Having become the world’s largest auto market, China is looking for alternative forms of energy to meet the rising demand for auto fuel. Ongoing economic growth is expected to boost the country’s crude oil consumption to an estimated 560 million tons in 2020; and with soaring oil prices and the possibility of future shortages, China considers the quest for new auto energy sources a vital national defense strategy.


The demand for new auto energy is accentuated by China’s determination to control its Co2 emissions. As the world’s largest Co2 producer, China is under increasing pressure to control its Co2 emissions. Prior to the Copenhagen Conference on Global Climate Change last December, China announced its Co2 emissions target for 2020: a reduction of emissions by 40-50% from their 2005 level, implying a decrease from 6.9 tons per capita now to 4.9 tons per capita in 2020.

Some Western media have termed that target “incredible,” especially with the expectation of continued growth in China’s economy. Even if the target is not achieved, however, it should at least help slow the growth of Co2 emissions there.

New Energy Industry

China’s new-energy industry got started around the beginning of the 21st century and made significant progress in 2006-2007 with the launching of the first models of self-developed hybrid, battery electric, and fuel cell electric vehicles. The industry grew sharply in 2008, with sales of new-energy passenger cars amounting to 899 units and those of commercial vehicles reaching 1,536 units.

Practically unlimited market potential has attracted more companies, one after another, to become involved in the development of new energy. Large petrochemical giants like the China Petrochemical Co., China Petroleum & Chemical Corp., and China Offshore Oil Corp. all have made plans to develop the new field of alternative auto energy.

“Alternative auto energy” refers to auto fuel made with non-traditional power resources. Autos currently powered by alternative auto energy include hybrid electric vehicles (HEVs), battery electric vehicles (BEVs), fuel cell electric vehicles (FCEVs), hydrogen-powered electric vehicles, and ethylene-powered electric vehicles, among others.

The proliferation of new energy producers once aroused worries about over-production; as market analysts have commented, however, the over-production is not of new energy but of new-energy producers. The industry is still in its initial stage of development and has a long way to go before it becomes mature.

“Faced with the rising trend of new-energy development, the government should have a comprehensive understanding of the new trend and make regulations to govern the new business,” said a government official. “It’s too early to predict if the new energy will be over-produced.” One of the rules formulated by the government, the official reported, is designed to encourage private companies to strengthen their R&D capability and reduce their reliance on foreign technology.

The Beijing authorities are drafting an “Alternative Auto Energy Development Plan” to be coupled with reinforcement rules and serve as guidelines for the new-energy industry. A full package of industrial regulations is scheduled to be published within this year.

The new guidelines will be designed to save energy through the use of diesel vehicles (saving 73 million tons of gasoline) and replacement fuel (saving 91 million tons of gasoline) by 2020, equivalent to 41% of China’s consumption of crude oil. If the guidelines bear their expected fruit, at least half of all the automobiles on the streets and roads of China in 2025 will be “energy-saving” vehicles.

National Strength

China’s aggressive move into new energy development has caught widespread attention among the media, and foreign press people have commented that China has the potential to become a leading supplier of new energy.

“Energy recycling technology used to be dominated by the U.S., Japan, and Europe,” commented a German journalist, “but those areas are now faced with increasing pressure from China, which has made significant progress in this field over the past few years.”

“China’s global influence will be comparable to that of the U.S. if it successfully develops new energy as an alternative to crude oil,” commented a report in the Global Times of Hong Kong. “Currently, there is a group of Chinese scientists engaged in crude oil replacement, which will help reduce auto exhaust emissions and restrain the greenhouse effect.”

“Right now it looks like it will not be very difficult for scientists to search out new-energy production technologies. In the past, plentiful supplies of crude oil caused people to neglect the need to find new energy. When supplies of crude oil gradually decline, people will be motivated to look for new energy as solutions.”

Given the high cost of R&D, however, new auto energy may not be a profitable business at first. Only those countries that consume huge amounts of gasoline and have strong economic power, like the U.S. and China, are able to afford it.

(by Quincy Liang)