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Zhou Sheng, Associate Professor of Energy Environment Institute, Tsinghua University

Date: Aug 10, 2010      Source: IEEPA      
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First of all, I am delighted to have the chance to participate in the conference, whose title is World Economic and Environmental Conference, and covers two topics such as low carbon economy and climate change. Energy technology, which is closely related to such topics and is also involved in our research area, is the main content I’d like to say. So, my speech theme is “the role that energy technology plays in the process of China’s response to climate change”, which is divided into three aspects, shown as following:

 

First, low carbon economy; second, low carbon technology, with the focus on low carbon energy technology, and later on, I will talk something on technology transfer according to the conference title.

Concerning low carbon economy, as we all know, China is a developing country with urgent requirement to vigorously develop economy, and is also facing the task to reduce the greenhouse gas emission at the same time, which is a prerequisite for economic development. As a result, I have to mention three features therein:

1. China has to develop vigorously economy in such high-speed economic growth phase. As estimated, China will double GDP by 2020 as that in 2010, and quadruple by 2050, which is the China’s growth rate.

2. Chinese population. China is most populous in the world and has carried out measures of family planning. It is predicted that Chinese population will reach peak by 2030, and slowly drop later on.

3. China has to increase fossil energy similarly at the rate of GDP growth, but lower than the latter. The above-mentioned is the three features, which will bring out two fundamental problems:

The first question is on energy security, which means, in people's opinion, oil import quantity. That is to say, in despite of limited petroleum resources, the energy consumption on transportation is increasing along with people's increasing living standard. By the year 2020, China's 60% oil will be dependant on import.

The second question: the emission of greenhouse gas (GHG) will definitely increase along with increasing energy consumption and unchanged coal-based energy consumption structure in a short period. By 2020, Chinese total GHG emission will exceed 10 billion tons, and around 80 per cent is from energy system. As a result, energy security and pressure from GHG emission are still key questions facing China. One thing needs to be mentioned: despite increasing energy consumption in the future, energy consumption and CO2 emission of China’s per capita GDP will surely decline, which is a basic conclusion we draw.

In order to solve these two questions, we should make efforts in three aspects: (1) economic restructuring; (2) improvement of energy efficiency; which serve as effective means to lower ultimate energy demand; (3) development of low-carbon technology. Efforts China has made mainly cover: enhance R&D, make investment on new energy technology, promote cost-saving and energy-efficiency technology. 

 Such efforts were mainly embodied on per capita GDP energy consumption, namely energy intensity. As we all know, during the 11th Five Year Plan period, (for over 4 years since 2005), energy intensity has decreased sharply to round 15%, of which some data have already been upgraded at present. We may know that energy efficiency improves extraordinarily fast from 2005 to 2007, but slower in the later period. By way of analyzing the reason of energy efficiency improvement, we know that China’s energy conservation from 2000 to 2008 mainly focused on three aspects: daily energy saving, technological energy saving and industrial restructuring. Furthermore, China’s energy efficiency decreased rather than increased from 2003 to 2005. Above-mentioned information constitutes Mckinsey diagram on cost of emission reduction, of which the most important is that such study has shown negative cost in China’s energy saving and emission reduction, namely, we may gain extra ecnomic benefit while carrying out such activities.

China’s effort in energy conservation and emission reduction is firstly embodied in industry field. Statistics on 14 high energy-consuming industries including electricity, steel and cement shows that per-unit energy consumption, namely energy intensity dropped sharply despite the output of such industries increased, which illustrates that China has advanced fast in energy-efficiency technology, and some energy efficiency has even increased by over 30%.

As for energy supply, power industry is the most important sector to be considered. From 2005 to 2008, power related consumption reduced consistently for 7 to 10 gram standard coal annually when compared with 2005. Simultaneously, the loss of power transmission dropped sharply, which gave convincing evidence that our energy efficiency had risen up during power transmission, and further increased whole power efficiency, rising to 40.24% in 2007 from 37.36% in 2000. Furthermore, it also explained lower CO2 emission for per-unit power supply, we can see it at the right bottom: CO2 emission per KWH in 2000 reached 1,087g, while 968g in 2008, dropping round 11%.

