Li Shousheng, President of the China Petroleum and Chemical Industry Federation, recently stated at the 2017 Sanya International Energy Forum that China’s energy sector faces three major challenges.

　　First, China’s refining industry faces serious challenges in resolving the contradiction of overcapacity, enhancing scale and concentration, and upgrading its technology. Li Shousheng said that China’s current refining capacity stands at around 800 million tons, while crude oil processing volume falls short of 600 million tons, making the issue of overcapacity particularly acute.

　　Meanwhile, domestic refining companies still face challenges related to low industry concentration and the need for upgrading product technologies. At the same time, a prominent trend in the global petrochemical industry is scale-up and clustering; however, China’s refining and chemical industry has long been characterized by a large number of small-scale enterprises and an uneven industrial distribution.

　　Moreover, there’s a stark reality: on the one hand, the refining industry suffers from severe overcapacity, while on the other hand, large-scale new refineries are still being vigorously constructed.

　　Second, China’s new energy sector and emerging energy technologies face a serious challenge: the need to accelerate strategic decision-making in response to breakthroughs in diverse technological fields. Li Shousheng said that in recent years, the development of new energy technologies has surged forward, and a series of breakthroughs and practical applications in conventional energy technologies have provided more options for the development of traditional energy sources.

　　Meanwhile, new energy sources—especially unconventional and renewable energies—are rapidly developing, marking a substantive step forward in the transformation of the energy industry. From shale gas to combustible ice and then to enhanced geothermal systems, China has achieved several major breakthroughs in the development of unconventional energy sources this year. According to the latest edition of the BP Statistical Review of World Energy, China has surpassed the United States to become the world’s largest producer of renewable energy. These significant changes are giving rise to new growth drivers in the energy sector, while also posing a serious challenge to the traditional energy industry to accelerate its strategic choices.

　　Third, China’s traditional petrochemical industry is facing the challenge of disruptive technological breakthroughs. In preparation for the future, it must develop comprehensive plans for sustainable development. Li Shousheng said that the rapid rise of electric vehicles has drawn considerable attention. Faced with the sudden emergence of new-energy vehicles, the traditional petrochemical industry may be entering a developmental crisis, a situation that calls for heightened awareness and in-depth reflection. At present, a fierce innovation race is underway among lithium-ion battery technology, hydrogen production technology, and hydrogen storage technology—each vying to emerge as the undisputed leader.

　　He said that in 2016, China produced a total of 517,000 electric vehicles, surpassing the United States to become the world’s largest producer and seller of electric vehicles. Several European countries have successively announced timelines for banning the sale of gasoline-powered vehicles, and China has also put the issue of banning the sale of gasoline-powered vehicles on its agenda.

　　According to a report by the China Chemical Industry News, there are currently two major theoretical schools and two competing technological approaches regarding whether electric vehicles or hydrogen-powered vehicles will ultimately dominate the market. These ongoing shifts serve as a constant reminder that the development of the traditional energy industry must be underpinned by forward-looking strategic thinking, well-prepared transformation and upgrading plans, and a strategic technological reserve geared toward sustainable development.