VZCZCXRO0435
RR RUEHCN RUEHGH RUEHVC
DE RUEHBJ #3811/01 3200748
ZNR UUUUU ZZH
R 160748Z NOV 06
FM AMEMBASSY BEIJING
TO RUEHC/SECSTATE WASHDC 2145
INFO RUEHOO/CHINA POSTS COLLECTIVE
RHMFIUU/DEPT OF ENERGY WASHINGTON DC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 BEIJING 023811 
 
SIPDIS 
 
SIPDIS 
SENSITIVE 
 
STATE for EAP/CM GWARD AND PSECOR, EB/ESC PHAYMOND 
STATE/H please pass to Senator Cantwell's Staff 
USDOE for DOE OIC DPUMPHREY, OFFICE OF THE SECRETARY for 
MWILLIAMSON 
TRESURY for OASIA/ISA ADAMS/DOHNER/CUSHMAN 
USDOC for 4220/ITA/MAC/CMMCQUEEN/HAMROCK 
USDOC for 1003/ITA/OUS/OC 
USDOC for 6310/ITA/TD/OIEM/KMURPHY/HBURROUHGS/KHOLLANDE R 
UDDOC for 6000/ITA/TD/RPACE 
 
E.O. 12958: N/A 
TAGS: ENRG PREL ETRD SENV TRGY CH
SUBJECT: CHINA/ENERGY: SENATOR CANTWELL, NDRC VICE-CHAIRMAN ZHANG 
GUOBAO MEET TO DISCUSS BILATERAL ENERGY ISSUES 
 
SUMMARY 
------- 
 
¶1. (SBU) United States Senator Maria Cantwell (WA) and National 
Development and Reform Commission (NDRC) Vice-Chairman Zhang Guobao 
met to discuss a broad range of bilateral energy issues on Monday 
November 13, 2006.  Senator Cantwell invited Zhang to travel to 
Washington State for bilateral energy talks.  Washington's rich 
energy and environmental protection history coupled with its leading 
edge technology and business resources make the state a good venue 
to explore solutions the energy challenges facing China and the 
United States, said Senator Cantwell.  Vice-Chairman Zhang stated he 
is pleased with the invitation and will pass it along for 
consideration.  President Hu Jintao's "new energy security concept" 
is guiding China's energy policies.  Recent internatioal energy 
price increases have been unfairly lamed on China's rising energy 
demand.  Chinaonly accounts for six percent of international oil 
trade and is largely self-sufficient in energy supply, according to 
Zhang. End Summary. 
 
Senator Meets Chinese Energy Leader, Issues Invite 
--------------------------------------------- ----- 
 
¶2. (SBU)  Senator Cantwell and NDRC Vice-Chairman Zhang Guobao met 
to discuss a broad range of bilateral energy issues on Monday 
November 13, 2006.  Senator Cantwell began the meeting by inviting 
Zhang and members of his staff to Washington State for bilateral 
energy meetings.  Washington has a rich energy history that would 
provide a good backdrop for United States-China energy policy 
discussions.  Senator Cantwell noted that 72 percent of Washington 
State's electrical power is generated by hydroelectric means. 
Additionally, Washington is one of the few states offers cost-based 
power pricing, making electricity very affordable for residents and 
businesses. 
 
¶3. (SBU) Vice-Chairman Zhang expressed surprise that hydroelectric 
power is so prominent in Washington State's electric power mix. 
China has the largest untapped hydroelectric power resources in the 
world and should study Washington's experiences.  China has 11.7 
gigawatts of hydroelectric power generation capacity, but has only 
developed about 25 percent of its available resources, said Zhang. 
Senator Cantwell stated that Washington has significant experience 
managing the environmental impact of its heavy use of hydroelectric 
power.  This also may be of interest to Chinese energy officials 
when considering the merits of the energy meeting invitation. 
 
¶4. (SBU) Senator Cantwell further noted that the nexus of Washington 
State's computer science industry and resident national laboratories 
is making the State a leader in energy research.  Washington-based 
researchers are developing wind, solar, and wave power generation 
technologies.  Additionally, researchers in partnership with the 
power sector are achieving significant results in making the state's 
electric power grid more efficient.  Senator Cantwell stated that 
Washington is home to what will be the largest bio-diesel facility 
in the United States when it becomes operational in June 2007.  The 
facility is expected to be capable of generating 100 million tons of 
soybean-based fuel a year when fully operational.  Relatedly, 
university and national laboratory experts are conducting 
cutting-edge research on ethanol fuels derived from wheat straw, 
according to Senator Cantwell. 
 
