Risk management for rural energy industry of Sichuan Province in China

As one of the most populous provinces in China, Sichuan is also the most important regions for ecology protection and rural poverty alleviation in the upper reaches of the Yangtze River. The rural energy industry of Sichuan Province has a national ecological and political significance for reducing excessive utilization for fossil fuels, protecting ecosystem, fostering equal development for urban-rural economy. However, this industry of Sichuan remains to be deteriorated by multiple risks. Hitherto, risk management research on rural energy industry is rather limited. Therefore, according to the fault tree analysis and catastrophe model, this study has implemented a complete and comprehensive risk management procedure on rural energy industry of Sichuan Province based on data of 31 provinces ranging from 2008 to 2012 in China. Based on the fault tree analysis for risk identification, four categories of risks have been revealed: financial risks, service networks risks, energy provision risks as well as enterprises risks. Furthermore, 13 risk indicators have been identified because they have imposed negative impacts upon rural energy industry in Sichuan to a large extent. The catastrophe model for risk evaluation has presented that the risk value of Sichuan rural energy industry (A) reaches the highest risk level. Simultaneously, financial risks (M1), energy provision risks (M3), enterprises risks (M4) have also been ranked as the highest risk grade. The result of risk response indicates that X9 (poor construction for wind energy provision projects), X13 (low output values for energy-saving stoves and kangs production enterprises), M4 (enterprises risks) have the priorities for risk response. This paper suggests that it is urgent and paramount to establish an exclusive risk supervising center which can integrate government ministries, financial agencies, universities and research institutions, non-government organizations via joint participation and interactive communication in risk identification, risk evaluation, risk response as well as risk supervising.