In order to comprehensively implement the decisions and plans of the CPC Central Committee and the State Council on promoting primary product supply and price stability, deepening the structural reform on the supply side of the coal sector, innovating the coal production capacity management mechanism, promoting appropriate coal production capacity margins and adequate elasticity, and continuously consolidating the foundation of energy security, the National Development and Reform Commission and the National Energy Administration recently issued the Implementation Opinions on Establishing Coal Production Capacity Reserve System (hereinafter referred to as the Implementation Opinions). Here is the interpretation of the Implementation Opinions from four aspects.

1. Background and necessity for document drafting

Coal is China's primary energy source, playing the role of "ballast" and "stabilizer" in energy supply security. General Secretary Xi Jinping stressed that "China is rich in coal, poor in oil and gas. We must consolidate our domestic energy production base and ensure the security of coal supply." In recent years, China's high-quality economic development has been steadily advancing, and energy consumption has maintained rapid growth, coupled with the impact of uncertain factors such as extreme weather, resulting in a situation of tight coal supply in some areas at some times. Building a certain scale of coal reserve production capacity can "produce upward elasticity" under extreme conditions such as drastic fluctuations in the international energy market, frequent severe weather, and drastic changes in supply and demand, rapidly release reserve production capacity, effectively enhance the emergency response capability of coal, and better play the role of coal as a bottom-line guarantee in energy supply. At the same time, the reserve production capacity of coal can effectively enhance the flexibility of coal supply, ensure that coal-fired power plays a better supporting and regulating role, promote the high-quality development of new energy, and facilitate the green and low-carbon transformation of energy.

2. Overall requirements

The "Implementation Opinions" are guided by Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, fully implement the spirit of the 20th National Congress of the Communist Party of China and the Second Plenary Session of the 20th Central Committee of the Communist Party of China, conscientiously implement the new energy security strategy, and emphasize that the establishment of a coal production capacity reserve system should give full play to the market's decisive role in resource allocation, better play the role of the government, and focus on implementation on large-scale modern open-pit coal mines and underground coal mines with high safety guarantees. Select a number of coal mines with capacity reserve among new and construction coal mine projects, actively and steadily organize and implement them, vigorously improve the quality of safe and green production, maintain reasonable and abundant coal production capacity, enhance coal supply elasticity and flexibility, and effectively respond to cyclical and seasonal fluctuations in coal supply.

Taking the actual construction of production capacity reserve coal mines into full consideration, the "Implementation Opinions" propose to initially establish a coal production capacity reserve system by early 2027, form a certain scale of dispatchable production capacity reserve, and strive to form a dispatchable production capacity reserve of about 300 million tons per year by 2030. The coal production capacity reserve system is an innovative measure to strengthen supply-side management. Its main purpose is to enhance the elasticity of the coal supply. The production capacity reserve target proposed in the "Implementation Opinions" is a concept of production capacity, and the production capacity reserve is just a reserve measure to cope with extreme situations. It will not be activated under normal circumstances.

3. Main contents

The "Implementation Opinion" mainly includes work rules for the construction of production capacity reserve coal mines, management procedures, supporting policies, etc.

(1) Working rules for the construction of coal mines with capacity reserve. The first is to clarify the definitions of the design production capacity, regular production capacity and reserve production capacity of the capacity reserve coal mine. Regular production capacity refers to the production capacity of the coal mine under non-emergency conditions, and reserve production capacity refers to the moderate scale reserved on the basis of regular production capacity. Capacity used for peak shaving, and the sum of regular production capacity and reserve production capacity is the design production capacity. Second, in order to standardize the construction of coal mines with capacity reserve, relevant working rules have been determined from five stages: planning, approval, construction, acceptance, and production. The approval of coal mines with capacity reserve, mining, environmental impact assessment and other procedures must be handled according to the designed production capacity, and each production system and related equipment must be constructed and equipped according to the designed production capacity. The third is to clearly put forward requirements related to safety construction and production. Coal mines with capacity reserve must strictly implement the "three simultaneousness" system for safety facilities during the construction period. During the production period, they must increase investment in production safety, strengthen the investigation and management of hidden dangers, and continuously enhance the ability to ensure safe supply.

(ii) Capacity Reserve Coal Mine Management Procedures. The application conditions, application process, activation mechanism, and relevant requirements for signing medium- and long-term contracts for capacity reserve coal mines are proposed in accordance with the principles of applications submitted by enterprises, specific organization by local authorities, and overall planning by the state. Coal mines applying for capacity reserves should be newly constructed or under-construction coal mine projects approved by the National Development and Reform Commission and the National Energy Administration, and their coal products should be mainly used to guarantee electricity generation, heating, and household energy demand. According to the proportion of designed production capacity, the reserved production capacity of coal mines is divided into three levels: 20%, 25%, and 30%. After the construction of the capacity reserve coal mine is completed, the state will implement unified scheduling of the reserved capacity according to the changes in the supply and demand of the coal market. When the coal supply is tight, “upward flexible production” of the capacity reserve coal mine will be organized to quickly release the reserved capacity and ensure national energy security. When the coal supply is sufficient, the capacity reserve coal mines will be organized to produce according to the normal production capacity, reducing fossil energy consumption, making space for the development of new energy, and helping the green and low-carbon transformation of energy.

(III) Supporting policies. Specific incentive and support measures are proposed in terms of capacity replacement, overall planning of coal mine areas and planning and environmental assessment procedures, and new capacity indicators, which aim to boost the enthusiasm of coal-producing provinces and coal mines to build coal mines with reserve capacity. In terms of capacity replacement, newly built and under-construction coal mines may be exempted from implementing capacity replacement to different degrees based on the proportion of reserve capacity construction. In terms of the overall planning of coal mining areas and procedures for the planning and environmental assessment, coal mines with reserve capacity are permitted to increase their scale by no more than 30% on the basis of the existing planned scale. In terms of new capacity indicators, the reserve capacity of coal mines with reserve capacity will not occupy the new capacity indicators of the province in which they are located.

4. Organize and implement

The "Implementation Opinions" propose safeguard measures from three aspects: strengthening organizational coordination, consolidating work responsibilities, and strengthening supervision and management to form a joint force to promote the construction of coal mines with capacity reserve and ensure the implementation of the coal production capacity reserve system. The first is to strengthen organization and coordination, establish a working mechanism for the management of coal production capacity reserves, strengthen overall guidance, and coordinate the management of national coal production capacity reserves. Relevant provincial departments may establish a provincial working mechanism based on actual conditions to guide enterprises within their jurisdiction to reserve production capacity. The second is to consolidate work responsibilities. Project units of coal mines with capacity reserve strictly perform their main responsibilities, solidly promote the construction of coal mines with capacity reserve, and organize production according to unified national dispatch. Provincial coal industry management departments fulfill their supervision and management responsibilities and strengthen daily supervision of production capacity reserve coal mines within their jurisdiction. The third is to strengthen supervision and management. The National Energy Administration, together with relevant departments, will strengthen comprehensive coordination and supervision and guidance on the national coal production capacity reserve work. Provincial coal industry management departments will organize inspections in a timely manner to ensure the implementation of various production capacity reserve requirements.

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