Address by Li Wei, President, Development Research Center of the State Council

At the Chatham House, July 7, 2014

Distinguished Director Niblett,

Distinguished Minister Willetts,

Ladies and gentlemen,

Good afternoon.

It is a great pleasure to address at the Chatham House, a time-honored and world-famous research institute in the field of international affairs. My colleagues and I are very glad to participate in exchanging views with an open and honest approach.

Three weeks ago, Chinese Premier Li Keqiang paid a fruitful visit to the UK. Witnessed by Premier Li and Prime Minister Cameron, a series of important cooperation agreements were signed between the two countries. In the agreement, energy cooperation is highlighted and to enhance the communication and cooperation between our think tanks is an important consensus. At the event hosted jointly by the Royal Institute of International Affairs (Chatham House) and the International Institute for Strategic Studies, Premier Li delivered an important speech. We can say that today's activity is another practical move to implement the agreement reached by the leaders and to deepen cooperation between the two sides. I would like to express my gratitude for the thoughtful arrangement by Chatham House and for the active participation of you all.

Now, I would like to share some of my observations on the energy technology innovation, especially from the perspective of China.

First, the innovation of energy technology will create a greener, more sustainable and brighter future. Energy is both the material living basis in modern society and the source of motivation for the progress of human society. Historically, due to the invention of steam engine, machine production started to replace human labor, and centralized factories began to appear; and thanks to electric power, the utilization of energy became convenient, making it possible to work in large-scale assembly lines. Those energy technology breakthroughs not only changed the energy system itself, but also sparked the first and the second industrial revolutions, leading the social productivity and the level of people's welfare to a new stage. Admittedly, the speedy development has triggered some problems, such as environmental pollution, ecological destruction, the depletion of natural resources and global warming. And the rapid changes of lifestyles and the unceasing pursuit of living quality have greatly aggravated the contradiction between energy supply and demand. Besides, the competition for energy resources has often led to international tensions and regional conflicts. However, we will not hold our steps. The desire for a better life and the effort to realize sustainable development complement each other and interact as both cause and effect. At present, a series of breakthrough have been achieved, not only in the field of renewable energy, such as wind power, solar power and marine energy, but also in shale gas, shale oil and other unconventional oil and gas; and breakthroughs can also be found in the new generation of nuclear technology and nuclear fusion, as well as the use of energy in electric vehicles and intelligent buildings. The new-generation energy system is gradually taking a clear shape. Together with internet technology, new material technology and biological technology, the new energy system is opening the door of the third industrial revolution. Fortunately, since the 1990s, the global R&D investments and patented inventions in the field of renewable energy and energy efficiency have increased remarkably. And today those efforts have bared fruits and gained reward, giving us hope and confidence for the future. We firmly believe that, human wisdom and the enthusiasm for innovation will never dry up, growth will not hit the ceiling, resources could be sustainable, and tomorrow will be nicer.

Second, the fundamental way out to solve China's energy problem lies in innovation. China is one of the biggest energy consumers in the world and will keep its rapid growth for a considerably long time. I should say that it is not China’s fault, because, on one hand, China has accounted for almost 1/5 of the world population, and on the other hand, the energy consumed has enabled China to provide a lot of cheap and practical products for many other countries. According to our calculation, despite the slowdown of average economic growth rate from around 10% to 7%, China will keep an average increase rate of about 4% in energy consumption in the following ten years. As a result, energy exploitation and utilization will lead to higher pressure from environment and resources. China's dependence on oil import reached 58% in 2013, having become the biggest oil importer in the world for the first time. The air pollution problem, especially the PM2.5 pollution in China, has become the focus of public attention. In terms of greenhouse gas emission, though China is still a developing country facing the primary task of development, it is also fully aware of the harmful effect brought by climate change to China and to the world. And China will make due and currently affordable contribution to the global efforts to address the climate change. During our research on China's energy strategy, we have truly realized that China’s energy problem is a worldwide one, as there is no other country as China faced with such huge energy demand, limited resources supply and urgent ecological problem. Recently, Chinese President Xi Jinping has delivered an important speech on energy issue, explicitly pointing out that China is in need of a series of revolution in energy consumption, energy supply, energy technology and energy institutions. That is to say, China has to pursue a new path of energy development and build an efficient, green and safe energy system. In this system, there is a need not only for the emerging renewable energy technology and smart energy technology, but also for the advanced unconventional oil and gas technology and nuclear power technology. In addition there is also the need for the traditional energy-saving technology and the technology of clean and efficient utilization of coal. All these technologies have their places in China. China has also realized the importance of technical innovation in building a new energy system. In recent years, 70% of the saved energy is owing to the application of energy-efficient new equipment, and the fast growing capacity of wind and solar power generation has provided a great amount of clean energy. In 2013, China ran the top of the world in wind power generation, reaching 91.42 million kilowatt, roughly equivalent to the total power generation capacity in the UK. Judging from the development trend, the application of new technologies will play a more crucial role in China's energy development.

