgated detailed policies in relation to the solar Feed-in-Tariff, tax incentives, development of distributed generation and simplifying the project approval procedures.

Q10: What are the main legislative provisions concerning the Chinese renewable industry?

A10: There are:

Electricity Act, 1996

Administrative Regulations on the Power Business Permit, 2005

Interim Regulation on the On-grid Tariff, 2005

Renewable Energy Law, 2006

Regulations on the Administration of Renewable Power Energy, 2006

Interim Measures on the Pricing of Renewable Power Energy and the Sharing of Relevant Cost, 2006

Notice of the National Development and Reform Commission on Perfection of Policy Regarding Feed-in Tariff of Power Generated by Solar PV, 2011

Relevant Opinion of the State Council in Improving the Healthy Development of Solar PV Industry, 15 July 2013

The Notice of the Ministry of Finance regarding the Subsidies to the Distributed Solar PV Power Generation according to the Quantity of Power, 24 July 2013

The Notice of the National Energy Administration on Carrying out the Establishment of Demonstration Area of Distributed Solar PV Power Generation, 20 August 2013

The Notice of the National Energy Administration and China Development Bank on Supporting the Financial Services to the Distributed Solar PV Power Generation 22 August 2013

The National Energy Administration’s Temporary Administration Rules of Solar PV Power Generation Plants, 29 August 2013

The Notice of the National Development and Reform Commission on Improving the Development of Solar PV Industry by Utilizing the Price Leverage Effect, 30 August 2013

The Notice of the National Energy Administration on Application of Large-scale Usage Demonstration Area of Distributed Solar PV Power Generation 28 September 2013

The Notice of the Ministry of Finance on the VAT Policies on Solar PV Power Generation, 29 September 2013

Q11: What are the main supervisory bodies for solar industry?

A11: Here are several regulatory authorities in China:

The National Development and Reform Commission and/or its competent local counterparts (the "NDRC"), which is China's national authority for accepting and approving all fixed-asset investment projects including renewable projects.

The National Energy Administration (the "NEA"), which is the department within the NDRC primarily in charge of energy related projects.

Ministry of Land and Resources (MOLAR), which is responsible for approving the land-use rights for all projects

Ministry of Environmental Protection (MEP), which is responsible for approving the project's environmental impact assessment reports

Ministry of Water Resources (MWR), which is responsible for approving the project's soil and water conservation plan

State Administration of Culture Heritage (SACH), which is responsible for reviewing the project’s impact on cultural heritage

Ministry of Finance (MOF), which is the government authority which assesses and approves any government subsidies for a renewable project

Also, the grid companies have the special power to determine whether the intended power project can connect to the grid.

For foreign-invested projects, approval from the Ministry of Commerce (MOFCOM) will also need to be obtained after your project has received final NDRC approval

Q12: What kind of issues will be taken into consideration by MOFCOM during its approval process?

A12: In approving a foreign-invested solar project, MOFCOM will consider whether: (1) their industrial policies are carried out; (2) there are benefits for economic development; and (3) the measures for protecting the environment and state interests are implemented.

Q13: How does the Chinese government classify the solar projects according to the "2011 Feed-in-Tariff (Solar)"?

A13: All non-bidding Chinese solar projects are divided into two categories:

(1). Projects approved prior to July 1, 2011 and which have achieved commercial operation prior to December 31, 2011.

These projects are entitled to a tariff of 1.15 RMB per kWh.

(2). Projects approved after July 1, 2011 (or approved prior to that date but have not begun commercial operation by December 31, 2011).

These projects are entitled to a tariff of 1 RMB per kWh.

While exceptions have been given to projects located in Tibet, which can still receive a Feed-in-Tariff of RMB 1.15

Q14: What is the main problem with the 2011 Feed-in-Tariff (Solar) and what is the rescue?

A14: The 2011 Feed-in-Tariff (Solar) did not differentiate between the different regions in China. Thus, comments, the NDRC released the Notice on Improving the Development of Solar PV Industry by Utilizing the Price Leverage Effect (the "New Feed-in-Tariff Policy") for solar PV projects which has split the country into three different regions, and provided a differentiated Feed-in-Tariff for each region. It sets as follows:

(1) 0.90 RMB per kWh for Type-I areas, including Ningxia; Haixi of Qinghai Province; Jiayuguan,Wuwei, Zhangye, Jiuquan, Dunhuang, Jinchang of Gansu Province; Hami, Tacheng, Aertai, Kelamayi of Xinjiang Province; Inner Mongolia (other than Chifeng, Tongliao, Xinganmeng, Hulunbeier);

(2) 0.95 RMB per kWh for Type-II areas, including Beijing; Tianjin; Heilongjiang; Jilin; Liaoning; Sichuan; Yunnan; Chifeng, Tongliao, Xinganmeng, Hulunbeier in Inner Mongolia; Chengde, Zhangjiakou, Tangshan, Qinhuangdao of Hebei Province; Datong, Suzhou, Yizhou of Shanxi Province; Yulin, Yanan of Shannxi Province; places other than the Type-I areas in Qinghai, Gansu and Xinjiang;

(3) 1.00 RMB per kWh for Type-III for areas other than the above5

There is also an additional Feed-in-Tariff specifically aimed at improving the market for distributed Solar PV projects.

Q15: What are the new regulatory provisions for Medical Device?

A15: The China Food and Drug Administration (“CFDA”) recently introduced two important initiatives concerning medical devices to impose a pre-approval requirement for certain high risk Class 3 medical devices and define a 3-year work plan for the expansion of a monitoring network and upgrade of the technical evaluation capabilities.

1. The Tentative Rules on the Review and Approval of Medical Device Clinical Studies (Draft)

Manufacturers of the high risk implants, such as implantable pacemakers/defibrillators, implantable blood pumps, nano orthopedic implants, 3D-printed orthopedic implants, prosthetic heart valves and oral bone filling material containing drugs or biologics, will need to apply for the CTA with the CFDA and the statutory timeline for approval is 95 days in total. In addition, a supplementary CTA application is mandatory in the events of (1) substantive changes in the study protocol, informed consent or other documents which may compromise the rights, safety and health of study subjects, the scientific merits of the study, data quality, study objectives, or end points; or (2) resuming a study previously suspended or terminated as required by the Medical Device GCP. The statutory timeline for the supplementary CTA is also 95 days.

2. The Guiding Opinion on Further Improving the Infrastructure for the Monitoring of Medical Device Adverse Events

The CFDA plans to establish a monitoring network comprised of all Class 3 medical device manufacturers and the majority of Class 3 medical device distributors as well as Class 3 and Class 2 hospitals by the end of 2015.

 

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