Haven’t done a Green Hops for a long time, so there are lots of developments over the past weeks to catch up on!
Ten-Year New Energy Development Plan Closed to being Unveiled
State media is reporting that the National Energy Administration has finalized a 10-year new energy development plan that will require a cumulative investment of 5 trillion yuan ($740 billion) to realize. The plan, which is a strategy to help China realize its goals to achieve 15 percent of its primary energy mix from non-fossil sources and also to reduce its carbon intensity by 40 to 45 percent by 2020, will be sent to the State Council for approval.
This plan seems to be the long-awaited new energy stimulus plan that GLF blogged about more than a year ago with baited breath, and in fact seems to provide almost double the investment dollars. I would, however, strongly caution against assuming that this investment estimate will translate to direct funding by the central government. Most likely, just like the economic stimulus package of 2008, this amount represents a total investment amount that will be provided by a combination of central, provincial and local governments in addition to the private sector (see my presentation at CSIS earlier this year).
That said, the details released so far are still impressive. Important to note is the comprehensive breadth of sectors that fall under the “new energy” concept-its not just renewables such as wind, solar and biomass, but also energy efficiency, nuclear, smart (and strong) grid, transportation, unconventional natural gas, and more efficient use of fossil fuels.
A notable winner of this plan is natural gas, a hitherto minor energy resource for China (see picture). The NEA estimates that natural gas will account for 8 percent of China’s energy needs by 2015 at 260 billion cubic meters, compared to just 4 percent of a smaller energy supply base today at around 100 bcm. As the Financial Times blog recognizes, this strategic push for natural gas represents an economic opportunity for foreign firms with the right expertise.
New Energy Car Subsidies
In June, new subsidies for the private purchase of “new energy cars” came into effect ona pilot basis in five cities-Shanghai, Changchun, Shenzhen, Hangzhou and Hefei. The scheme provides up 3,000 yuan ($440) for fuel-efficient cars below 1.6 liters in engine capacity, and up to 50,000 yuan ($7,400) for plug-in hybrids and 60,000 yuan ($8,900) for pure electric vehicles for private consumers. This new program is different from the 13-city new energy vehicle subsidy a few years ago which targeted public fleets (this will be expanded to 20 cities).
Beijing was a notable omission from this new 5-city pilot program, and according to my conversations Read the full story
State Council presses for accountability for urgent energy conservation measure; NDRC issues 12-point circular to deepen economic reform.
If China is to achieve its 20 percent reduction in energy intensity in the current five year period, it will have to undertake some drastic actions in the months that remain.
And drastic action is just what the Premier has ordered.
Last month, the central government announced that energy intensity for the first quarter of this year rose 3.2 percent (from what baseline is not clear, although the press is saying its from Q1’09 rather than Q4’09). This represents a reversal of a downward trend-the first time since first half of 2006 that energy intensity has actually risen. This news also comes in a month after it was announced that China’s first quarter GDP grew by a remarkable 11.9% year-on-year, signaling that a recovery from the financial crisis is in full swing and stoking fears of inflation.
At the end of 2009, the government reported that China had achieved a 14.38 percent reduction in energy intensity from 2005 levels, putting it slightly behind pace (16 percent) to achieve its 2010 target of 20 percent. That said, no one I’ve spoken to about China’s energy intensity numbers understands how the government arrives at its statistics. Recall previous guest post on this issue, and this more recent reflection. At best, China is at 8 percent energy intensity reduction, folks tell me. But whether its 8 percent or 14 percent, the admission by the government that energy intensity has started to go up means that it will be extremely difficult under any circumstance to hit that cherished 2010 target.
The rise in energy intensity is attributed to the resurgent heavy industry sectors that were the beneficiaries of the economic stimulus program. So much for all that hype about China having the greenest stimulus in the world. (As I recently pointed out, the reality about China’s “green stimulus” is much more complicated.)
But now, Premier Wen and the State Council have apparently had enough. In a nationally televised videoconference, Premier Wen used very strong language, saying that energy conservation is a “fundamental national policy” that concerns the “survival and development of the Chinese people.” Government communications have gone on to attribute Premier Wen as using the vivid metaphor of needing to use an “iron hand” (“采取铁的手腕“) to eliminate backward heavy industrial production capacity.
