1. Updates on the Chinese Energy Sector and the China LEAP Model: Inputs to and Results of National and Regional Alternative Paths for China
Yanjia Wang, Alun Gu, Aling Zhang
EETC, Tsinghua University, China
3rd Asia Energy Security Workshop
13-16 May 2005, Beijing, China

2. Part A: Background Information of Energy Situation in China
Yanjia Wang

3. Where Does China’s Energy Go?
Basic facts in 2004
Primary energy production billion tce
Total energy consumption billion tce
Energy production and consumption both increased 15% than the year before
Coal consumption billion ton, 14.4% higher
Crude oil consumption 2900 million ton, 16.8% higher
More questions and worries internal, regional and worldwide
Energy security
International oil price
Emission from coal consumption

4. Remaining recoverable reserves per capita (2003)
Poor on Domestic Conventional Energy Resources Source: Coal Economic Research 2005 Special Issue. Page 10
Remaining recoverable reserves per capita (2003)
China
USA
Japan
World Average
Coal (ton) 89
859 6 79
Oil (ton)
2.48
14.43
0.06
24.85
NG (m3)
1408
17973
312
27875

5. Low Consumption and Income Per Capita Source: Coal Economic Research 2005 Special Issue. Page 10

6. Primary Energy Consumption Source: China Energy Statistical Yearbook 2003
Coal
Oil

7. Primary Energy Mix（％） Source: China Energy Research Society, Energy Policy Research, 2003.6
World
Year
1980
1990
2000
2003
Coal
72.2
76.2
66.1
67.1
26.5
Oil
20.7
16.6
24.6
22.7
37.3 NG
3.1
2.1
2.5
2.8
23.9
Elec.
4.0
5.1
6.8
7.4
12.3

8. Less Coal for Final Users Source: China Energy Statistical Yearbook 2003

9. Heavily Relays on Small-scale Coal Mines Source: China Energy Research Society, Energy Policy Research,

10. Death on Coal Mining Accidents (person/Mt) Source: China Energy Research Society, Energy Policy Research, Coal Economic Research 2005 Special Issue. Page 24 * Calculated
Total Death*
(person)
China
USA
Russia
Average
State-owned
Local
TVE
1980
5066
8.17
7.11
10.50
9.03
1990
7300
6.76
4.53
10.19
16.88
2000
5800
5.80
0.97
3.46
10.99
0.039
2001
5951
5.13
1.88
4.23
15.44
0.041
0.490
2002
6997
5.07
1.25
3.83
12.12
0.027
0.335
2003
6951
4.17
1.08
3.13
9.62
0.031

11. China’s Petroleum Supply Course
Partial dependence on oil import
Self-reliance
Partial oil export
Increasing oil import and declining oil export
Net oil importer with a growing annual amount
Net importer of oil products
Net importer of crude oil
Now

12. Higher and Higher Dependency on Import Oil Source: China Energy Research Society, Energy Policy Research,
Prod.

13. Oil Import Dependency

14. 2nd Power Generation Industry in the World Source: Coal Economic Research 2005 Special Issue. Page 37
Year
Capacity/GW
Generation/TWh
Total
Thermal
Hydro
Nuclear
1980
65.9
45.6
20.3 --
301
243 58
1985
87.0
60.6
26.4
411
318 92
1990
137.89
101.84
36.05
621.32
494.97
126.35
1995
217.22
162.94
52.18
2.10
807.34
186.77
12.83
2000
319.32
237.54
79.25
1386.5
1107.9
243.1
16.7
2001
338.49
253.01
83.01
261.11
17.47
2002
356.57
265.54
86.07
4.47
274.57
26.49
2003
391.41
289.77
94.90
6.19
281.33
43.85

15. ENERGY EFFICIENCY IN CHINA Source: Handbook of Energy & Economic Statistics in Japan, 2004 Coal Economic Research 2005 Special Issue. Page 10

16. …has gone a long way Source: “Energy Efficiency Programmes in Developing and Transitional APEC Economies”, ISBN

17. …but much remains … Source: “Energy Efficiency Programmes in Developing and Transitional APEC Economies”, ISBN
World
Average
0.264

18. China is still Looking for the Way of Development

19. Industry is the Main Energy Consumer Source: China Energy Statistical Yearbook 2003
Resident
Service
Trans.
Industry
Agri.

