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1
How does Chinese government move the energy regime toward
low-carbon development? A critical review of energy-climate
policy
Energy Workshop at Hong Kong Baptist UniversityMarch 2, 2017
Dr. Akihisa MORI, Kyoto UniversitySecretary General, East Asian
Association of
Environmental and Resource
[email protected]
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Contents
Background and Research questionsAnalytical MethodologyChina’s
Energy System Transition in BriefAnalysisConclusions
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I. Background and Research questions
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Growth of CO2 Emission decreases, especially from coal
combustion
0
2000
4000
6000
8000
10000
1995 97 99 01 03 05 07 09 11 13
BunkersGasOilCoal
Million ton of CO2
4Source: Author compilation based on IEA (2016)
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Chinese govt has implemented few climate change policies
Year Policies2007 Published a National Climate Change
Programme
2010 Launched a demonstration program of 5 low-carbon pilot
provinces and 8 pilot cities
2011 The 12th Five year plan announces a 17% reduction target of
carbon per unit of GDP
2013-4 Launched a pilot carbon emission trading scheme (ETS) at
five cities and two provinces
2014Released the National Plan for Climate Change 2014-20
describing stabilization of CO2 emissions from the steel and cement
sectors in 2020 at 2015 levels
2016 The 13th Five year plan announces a 18% reduction target of
carbon per unit of GDP2017 Will implement a nationwide ETS 5
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Previous Researches• Energy intensity targets is binding than
carbon
intensity target due to active reduction in power sector (Cao
and Karplus, 2014)
• Greater role of the govt in the emergence of renewable energy
industry (Lewis, 2007; Groba and Cao, 2015; Hochstetler and Kostka,
2015)– Difference in wind and solar (Zhang 2011)
• Possibility of carbon leakage from increased renewable to
non-ETS covered sectors (Qi, Zhang, Karplus 2014)
• No improvement of energy security due to passive reaction of
energy policies to macroeconomic reform (Yao and Chang 2015) 6
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Coal Consumption is about to Peak Out amid Rise in Renewable
0
500
1000
1500
2000
2500
3000
3500
4000
4500
1980 83 86 89 92 95 98 01 04 07 10 13
million tce
0
10
20
30
40
50
60
70
80%
Hydro, nuclear and othersNatural GasCrude OilCoalRatio of Hydro,
nuclear and othersRatio of Natural GasRatio of Crude OilRatio of
Coal
7Source: Author compilation based on China Statistical Office
(2016)
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Research Questions• What are the drivers for China to move
the
energy regime toward the one that advance low carbon
development?
• What are the enabling factors for China to get over the
barriers to the transition of energy regime?
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II. Analytical Methodology
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1010
A Dynamic Multilevel Perspective on System Innovation
Source: Verbong and Loorbach (2012:8). 10
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Typology of Transition Pathway• Transformation
– Change the perceptions of regime insiders– Innovations are
still limited to a niche
• De-alignment and re-alignment– Regime experiences major
internal problems– Multiple niche innovations co-exist, eventually
one of
them becomes dominant
• Reconfiguration– Regime takes certain niche into the system–
Change guiding principles, beliefs and practices
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Acceptance of renewablesto a certain portion
Decentralized energy system orregion-wide super-grid
Competition between incumbentsand alternatives
Source: Verbong and Geels (2010).
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Key Concepts for Analyzing the Mediation of Connections
• Market competition– between niche innovators and
incumbents
• Power relation– Innovative power– Constitutive power–
Transformative power
• Interpretation– Propagation of new interpretation of rules
12Source: Gioia, D.A. and Pitre (1990); Avelino and Rotmans
(2009)
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III. China’s Energy System Transition in Brief
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Landscape DevelopmentsYear Events
1997 Asian Economic crisis, followed by reform of electricity
industry and shutdown of small coal mines
2001Accession to WTODefine rules and guidelines of the Kyoto
Mechanism
2005-6 Frequent reports on disasters in coal mines.
2009-10
Border carbon adjustments bills at the US congressCopenhagen
accord: Pledged a 40-45% reduction of carbon intensity by 2020
compared to the 2005 level.