Three scenes have been analyzed on the forecast of China’s future energy supply, and two basic restraints have been considered: (1) ensure energy security, (2) lower GHG emission. From different scenes analysis, we know that future GHG emission and installed power capacity are still high in reference scene; second scene is the restraint of CO2 emission, and the scene on the right is dual-control one for CO2 emission and oil import, which is obtained by increasing the proportion of non-fossil energy and reducing oil consumption.

To increase such proportion, we should firstly increase the proportion of renewable energy, which remained low in China despite it developed fast. Data of 2008 showed that 9% were from renewable energy, among which 6.5% were hydroelectric power, and even tiny proportion for other renewable energy like biological energy. At present, even though there are many disputes on the development of biological energy, it accounted for more than 2/3 renewable energy. Of course, among all renewable energy, wind power grows fastest in recent years, which doubled annually in the past 5 years. By the end of 2009, the total installed capacity of wind power had exceeded 20 million kilowatt,a high speed even in the world.

Nuclear power generation, as another low carbon technology, is in the stagnant stage in western developed countries, while has huge market potential in China. Generally, The technology can be divided into four generations, presently, over 400 nuclear power plants, which have started market operation in the globe, belongs to second generation, namely light-water reactor or pressurized-water reactor. The third-generation technology being promoted in China is AP1000 of USA and EPR of Europe. In addition, the fourth-generation technology, namely high temperature gas-cooled reactor, independently developed by China, has made experimentally successful, and 200,000 kilowatt pilot project are underway at present. In brief, future development of China’s nuclear power is optimistic.

The above-mentioned is on energy technology of supply chain, China has to consider oil security, which is closely related to traffic demand. When talking about traffic demand, we have to notice that China’s per-capital car is relatively low in the world, and even lower in comparison with western developed countries. However, along with the enhancement of China’s economic level, or improvement of people’s living standard, traffic demand will increase dramatically, whose energy demand grows fastest among Chinese counterparts. Research showed that oil demand in China’s traffic will double in 2020 to 200-300 million tons, which will bring about serious question of oil security.

In order to solve the problem of oil security, we shall vigorously develop alternative energy technology, which is a kind of technology to alternate oil and reduce oil consumption in China, and involves numerous other technologies such as electric-vehicle technology, biofuel technology, coal-to-liquids technology, as well as relevant technology means aiming at enhancing economic efficiency of fuel and annual driving range. However, such technologies have brought numerous disputes, of which electric vehicles remain relatively small, the reason is that electric vehicles are driven by electricity instead of oil, whose life cycle covers a series of steps from resource exploration, processing, distribution to end user. Study showed that energy consumption per thousand kilometers covered direct and indirect consumptions, as you know, electricity is also transformed from other energy. Here are two pictures, the left one is gasoline (routine energy) technology, while the right one is electric-vehicle technology, which consumes less half of total energy and fossil energy as the picture shows.

By using electric-vehicle technology, we can not only save fossil energy, but also reduce GHG emission. In the process of coal-fired power, CO2 will be emitted accordingly. The right chart shows that electric-vehicle can reduce round 1/3 CO2 emission per kilometer, which represents its advantage. Unlike this, other alternative energy technologies, focusing on bio-fuel like ethanol and biodiesel, coal-to-oil technology like di-methyl ether from coal and methanol from coal, caused violent controversy, because these technologies originally are designed to reduce GHG emission, and CO2 in particular. However, by way of study, mainly on life cycle analysis, we found that first-generation bio-fuel and coal-to-oil technology got little effects on energy conservation and emission reduction in the same mileage. We can see that bio-diesel got certain effects on energy conservation and emission reduction, with half equivalent of fossil fuels and less GHG emission, while other technologies like bio-ethanol and di-methyl ether from coal caused more GHG emission.

