Global Visibility | Zhang Yundong from China National Petroleum Corporation Economic Research Institute: Developing New Quality Productive Forces in Energy to Foster and Strengthen New Momentum

[Global Times Finance Report by Chen Chao] In the opening year of the 14th Five-Year Plan (2026), the government work report emphasizes “optimizing and upgrading traditional industries” alongside “cultivating and expanding emerging and future industries” as the core strategies for fostering new growth drivers. At the same time, it places “energy security” and “green low-carbon transformation” on equal footing as the key tasks for energy development, coordinating high-quality development with comprehensive green transition.

The report clearly sets the hard targets for the end of the 14th Five-Year Plan: China’s comprehensive energy production capacity should reach 5.8 billion tons of standard coal, with a cumulative 17% reduction in CO2 emissions per unit of GDP, providing direction for enhancing energy supply security and advancing green transformation. These figures outline the basic landscape for energy transition over the next five years: firmly maintaining energy independence—“holding the rice bowl of energy in our own hands”—while accelerating on the green low-carbon track. However, for the industry, a more immediate core question remains: what pathways are needed to cultivate and expand new energy development momentum? How far have the promising future energy sources advanced?

Recently, Zhang Yundong, Chief Expert at the China National Petroleum Corporation (CNPC) Economic and Technical Research Institute, provided a systematic response in an interview with Global Times. He emphasized that the core of traditional energy companies cultivating new momentum lies in developing new quality productivity, focusing on technological breakthroughs, digital intelligence empowerment, and green transformation in traditional industries, while also strengthening frontier technology reserves to nurture and expand emerging and future industries; balancing rapid breakthroughs supporting current needs with sustained efforts to lead future development.

Transformation Challenges: The Global “Two Deep and One Non” Era and the Urgent Need for Upgrading Traditional Industries

The global oil and gas industry is undergoing a fundamental resource revolution. The decline of high-quality, easily accessible conventional oil and gas resources continues, with deep, deepwater, and unconventional oil and gas becoming the main focus for increasing reserves and production worldwide. According to the 2025 “World Oil and Gas Exploration and Development Outlook” by CNPC’s Research Institute, from 2015 to 2024, 62% of new recoverable reserves globally in the “two deep and one unconventional” fields were added, making them the dominant force in reserve growth and production increase. International giants like ExxonMobil, Shell, and BP have shifted core R&D investments toward these areas, marking the official entry of the global oil and gas development into the “difficult extraction era.”

This transformation presents even more severe challenges for China’s oil and gas industry. Zhang Yundong summarizes three practical pressures: first, resource endowment and supply security pressures—ensuring national energy security faces real challenges amid increasing development difficulty; second, low-carbon and regulatory pressures—under the “dual carbon” goals, lifecycle carbon emissions of the oil and gas industry are under stricter supervision; third, industrial restructuring pressures—accelerating electrification of end-use energy, with renewable energy continuously squeezing demand for oil and gas, forcing traditional oil and gas companies to transform into comprehensive energy service providers. Facing new circumstances, tasks, and challenges, energy companies are driven by innovation, continuously strengthening the “first growth curve” of traditional industries, accelerating the deep coupling of fossil and renewable energies, and tailoring green development models based on local conditions, actively elevating the “second curve” of new energy.

Zhang Yundong explained that most domestic traditional energy companies’ “second growth curve” has already “started and run for some time,” with established new energy departments and certain asset scales, but overall still in the “scaling-up phase,” far from becoming new profit engines. In the next 3-5 years, industry growth will focus on three directions: refined and stable production of old oil fields and technological revolution in “two deep and one unconventional” projects; digital intelligence empowerment transitioning from “system-based” to “process reengineering”; green upgrades through multi-energy complementarity and carbon asset management.

Technological Breakthroughs: From Shale Oil to “Zero-Carbon” Crude Oil, the Fusion of Fossil and New Energy Is Near

A core consensus in global energy transition is forming: traditional oil and gas operations and new energy businesses are not mutually exclusive alternatives but are synergistic, enabling each other.

This view is repeatedly confirmed by strategic adjustments of international oil giants. In recent years, faced with complex energy transition challenges, their low-carbon investment strategies have shown clear differentiation. European companies like Shell, TotalEnergies, and BP initially adopted more aggressive diversification into renewables, hydrogen, and biofuels; American firms like ExxonMobil and Chevron have been more cautious, emphasizing decarbonization efforts around core oil and gas businesses. Meanwhile, some companies, after aggressive expansion, are re-evaluating their transition pace, with BP and Shell moderating their low-carbon investments, focusing more on capital discipline and project returns.

Compared to overseas peers, Chinese oil and gas companies have charted their own path of integrated development. Domestic practices have demonstrated that integration is not a future concept but an ongoing process. Zhang Yundong introduced that CNPC’s Jilin Oilfield has built a multi-energy complementary supply system—using “wind and solar power + energy storage” to replace grid electricity, “geothermal + solar thermal + air source heat pumps” to replace gas heating, and leveraging CCUS technology to absorb residual carbon emissions, successfully producing “zero-carbon” crude oil. CNOOC has established the “Hainong Guanlan” deep-sea floating wind platform, which has been integrated into the Wenchang oilfield grid, promoting deep integration of offshore wind power with oil and gas operations; the Enping 15-1 platform’s CCUS project has injected over 300,000 tons of CO2, pioneering a marine energy cycle model of “CO2-driven oil recovery and oil-based carbon sequestration,” filling domestic gaps in offshore CCUS technology.

Hydrogen Sector: Leading Globally in Scale, Nearing Cost Breakthrough

Among future energies, hydrogen is the fastest to commercialize and a core focus of global energy strategies.

