Transcript PowerPoint

Energy Efficiency in China: Glorious
History, Uncertain Future
Mark D. Levine
Lawrence Berkeley National Laboratory
[email protected]
American Physical Society Energy Workshop
Berkeley, CA
March 1, 2008
Part I: Glorious History
In three Acts
Part II: Energy Crisis in China: 2001 to
present
repeat of much earlier “inglorious history”??
Part III: The Future:
What might happen? What is to be done to end the crisis?
Executive Summary (Part I)
• Things were bad in energy (for 3 decades)
• Deng Xiaoping came to power
— A group of academics suggested a new approach to energy
— Deng listened!
• Things were much better (for 2 decades)
• The market became king
— Energy went off track again
• There are solutions
— The Chinese government and Communist party are
responding, somewhat in the manner of Deng
3
Part I: China’s Energy History
in Three Acts
“Soviet Style” Energy Policy (1949-1980)
Deng’s Initial Reforms (1981-1992)
Transition Period (1993 to 2001)
4
“Soviet Style” Energy Policy (1949-1979)
•
•
•
•
•
Single objective was rapid energy supply growth
Energy prices greatly subsidized
Central allocation system provided energy primarily to heavy industry
No attention to environment
Result: one of the world’s least efficient (and fastest growing) energy systems
700
700
Hydroelectricity
600
Natural Gas
600
500
Coal
500
GDP
400
400
300
300
200
200
100
100
0
1950
1955
Source: NBS
1960
1965
1970
1975
GDP (billion 1980 RMB)
Mt coal equivalent
Oil
Energy Output
and GDP, 19501980
0
1980
5
Deng’s Initial Reforms (1980-1992)
•
Key meetings among more than 100
academic energy experts in 1979
and 1980 stated:
Energy Intensity of China's Economy, 1952-1992
— China energy policy in crisis
— need for radical reform
— major changes identified:
tce/thousand 1995 yuan GDP
0.75
0.5
0.25
(1) energy price reform, and
(2) serious attention to energy efficiency
•
0
1950
1955
1960
1965
Government quickly implemented
reforms in Sixth Five-Year Plan
(1981-1985)
Source: NBS
6
1970
1975
1980
1985
1990
Energy-conservation policies & measures
in Phase II
• Energy Management
— factory energy consumption
quotas
— factory energy conservation
monitoring
— efficient technology promotion
— close inefficient facilities
— controls on oil use
• Financial Incentives
— low interest rates for efficiency
project loans
— reduced taxes on efficient
product purchases
— incentives to develop new
efficient products
— monetary awards to efficient
enterprises
• RD&D
– funded strategic technology
development
– funded demonstration projects
• Information Services
– national information network
– national, local, and sectoral
efficiency technical service
centers
• Education & Training
– national, local, and sectoral
efficiency training centers
– Energy Conservation Week
– school curricula
7
Energy efficiency investment is stable,
but declining as share of total investment
Energy Supply and Energy Efficiency Investment, 1981-1998
300
15%
Energy Supply Investment
Energy Efficiency Investment
Estimated Efficiency Share, 1996-1998
200
10%
100
5%
0
0%
1981
1986
1991
1996
N.B. Only partial data on energy efficiency investments after 1995 are available. These partial data informed the estimates presented here
of efficiency's shares of total energy sector investment for 1996-1998. All investment data are for state-owned units only.
Source: NBS, SPC
8
Share of Total Investment
Investment (billion 1995 yuan)
Efficiency Share of Total Energy Investment
Investment in energy efficiency and other
policies greatly reduced China’s energy
intensity (1980-2000)
Primary Energy Use (Mtce)
4,500
4,000
Consumption at 1977 Intensity, Reported GDP
3,500
Consumption at 1977 Intensity, Adjusted GDP
3,000
Actual Consumption
2,500
2,000
1,500
1,000
500
0
1952 1957 1962 1967 1972 1977 1982 1987 1992 1997
Energy Use, Actual and Projected at 1977 Intensity, 1952-1999
Source: NBS
9
Transition Period (1993 to 2001) and After
Rapid movement towards market-based system…
—Dramatic energy price reforms (raised all energy prices to
consumers)
—Enterprise reforms increased price sensitivity
…but past successes in improving energy efficiency
were based on mechanisms that were disappearing…
—Elimination of energy quotas
—Low incentives for monitoring in industry
—Difficulty in continuing energy efficiency loan subsidies
—New tax code (1994) eliminated tax breaks for efficiency
10
Take-off of consumer goods highlights
the need for efficiency standards
15
Production of Consumer Durables, 1980-1999
Output (millions)
Air Conditioners
10
Refrigerators
5
Motor Vehicles
0
1980
1985
Source: NBS
1990
1995
11
Part II: Energy Crisis in
China: 2001 to present
repeat of much earlier “inglorious
history”??
Executive Summary (Part II)
• China faces a serious new energy crisis
— Most Chinese see the energy shortage as the crisis
— The real crisis is in energy policy (just as in 1979)
• A key issue: how can investment be attracted to energy
efficiency and how can government policy spur such
investment?