Third, from "catching-up" to "leading", China's energy technology calls for innovation. China is working hard to catch up with the world advanced energy technologies, through introducing, digesting and absorbing technologies. At present, China's average energy consumption in steel, electrolytic aluminum and other industries has approached the world average level; the comprehensive energy efficiency of ultra-supercritical thermal power has achieved world advanced level; the application of UHV power transmission technology has been commercialized; China has taken the lead in building the third-generation nuclear power plant and is planning to export relative technologies, products and operation services. Next, further efforts will be made to apply the existing advanced technologies from around the world in China. However, technological catch-up is far from enough to meet the demand for energy technology innovation in China. To solve this problem and to ensure the global sustainable development, China will work with the international community and make more contributions in expanding the cutting-edge energy science and in providing innovative technologies, products and services. Chinese government has attached great importance to technological innovation. Chinese President Xi Jinping called for 'innovation, innovation and further innovation' at the conference for academicians from the Chinese Academy of Sciences and the Chinese Academy of Engineering. China has increased its investment in technological innovation. In 2013, the share of R&D input in GDP reached 2.09%, approaching the level of the European Union and the UK. Considering the current development stage and economic size of China, it was already a considerably large input. Energy is an important area for technological input. China has put the oil and gas development and large nuclear power plant construction on the list of the 16 key national science and technology projects. A great amount of investment has been put into R&D in the fields of renewable energy power generation, new-generation ultra-supercritical power generation, coal-to-liquids and coal-to-gas. Great progress has been made in related technologies and China has taken the lead in coal-to-liquids technology and the number of related paten holding. Despite the achievements, we clearly see the fact that the formation of innovation capability calls for a long-term accumulation of knowledge, talents and scientific research system. China’s energy technology innovation is based on a weak foundation, in lack of accumulation, faced with a scattered system and sometimes constrained by the existing institutions and mechanisms. China still has a long way to go in transforming from "catching-up" to "leading" in the innovation of energy technology. But I also believe that China will make greater achievement as well as contribution in the innovation of energy technology, through strengthening the basic R&D capacity and improving the institutions and mechanisms.

Fourth, Speed up the innovation of energy technology with an open and collaborative manner. Openness and collaboration have already become a new trend in technological innovation, as innovative activities are no longer limited within single enterprise, single region or single country. An increasing number of enterprises have conducted their innovation by integrating talents, technology and capital from around the world. There are a lot of successful cases in the new energy industry in China. Many business entrepreneurs have returned from their overseas study with a good command of advanced knowledge and technology. By making the use of international capital market, they recruit global talents and fit in the international industry; and by utilizing the large number of skilled domestic labor and the huge manufacturing capacity in China, they produce new energy products attractive both in price and in quality, and sell them both at home and abroad. To support this kind of open innovation, we need to give play to the comparative advantages of different countries in terms of innovation, and create a pleasant environment and system for global energy technology innovation. As to China, we are now promoting the economic system reform so as to endow the market a decisive role in allocating resources and at the same time give a better play to the role of the government. Further efforts are being made to improve the industrial organization structure and the pricing mechanism in energy industry, and a research is conducted on enacting environmental taxes, in order to provide lasting endogenous power for energy technology innovation. Meanwhile, intensified efforts are being made to protect intellectual property rights to safeguard the interests of innovators. Policy environment will be further improved so as to facilitate innovation and related businesses of global talents and R&D activities of international enterprises in China. On the other hand, the international community should adapt to the rise of China in innovation and give fair treatment to China in the international trade and greenfield investment. This is not only beneficial to both sides of the cooperation, but also to the global sustainable development, because, different from other kinds of technological innovation, the innovation in energy technology is externally influential, that is to say, it can also make contributions to global sustainable development while it brings value to both innovators and users.

Ladies and gentlemen,

As a think tank in China, DRC is committed to promoting the cooperation between the two countries in the field of energy and especially in policies. In December 2013, under the witness of Premier Li Keqiang and Prime Minister Cameron, DRC and Royal Dutch Shell signed an agreement concerning the research on the strategy for China's natural gas development as a part of the cooperation between the two countries. This is another major joint research project after the Research on China's Medium and Long Term Energy Development Strategy. During his visit in the UK Premier Li proposed the idea of jointly hosting a China-UK forum on reform and innovation by relevant think tanks of the two countries, and DRC is willing to be the Chinese organizer of the forum. Having shared a long-term cooperation, DRC and the Chatham House are jointly conducting a research on the global governance of energy resources following the collaborative research on the ways of China's low carbon economy development and low carbon industrial development strategy. Now we have signed a Memorandum of Understanding for cooperation, in the hope of sharing experiences and exchanging views on policies, so as to promote the green low carbon development and innovation of the two countries and of the whole world. Ladies and gentlemen, the Chinese sage Lao Zi once said, "journey of a thousand miles begins with a single step", and the English poet Browning wrote, "light tomorrow with today". People from two different countries convey one same idea that despite nationalities and skin colors, we should join hands and take actions——strengthen the innovation of energy technology, for our planet and for our brighter future!

Thank you. And thanks again for the invitation of Chatham House.