2011The Fukushima nuclear disasterUS embassy’s release of
concentration of PM2.5
2014 Pledged to peak CO2 emissions around 2030 and best efforts
to peak early at the US-China summit. 14
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China suffered serious electricity shortage in the early
2000s
0
1000
2000
3000
4000
5000
6000
1995 97 99 01 03 05 07 09 11 13
Billion kWh
0
1000
2000
3000
4000
5000
6000Billion kWh
OthersWind powerNuclear powerThermal
powerHydropowerConsumption
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Govt Addressed Power Shortage by Saving and Efficiency
Year Target and Policies
2006 The 11th FYP announced a 20% reduction target for energy
consumption per unit of GDP
2006 NDRC launched a Top 1000 Energy Consuming Enterprise
program (expanded to 10000 installations)
2007Revised the Energy Conservation Act to clearly appoint
responsible entity for energy conservation;“Down-by-one-vote
system” of personnel evaluation
Energy-conservation standard and energy efficiency labels
2011 The 12th FYP announced a 16% reduction target for energy
consumption per unit of GDP
2014 Issued an energy development plan to cap primary energy
consumption at 4.8 billion toc per year by 2020
2015 Released the 2015-2020 action plan on the efficient use of
coal, aiming at decreasing coal by 160 million tonnes 16
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Long-term Contracts on Pipeline GasCountry Year of Contract
Benefits to counterpart
Amount of purchase
Myanmar 2008 Myanmar has a stake of 2 bcm 5.2 bcm (2013- )
Kazakhstan 2009
USD 1.7 billion of loan from CEXIMUSD 3.3 billion of investment
by CNPC
5 bcm
Uzbekistan 2010 10 bcm (2012- )
Turkmenistan 2009 USD 4 billion of loan from China Devt Bank40
bcm (2010-40)
Turkmenistan 2010 USD 4 billion of loan from China Devt Bank 65
bcm (2020- )
Russia 2014 USD 25 billion of loan from China Devt Bank38 bcm
(2019-48)
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Coal Import has increased as well, Let Alone Oil and Natural
Gas
0
100
200
300
400
500
600
700
800
2000 02 04 06 08 10 12 14
million tce
0
10
20
30
40
50
60
70
80%LNG importNatural gas importCrude oil importCoal importImport
share in natural gas consumptionImport share in crude oil
consumptionImport share in coal consumption
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CDM projects by Host CountryHost As of August 13, 2007 As of
August 1, 2011
NumberTotal emission reduction by 2012 (mil t-CO2)
NumberTotal emission reduction by 2012 (mil t-CO2)
China 104 427 1677 1277India 267 187 785 303Brazil 104 107 228
155Mexico 89 39 142 60Malaysia 16 11 108 29Indonesia 9 11 74
29Others 168 241 688 2704Total 757 1024 3702 4558
Source: Mori (2013) 19
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China’s Renewable Energy Policy Year Target and
Policies2003-
09Govt auction for development of selected wind sites, with 50%
(70% during 2005-07) local contents requirement.
2006 Renewable Energy Act: mandatory purchase and connection
provisions, and favorable tariffs for wind, biomass and solar
2007 Midterm Development Plan for Renewable Energy set out goals
for non-fossil fuel as 10% by 2010 and 15% by 2020.
2009 Implement a feed-in-tariff for wind power (applied to solar
power in 2012)
2010Amendment to the Renewable Energy Act: mandate grid
companies to purchase minimum amountCreate renewable energy devt
fund to compensate margin
2011 The 12th FYP announced a target of 11.4% of total energy
use from non-fossil fuel share by 2015 and 15% by 2020
2016 The 13th FYP announced a target of 15% of total energy use
from non-fossil fuel share by 2020 20
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Top Wind Turbine Supplies in 2011Rank Company
Delivery (MW)
Global Market Share (%)
1 Vestas (Demark) 5,211 12.7 (14.8)2 Sinovel Wind (China) 3,700
9.0 (11.1)3 Goldwind (China) 3,584 8.7 (9.5)4 Gamesa (Spain) 3,308
8.0 (6.6)5 ENERCON (Germany) 3,203 7.8 (7.2)6 GE Energy (USA) 3,170
7.7 (9.6)7 Suzlon (India) 3,116 7.6 (6.9)8 Guodian United Power
(China) 3,042 7.4 (4.2)9 Siemens (Germany) 2,591 6.3 (5.9)10
Minyang Wind Power (China) 1,500 3.6
Source: Mori (2015) 21
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Wind Power Installation by Country
0
50000
100000
150000
200000
250000
300000
350000
400000
450000
2002 03 04 05 06 07 08 09 10 11 12 13 14 15
China United States GermanySpain India UKItaly France
CanadaPortugal Denmark SwedenJapan Netherlands AustraliaKorea
Others
MW
Source: Mori (2015) 22
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Top PV Module Suppliers in 2012Rank Company (rank in 2011)
Delivery (MW)
Global Market Share (%)
1 Yingli (China) (3) 2,300 6.7 (4.8)2 First Solar (USA) (2)