Of course, the more low-carbon power technologies, the better effects we will get. We shall pay attention to second-generation bio-fuel technology, which is a kind of technology adopting crop straw as raw material, and will reduce dramatically GHG emission. At the same time, even though coal-to-oil technology has no effects on energy conservation and emission reduction as a whole, China has to respond to the problem of oil security. Due to its rich coal resource, China may lower its oil import by developing liquids from coal, which is propitious to domestic oil security. So China’s liquids from coal has certain market potential.

Aside from relevant technologies, China is considering Carbon Capture and Storage (CCS) technology, whose pilot projects have been carried out in some places. CCS is a kind of technology aiming at capturing and drawing back CO2 emitted during power generation and production process, and storing it in a steady way. CCS technology can be applied throughout the whole combustion process as CO2 is emitted from burning fossil fuel. One thing to be mentioned is the uncertain risk during CCS, even extra energy required in the process, which will reduce 7-15 percentage points of China’s energy utilization rate. That is the point.

The next question is that CCS technology will not be applied easily, but need extra cost. Study showed that extra cost was 20-60 dollars as 1 ton CO2 was reduced. We can image that several billions of CO2 are emitted annually in China, the cost is astonishing even 10% were drawn back.

At present, coal poly-generation technology, as a promising technology, has been developed, whose principle is shown as follows: gasify coal material firstly, then apply some gas products for manufacturing liquid fuel, some for synthesizing ammonia, others for generating power. By way of using coal as a kind of resource rather than simple energy, we can improve greatly utilization rate of coal and resources, because we can produce liquid fuel, electricity and chemicals simultaneously. The process may reduce round 20% coal when compared with separate production, and reduce sharply CO2 emissions together with CCS system. However, it is difficult to promote such technology because it involved different sectors like power, chemical and transportation.

In the above chapter, we have talked about terminal energy technology (for increasing energy efficiency), low-carbon energy technology (namely energy technology of supply chain), alternative energy technology, CCS and poly-generation technologies. More efforts are needed to reach truly energy conservation and emissions reduction, of which the largest barrier is technical implementation and application. That is to say, many technologies are not truly commercialized, have encountered technical, cost and market access barriers. We have to concede that developing countries technically are falling behind developed ones, which took the lead in the globe. If we want to achieve global GHG emission reduction, low carbon technology transfer is imperative. We shall introduce overseas advanced low carbon technologies. Despite too much talks on low carbon transfer, there are few truly technology transfer, especially under the rapid Clean development mechanism (CDM) framework.

As the fastest-development international cooperation mechanism in recent years, CDM brought human kind with new knowledge on climate change and emission-reduction of GHG. However, the original function of CDM internationally is to accelerate sustainable development of developing countries, and transfer advanced technologies concerned to them like China. Analysis on UNFCCC report, which incorporates 26 categories with over 3200 CDM projects, showed that technology transfer involved importing equipment and transferring techniques, which were of host countries, and difficult for developing countries to obtain. In general, about 36% projects, or over 60% GHG emission-reduction projects got involved in international technology transfer when making an application.

I have to mention that the term “related to” is very important. Analysis showed that technologies were mainly from developed countries, among which 94% equipments and 98% techniques were mainly from countries like USA, Japan, France. That is technology transfer we talked under the CDM. Moreover, one thing we shall emphasize on is that the meaning of technology transfer is extensive, primarily shown in two aspects: equipment import and process management knowledge transfer. As we all know, there is distinct difference between actual technology transfer and expected one, the reason is that what we hope is core technology rather than sheer equipment import. Therefore, developed countries shall push forward advanced technology transfer in an essential way.

As a whole, in order to develop low carbon economy and sustainable energy, China shall focus on two aspects: (1) take full advantage of domestic resource and strength, enhance R&D and investment, upgrade level on technology innovation. (2) strengthen manufacturing capability of domestic equipment. As for imported equipments under CDM, it will be preferable if such equipments produced domestically, which will accelerate domestic development of low carbon and energy technologies.

In addition, we shall make full use of overseas advanced experience and technologies, and transfer them by a certain cooperation, ensuring that they may be expanded and applied in developing countries at lower cost.

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