20. ‘Three Shortages and One Hot Topic’
Three shortages: electricity, coal & oil
Quick switch from surplus to shortage
Broad range– 24 out of 31 provinces
Shortage in coal
One hot topic: energy development strategy
Sustainable development strategy for oil and gas
Energy science and technology development planning
Outline of medium-long term energy development planning ( ) (draft)

21. Outline of Medium-Long Term Energy Development Planning ( ) (Draft) Source: Shanghai Security Nwespaper July 1st
Top priority given to energy conservation and efficiency improvement
To make adjustments on energy profile– coal dominant, power oriented, as well as oil, natural gas and new energy
Better distribution of energy facilities– east and west, urban and rural, transportation capacity
Full utilization of domestic and overseas resources and markets– self sufficient and international cooperation

22. Outline of Medium-Long Term Energy Development Planning (2004-2020) (Draft)
Rely on technology innovations
Make great efforts on minimizing environmental impacts by energy production and consumption
Full attention given to energy security– diversification, stockpiles
Improvement of energy policy-making

23. Main Areas of Energy Technology Development Source: Tsinghua, China Energy Outlook 2004
Energy efficiency technologies
Higher efficient and cleaner utilization of coal
Technical system to support oil security
Advanced nuclear power technologies
Large-scale hydropower generation technologies
Increasing reliability of power grids
Renewable energy
Hydrogen and fuel cell

24. China Medium and Long Term Energy Conservation Plan
Taking energy conservation as an important component of changing the economic growth pattern (saving energy through changing the economic growth pattern)
Integrating energy conservation with economic structural adjustment, technology innovation and management enhancement
Integrating the function of market mechanism with government macro-regulating
Integrating lawful management and policy incentives
Three key sectors (industry, transportation, building)
Public participation (governmental agencies’ role)

25. Measures for Energy Security
Oil conservation
Domestic resource exploration
Overseas resource development
Shipping security
Fuel substitution (coal liquefaction, Ethanol, bio-diesel)
Stockpile

26. Actions in 2005 Electricity pricing
Law for Promoting the Development and Application of Renewable Energies
Set up State Energy Committee/Office
Oil industry reform

27. Electricity Pricing Associated with Coal Price
Market coal vs planning electricity
440 power plants among 1140 plants lost 7.8 billion yuan RMB in 2004 because of higher coal price.
First quarter of 2005, price of coal for power plants raised 10-15%
New pricing mechanism effected in May If coal price changes 5% or above within more than 6 months, power price will change.
Power for industrial consumers will increase yuan/kWh in May.

28. Law for Promoting the Development and Application of Renewable Energies
Finished legal procedure on Feb. 28th, 2005 and will effect on Jan. 1st, 2006.
Encourages all entities to participate in and protects legal rights and interests of the developers and users.
Sets middle and long-term target of the total volume at the national level.
Encourages and supports various types of grid-connected renewable power generation.
Government budget establishes renewable energy development fund to support research, standard establishment, pilot project, project construction, resource surveys and assessments, and localized production of the equipment.

29. Top Authority of Energy
No integrated authority to deal with energy issues since 1992.
Set up Energy Bureau under NDRC in April 2004 with 30 staff.
China will set up the State Energy Committee/Office. Mr. Ma Kai, the Minister of NDRC will be the head of the office.

30. Monopoly in Petroleum Industry will be Broken
Dec. 11st 2004 is the first day that China opens its oil product retail market based on the commitments for joining the WTO.
Dec. 11st 2004, Petroleum Chamber of Commerce under ACFIC (All-China Federation of Industry & Commerce) was set up. More than 100 non-state-owned enterprises joint it.