• A failure to rein in energy demand growth will have serious
impacts
— The environmental consequences of energy policy failure are
truly frightening
— Rapid energy growth portends economic consequences of equal
concern
13
Current Energy Crisis
•
•
•
•
•
•
Energy demand growing very, very fast
In 2004, widespread power shortage (24 of 31 provinces)
Soaring coal prices
Transportation bottlenecks for coal
Significant economic losses
“Surge” in oil imports especially as oil is used in place of coal
14
Since 2001, energy use has grown much faster
than GDP, reversing patterns from 1980 to 2000
170
160
Actual Energy
2001 = 100
150
140
130
GDP
120
110
Energy Target
100
90
2001
2002
2003
2004
2005
Source: NBS, China Statistical Yearbook, various years; China Statistical Abstract 2005; growth estimates
extrapolated from mid-year production data for 2005.
15
million tonnes carbon dioxide
Annual energy-related carbon dioxide emissions, 1980-2006
6,000
5,000
USA
4,000
3,000
PRC
2,000
1,000
1980
1985
1990
1995
2000
2005
Source: US annual emissions amounts reported by US EIA in the 2006 Annual Energy Review and 2007 Flash
Estimate; China emissions are derived from revised total energy consumption data published in the 2007 China
Statistical Yearbook using revised 1996 IPCC carbon emission coefficients by LBNL.
million tons carbon dioxide
Annual energy-related carbon emissions, 1950-2006
30,000
25,000
20,000
15,000
other global emissions
10,000
PRC
5,000
USA
1950
1960
1970
1980
1990
2000
Source: Historical 1950-2003 US and global emissions data from Oak Ridge National Laboratory, Carbon Dioxide Information Analysis Center; 2004-2006
US data from BP via Global Carbon Project. China 1950-2006 emissions data are derived from revised total energy consumption data published in the 2007
China Statistical Yearbook using revised 1996 IPCC carbon coefficients by LBNL.
Figure 6: Historical and Forecast China Carbon Emissions (WEO), 1990-2030
12,000
WEO 2007
10,000
WEO 1994
WEO 1995
Mt CO2
8,000
WEO 1996
WEO 1998
WEO 1998
WEO 2000
6,000
WEO 2002
WEO 2002
WEO 2004
WEO 2006
4,000
WEO 2007
Historical (LBNL)
2,000
1990
2000
2010
2020
2030
Figure 8: Historical and Forecast China Carbon Emissions (8, 9, 10), 1990-2030
9,000
Mt CO2
6,000
ERI (2005)
RNECSPC (2004)
Tsinghua (1999)
Historical (LBNL)
3,000
0
1990
2000
2010
2020
2030
Figure 3: Global, Chinese, and American Per-capita Energy-Related CO2 Emissions, 1950-2004
tonnes CO2/person
25
20
USA
15
10
global average
5
PRC
0
1950
1956
1962
1968
1974
1980
1986
1992
1998
2004
Source: China emissions are derived from revised total energy consumption data published in the 2007 China Statistical Yearbook using
revised 1996 IPCC carbon emission coefficients by LBNL; China population data from NBS and US Census (for 1950-51); global and
American emissions data from Oak Ridge National Laboratory, Carbon Dioxide Information Analysis Center; global and American
population data from US Census.
Cumulative Energy-Related CO2 Emissions, 1950-2006
350,000
250,000
200,000
USA
150,000
100,000
PRC
50,000
05
20
00
20
95
19
90
19
85
19
80
19
75
19
70
19
65
19
60
19
55
19
50
0
19
Mt CO2
300,000
Source: Historical 1800-1980 US emissions data from Oak Ridge National Laboratory, Carbon Dioxide Information Analysis Center;
1980-2006 US data from US EIA 2006 AER. China 1902-1949 emissions data from Oak Ridge National Laboratory, Carbon Dioxide
Information Analysis Center; 1950-2006 emissions data are derived from revised total energy consumption data published in the
2007 China Statistical Yearbook using revised 1996 IPCC carbon coefficients by LBNL. Pre-1902 China emissions data unavailable,
but generally considered to be negligible.
