The National People’s Congress of China is set to approve the 14th Five-Year Plan (FYP 2021-2025) which focuses on domestic consumption, environmental sustainability, and technological innovations. Analysts said that the more domestically driven plan would support the consumption of high value-added petrochemical products. However, demand for transportation fuels is expected to decline amid the shift to LNG and New Energy Vehicles propelled by electricity and even hydrogen.
Chinese petrochemical makers have been prepared for the expected expansion in demand. For instance, state refiner Sinopec is projecting petrochemicals and new materials as its primary growth sources over the next five years. Sinopec has also been increasing investments in this segment. For the first nine months of 2020, Sinopec spent CNY10.46 billion ($1.34 billion), an increase of 21% from a year earlier. Growing petrochemical demand will also boost China’s crude imports, analysts said.
At the same time, the FYP 2021-2025 will mark the start of Beijing’s push to achieve its 2060 zero-emissions targets. It will be the basis for China’s future plans on energy transition and carbon emission reduction. Beijing will put in efforts to balance between driving economic growth and ensuring its low-carbon future. Commodities market players will watch closely whether the dynamics will benefit certain fuels such as renewables, natural gas, nuclear, and hydrogen.
Chinese energy firms have been preparing for the transition. For instance, PetroChina plans to invest CNY10 billion ($1.5 billion) a year until 2026 in low-carbon energy, including geothermal, natural gas, wind, and solar. Meanwhile, CNOOC intends to focus more on offshore wind developments through the newly-established CNOOC Renewable Energy Co., Ltd.