31. Aling ZHANG, Yanjia WANG, Alun GU
PART B China LEAP Model: Inputs to and Results of National and Regional Alternative Paths for China
Aling ZHANG, Yanjia WANG, Alun GU
Tsinghua University
May 13-16
Beijing

32. Outline Background of this study Basic assumptions
Business as usual Path
National Alternative Path & Regional Alternative Path
Cost comparison and emission comparison

33. Background of this study
Funded by Nautilus Institute, LEAP modeling and dataset in China started from 2001 as a part of the larger EAEF/AES regional project
Prof. Yanjia Wang, Prof. Aling Zhang, Dr. David Von Hippel and Ms Lea Prince have been of great help to the completion of the dataset and the paper summary

34. Background of this study
Approach: Use LEAP to study the energy futures scenarios for China
Task: Describe the possible results of energy consumption, GHG emission and costs comparison (demand cost, transformation cost or import cost and so on)

35. Basic assumptions
There are three Scenarios in this LEAP model: BAU, NAP and RAP
The data are from China statistical yearbooks of various years, energy reports and energy articles
Some O&M cost data is estimated according to the current average level in China

36. Business as usual Path

37. Business as usual Path Assumptions
There is no dramatic breakthrough has taken place in the regional political relations and economic cooperation
Natural gas is widely used for electricity generation
The urbanization process continues to speed up, bringing high pressure in terms of both energy consumption and environmental problems in most cities

38. Energy demand growth rate: 3%/yr
The renewable energy will not strongly promoted by the reason of national energy policy

39. Business as usual Path
Comparison of the Energy Demand Structure (by sector)
transportation sector is projected to be the fastest growing sector, with its share of total national energy use increasing from 10% in 2000 to 26% in 2030
industry sector share of energy use decreases, it remains the largest energy consumption sector, accounting for 44% of total energy consumption in 2030

40. National Alternative Path Assumptions
This path describes the development of nuclear power and renewable energy in China
the program of renewable energy utilization as a part of the National Alternative Path for China
Nuclear power is widely used in electricity generation
Coal will still play an important role in the all demand sectors

41. Energy demand: 3%/yr
The renewable energy will account for a little share by the reason of national energy policy

42. Output: Electricity Generation of NAP
The nuclear power generation will account for about 11% of the total electricity generation in 2030
More natural gas will be applied in the power generation

43. National Alternative Path GHG emissions
GHG emissions are mainly dominated by the Industry and transport sectors
Due to the usage of natural gas and nuclear in electricity generation in China, GHG emissions from the electricity sector are projected to decrease
As a result of the rapid development of the transport sector, emissions from the transport sector are projected to increase to account for 21% of total GHG emissions by 2030

44. Regional Alternative Path Assumptions
Under the Regional Alternative Path (RAP) for China, the fast-growing economy in the middle and western parts of China leads to increasing demand for electricity and for cleaner energy (including the current Northeast revival)
Allowing the expansion of international power networks and construction of international pipelines, regional cooperation brings new opportunities to all countries concerned
An energy charter is drafted to promote further cooperation in the region, including the free transfer of new energy technologies and a common set of benchmarks concerning energy efficiency to guide design of energy-using products in the region
More natural gas is used in China’s economy as a whole, relative to the BAU and NAP cases

45. Net final fuel demand of RAP
The shares of electricity and natural gas in energy demand are projected to increase through 2030
The coal share of total energy demand is projected to decrease by 2030

46. Output: Electricity Generation of RAP
For the regional cooperation, natural gas will play very important roles in the electricity generation in 2030

47. In the BAU and NAP scenarios, the energy demand fuel mix is almost the same, but for the RAP scenario, the natural gas share of total energy demand is projected to increase quickly
Coal energy demand is projected to decrease in all three scenarios, but the decrease in the level of coal demand differs between the scenarios
The increase in demand for oil in the future in China is expected to be unchanged, the driving force behind the increase being the rapid growth in China’s transport sector

48. Cost comparison
This section is not completed, but the trend is not unchanged
The cost of RAP scenario is projected to be much larger than the NAP scenario for the import cost.

49. Emission comparison
The emissions of RAP scenario is projected to be less than the NAP scenario

50. Conclusions
From 2001 to 2030, all three scenarios describe future “clean energy” paths
The era of cheap oil had already gone, rapidly growing energy demand will generate a need for increased energy supplies and energy security for China (natural gas and nuclear energy)
Regional cooperation will promote increased energy output and cut down the total GHG emissions

51. Next Step Continuous modification LEAP TED substantial
Hydrogen economy
CDM Project and energy structure in China
District heating added in the China LEAP model

52. Thank you !
(O)