1. Updates on the Chinese Energy Sector Yanjia Wang, Alun Gu, Aling Zhang Tsinghua University, China EASS Workshop 23 rd September 2010, Beijing

2. Part A: Targets, Efforts and Results WANG, Yanjia wangyjia@tsinghua.edu.cn Part B: China LEAP Modeling Efforts GU, Alun gal@tsinghua.edu.cn

3. Targets National 11 th Five-Year Plan(2006-2010): 20% reduction of energy intensity of GDP 10% reduction of pollutant emission National 12 nd Five-Year Plan(2011-2015): may be another 20% EE Commitment to Copenhagen (2006-2020): 40-45% of reduction of carbon intensity of GDP

4. Efforts Adjust economic structure Improve energy efficiency Develop low-carbon energy resources

5. Energy Intensity of Value-added EI (current price) calorific value calculation coal equivalent calculation Primary0.210.29 Secondary1.581.50 Tertiary0.450.60 EI (2005 constant price) calorific value calculation coal equivalent calculation Primary0.250.34 Secondary1.741.65 Tertiary0.500.67 Data before census

6. A Long Way To Go … Source: China Statistical Yearbook 2009(measured by current price) Achieve EE target heavily relay on structure changed, but..

7. Direct Input Coefficient of Input- Output Table(2005) Input OutputPrimarySecondaryTertiary Primary0.379200.069040.03317 Secondary0.452640.767090.56483 Tertiary0.168160.163880.40201 Source: China Statistical Yearbook 2009

8. Infrastructure construction consumed more energy-intensive products Source: China Statistical Yearbook 2001--2009

9. Energy Efficiency in Power Generation Plants Measures: shut down small plants(200MW), build SC, USC power plants (600MW, 1000MW per generator)

10. Mandatory Standards to Energy-intensive Products Published norms of energy consumption per unit product in various industrial sectors (affected on June 1st 2008). Including three levels of EE: for existing plants, for new-built plants and for targeted plants. Covered crude steel, ferroalloy, coke, cement, ceramics, flat glass, caustic soda, calcium carbide, synthetic ammonia, yellow phosphorus, copper, zinc, lead, nickel, tin, magnesium, antimony copper and copper-alloy tube, wrought aluminum alloy extruded profiles for architecture, electrolyzed aluminum. More norms are under development.

11. Award Energy Saving Projects Central government: 300 yuan/tce (savings ≥10,000tce/a) Some provincial government: 200- 300yuan/tce (10,000 ≤savings ≥thousands) A few city government: 100yuan/tce

12. Efforts in Transport Sector Build mass transit and inter-city rapid transit system Consumption tax reduction(5% to 2.5%) to compact cars and hybrid cars (2009) Fuel tax on petrol consumption (2009) Subsidy vehicle buyers if old car eliminated (2009) Mandatory limitation of vehicle ages Fuel economy standards

13. Improving fuel efficiency by 19% GB19578-2004 Limits of Fuel Consumption for Passenger Cars –Stage I: effected July 1 st 2005 for new certified cars; July 1 st 2006 for current produced cars –Stage II: effected January 1 st 2008 for new certified cars; January 1 st 2009 for current produced cars Covered 2374 types of vehicles and 95 manufacturers in stage II, 444 types of vehicles (produced by 55 manufacturers) are failure to meet the standard. The manufacturers had to stop producing these 444 types of vehicles.

14. Traffic Makes Real Fuel Consumption Much Higher than the Standards Source: Jin Yuefu (2005)

15. EE in Building Sector Appliance standards and labels Design standards for new buildings (big progress) Retrofit existing buildings (no progress) Monitoring governmental buildings (trial stage)

16. Saving Targets: 30%, 50% & 66% Regional based Baseline: 1980’s standard 30% saving standard: 1986 50% saving standards: 1996 65% savings standards: under development, effected in some regions.

17. Space-heating Standard in Beijing StandardsAverage space- heating load (W/m 2 ) Heating system efficiency (%)Energy intensity (W/m 2 ) Boiler houseNetworkSystem 198031.7558546.7567.8 30%25.360905446.9 50%20.6689061.233.7 65%11.1689061.223.7 Source: Kang Yanbin 2008

18. More Specific Requirements (Beijing) Source: 2009 Annual Report of Energy Conservation of Buildings

19. Wind Power Development

20. Solar Power Development

21. Installed Capacity of Power Generation (1980 – 2008)

22. Mix of Installed Capacity of Power Generation(2008)

23. Results Vs. Target Energy Intensity of GDP (tce/10k RMB) After census

24. Build Baseline Economic census of 2008 conducted in 2009. Revised GDP and energy data. GHG inventory of 2005 is under development.

