Transcript Demographics of China - The Franke Institute for the

Outline
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Introduction: What should China and India do?
Current State of India
Current State of China
What is Carbon taxation?
Why Carbon Taxation and not Cap and Trade?
What we aim to do and why
Results
Conclusions
The Chinese Economy
GDP growth (annual %)
GDP, PPP (current international $)
7
16
6
14
12
10
4
%
$ trillions
5
8
3
6
2
4
1
2
0
year
Environmental degradation
growing problem
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
0
year
Adjust economic structure in
favor of less resource-intensive
economic activities
Demographics of China
Largest population in the world: 1.31 billion people (2005)
– Population density higher in coastal region than inland
Current Energy Mix
Coal is backbone of
energy system
– Meets about 60% of
primary energy needs
– Importance growing in
recent years due to
increasing demand for
electricity
• Electricity almost 80%
coal-based
– Most of the coal
concentrated in a few
inland provinces, while
largest centers of
demand in coastal
provinces
Current Energy Consumption
Electric Power Consumption in China
Total energy consumption
increased by 9.3% over 2005.
• Now third-largest importer
behind United States and
Japan
CO2 emissions
– Air pollution estimated to cost
China 3%-7% of GDP each
year
– Contains 20 of the world’s 30
most polluted cities
1800
1600
kWh per capita
1400
1200
1000
800
600
400
200
0
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2000
2001
2003
2004
2005
ye ar
Carbon Dioxide Emmisions (kt)
6000000
5000000
4000000
kt of Carbon Dioxide
– Coal consumption increased by
9.6%
– Crude oil consumption by 7.1%
– Natural gas consumption by
19.9%
– In first six months of 2007, net
importer of coal
– Imported natural gas in liquefied
form from 2006
– Net oil exporter until early
1990s
2000
3000000
2000000
1000000
0
1990
1991
1992
1993
1994
1995
1996
1997
ye ar
1998
1999
2002
2003
2004
ElectricitySources(China)
100%
80%
%of total
60%
40%
20%
0%
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
year
Electricity productionfromcoal sources (%of total)
Electricity productionfromhydroelectric sources (%of total)
Electricity productionfromnatural gas sources (%of total)
Electricity productionfromnuclear sources (%of total)
Electricity productionfromoil sources (%of total)
2005
Renewable Options
• Hydropower
– World’s largest hydropower
potential
• National Hydropower
Resources Survey (2003)
estimate technologically
exploitable capacity of
China's water resources is
540 GW
– Rivers that will likely be
dammed
• Nuclear
– If all nuclear power stations that
have been planned to date are
completed, total installed
capacity will exceed 10GW in
2010, and total approximately
32GW in 2020
• Hongshui River, Yangtze
River, Yellow River,
Lancanjiang River, Wujiang
River
• Solar
– 2/3rds of China's territory
enjoys annual sunshine of
over 2,200 hours and annual
solar radiation of over 5,000
MJ/m2
– Tibetan Plateau has the
richest solar energy resources
Wind
• Estimated that utilizable wind
energy resources
– inland area about 300 GW
– combined with utilizable wind
energy sources in near-shore
areas, could reach about 1000
GW in total
• China produces more wind
turbines than any country in
the world
– 40 manufacturers of smallscale wind turbines
• Wind power most successful
in Inner Mongolia
Autonomous Region (IMAR)
– 1/3 of rural, remote herdsmen
use wind electric generators
Goals for the Future
11th Five-Year Plan (2006-2010)
• Growth of 7.5% per year
between 2006-2010 planned to
prevent overheating of
economy
• Cut energy use per unit of
GDP by 20% and pollution by
10% by 2010 compared to
2005
• Target shares of each major
fuel in primary energy mix in
2010
–
–
–
–
–
–
66.1% coal
20.5% oil
5.3% natural gas
0.9% nuclear power
6.8% hydropower
0.4% other renewables
2020 plans (NDRC)
• Nuclear
– Target: 40GW by 2020
• Hydro
– Target: 300 GW by 2020
• Solar and Wind
– Target: over 60GW by 2020
India’s Economy
• With 1.50 trillion in current $, it is twelfth in the world
•Third largest world economy in terms if PPP
• Starting 2005 India allows 100% foreign investments for most industry fields
• FDI inflows into India reached a record US$ 19.5 billion in fiscal year 2006/07
(April-March) double that of USA
Demographics of India
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•
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•
Population 1.07 billion (second in
the world)
Labour force by occupation
agriculture: 60%, industry: 12%,
services: 28% (2003)
Unemployment 7.8% (2006 est.)