1,800 5.3 (5.7)3 Trina Solar (China) (4) 1,650 4.7 (4.3)4 Suntech
(China) (1) 1,650 4.7 (5.8) 5 Canadian Solar (China) (5) 1,600 4.6
(4.0)6 Sharp (Japan) (7) 1,050 3.0 (2.8)7 Jinko Solar (China) (13)
900 2.6 (2.3)8 SunPower (USA) (6) 850 2.6 (2.8)9 REC Group (Norway)
(15) 757 2.3 (1.9)10 Hanwha SolarOne (Korea) (9) 750 2.3 (2.7)
Source: Mori (2015)Note: Based on 35.5GW produced in 2012
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Solar Power Installation by Country
0
50000
100000
150000
200000
250000
2001 02 03 04 05 06 07 08 09 10 11 12 13 14 15
Germany China Italy
Japan United States Spain
France Australia Bergium
UK Korea Others
MW
Source: Mori (2015) 24
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IV. Analysis of Market Competition, Power Relation and
Interpretation
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Interpretation1. Energy Security additional development of oil
and gas around the
world as enhancing energy security of China through increasing
global energy security (Hayashi 2006)
2. Climate change as an issue of development for new
industrial
development (NDRC 2007)3. Renewable energy as creating new
growth point (Mori 2015)
4. Air pollution/ PM2.5 as shaking the legitimacy of govt (Ren
and Shou
2013) 26
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Increasing Market Competitiveness of Renewables
• Cost down through– Competition– Cheap labor and
technology supplier– Cheap/subsidized capital– Economics of
scale– Learning by doing
• Technological upgrade by– Merger and acquire
Protection from foreign competitors
Export to countries with renewable promotion
High renewable targetFeed-in tariff
Phase-out of coal subsidy
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Govt-backed Loan to Solar Power Manufacturers in China US and
EU
impose anti-dumping tax
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No Alliance of Innovative and Transformative Power:
GovtOrchestrate!
State grid companies
CPC and state
Coal powers
Renewable energy manufactures
Local govts
Local contentrequirement
Shut downof small coal
power/ miners
Responsibilityfor emission
reduction
Coal miners
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Renewabletarget
Feed-intariff
Investment in long distance
transmission line
Financial support forforeign investment
Renewable energy developers
Technologicalupgrade
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Land Subsidence and Ruins Increases after the Coal Boom
Source: Coal mining areas suffer from land subsidence and
increasing economic burden after the coal boom in China, Newsweek
Japanese edition, August 17, 2016 (in Japanese)
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• Wind curtailment increased up to one-third in 2015 (World
Nuclear Association, 2016).
• Govt requires cancellation of new coal power projects (Song
and Hong, 2016)
Local Grid Prioritizes Coal Power and CHP, Causing Wind
Curtailment
Source: Davidson, M. (2013) 31
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Constitutive Power is not Limited to Coal Miners and Power, but
Consumers as well
• Skyrocketing coal price in 2016
• Halting scrap of coal production capacity
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Carbon emissiontrading scheme (2014)Import ban/ tariff on
low quality coal (2014)Scrap of domestic coal production
capacity (2016)
Inflation
Adverse economic impact
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V. Conclusions
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Key Takeaways1. Global climate governance, coupled with
deteriorating air pollution, coupled and visible profit from
energy import and renewable energy industry has motivated the state
to transit the energy regime.
2. Changes in recognition, market competition and power relation
has been orchestrated by the state, not by an alliance initiated by
innovative power.
3. Supporting foreign investment of coal powers and miners are
indispensable to advance transformation. 34
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References (1)• Avelino, F. and Rotmans, J. (2009) Power in
transition: An
interdisciplinary framework to study power in relation to
structural change, European Journal of Social Theory 12 (4),
543-69.
• Cao, J. and Karplus, V.J. (2014) Firm-level determinants of
energy and carbon intensity in China, Energy Policy 75, 167–78.
• Davidson, M. (2013) Transforming China’s Grid: Obstacles on
the Path to a National Carbon Trading System,
http://www.theenergycollective.com/michael-davidson/259871/transforming-china-s-grid-integrating-wind-energy-it-blows-away
• Gioia, D.A. and Pitre, E. (1990) Multiparadigm perspectives on
theory building, Academy of Management Review 15, 584-602.