25. General Published Data Source 1.Statistical Communiqué: Published by National Bureau of Statistics (NBS) in February of Year X+1, using statistical data of January to November Year X and the growth rate of December Year X-1 to estimate GDP and energy of Year X. 2.Yearbook: Published by NBS in autumn of Year X+1 to present GDP and energy of Year X. 3.National Economic Census: Leading by State Council and NBS. Published in January of Year X+1. Conducted in Year X to investigate data of Year X-1. Once in every 4 years.

26. GDP Data Communiqué 2008 estimated GDP of 2008 was 30.067 trillion RMB. Yearbook 2009 adopted the same number (30.067 trillion RMB). GDP of 2008 was adjusted to 31.4045 trillion RMB after census, increased 4.45%. Communiqué 2009 estimated GDP of 2009 was 33.5353 trillion RMB.

27. GDP Adjustment – Big difference in service sector Before census After census Discrepancy GDP3006731404.51337.54.45% First Industry 34003370.2-29.8-0.88% Second Industry 14618.314900.32821.93% Tertiary Industry 12048.713134.01085.39.01%

28. Regular statistical system (Yearbook) collects value-added data mainly from designated size of organizations Designated size of organization: –Mining, Manufacture, Elec. Gas, Water: All state-owned and non-state-owned enterprises with annual revenue from principle business ≥5 million RMB –Construction: various types of ownership with qualification certification and independent accounting systems –Wholesale: Sales ≥20 million RMB; Employer (year- end)>20 –Retail: Sales ≥5 million RMB; Employer (year-end)>60 –Hotel: rating stars –Catering: Sales ≥2 million RMB; Employer (year- end)>40 Other sectors: spot check

29. Census collects value-added data from all organizations Wholesale, retail, hotel & catering YearbookCensusCensus/ Yearbook (times) Number of enterprises 138,0861,403,00010.16 Employee11,374,81918,912,0001.66 Revenue187,656.8247,4831.25 Total assets75,118.3121,6191.62

30. Only collect gross output value from industrial enterprises by year Following former Soviet system, industrial enterprise accounting didn’t use the concept of value-add before 2009. The concept of value-add in constant price is even more difficult than for industrial enterprises. All value-add data for agriculture and industrial sectors are estimated by national and local statistical bureaus.

31. Key Energy Data Points Statistical Communiqué on the 2008 National Economic and Social Development (issued on February 26 th 2009) estimated total energy consumption of 2008 was 2.85 billion tce (coal equivalent calculation). China Statistical Yearbook 2009 (published in September 2009) adopted the same number(2.85 billion tce). Total energy consumption of 2008 was adjusted to 2.91 billion tce after census, increased 2.12%. Statistical Communiqué on the 2009 National Economic and Social Development (issued on February 25 th 2010) estimated total energy consumption of 2009 was 3.10 billion tce.

32. Energy Yearbook 2009 revised energy consumption data from 2005 to 2007 based on the results of the 2 nd national economic census in 2009 Version of Yearbook20092008 Discrepancy to 2 nd census (%) 20052257812144665.28 20062475622351565.28 20072684132534885.89 2008277515-- Primary Energy Consumption (10ktce, calorific value calculation )

33. Differences mainly in coal from 2 nd census Source: Energy Statistical Yearbook 2008, 2009 2007Before censusAfter census Discrepancy (%) Primary Energy Consumption(10 4 tce) 2534882684135.89 Coal (10 4 ton)2586412727465.45 Petroleum (10 4 ton)36570366590.24 NG(10 8 cu.m)6957051.47 Hydro power (10 8 kWh) 4853 0.00 Nuclear power (10 8 kWh) 621 0.00

34. Energy Efficiency Improvement Before census GDP Constant price Energy Consumption (coal equivalent calculation) EI Decrease rate(%) GDP Current price Inflation (%) 2005183217.42246821.23183217.40 2006204556.12462701.201.83212923.54.09 2007231228.42655831.154.60257305.611.28 20082520392850001.131.5530067019.30 2009 Source Statistical Yearbook 2009 Energy Statistical, Communiqué Cal. Statistical Yearbook 2009 Cal. EI decreased 8.13% from 2005 to 2008.

