1. © OECD/IEA 2011 COAL AND CHINA’S CHOICES Jonathan Sinton China Program Manager International Energy Agency Washington, D.C., 12 January 2011

2. © OECD/IEA 2011 Coal, long the big story, is now even bigger

3. © OECD/IEA 2011 2010 was a big year for Chinese coal imports

4. © OECD/IEA 2011 China’s coal imports are a small portion of total consumption Mt coal

5. © OECD/IEA 2011 China may have lots of coal, but it’s no longer dirt cheap Monthly spot coal prices Qinhuangdao imports CIF

6. © OECD/IEA 2011 Center of production moving west Getting deeper Quality an issue Water too Transport very stretched source: China5E

7. © OECD/IEA 2011 Is coal cheaper than the alternatives?

8. © OECD/IEA 2011 Longer-term: WEO 2010 scenarios Global energy scenarios to 2035 New Policies Scenario is the central scenario in WEO-2010 > assumes cautious implementation of recently announced commitments & plans, even if yet to be formally adopted > provides benchmark to assess achievements & limitations of recent developments in climate & energy policy Current Policies Scenario takes into consideration only those policies that had been formally adopted by mid-2010 > equivalent to the Reference Scenario of past Outlooks The 450 Scenario sets out an energy pathway consistent with the goal of limiting increase in average temperature to 2 O C

9. © OECD/IEA 2011 0 2 000 4 000 6 000 8 000 10 000 12 000 14 000 16 000 18 000 Mtoe 1980199020002010202020302035 World primary energy demand by fuel in the New Policies Scenario Fossil fuels maintain a central role in the primary energy mix in the New Policies Scenario, but their share declines, from 81% in 2008 to 74% in 2035 Other renewables Biomass Hydro Nuclear Gas Oil Coal WEO-2009 Total: Reference Scenario

10. © OECD/IEA 2011 Recent policy commitments, if implemented, would make a difference Global energy use grows by 36% in 2008-2035, with the OECD share of world demand falling from 44% today to 33% in 2035 World primary energy demand by region in the New Policies Scenario 0 2 000 4 000 6 000 8 000 10 000 12 000 14 000 16 000 18 000 1990199520002005201020152020202520302035 Mtoe Rest of world China OECD WEO-2009: Reference Scenario

11. © OECD/IEA 2011 Other renewables Biomass Hydro Nuclear Gas Oil Coal WEO-2009 Total: Reference Scenario 0 500 1 000 1 500 2 000 2 500 3 000 3 500 4 000 198019902000201020202030 Mtoe 2035 China primary energy demand by fuel in the New Policies Scenario Total primary energy demand in China grows at 2.1% per year on average in 2008-2035, an overall increase of 75%

12. © OECD/IEA 2011 The power and industry sectors remain key drivers of global coal demand - 750- 500- 250 0 250 500 7501 0001 250 Other* Coal-to-liquids Industry Power generation Mtce OECD China India Indonesia Other non-OECD Change in primary coal demand by sector and region in New Policies Scenario, 2008-2035 Demand in power generation accounts for almost 60% of the increase in global coal demand, while another 30% of the demand growth comes from the industry sector

13. © OECD/IEA 2011 Coal remains the backbone of global electricity generation A drop in coal-fired generation in the OECD is offset by big increases elsewhere, especially China, where 600 GW of new capacity exceeds the current coal-fired capacity of the US, EU & Japan 0 2 000 4 000 6 000 8 000 10 000 12 000 199020002010202020302035 TWh China India Other non-OECD OECD Coal-fired electricity generation by region in the New Policies Scenario

14. © OECD/IEA 2011 The 450 Scenario: A roadmap from 3.5  C to 2  C The 450 Scenario sets out an energy pathway consistent with limiting the increase in temperature to 2  C Assumes vigorous implementation of Copenhagen Accord pledges to 2020 & much stronger action thereafter The failure of the Copenhagen Accord pledges: > As many lack transparency, there is 3.9 Gt of uncertainty over the level of abatement pledged to 2020 > As many lack ambition, the cost of achieving the 2  C goal has increased by $1 trillion in 2010-2030 compared with WEO-2009

15. © OECD/IEA 2011 The 450 Scenario: Abatement by technology In moving from the New Policies Scenario to the 450 Scenario, more expensive abatement options such as CCS play a growing role World energy-related CO2 emission savings by technology in the 450 Scenario relative to the New Policies Scenario 20 25 30 35 40 45 200820152020202520302035 Gt Efficiency50% Renewables18% Biofuels4% Nuclear9% CCS20% Share of cumulative abatement between 2010-2035 42.6 Gt 35.4 Gt 21.7 Gt Current Policies Scenario 450 Scenario New Policies Scenario 13.7 Gt 7.1 Gt

16. © OECD/IEA 2011 China abatement in the 450 Scenario In moving from the New Policies Scenario to the 450 Scenario, China starts to rely more on CCS as room for further abatement from lower-cost options becomes limited China energy-related CO2 emission savings in the 450 Scenario relative to the New Policies Scenario Efficiency50% Renewables18% Biofuels1% Nuclear8% CCS23% Share of cumulative abatement between 2010-2035 12.6 Gt 5.2 Gt 5.0 Gt 4 5 6 7 8 9 10 11 12 13 200820152020202520302035 Gt Current Policies Scenario 450 Scenario 10.1 Gt 2.4 Gt New Policies Scenario

17. © OECD/IEA 2011 Low-carbon technologies account for 78% of China’s power generation by 2035 in the 450 Scenario, up from 19% today Share of China electricity generation by type and scenario Additional low-carbon generation in 450 Scenario Low-carbon generation in the NPS Fossil-fuel fired generation 0% 20% 40% 60% 80% 100% 201020152020202520302035 in the 450 Scenario Power generation in China in the 450 Scenario

18. © OECD/IEA 2011 Bigger and more efficient power plants in non-OECD The average efficiency of coal-fired generation plants in the non-OECD countries rises from 33% in 2008 to 40% by 2035 Coal-fired electricity generation by technology and region in the New Policies Scenario

19. © OECD/IEA 2011 WEO 2010 Implications for China China's role in global energy is set to expand further & its policies will have major implications for global energy trends & prospects for limiting climate change A greater role for gas in China could contribute greatly to reducing CO2 emissions China's role as leader in manufacturing, deploying—and increasingly in developing—low-carbon technologies can drive down costs, to the benefits of all countries Growing interconnectedness & China's increasing weight in the energy market links its energy security to global energy security

20. © OECD/IEA 2011 Courtesy: IEA Clean Coal Centre Typical, old 200 MWe plant in China

21. © OECD/IEA 2011 Huaneng Qinbei Power Plant 2x600MWe SCHuaneng Yuhuan Power Plant 2x1000MWe USC Shanghai Waigaoqiao Power Plant 2x900MWe SC + 2x1000MWe USC Shandong Zouxian Power Plant 2x600MWe + 2x1000MWe Selection of supercritical (SC) and ultra-supercritical (USC) power plants constructed in China over the past decade