Fighting the Climate Change Challenges Facing China and WB Support

Junhui WuJunhui WuSector ManagerSector Manager

Energy and Mining Sector UnitEnergy and Mining Sector UnitEast Asian and Pacific RegionEast Asian and Pacific Region

OutlinesOutlines

1. Energy Consumption and Projections

2. Challenges Facing China

3. China’s Response – 11th Five-year Plan

4. China’s Response – Medium & Long-term Energy Conservation Plan

5. China’s Response – Promotion of Renewable Energy

6. WB Contributions and Support

Energy Consumption and ProjectionsEnergy Consumption and Projections

EAP region/China in 2002 - 2010

• Energy demand to grow the fastest among all regions in the world

• Coal to account for nearly half of primary energy environmental impacts

• Oil imports to rise security concerns

• Gas still low, renewables very low aggressive promotion needed

• Power generation to remain dominated by coal (~75%), with oil (~10%), gas (~10%), and renewables + nuclear (~5%)

• Biomass to be significant

EAP in 2010: Coal dominant, oil & gas risingPrimary energy consumption (IEA 2004)

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1,000

1,500

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Biomass

Otherrenew ablesHydro

Nuclear

Gas

Oil

Coal

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Energy Consumption and Projections

• High fossil fuel consumption is leading to increased Greenhouse Gas emissions

High fossil fuel consumption is leading to increasing Greenhouse Gas emissions

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China

Indonesia, Vietnam& Philippines

S. Korea, Thailand,Malaysia

USA

CO2 emission from fossil fuel consumption(Billion tons)

CoalCoal will dominate (>50% of will dominate (>50% of primary energy till 2020). primary energy till 2020). Coal consumption will Coal consumption will increase from 1.3 billion increase from 1.3 billion tons in 2000 to between 2.1 tons in 2000 to between 2.1 and 2.9 billion tons in 2020. and 2.9 billion tons in 2020.

Oil Oil will account for about will account for about 27% of total primary energy 27% of total primary energy in 2020. Consumption willin 2020. Consumption will increase from 4.6 million increase from 4.6 million barrels per day in 2000 to barrels per day in 2000 to between 9 and 12.2 million between 9 and 12.2 million barrels per day in 2020. barrels per day in 2020.

Energy Consumption and Projections

GasGas will increase from 26 bcm in 2000 to around 159 bcm in 2020, expanding to 7%-9% of primary will increase from 26 bcm in 2000 to around 159 bcm in 2020, expanding to 7%-9% of primary energy. energy.

Other sourcesOther sources (nuclear, hydro, other renewables) will account for less than 5% of primary energy in (nuclear, hydro, other renewables) will account for less than 5% of primary energy in 2020.2020.

China will remain heavily dependent on coal till 2020Fuel Mix - Primary Energy 2020 (IEA 02, Mtce)

- 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000

Korea

Indonesia

Mexico

Brazil

India

Jap-Aus-NZ

Russia

China

EU

US-Canada

Coal Oil Gas Nuclear Hydro Other Renewables

CHINA

China's per capita energy use could grow far beyond 2020

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- 10,000 20,000 30,000 40,000GDP per capita (2002$)

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eq

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USA 2002

Japan 2002

UK 2002Germany 2002

S. Korea 2002

China 2002 to 2020

India 2002

Energy Consumption and Projections

GoC’s long-term goal: to quadruple real GDP from $1,081 billion in 2000 to $4,132 billion in 2020 (2000$) - more pessimistic projections see the quadrupling in between 2024 and 2028.

Energy consumption will rise from 1,300 Mtce in 2000 to between 2,290 and 3,280 Mtce in 2020

Per capita energy consumption will be low in 2020 – with plenty of room for growth

Energy Intensity

• China has made great progress in reducing waste, however, further reductions will not be easy to realize.

• Energy intensity of China’s industries is still high.

Energy Consumption and Projections

Energy intensity of Chinese industries still highGap between energy consumption/unit output in China and

international best practice0% 50% 100% 150%

Coal for power gen

Steel

Cement

Trucks (fuel oil)

2000

1980

Energy intensity of China’s industries

Gap between energy consumption/unit output in China and international best practice

China has made great progress in reducing waste...(Energy intensity: tons of oil equivalent/1,000 dollars of GDP 1995$)

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Actual DRC - Ord Eff DRC - SustainabilityDRC - Green IEA 02 US DOE - HighUS DOE - Ref US DOE - Low

China: Energy intensity tons of oil equivalent /1,000 dollars of GDP (1995$)

Challenges Facing China

1. Long-term Energy Security Providing affordable and reliable energy supply

2. Local Environmental Impacts acid rains impact on agriculture and food security

- SO2 emissions will double and NOx emission will triple from 2000 to 2020

particulates impact on population health

- cost of exposure to particulates for urban residents expected to rise from $32 billion in 1995 to $98 billion in 2020 (WB: China 2020)

3. Global Environment Impacts – Climate Change China’s CO2 emissions are expected to increase from 3.3 billion tons in 2000 to 5.7

billion tons in 2020 (IEA 2004)

China’s Response – 11th Five-year Plan

One theme: establishing a harmonious, resource-saving and environmental-friendly

society

- through harmonization of economic development and social development;

- through harmonization of economic development and efficient resources utilization & environment preservation.