Data from the China Hydrogen Alliance shows that in 2024, China’s hydrogen production capacity exceeded 50 million tons per year, with about 125,000 tons per year of renewable-powered electrolysis projects, accounting for 51% of the world’s installed capacity. From the industrialization perspective, hydrogen has moved beyond demonstration to a critical window for large-scale deployment. Applications of green hydrogen are rapidly expanding from transportation to chemical and energy sectors, including green methanol, green ammonia, and sustainable aviation fuels.

CNPC has built China’s first 10,000-ton green hydrogen demonstration project using photovoltaic power in Kucha, Xinjiang, forming a full industry chain of green hydrogen production, infrastructure, scenario demonstration, and industrial collaboration. Sinopec, leveraging its integrated refining and chemical base, has elevated hydrogen from technological reserve to strategic business, accelerating deployment of green hydrogen production from renewable electricity, green chemical products based on hydrogen, and end-user refueling networks, now in a stage of rapid acceleration and key breakthroughs.

Globally, the EU aims to produce 10 million tons of green hydrogen domestically and import another 10 million tons by 2030; the US, through the Inflation Reduction Act, offers up to $3 per kilogram tax credits for green hydrogen. Cost comparisons show domestic green hydrogen production costs are generally 20-30 yuan per kilogram, 2-3 times higher than gray hydrogen; transportation and storage costs account for over 40% of end prices, with hydrogen pipeline networks less than 200 km long, and infrastructure lagging seriously.

Zhang Yundong believes that hydrogen is a “future energy” track that has “entered the industrialization phase, with a cost breakthrough imminent.” During the 14th Five-Year Plan, as renewable energy costs continue to decline and domestic electrolyzer core equipment reaches higher localization, green hydrogen is expected to achieve large-scale, cost-competitive applications first in chemical industries.

Controlled Nuclear Fusion: Long Road to Commercialization, Strategic Layout Must Start Now

If hydrogen is a near-term future energy, controlled nuclear fusion is widely recognized as the “ultimate energy” with the greatest future potential.

According to the IAEA’s “2025 World Fusion Outlook,” nearly 40 countries are advancing fusion programs. The top tiers include the US, Europe, and China: the US’s CFS aims to build the world’s first grid-connected fusion power plant in the early 2030s; Europe’s ITER international thermonuclear experimental reactor is steadily under construction; China leads in steady-state magnetic confinement devices, with EAST achieving 1.2 billion degrees Celsius for 1056 seconds of long-pulse operation, and further breakthroughs expected in 2025, continuously setting world records.

Zhang Yundong explained that CNPC is strategically investing in future industries like controlled nuclear fusion and advanced materials, based on national needs, industry trends, and corporate capabilities. In fusion, CNPC adopts a “joint venture and dual-track” approach, investing in and participating in two innovative fusion entities—Fusion New Energy (Anhui) Co., Ltd. and China Fusion Energy Co., Ltd.—deeply involved in related engineering projects, transitioning from “strategic investor” to “core industry chain builder.”

“Why get involved now when it’s so far off?” is a common question in the industry regarding oil and gas companies’ fusion plans. Zhang’s answer points to the fundamental strategic logic of global energy competition: it is about seizing technological and industrial high ground and gaining development initiative. History shows that technological revolutions are the result of long-term accumulation, and industrial transformation is a process from quantitative change to qualitative change. Today’s future industries could become tomorrow’s emerging industries or even pillar industries.

Especially with AI development, the demand for clean electricity is growing exponentially—“the end of AI is electricity” is increasingly accepted industry-wide. Experts estimate that a data center powered mainly by AI consumes electricity comparable to 100,000 households. By 2030, global data center electricity use is expected to double. Notably, US tech giants Meta, Microsoft, and Google are actively collaborating with nuclear power companies: Meta aims to add and maintain 6.6 GW of nuclear energy by 2035; Microsoft has partnered with Helion Energy, a fusion company, and Google has signed power purchase agreements with fusion firms CFS and Helion, respectively.

This is a future energy track that is “still distant” but must be laid out now. Relying on industry and capital advantages, oil and gas companies are deeply involved in the fusion industry chain through financial investments and engineering projects, not only preparing for long-term technological and capacity development but also helping the country seize the ultimate global energy race.

How can today’s practices grow into tomorrow’s industries?

Some may wonder: what is the relationship between today’s shale oil development, IoT in oilfields, CCUS projects, and the hydrogen and fusion industries awaiting us tomorrow?

Zhang Yundong pointed out that traditional industries, emerging industries, and future industries are not substitutes but an organic whole of inheritance, support, integration, and forward-looking leadership. Traditional oil and gas are the “ballast” ensuring national energy security and the foundation for new industries; emerging industries are key to building new industrial pillars; future industries, strategically laid out, are for long-term victory.

Conversely, investing in future industries also provides strong feedback to current traditional businesses. Zhang noted that fusion technology has significant spillover effects—high-temperature superconductors, plasma physics, and related research can directly drive breakthroughs in materials science and precision manufacturing; advanced materials like high-temperature, high-pressure, and corrosion-resistant alloys can be directly applied to deep and ultra-deep oil and gas exploration; high-performance catalysts can enhance refining and chemical processes, increasing oil yield and reducing energy consumption, thus improving traditional industry quality and efficiency.

Globally, giants like Shell have already validated this “dual focus” transformation model. Shell’s 2023-2025 plan allocates $10-15 billion annually to low-carbon investments, focusing on hydrogen, CCUS, and future industries; meanwhile, stable cash flows from traditional oil and refining support long-term transformation, prioritizing quick-return, scalable projects, and steadily advancing heavy asset, long-cycle projects.