Zhang: Want to Set China's Energy Record Straight 
--------------------------------------------- ---- 
 
¶5. (SBU) Vice-Chairman Zhang said that he is inclined to accept 
Senator Cantwell's invitation, but he must first pass it along to 
his staff and other senior NDRC leaders for consideration.  Zhang 
then stated that it is important for him to set the record straight 
on China's impact upon the international energy market.  China has 
been unfairly criticized for international energy price increases 
during the past several years.  Coal accounts for 74 percent of 
China's total energy consumption.  This figure dwarfs that of most 
developed countries, including the United States.  Zhang said that 
in 2005 China imported 130 million tons of oil, accounting for only 
six percent of total international oil trade.  China ranked behind 
the United States and Japan in oil imports, said Zhang. 
 
¶6. (SBU) Vice-Chairman Zhang said that observers who blame rising 
 
BEIJING 00023811  002 OF 002 
 
 
international energy prices on China only consider the country's oil 
import ranking when analyzing international energy market 
developments.  Zhang acknowledged that Chinese oil imports account 
for forty percent of its total oil consumption; however, imported 
energy resources, including natural gas and oil, account for only 
six percent of the country's total energy mix.  Beijing has a very 
ambitious energy conservation goal during the next five years and 
has room to expand other energy resources-such as wind, solar, and 
nuclear power-in its energy mix.  These developments should help 
China manage its international energy market footprint, according to 
Zhang. 
 
Zhang:  Hu's New Energy Security Concept is Guide 
--------------------------------------------- ---- 
 
¶7. (SBU) Vice-Chairman Zhang stated China's future energy policy 
will be guided by Chinese President Hu Jintao's "new energy security 
concept."  The concept is based upon self-reliance for meeting most 
of China's energy needs, and the prioritization of domestic energy 
conservation.  Zhang said that Hu's guidance has resulted in 
significant improvements in China's energy situation.  For example, 
1,000 counties have benefited from Central Government efforts during 
the past six months to bring electric power to rural areas.  This 
still leaves 10 million Chinese citizens without access to power, 
but the Central Government recognizes the problem and will address 
it. 
 
¶8. (SBU) Vice-Chairman Zhang said that the most significant goal of 
Hu's energy security concept is China's plan to reduce energy 
consumption by 20 percent during the next five years.   This is a 
very ambitious goal, but given that China's energy intensity level 
is ten times that of Japan and five times that of the United States, 
the country has a great deal of room for improvement.  (Note: Zhang 
articulated the measurement of energy intensity as the amount of 
energy consumed per 10,000 RMB of GDP produced. End Note.) 
 
 
Zhang, Senator Encourage Further Talks 
-------------------------------------- 
 
¶9. (SBU) Senator Cantwell closed the meeting by commending China for 
its energy conservation goals.  The United States similarly needs to 
set energy conservation goals.  For example, the United States 
imports half of the oil it consumes, but its domestic production is 
incapable of influencing international oil prices.  Senator Cantwell 
Stated this is an indication that the United States must do a better 
job addressing its reliance on imported oil.  For his part, 
Vice-Chairman Zhang said that he looked forward to being able to 
accept Senator Cantwell's invitation to visit Washington State for 
energy meetings.  China can profit from Washington's experiences 
promoting energy conservation and environmental protection.  Zhang 
encouraged more visitors from Washington State to visit the NDRC to 
discuss energy and other economic issues. 
 
Meeting Participants and Clearance Information 
--------------------------------------------- - 
 
¶10. (U) UNITED STATES Participants: 
 
Senator Cantwell 
Deputy Chief of Mission Sedney 
Stacey Baird, Office of Senator Cantwell 
Environmental, Science, Technology, and Health Officer Cintron 
Economic Officer Jones (notetaker) 
Cindy Yang, Interpreter 
 
¶11. (U) Chinese Participants: 
 
Zhang Guobao, NDRC Vice-Chairman 
Zhao Xiaoping, Director General, NDRC Energy Bureau 
Li Bin, Deputy Director General, NDRC Department of Foreign Affairs 
Li Fang, Director, NDRC Department of Foreign Affairs 
Guo Xin, Interpreter, NDRC Department of Foreign Affairs 
 
¶12. (U) Senator Cantwell and her staff were unable to clear this 
cable before departing Beijing. 
 
RANDT