Two Targets:

doubling the GDP (2000 – 2010)

reducing energy consumption per unit GDP by 20% from 2005 to 2010

- through economic structure adjustment – less energy intensive development path;

- through more efficient resource utilization.

For the energy industry specific, the 11th Five-year Plan calls for

Policy guidelines: give priority to energy efficiency

Principle: diversify energy sources, with coal as the major source of supply

Coal:

- construct large-scale coalmines, upgrade small- and medium-scale ones

- make use of coal-bed methane

- encourage co-generation operation

Petroleum and Gas:

- strengthen exploitation of petroleum and natural gas

- increase strategic oil reserve

- develop gradually alternative forms of energy to petroleum

Power:

- install large-size, high-efficiency thermal generators

- encourage hydropower development harmonized with better protection of natural and ecological environment

- further develop nuclear power generation

Renewable Energy:

- accelerate research and scale up utilization of wind, solar, and biomass energy and other renewable energy

Energy in Rural Development: to encourage use of methane gas and other clean energy in rural areas

China’s Response – 11th Five-year Plan

Objectives

Achieving annual reduction of energy consumption per unit GDP by 2.2%.

Measures:

Enhancing Regulations: formulate and implement harmonized energy & environment policies

- facilitate industrial structure adjustment

- provide incentives to energy efficiency improvement

- set up energy efficiency standards

- control strictly addition of new stocks from energy efficiency perspective

- reinforce regulation on energy efficiency in major sectors: key industries (power, petroleum, steel, coal …), transportation, building, household electric appliances, etc.

- strengthen monitoring of energy efficiency

Promoting market-based mechanism for energy efficiency improvement

- accelerate development, demonstration and promotion of energy efficiency technologies and services

- create enabling environment to facilitate financing investments in energy efficiency improvement

Implementing major energy efficiency projects

- explore energy efficiency potentials in existing stocks

- apply new energy efficiency technologies/practices in new stocks

Creating energy efficiency awareness and knowledge dissemination

China’s Response –Medium & long-term energy Conservation Plan

Renewable Energy Objectives by 2020

announced by GoC at the International Conference on Sustainable Development of Renewable Energy, Beijing, 2005

- Wind power capacity: 30 GW

- Solar PV capacity: 2 GW

- Biomass generation capacity: 20 GW

Renewable Energy Law has been made effective since January 2006

Implementing regulations

- feed-in tariff – biomass

- Market Mandatory Share (MMS) of renewable energy – in consideration

China’s Response –Promotion of Renewable Energy

WB supports contributed to sustainability of energy development in China through lending and TA

Introduced advanced technologies - greatly improved efficiency in power generation 300, 600 and 1,000 MW thermal power units 300, 550 MW hydro units; 300 MW pumped storage units

Assisted in capacity building Energy master planning, resource use planning Social and environment impact assessment and management project processing – selection and processing criteria, procedures and methodologies Advanced project management concepts and practices

Supported energy sector reform and sustainable development development strategies and planning policy dialogues and sector regulation Formulation of 《 China Renewable Energy Law 》

WB Contributions and Support - Past

WB Contributions and Support - Current

Policy and Regulation • China Energy 2020 (long-term

planning)• Implementation of Renewable

Energy Law• Municipal heat industry regulation

and EE pre-invest• Coal sector restructuring and

development strategy• China CDM strategy• Coal-bed Methane Strategy• DSM knowledge & policy

Energy Efficiency • Market-mechanism - ESCOs,

intermediaries for financing• Heat reform & Building EE (China

Energy Conservation, Liaoning City Infrastructure)

• Thermal Power Efficiency• AAA on Cleaner & more efficient

coal-fired generation

ChallengesEnergy Security

Local Env Impacts

Climate Change

Renewable Energy • CRESP – wind (200 MW), biomass (25

MW) & hydro rehab.• Lending to new hydro (269 MW)• CF to new hydro (130 MW)

Clean Coal Technology Development -

support/recomm.

• New park – leapfrogging to newest technologies & most stringent energy standard

• Existing park – intensify efficiency improvement

• TT & increased invest. in R&D

Environment • Set-up of SDF (TA, HFC-23)• Conversion of coal-fired to gas

boilers (Beijing Env. Project) • Integrated forestry management

(Guangxi) • Waste mgmt. (Shandong, Shanghai,

Tianjing)• Coal-bed methane recovery

(Jingcheng, Qingshui)