U.S. Department of State

Clean, Efficient, and Secure Electricity Production and Transmission Action Plan

Background

The United States and China agreed to conduct extensive cooperation on energy and the environment over a ten-year period at the third meeting of the U.S.-China Strategic Economic Dialogue (SED) in December, 2007. At the fourth meeting of the U.S.-China Strategic Economic Dialogue (SED) in June, 2008, the United States and China signed the U.S.-China Ten Year Energy and Environment Cooperation Framework (Ten Year Framework).This Cooperation Framework is focused on promoting extensive cooperation over a ten year period to address the challenges of environmental sustainability, climate change, and energy security. The Ten Year Framework established five goals each with its own task force.  The Ten Year Framework established five goals each with its own task force.   

Clean, Efficient, and Secure Electricity Production and Transmission is one of the five goals that have been identified by both countries.  Cost effective, reliable, and environmentally sustainable electricity production and transmission is critical to future energy, environmental and economic security of both nations.  The two nations agree to focus on steps we can take together to address electricity supply challenges, and in the power generation sector emphasize the efficient diversification of energy resources. Additional areas of collaboration may include renewable and alternative sources of clean energy, clean fossil fuel, power grid and the electricity market, and nuclear power.

The United States industrial sector consumes about one third of the total energy used, including the consumption of a quarter of the total electricity generated.  The Chinese industrial sector consumes more than seven-tenths of the total energy used in China, including the consumption of three-quarters of the total electricity generated. 

There is no single solution to our growing energy demands.  While we seek ways to make solar and wind energy reliable and cost competitive, we also must seek ways to provide baseload power supplies such as that produced by clean coal power and to expand emissions-free nuclear energy.  Additionally, we must also seek ways to remove the obstacles to expanding transmission so we can safely deliver electricity from generator to consumer. 

The challenges relevant to electricity production and transmission are intrinsically tied to environmental goals.  Under the Ten Year Framework, China and the United States seek to look at these challenges together and develop solutions that meet both nations’ long-term environmental and energy needs. China and the United States recognize and support existing initiatives in which both countries are engaged in multilaterally, and will promote cooperation in this area by taking advantage of the existing multilateral cooperation mechanisms.

There are twelve recent, current, and pending agreements in energy cooperation (listed in Appendix A.) between the two nations.

There are nine recent accomplishments in energy cooperation, which are listed in Appendix B.

The successful completion of existing bilateral projects is a strong indication that mutually agreed upon projects with a focus on maximizing mutual benefits produce beneficial results.  

Participating Agencies for Electricity Task Force

U.S.

Department of Energy

Federal Energy Regulatory Commission

Nuclear Regulatory Commission

Department of State

Environmental Protection Agency

China

National Energy Administration

National Development and Reform Commission

State Electricity Regulatory Commission

Ministry of Environmental Protection

Ministry of Science and Technology

Future Areas of Cooperation

Sub-Goal 1:  The United States and China will implement best practices in electricity planning.

Actions: 

·         In year 1, the United States and China will exchange theories and application methods of electricity planning studies, introduce experiences and deficiency of domestic electricity planning to each other; the United States will provide China with training and necessary technical assistance on the theory and study tools of “Regional Planning (RP)”; China will introduce its best practices in grid planning study, and safe and stable grid operation to the United States.

·         In years 1-2, the United States will share with China its experiences and expertise with RP, a tested and proven U.S. technique in which electric generation, transmission, and energy-efficiency resource options are equally considered to produce optimum investment strategies. The United States electric utilities and state regulators have extensive long-term planning experience.  Expertise in RP methods has been transferred to U.S. industry and regulators over the last two decades by U.S. national laboratories, where the expertise resides. 

·         In years 2-3, the United States will assist China in jointly developing RP pilot projects in China, comparing RP with traditional planning methods, and further test the method of RP and its real outcomes.

·         In years 3-5, the United States and China will jointly develop “best practices” guidance for electricity planning, with incorporation of demand response programs into the RP methods.

·         After year 5, the United States and China will disseminate the guidance, educate industry members and associations, and seek voluntary compliance with the guidance.

Sub-Goal 2:  The United States and China will implement best practices in utility operations and management, including emergency planning and response, and best environmental management practices.

Actions: 

·         In years 1-3, study tours will be planned through major trade associations in cooperation with government representatives for Chinese utility industry CEOs to meet with U.S. utility industry CEO peers to share experiences on emergency planning (i.e., major outages, brownout events, etc.), and lessons learned from natural disasters (i.e. hurricanes and earthquakes).

