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China promotes alternative fuel vehicles

Hydrocarbon Engineering,

According to the US Energy Information Administration (EIA), unprecedented motorisation in China has led to increases in both oil demand and oil imports.

Gasoline consumption in China has increased from 0.9 million bpd in 2003 to more than 2 million bpd in 2013. Increasing oil demand requires China to import more petroleum from other countries. Since 2009, China has been importing more than half of its petroleum needs.

New government strategy

The Chinese government has adopted a broad range of policies in response to growing oil imports, including improvements in the fuel economy of new vehicles and the promotion of alternative fuel vehicles. Under the Energy Saving and New Energy Vehicle Plan for 2012 – 2020 released in 2012, average passenger car fuel economy is targeted to increase 34 miles/gal. by 2015 and 47 miles/gal. by 2020.

In addition, the government intends to invest US$ 15 billion in alternative fuel vehicles over the next ten years. A new strategy to promote new energy vehicles (NEVs; vehicles that are partially or fully powered by electricity) and to support the domestic energy industry to mass-produce NEVs has been launched. The national target for the production and sale of electric and plug-in hybrid vehicles is 500 000 units by 2015. The NEV target for 2020, which was originally set at 5 million vehicles, has recently been revised to 1 million vehicles.

In order to meet NEV penetration targets and boost consumer demand, the government has been offering many financial incentives, including approximately US$ 4 billion allocated for energy saving products, primarily NEV and household appliances. Additionally, in 2012 the Chinese Ministry of Finance announced it would provide annual subsidies up to two billion yuan (US$ 323.6 million) to support the growth of new vehicle ownership through 2015. For electric vehicles, subsidies for local government are often matched by local subsidies.

Limited success for NEVs

Despite a number of incentives, electric vehicle sales have been minimal. NEV sales account for less than 1% of total vehicle sales in China, which in 2013 remained the largest vehicles sales market for the fifth year in a row. According to China Daily, as of March 2013, an estimated 39 800 electric vehicles were on the road, approximately 80% of which are used for public transport.

The EIA has highlighted the following reasons as contributing factors to low sales:

  • High vehicle cost despite government subsidies.
  • Inadequate charging infrastructure.
  • Limited driving range compared to conventional internal combustion engine vehicles.
  • Lack of a national industry standard for charging connectors.
  • Consumer education and acceptance of the new technology.
  • Vehicle safety issues.

Adapted from a press release by Emma McAleavey.

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