• Groba, F. and Cao, J. (2015) Chinese renewable energy
technology exports: The role of policy, innovation and markets,
Environmental and Resource Economics 60, 243-83.
• Hayashi, K. (2006) Conditions for high-performer in
international oil and gas upstream industry: A CERA proposal for
increasing international competitiveness of Japanese firms, Oil and
Gas Review 40 (3), 33-41 (in Japanese). 35
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References (2)• Hochstetler, K. and Kostka, G. (2015) Wind and
solar power in
Brazil and China: Interests, state–business relations, and
policy outcomes, Global Environmental Politics 15 (3): 74-94.
• IEA (2016) CO2 Emissions from Fuel Combustion (2016 Edition),
Paris: OECD/IEA.
• Lewis S. (2007) Technology acquisition and innovation in the
developing world: Wind turbine development in China and India,
Studies in Comparative International Development 42: 208-32.
• Mori, A. (2013) , Regional environmental regime in East Asia:
Collapse or arrested development?, in Mori, A. (ed.) Environmental
Governance for Sustainable Development: An East Asian Perspective,
Tokyo: United Nations University Press, 271-91.
• Mori, A. (2015) Green growth and low carbon development in
East Asia: Achievements and challenges, in Yoshida F. and Mori A.
(eds.) Green Growth and Low Carbon Development in East Asia,
Routledge, 278-304.
• NDRC (2007) China’s National Climate Change Programme. 36
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References (3)• Qi, T., Zhang, X., and Karplus, V.J. (2014) The
energy and CO2
emissions impact of renewable energy development in China,
Energy Policy 68: 60-9.
• Ren, B. and Shou, H. (2013) Introduction: Dynamics, challenges
and opportunities in making green China, in Ren, B. and Shou, H.
(eds) Chinese Environmental Governance: Dynamics, Challenges and
Prospects in a Changing Society, Palgrave McMillan, 1-18.
• Song, R. and Hong M. (2016) China’s 1-2-3 punch to tackle
wasted renewable energy, World Resource Institute Blog,
http://www.wri.org/blog/2016/04/chinas-1-2-3-punch-tackle-wasted-renewable-energy,
accessed on July 26, 2016.
• Verbong, G.P.J. and Geels, F.W. (2010) Exploring
sustainability transitions in the electricity sector with
socio-technical pathways, Technological Forecasting & Social
Change 77, 1214–21.
• World Nuclear Association (2016) Nuclear power in China,
http://www.world-nuclear.org/information-library/country-profiles/countries-a-f/china-nuclear-power.aspx,
accessed on December 11, 2016.
• Yao, L. and Chang Y. (2015) Shaping China’s energy security:
The impact of domestic reforms, Energy Policy 77, 131-9. 37
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Thank
[email protected]://kyouindb.iimc.kyoto-u.ac.jp/e/uT2bD
How does Chinese government move the energy regime toward
low-carbon development? A critical review of energy-climate
policyContentsI. Background and Research questionsGrowth of CO2
Emission decreases, especially from coal combustionChinese govt has
implemented few climate change policiesPrevious ResearchesCoal
Consumption is about to Peak Out amid Rise in RenewableResearch
QuestionsII. Analytical MethodologyA Dynamic Multilevel Perspective
on System InnovationTypology of Transition PathwayKey Concepts for
Analyzing the Mediation of ConnectionsIII. China’s Energy System
Transition in BriefLandscape DevelopmentsChina suffered serious
electricity shortage in the early 2000sGovt Addressed Power
Shortage by Saving and EfficiencyLong-term Contracts on Pipeline
GasCoal Import has increased as well, Let Alone Oil and Natural Gas
CDM projects by Host CountryChina’s Renewable Energy Policy Top
Wind Turbine Supplies in 2011Wind Power Installation by CountryTop
PV Module Suppliers in 2012Solar Power Installation by CountryIV.
Analysis of Market Competition, Power Relation and
InterpretationInterpretationIncreasing Market Competitiveness of
RenewablesGovt-backed Loan to Solar Power Manufacturers in ChinaNo
Alliance of Innovative and Transformative Power: Govt
Orchestrate!Land Subsidence and Ruins Increases after the Coal
BoomLocal Grid Prioritizes Coal Power and CHP, Causing Wind
CurtailmentConstitutive Power is not Limited to Coal Miners and
Power, but Consumers as wellV. ConclusionsKey TakeawaysReferences
(1)References (2)References (3)スライド番号 38