·         In years 2-5, the United States and China will exchange information on the development of environmental regulations and standards impacting power production and transmission

·         In years 3-5, the United States and China will jointly study and develop “best indicator system”, and “best practices” guidance for utility operations and management.  Such guidance is expected to address contingency planning and emergency response programs for pre-incident solutions.

·         After year 5, the United States and China will disseminate the guidance, educate industry members and associations, and seek voluntary compliance with the guidance.

Sub-Goal 3:  The United States and China will implement best practices in electricity pricing policy in China.

Actions: 

·         In years 1-2, U.S. electricity regulators will host visits by Chinese experts to U.S. state public service commissions and the U.S. Federal Energy Regulatory Commission (FERC) for an exchange of experiences and best practices in electricity pricing policy.  Such visits expand upon exchanges that already occur in the area of energy efficiency electricity policy through the National Association of Regulatory Utility Commissioners (NARUC) as well as through the FERC. Intensive and in-depth training will be provided to relevant Chinese participants.

·         In years 3-5, the United States and China will jointly develop “best practices” guidance for electricity pricing policy in China. 

Sub-Goal 4:  The United States and China will review the use of incentives as a public policy tool.

            Actions:

·         In years 1-2, the United States and China will undertake a study of the history of incentives used in both countries as tools to influence electric power sector development, specifically with respect to commercialization and utilization of new transmission and distribution infrastructure and alternative energy technologies.  The goal of the study is to identify those incentives that are most effective in achieving public sector goals and the economic, cultural, and organizational context required to maximize the benefits of incentive programs. Also included is a review of the regulatory mechanisms in both China and the U.S. that order compliance with directives aimed at strengthening infrastructure in both countries.

·         In years 3-5, the two sides, within certain scope, will develop and implement pilot projects in China to demonstrate the effectiveness of the policy tools identified.

Sub-Goal 5:  The United States and China will cooperate in nuclear safety and regulatory matters to ensure the safe construction and operation of new nuclear power plants

            Actions:

·         The U.S. Nuclear Regulatory Commission (USNRC) and the National Nuclear Safety Administration of China (NNSA/China) will establish a USNRC-NNSA/China Steering Committee to oversee technical cooperation on the Westinghouse nuclear reactor AP1000.

·         In years 1-3, USNRC will host six NNSA-China staff members for technical assignments and training at USNRC headquarters and regional offices, and conduct two training workshops on the AP1000 in total over the three year period.

·         In years 3-5, NRC will conduct 8-10 training workshops on new reactor designs, construction, siting, and on operational safety issues, and cooperate on quality assurance and equipment qualifications for new nuclear reactors.

Sub-Goal 6:  The United States and China will analyze the potential for increasing the levels of intermittent renewable generation resources, including wind and solar power, and base load renewable generation from geothermal power, into the power system while maintaining system reliability. The United States and China will conduct advance studies on the impact of integrating large scale wind power, solar power and other renewable generation resources into the power system on grid development, grid operation management and electricity market, and propose countermeasures.

            Actions:

·         In year 1, the United States and China will hold a technical workshop on a series of key issues concerning grid integration and management.

·         In years 1-5, the United States and China will seek opportunities for joint research on grid integration technologies.

·         In year 1, the two countries will exchange information on experiences learned in rural electrification programs.

·         In years 3-5, the two countries will work to identify commercialization strategies for technologies developed jointly.

·         As appropriate, the two countries will develop one or more demonstration projects to promote commercialization.

Sub-Goal 7:  The United States and China will explore programs and incentives such as smart grid concepts, demand response and consumer participation.  The goal is to engage consumers.

            Actions:

·         In years 1-3, the United States and China will host meetings of experts on demand response.

·         In years 2-3, the United States and China will host meetings to exchange information on commercially available Smart Grid technologies, with support from the US Department of Commerce and Chinese stakeholders.

Appendices

A.   Recent, Current and Pending Agreements

There are twelve recent, current, and pending agreements between the United States and the People’s Republic of China

1)            Protocol for Cooperation in the Field of Fossil Energy Technology Development and Utilization between the Department of Energy of the United States of America and the Ministry of Science and Technology of the People's Republic of China.

         Date Signed: 20-April-2000                  Expires:  20-April-2010

2)            Annex II to the Protocol on Cooperation in the Field of Fossil Energy Technology Development and Utilization between the Department of Energy of the United States of America and the Ministry of Science and Technology of the People's Republic of China for Cooperation in the Area of Clean Fuels.

         Date Signed: 19-Nov-2002                   Expired:  19-Nov-2007

3)      Statement of Intent (regarding a mutual agreement on exchange of nonproliferation assurances required for transfers and mutual exchanges of nuclear technology) between the Department of Energy of the United States of America and the China Atomic Energy Authority of the People’s Republic of China.

