The first stage of a cooperative program under which Russia will supply electricity to China as part of the "Year of China" in Russia has begun. Russia has agreed to supply 60 trillion kilowatt-hours of electricity to China annually. At present, it supplies 2 to 3 trillion kilowatt-hours.

According to a report from the Chinese Renewable Energy Society, renewable energy could contribute to 30 percent of China's total energy supply by 2050. Chinese wind power stations may have the ability to generate 300 to 500 million kilowatts of electricity in 2050 and another 200 million to 300 million kilowatts will be generated by solar energy. Small hydropower stations could generate 100 million kilowatts of electric power by 2030, which would account for 10 percent of overall energy supply at that time.

Energy officials from China and the United States signed a memorandum of understanding (MOU) this weekend to cooperate on increasing energy efficiency in China's industrial sector, which accounts for 70 percent of the country's energy demand. Karen Harbert, assistant secretary for policy and international affairs of the US Department of Energy (DOE), and Chen Deming, vice minister of the National Development and Reform Commission, signed the agreement at a meeting in San Francisco. The two sides agreed to jointly conduct audits to increase national, regional and local energy efficiency in energy-intensive factories, which will reduce greenhouse gas emissions.

China will use up to 350 million tons of oil this year, ten million tons more than last year according to State Development and Reform Commission (NDRC). High oil prices have affected the nation's energy budget and the country might replace oil with gas in some areas.

A Chinese expert has called for developing liquefied natural gas (LNG) and liquefied petroleum gas (LPG) to replace the expensive crude oil. LNG and LPG markets will have a promising prospect and LPG may face supply shortage in the long term according to NDRC Energy Research Institution.

China's demand for natural gas in the next 20 years will be between 227.54 billion cubic meters and 296.54 billion cubic meters. Its annual domestic production will be 120 billion cubic meters. Part of this demand natural gas will be filled by 60 billion to 70 billion cubic meters of gas piped from Russia and Central Asia, and the rest will be LNG from overseas. Therefore, the LNG market will have promising prospects and may face a supply shortage in the long term.

By now, China has three planned LNG receivers, in the Pearl River Delta, the Yangtze River Delta, and Fujian. CNOOC is the largest LNG project builder and investor. According to the plan, China will build imported LNG receiver projects with a combined capacity of 70 million tons/year by 2015 along its coastal areas, but most projects are not making any progress.

LPG consumption in China has seen annual growth of 14.9 percent. It is estimated that China may need 250 million to 300 million tons in 2010, and 400 million to 500 million tons in 2020. There will be a LPG shortage in the long term.

China's top oil companies plan to boost the supply of cleaner fuels such as natural gas to Beijing to help clear the capital's smoggy skies in the run-up to next summer's Olympic Games. China National Petroleum Corp. (CNPC), China's biggest oil and gas producer, plans to increase Beijing's natural-gas supply by 17 percent to 5.5 billion cubic metres in 2008. The increased supplies will help to replace coal used in water heaters and electric power plants and will substitute for coal gas in cookers. It will also power some buses and cabs in the city.

Sinopec, China's largest refiner, has upgraded its Beijing plant to produce cleaner fuels. The Yanshan plant, with 10 million tons of crude-processing capacity, is fully ready to produce gasoline and diesel to meet the Euro IV low-sulphur standard, after 5.7 billion yuan ($750 million) in new investments. Beijing will lead the country in adopting the Euro IV standard in 2008, which limits sulphur levels in gasoline to no more than 50 parts per million.