Growth in heavy industry has been
extraordinary in past five years:
industrial efficiency especially critical
_______________________________________________________________
• Consumes >60% of energy
• Technical complexity: many different types of processes
• Extraordinary growth in past five years
• Existence of many old, legacy industrial facilities
22
Cement Production Worldwide: 2004
Rest of World 32%
Italy 2%
Brazil 2%
Spain 2%
Russia 2%
South Korea 2%
Japan 3%
United States 5%
(includes Puerto Rico)
US: 99 Mt (2004)
41% China
44 %
India 6%
Sources: U.S. Geological Survey, 2005. Mineral Commodity Summaries: Cement; Cui, Y., 2006
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China is the world leader in the production
of many industrial commodities
China's Crude Steel Production
1990-2004
China's Cement Production
1990-2004
300
Recycled Steel (Electric Arc Furnace)
Primary Steel (Open Hearth Furnace)
Primary Steel (Basic Oxygen Furnace)
200
150
100
50
0
1990 1992 1994 1996 1998 2000 2002 2004
Rotary Kilns
1000
Million Metric Tons
Million Metric Tons
250
1200
Shaft Kilns
800
600
400
200
0
1990 1992 1994 1996 1998 2000 2002 2004
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Industry Major Drivers
Industry Production Revision (million ton) 2000
Glass previous
Glass revised
Ethylene previous
Ethylene revised
Ammonia previous
Ammonia revised
Paper previous
Paper revised
Cement previous
Cement revised
Aluminium previous
Aluminium revised
Iron and Steel previous
Iron and Steel revised
9.1
9.1
4.7
4.7
33.6
33.6
30.5
30.5
597.0
597.0
3.0
3.0
128.5
128.5
2005
9.6
17.5
7.7
7.6
36.0
46.0
40.0
52.6
680.0
1050.0
4.0
7.7
250.0
349.4
2010
10.1
27.5
12.0
13.0
38.0
38.0
50.0
68.0
790.7
1310.0
4.6
11.2
300.0
440.0
25
Energy intensities within industrial
sub-sectors are actually declining
2.0
smelting & rolling of
ferrous metals
1.8
1.6
kgce/RMB (2000)
1.4
petroleum, coke, & nuke
non-metal min prod
1.2
1.0
smelt & roll n-f m
raw chemicals & ch pr
0.8
0.6
coal
paper
0.4
electricity
0.2
0.0
1995
textiles
1996
1997
1998
1999
2000
2001
2002
2003
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Part III: The Future
What might happen? What is to be
done to end the crisis?
Executive Summary (Part III)
• Things could get worse
— Very unlikely, but they could continue on the present
path for some time
• Things could get better
— There is some chance!!
28
China’s National Energy Strategy
“Energy development and efficiency have
equal role (emphasis on efficiency)”
• But supply investment at RMB 424 billion ($ 50B)
while energy conservation investment at RMB 23
billion ($3B) in 2003 !!
29
Energy Investment
_______________________________________________________________
• Energy supply investment is ~18 times energy efficiency
investment
• Energy efficiency investment needs to increase from
$3B to $25B per year (avg over next decade)
30
China’s government now recognizes the urgency of
energy efficiency
• The reform period (1980-2000) showed that energy efficiency was
essential to achieve economic goals (Deng Xiaoping)
• The current leadership recognizes the same imperative (Plenary of the
Communist Party, Nov, 2005)—Premier Wen Jiabao:
“Energy use per unit of GDP must be reduced
by 20% from 2005 to 2010”
• Statement reiterated by the National Peoples Congress (March 2006)
• National Development and Reform Commission creating and recreating aggressive energy efficiency policies and programs
The loss of control led to imposition of new 2010
target of reducing energy/GDP intensity by 20%
50
50
40
40
energy axis
energy target
30
30
new 2010 target
actual
energy
GDP
target
20
20
actual GDP
10
10
GDP axis
0
2000
2005
2010
0
2020
2015
Year
32
GDP (trillion 2000 RMB)
Energy Consumed (million boe/d)
reference scenario
Is the 20% intensity reduction possible?
3,500
GDP elasticity=1
LBNL BPS baseline
Aggressive Industrial Efficiency
3,000
Mtce
Aggressive Industrial and Appliance
Efficiency
AGR 5.0%
7.3%
Aggressive Industrial, Appliance and
T&D Efficiency
AGR 3.5%
AGR 3.5%
AGR 2.8%
(2010 target)
2,500
2,000
2005
2006
2007
2008
2010
2009
33
Is 20% energy intensity reduction by 2010
possible?
2010 Energy Consumption Senarios
1.5
AGR 7.5%
1.4
2005=1
-11%
AGR 5%
1.3
-17%
AGR 4.3%
AGR 4.1%
AGR 3.9%
1.2
AGR 3.55%
AGR 2.8%
1.1
1
GDP
elasticity=1
LBNL BAU
baseline
Aggressive +Aggressive +Aggressive
Industrial
Appliance
T&D and
Efficiency
Efficiency
Thermal
Efficiency
+closing
inefficient
plants
EI target
34
Policies
•
Microeconomic policies (targeting energy efficiency)
— targets for energy efficiency for industries, with strong incentives
(carrots) and penalties (sticks)
•
—
—
—
—
—
Key supporting policies: information and technical guidance; strengthening local
energy conservation service provider network; and subsidies directly connected
to achieving industrial targets
enhanced enforcement of tighter building energy standards,
tighten and assure compliance with appliance efficiency
standards,
strict enforcement and strengthening of auto fuel economy
standards,
initiation of demand-side management programs of scale in
several electric utilities, and
investment in mass transit alternatives.
35
Policies (cont)
• Macroeconomic Policies
— Revisiting of energy prices to better reflect costs and taxes to better
achieve social/political objectives
— Re-creation of successful approach (during 1980s and part of
1990s) of subsidizing investments in energy efficiency
— Policies that result in additional closings of energy inefficient
factories
— We also recommend exploration of ways in which macroeconomic
policies can lead to structural changes favoring lower energy use.
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THE END