         Date Signed: 16-Sept-2003                   Expires:  No ending date

4)      Protocol for Cooperation in Clean Energy Technologies for the 2008 Summer Olympic Games in Beijing.

         Date Signed: 12-Jan-2004                     Expires:  12-Jan-2010

5)      Statement of Intent between the Department of Energy of the United States of America and the China Atomic Energy Authority of the People's Republic of China Concerning Cooperation in the Field of Peaceful Use of Nuclear Energy and Nuclear Non-Proliferation and Counter-Terrorism.

         Date Signed: 12-Jan-2004                     Expires:  12-Jan-2009

6)      Memorandum of Understanding between the Department of Energy of the United States of America and the National Development and Reform Commission of the People's Republic of China on Bilateral Energy Policy Dialogue.

         Date Signed: 23-May-2004                   Expires:  23-May-2009

7)      Agreement to Extend the Protocol for Cooperation in the Field of Fossil Energy Technology Development and Utilization between the Department of Energy of United States of America and the Ministry of Science and Technology of the People's Republic of China.

         Date Signed: 05-April-2005                  Expires:  20-April-2010

8)      Memorandum of Understanding among the General Administration of Customs, the General Administration of Quality Supervision, Inspection, and Quarantine of the People's Republic of China and the Department of Energy of the United States of America Concerning to Prevent the Illicit in Nuclear and other Radioactive Material.

         Date Signed: 19-Nov-2005                   Expires:  19-Nov-2008

9)      Memorandum of Cooperation on Nuclear Safety for the Westinghouse AP 1000 Nuclear Reactor between the USNRC and the National Nuclear Safety Administration of China

         Date Signed:  27-May-2007                  Expires:  Open ended

10)    U.S.-China Bilateral Nuclear Energy Action Plan, between the Department of Energy of the United States of America and the National Development and Reform Commission of the People's Republic of China

         Date Signed: 18-Sep-2007                    Expires:  no expiration date

11)    The Revised Protocol for Cooperation between the USNRC and the National Nuclear Safety Administration (NNSA) of China.

         Date Signed:  7-January-2008               Expires:  7-January-2013

12)    Pending Agreement on Carbon Capture and Storage

         Date Signed:  TBD

B.     Recent Accomplishments

1)            Natural Gas Training and Certification - This activity included the development of a natural gas training curriculum and a workshop that took place in Beijing during August of 2002.  As a follow-on to this work, the USTDA funded the expansion of this training program in China.

2)            Joint Coal Bed Methane Training Program - This project included a coal bed methane training workshop, which was held in Wuxi in November 2003.  This project increased the visibility of U.S. coal-bed methane production technology in China and included participation of independent producers from the United States.

3)            Coal-bed Methane Workshop - This project expanded upon the work conducted in the training program by holding a second workshop in Washington, DC in June 2004, which was attended by 32 representatives from China.  

4)            Overview and Use of Publicly Available DOE Oil and Gas Software - This project consisted of technology briefings on reservoir simulation software that had been developed by DOE.  A workshop was held October 12-14, 2004, in Beijing, China to demonstrate the use of this software to make oil and gas development decisions.

5)            Two Researchers from China’s Petroleum Research Institute of Petroleum Exploration & Development (RIPED) worked cooperatively with faculty at the University of Tulsa comparing the history of petroleum development in China and the United States.  Final report and presentation completed October 2006.

6)            The extension of Annex III under the Protocol for Cooperation was signed in September 2006 and a new coal-bed methane and coal mine methane technology exchange project was completed in May 2007.  There were approximately 120 participants from 35 different organizations including major oil companies such as CNPC/PetroChina, SINOPEC, CUCBM as well as Beijing Petroleum University staffs.  U.S. DOE and China -CPCIA along with provincial NDRC, local government officers, opened the workshop followed by two days of presentations given by ALL Consulting, Dan Arthur and Bruce Langhus. The topics included the technical and applied aspects of selected current technologies used in U.S. coal basins for the exploration, drilling, and development of CBM and CMM Resources. 

7)            U.S. participation in the Chinese Methane to Markets conference and expo in Beijing in October 2007. This included a successful outreach effort by CPCIA to encourage their member companies’ technology experts/vendors to attend and participate in the Expo.

8)            The USNRC sent an 11 member team to China, in August 2007, to conduct a 2 week training course on the licensing and review of the AP 1000 reactor design.

9)            A 7-member team of USNRC representatives traveled to China in October 2008 to conduct a second training workshop on AP 1000. Both USNRC and NNSA/China share information on the review of the AP 1000.