35. Energy Efficiency Improvement After census GDP (constant price) Energy Consumption (coal equivalent calculation) EI decrease rate (%) GDP current price Inflation (%) 20051849372359971.2761849370 20062084422586761.2412.742163143.78 20072379202805081.1795.0426581011.72 20082606872914481.1185.2031404520.47 20092846803066001.0773.1633535317.80 Source: Calculated by EI and energy consumption Energy Statistical NSB Document 2010 NSB Document 2010 Communiqué Cal. EI decreased 12.38% from 2005 to 2008; decreased 15.6% from 2005 to 2009

36. Energy Efficiency Improvement After census GDP (constant price) calorific value calculationcoal equivalent calculation Energy Consumption (% of hydro & nuclear) EIEnergy Consumption(% of hydro & nuclear) EI 2005184937225781 (2.5)1.221235997 (6.8)1.276 2008260687277515 (3.0)1.065291448 (7.7)1.118 △ 2008- 2005 757505173455451 EI decreased 2005 to 2008 12.78%12.38% 1.Total energy consumption coal equivalent calculation based is not transparent since the data of coal consumption per kWh generated changed year by year and not be published formally. 2.Prefer to use coal-based number since it shows a bigger share of clean energy while 15% target was set by 2020. 3.May be change to use calorific-based number since it shows a big improvement on EI.

37. Part B: China LEAP Modeling Efforts

38. Basic Assumptions Base year: 2000 ->2005 Target year: 2030 Dataset: AES2007 Draft LEAP2008 Three scenarios: BAU (considering regional cooperation), Maximum Nuclear Path(MaNS), Minimum Nuclear Path(MiNS) Data source

39. Per capita GDP China’s per capita GDP is expected to be quadrupled by the year 2020 as against 2000 in the report of 17 th NCCPC on October 2007. 2000 yr: 7078 RMB (856 US$) 2020 yr: 28000 RMB (3500US$, not considering rate fluctuation) 2006 yr: 2024 US$ This goal is much higher than the target set by the CPC five years ago at the 16th National Congress which was to quadruple the GDP value, without the mention of per capita by 2020. But the rapid growth will be under the condition of reduced consumption of resources and greater efforts in environmental protection. 856 2024 3500

40. Per capita house area and urbanization Industrialization and urbanization have speeded economic development. Per capita income will increase and people living level will be improved. Although there is a big income gap between urban and rural residents, per capita house area is expected to be similar by 2050.

41. The urban-rural income disparity has been increased recently Source: LI Shantong, 2006

42. Population and GDP assumptions The BAU scenario reflects a 20-year economic development path that yields average annual GDP growth rates of 8.38% between 2010 and 2020 and 7.11% between 2020 and 2030. China’s population forecast in the model, adopting national population plans and projections, shows the peak of total population arriving between 2030 and 2040, at 1.47 billion people, with continued and pronounced movement of population from rural to urban area.

43. Nuclear power scenarios changes AES2006 AES2007 2005201020202030 Installed capacity (GW) share Installed capacity (GW) share Installed capacity (GW) share Installed capacity (GW) share Maximum Nuclear Path8.71.60%253.5%808%1348% BAU8.71.60%152.1%707%1004% Minimum Nuclear Path8.71.60%121.7%606%802% AES2010

44. Industry assumptions Based on China’s government policy, growth in the most energy-intensive industrial sectors will be controlled and mainly used to fulfill domestic needs, and energy efficiency measures will be implemented in those sectors to enhance energy savings. In the steel, cement, and pulp and paper sectors, for example, physical output is projected to rise through 2020, but then fall slightly (steel), remain unchanged (cement), or rise only slightly (pulp and paper) through 2030. At the same time, the energy intensities per unit physical product in these industries is projected, in the BAU path, to fall by 1.0 to 1.8% annually, varying by industry and time period (China Low Carbon Scenario, 2009).

45. Results for BAU Scenario BAU Scenario Energy Demand by Sector, 2000-2030

46. Results for BAU Scenario BAU scenarios transport energy demand, 2000-2030

47. Results for BAU Scenario BAU Scenario Final Energy Demand by Fuel, 2000-2030

48. Results for BAU Scenario BAU Energy Supply Outputs by Fuel, 2000-2030

49. Results for three Scenarios Greenhouse Gas Emissions, 2000-2030, Three Scenarios for China

50. Conclusions China has experienced rapid growth in energy consumption in the recent years. Large amounts of investment have been provided for the power industry and for oil stockpile facility construction to secure energy supplies to support rapid economic growth. To realize China’s sustainable development, the national energy development strategy includes an energy conservation priority policy, and at the same time is vigorously developing renewable energy and new energy in China. A cleaner energy system and energy development strategy are needed, and should be established through government involvement leading to changes in all production processes and lifestyles through the applications of laws, regulations and fiscal policies. Vehicle emission problems in particular require special attention, especially those associated with increases in freight and passenger transport energy consumption.