India still has the world’s largest
number of poor people in a single
country. Of its nearly 1 billion
inhabitants, an estimated 350-400
million are below the poverty line,
75 per cent of the poor in the rural
areas.
Main industries textiles,
chemicals, food processing, steel,
transportation equipment, cement,
mining, petroleum, machinery,
software, services
Power Consumption and CO2 Per
Capita
CO2 Emission per capita (t)
1.0
0.8
0.6
0.4
0.2
0.0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Year
Current Energy Mix (mtoe)
Prospect to Grow
Current Potential
Coal (Mtoe)
148
38114
Natural Gas (BCM)
Oil (MMT)
Nuclear (GW)
Hydro (GW)
Bio-mass (Mtoe/year)
Bio-fuels (Mtoe/year)
Solar
(Mtoe/year)
Wind
(MW)
32
34
9
31
140
<1
/
<1
922
740
208
150
620
30
1200
10
Various Ministries
Future Goals
India’s 2030 energy projections remain bellow world’s 2004 average
• Five Year Plan
78,577 MW capacity addition (123,668 MW as of 2005-06) during
the 11th Plan of 14,000 MW through renewables and another 12,000
MW from captive route.
• 2030
Massive Investment Requirements:
To deliver sustained GDP growth of 8.0% till 2031-322, the
requirements are:
- Growth in primary energy supply by 3-4 times over
current consumption
- Electricity Installed Capacity should increase by 6-7 times
- Annual coal requirement: Nearly 3 times over current
demand
TERI, 2006
Environmental Concerns
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A one-meter rise in sea level could displace millions of people in
India, a country with a coast line of several thousand miles.
The ocean sequestration capacity is leveling off
Deforestation is another serious problem (large percent of
energy comes form biomass)
According to research carried out at Oxford University, the total
number of flood zone refugees in India alone could reach
anywhere between 20 and 60 million. Sea level rises could also
prompt an influx of millions of refugees from Bangladesh.
The Gangotri glacier, the source of the River Ganges, is
retreating at a speed of about 30 meters a year, with warming
temperatures likely to increase the rate of melting.
Kyoto will not be reinforced
Energy Policy
Advances:
•‘Energy for All’ by 2012
•The power sector is 60 % centralized and peak shortages that were common in
’90 reduced
•Numerous ministries, university institutes and to deal with R&D, modeling, energy
distribution and policy issues
•Admission of private and foreign investment to energy, mining and related sectors
(except for nuclear)
Concerns:
•Policy application in practice
•Corrected for PP, Indians pay one of the highest energy prices in the world
•Power sector loses ~ $6 billion per annum
•Not everyone pays the electricity they use… (30%-40% network losses)
•High pollution fuels adversely affect primarily the poor
Integrated Energy Policy for India (August 2007)
Eleven scenarios based on source availabilities
and technological development but not incentives
CO2 Emissions By Different Scenarios
What is a Carbon Tax?
• A carbon tax is a tax on
emissions of carbon dioxide
and other greenhouse gases.
• It helps compensate for the
negative externalities of
pollution caused by these
emissions
• The alternative to carbon
taxation is cap and trade
reforms which are when
governments set a limit or
cap on the amount of a
pollutant that can be emitted
Why not “Cap and Trade?”
