The National Development and Reform Commission (NDRC) recently promulgated its Plan for Building the National Carbon Emission Trading Market (Power Generation Industry). According to the NDRC, the plan's implementation will play an important role in establishing the national carbon market and constitutes the official start of the national carbon emission trading system. However, a robust carbon emission trading system and a fair market trading environment for investors are still a long way off.
Under the existing legal framework, the state owns all mineral resources in China and the allocation of mining rights is heavily regulated. However, the various courts have different understandings of the relevant laws and regulations and judgment criteria for mining right disputes vary from court to court. As such, the Supreme People's Court recently issued an interpretation on the application of law in hearing cases involving mining right disputes.
The Ministry of Land and Resources (MLR) recently announced the Mineral Rights Granting System Reform Programme, which aims to promote the competitive granting of all types of mineral right in China. The programme requires the competent authorities to implement tender, auction and listing methods to grant mineral rights and imposes strict restrictions on the granting of mineral rights via agreements. It also requires the MLR to delegate its mineral rights approval powers to lower-level departments.
The Communist Party Central Committee and the State Council recently issued the Opinions on Deepening the Reform of the Petroleum and Natural Gas Sector. While the market-oriented reform of the entire oil and gas industrial chain includes no surprises, the opinions reflect the government's strong intentions behind the reform and send a positive signal to investors. However, the reform will not be an overnight success and significant resistance will be encountered.
The State Council recently promulgated the Plan for Mineral Resources Ownership Benefit System Reform with a view to transforming China's fiscal regime for the grant of mineral resources rights in an upcoming reform of the oil and gas upstream sector. The plan's primary purpose is to streamline the tax and fees system in China's mineral resources sector.
New guidelines on the regime for the use of natural resources with compensation were recently introduced. The guidelines are the first major document issued by the government to establish a full-scale regulatory system for the use of different kinds of natural resource with compensation. They provide a fundamental policy basis for establishing the system and will have a significant impact on the legislation governing China's use of its natural resources.
The National Energy Administration, the International Renewable Energy Agency and the People's Government of the Jiangsu Province recently held the second international energy transition forum. Part of the forum focused on distribution generation. As the conflict between energy and the environment continues to intensify, distributed generation systems are increasingly preferred by governments and enterprises. However, some issues have yet to be resolved.
China still has work to do to develop its electric vehicle charging infrastructure industry and the construction and operation of the infrastructure continue to face many challenges. The Hunan provincial government recently promulgated local legislation in this regard, in an effort to regulate the industry's development in the province in the absence of national legislation.
The National People's Congress Standing Committee recently passed a presidential order to amend six laws, including the Water Law. The amendment to the Water Law illustrates the government's attempt to limit water use in light of the present shortage. Although the amendment relates only to water projects under Article 19 of the law, it is likely to be the beginning of a larger initiative to improve China's water regulatory system.
In 2015 measures were issued encouraging domestic and foreign social capital investors and operators to enter into gas concession agreements with government bodies. As such agreements involve both enterprises and government bodies, public and investor interests must be protected and managed equally. Wuhan provides an example of the adverse effect that concessions can have when not awarded in accordance with legal procedure.
Energy performance contracting (EPC) has developed rapidly in China since its first appearance on the domestic market in 1987. EPC business is competitive and must be supported with well-developed laws and regulations. The government realised this from the beginning and has made great efforts to promote EPC business through legislation as well as judicial support – both of which are indispensable to the resolution of EPC-related disputes.
In 2015 the hottest topic in China's energy sector was not the domestic energy market reform; rather, the international arena garnered most of the spotlight, as the government unveiled the Belt and Road Initiative to promote Chinese outbound investment and commenced efforts to achieve greater international energy cooperation. In particular, the government is developing a closer association with Energy Charter Treaty signatories.
China has increased the pace of its natural gas pricing reform. The reform aims to facilitate greater access to natural gas resources, reduce controls on pricing and define the rationales behind natural gas transportation and allocation prices. It also promotes the free trade of natural gas for non-residential use, which will hopefully lay the groundwork for completely market-oriented pricing.
The National Development and Reform Commission is reportedly expediting the drafting process for natural gas pricing reform. Although the natural gas sector in China is largely under a monopoly, a significant breakthrough is expected as the reform progresses. A decision of the Qingyan City Intermediate People's Court may herald the forthcoming changes to be implemented through the reform.
The Ministry of Land and Resources recently announced that public bidding has been launched for the exploration rights to six oil and gas blocks in Xinjiang, marking the prelude to oil and gas mineral rights reform in China. The results of the public bidding are yet to be seen; however, the ministry views this as the beginning of efforts to experiment with upstream reform of mineral rights.
China's processed oil trading sector has undergone various reforms and adjustments, shifting from a highly centralised system to a market-based regulatory regime. Although the liberalisation of the processed oil market still has a long way to go, a recent case marks the first monopoly case in China's oil and gas sector.
With the growing diversification of upstream and downstream players and the rapid development of pipeline networks, demand for reform in China's oil and gas midstream sector is increasing. In response to this demand, the authorities are actively adopting various measures to change the existing situation in an attempt to liberalise the midstream sector.