• Environmental NGOs and movements
argue that trading does little to solve
pollution problems overall
– Groups that do not pollute sell their
conservation to the highest bidder
– Overall reductions would need to come from a
sufficient and challenging reduction of
allowances available in the system
“Cap and Trade” Criticisms (cont’d)
• Other Criticisms
– Many attribute accounting failures to the complexity
of system
– Cap and trade systems are seen to generate more
corruption than a tax system
– The administration and legal costs of cap and trade
systems are higher than with a tax
• Lack of credibility in the first phase of the EU
Emissions Trading
– In the first year, the number of permits topped the
amount of pollution
– The price of carbon fell to almost nothing
Taxes are Economically More
Efficient
• Finally, carbon taxes appear to be more efficient
than caps because the revenue can be used by
the government
• We would like to propose that the revenue be
directed towards research and development of
alternative energy sources
• Yes, Steve Goldberg criticized this notion in
regards to the US, however the governments
that rule China and India are structured very
differently-
We Want a Diversification of
Energy Sources
• Carbon atoms are present in every
fossil fuel — coal, oil and gas
• In contrast, non-combustion energy
sources — wind, sunlight,
hydropower, and nuclear — do not
convert carbon to carbon dioxide.
• Our goal it to investigate the cost
associated with diversifying the
power supply of China and India
and a tax rate which would make
this feasible
Representative Trajectory sampling various energy mixes.
Normalized Cost and CO2 output are the Cost and CO2 of a particular
mix divided by the Cost or CO2 of the initial Distribution
Initial Distribution based on IEA Alternative Reference Scneario
Simulation is observed to converge to a distribution with a stable minima
in the cost and in CO2 Emissions
Table 3
Generation cost (dollar/kWh) for different energy sources with used tax rates for both
countries
China
India
Initial
Low
Tax
Mediu
m
Tax
High
Tax
Initial
Low
Tax
Mediu
m
Tax
High
Tax
0.0355
0.0495
0.076
0.1134
0.0344
0.0484
2
0.0751
0.1123
Clean
Coal
0.065
0.0664
0.069
0.072
0.065
0.0664
0.069
0.072
Gas
0.062
0.069
0.0823
0.101
0.0328
0.0398
1
0.0531
0.0718
Biomas
s
N/A
N/A
N/A
N/A
0.0772
0.0782
0.08
0.0827
Hydro
0.048
0.0483
0.0488
1
0.0495
6
0.055
0.0553
0.0558
0.0565
Nuclear
0.044
0.0441
0.0442
0.0444
0.0463
0.0464
0.0464
0.0467
Wind
0.045
0.0451
0.0451
0.0454
0.0772
0.0773
0.0774
0.0772
Solar
0.7187
0.7195
0.7211
0.7231
0.3861
0.3869
0.3884
0.3861
Coal
Source: IEA, WEO 2007; World Nuclear Association; IEA, Renewable; CEA, 2004;
Scenario 1
Table 4
Scenario 1: China with Traditional Coal
Technology
Low Tax
($14.02/t
CO2)
Initial cost
Medium Tax
($40.65/t
CO2)
High Tax
($77.92/t
CO2)
$397 billion
$530 billion
$716 billion
4969 Tt
4969 Tt
4969 Tt
$400 billion
$513 billion
$673 billion
4265 Tt
4258 Tt
4247 Tt
$3 billion
-$16 billion
-$42 billion
-704 Tt
-711 Tt
-722 Tt
Percent change in cost
0.76%
-3.10%
-5.86%
Percent change in CO2
emissions
-14.16%
-14.31%
-14.53%
Initial CO2 emissions
Final cost
Final CO2 emissions
Change in cost
Change in CO2 emissions
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
IEA, Alternative Policy
Scenario Projections
Low Tax ($14.02/kWh)
Medium Tax
($40.65/kWh)
High Tax ($77.92/kWh)
Coal
63.70%
59.20%
59.09%
58.93%
Gas
5.74%
0.00%
0.00%
0.00%
Hydro
17.08%
27.62%
27.71%
27.84%
Nuclear
6.17%
8.38%
8.37%
8.38%
Wind
2.78%
3.70%
3.74%
3.74%
Solar
0.79%
1.10%
1.09%
1.12%
Scenario 2
Table 5
Scenario 2: China with the Introduction of Clean Coal
Technologies
Low Tax
($14.02/t CO2)
Initial cost
Medium Tax
($40.65/t CO2)
High Tax
($77.92/t CO2)
$480 billion
$499 billion
$526 billion
706 Tt
706 Tt
706 Tt
$474 billion
$487 billion
$504 billion
454 Tt
454 Tt
452 Tt
$6 billion
-$12 billion
-$22 billion
Change in CO2 emissions
-253 Tt
-253 Tt
-255 Tt
Percent change in cost
-1.26%
-2.32%
-4.10%
Percent change in CO2
emissions
-35.80%
-35.79%
-36.08%
Initial CO2 emissions
Final cost
Final CO2 emissions
Change in cost
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
IEA, Alternative Policy
Scenario Projections
Low Tax ($14.02/kWh)
Medium Tax
($40.65/kWh)
High Tax ($77.92/kWh)
Coal
63.70%
59.39%
59.40%
59.08%
Gas
5.74%
0.00%
0.00%
0.00%
Hydro
17.08%
27.51%
27.46%
27.73%
Nuclear
6.17%
8.25%
8.27%
8.36%
Wind
2.78%
3.76%
3.76%
3.72%
Solar
0.79%
1.09%
1.11%
1.10%
Scenario 3
Table 6
Scenario 3: India with Traditional Coal
Technology
Low Tax
($14.02/t CO2)
Initial cost
Medium Tax
($40.65/t CO2)
High Tax
($77.92/t CO2)
$121 billion
$159 billion
$198 billion
1399 Tt
1399 Tt
1399 Tt
$158 billion
$183 billion
$166 billion
949 Tt
934 Tt
940 Tt
$37 billion
$24 billion
-$32 billion
Change in CO2 emissions
-450 Tt
-465 Tt
-459 Tt
Percent change in cost
30.66%
15.37%
-15.99%
Percent change in CO2
emissions
-32.20%
-33.24%
-32.82%
Initial CO2 emissions
Final cost
Final CO2 emissions
Change in cost
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
IEA, Alternative Policy
Scenario Projections
Low Tax ($14.02/kWh)
Medium Tax
($40.65/kWh)
High Tax ($77.92/kWh)
Coal
54.71%
40.28%
39.64%
39.90%
Gas
10.67%
0.00%
0.00%
0.00%
Biomass
3.43%
7.68%
7.69%
7.57%
Hydro
15.97%
25.98%
26.28%
26.34%
Nuclear
7.90%
13.13%
13.41%
13.24%
Wind
5.38%
8.50%
8.64%
8.65%
Solar
0.65%
4.41%
4.34%
4.31%
Scenario 4
Table 7
Scenario 4: India with the Introduction of Clean Coal
Technologies
Low Tax
($14.02/t CO2)
Initial cost
Medium Tax
($40.65/t CO2)
High Tax
($77.92/t CO2)
$144 billion
$151 billion
$161 billion
264 Tt
264 Tt
264 Tt
$174 billion
$176 billion
$182 billion
123 Tt
123 Tt
124 Tt
$30 billion
$25 billion
$22 billion
Change in CO2 emissions
-141 Tt
-142 Tt
-140 Tt
Percent change in cost
20.87%
16.80%
13.48%
Percent change in CO2
emissions
-53.29%
-53.66%
-53.02%
Initial CO2 emissions
Final cost
Final CO2 emissions
Change in cost
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
IEA, Alternative Policy
Scenario Projections
Low Tax ($14.02/kWh)
Medium Tax
($40.65/kWh)
High Tax ($77.92/kWh)
Clean Coal
54.71%
40.61%
39.78%
40.53%
Gas
10.67%
0.00%
0.00%
0.00%
Biomass
3.43%
7.67%
7.55%
7.56%
Hydro
15.97%
25.66%
26.37%
25.87%
Nuclear
7.90%
13.19%
13.41%
13.26%
Wind
5.38%
8.52%
8.70%
8.41%
Solar
0.65%
4.34%
4.19%
4.38%
Conclusions
Both countries are capable of meeting their Energy Demand
in Original
ways that
Reset
significantly reduce negative environmental impact and externalities
Distribution
These changes in Infrastructure can be made financially appealing if the
social cost of CO2 Emissions is internalized through a modest Carbon Tax in China,
particularly if Clean Coal is developed as an option
Due to current limitations in domestic resources and technology, it seems
that changing Infrastructures in India is more costly, and a larger Carbon Tax may
be necessary to effectively internalize the social costs and provide incentives to
change; however, their potential to grow seems promising and perhaps renewable
options will become less costly with time
Nuclear is the most cost competitive energy source and the most promising source
to mitigate carbon emissions in the near future in both countries