Wen went on to describe seven broad points of urgent action (in Chinese). These seven points were a subset of 14 points outlined by the State Council (in Chinese), which consist of the following headings:
- Strengthen the sense of urgency and responsibility for energy conservation. Read the full story
A look at Lawrence Berkeley National Laboratory’s analysis on the energy conservation programs in China’s current five-year plan. For those of you in Beijing on Jan 20, you may listen to Dr. Mark Levine present these very findings at the Beijing Energy & Environment Roundtable (open free to public!). Details here.
Last month, I had the unique opportunity to gather with some of the top U.S-based thinkers on Chinese energy and climate policy. Participants hailed from World Resources Institute’s ChinaFAQs group of experts. Since it was a closed door session, I can’t spill everything that was discussed, but I did get permission to share what I thought was the most fascinating segment of the day’s programs. Mark Levine and Lynn Price of Lawrence Berkeley National Labs’ China Energy Group, presented a fascinating array of findings on how China is progressing on its energy conservation goals in its current five-year plan (2006 to 2010). The study, conducted by LBNL’s China Energy Group (in collaboration with Tsinghua University and McKinsey) analyzed China’s efforts in seven energy conservation programs–the Ten Key Projects, Enforcement of New Buildings Energy Standards, Building Retrofits, Top-1000 Energy-Consuming Enterprises, Structural Adjustments, Small Plant Closures, and Appliance Standards. A recent article in Science Daily also covered LBNL’s work in this study.
Lynn explained in an exclusive interview with The Green Leap Forward, the motivations for conducting such a study:
LBNL’s China Energy Group focuses on end-use energy demand, so we are always interested to learn more about the details behind the overall numbers. During this Five-Year Plan, China has been reporting remarkable progress in reducing energy use per unit of economic growth, but the question in our minds was how were they achieving this? With this project, we set out to really understand the end-use policies and programs that China established and how they were or were not contributing to the overall reduction in energy intensity.
The following slides, which are informative and comprehensive, were what was used in Mark and Lynn’s presentation. I highly recommend going through them in entirety.
LBNL’s findings is summed up best by Mark, lead author of the study and founder of the China Energy Group, who told The Green Leap Forward , also in an exclusive interview: Read the full story
Let’s take a break from the heavy reading and enjoy some great video clips. The first two are first and third place winners of the UNFCCC/CDM International Video Contest 2009 (the theme was “How the Clean Development Mechanism Changes Lives”), the prizes for which will be awarded in Copenhagen during the ongoing climate summit. The third is first in an upcoming series by ClimateWorks.
Natural Gas Power Plant in Inner Mongolia Changes Nasong’s Lives, by Yang Li & Xiaochen Zhan
Waste Heat and Methane Capture Project at a Steel Plant in Hunan Province, by Van Yang
China Takes the Lead in Wind Energy Development, by ClimateWorks
By Angel Hsu and Christopher Kieran, part of ‘Team China’ tracking the Chinese delegation a the Copenhagen climate negotiations.
Plenary sessions were closed off to observers today, which means that we unfortunately cannot beat the Earth Negotiations Bulletin with insights as to what went down on the negotiating floor. Nonetheless, we were able to get quotes from Vice Minister of Foreign Affairs He Yafei (seated center; on his left is Yu Qingtai, a leading negotiator in the Chinese delegation) – the highest level Chinese government official that has spoken to date (Premier Wen Jiabao is expected next week). We also acquired the text of the big proposal that hit the COP today: “The Copenhagen Protocol” from the Alliance of Small Island States (AOSIS).
1) Is “auditing, supervision, and assessment” (ASA) the new “measurable, reportable, verifiable” (MRV)?
On the question of “measurable, reportable, and verifiable” (MRV) actions for developing countries (He showed his climate policy prowess by referring to a reporter’s question on “verification” by saying, “You mean MRV-able? I think I just made up that word.”), Vice Minister He first referred back to the Bali Action Plan, which was agreed to by all Parties of the UNFCCC and does not require MRV for developing countries. While sticking to his guns regarding the Bali Action Plan, he said, “It doesn’t mean China would not do what it promises, we’re very serious about it [climate change mitigation actions].”
As promised, for the nex two weeks, Angel Hsu (pictured right) and her colleagues from Yale University will be blogging live from Copenhagen. Angel Hsu is a Doctoral Student at Yale University, focusing on Chinese environmental performance measurement, policy and governance. Prior to Yale, she worked in the Climate Change and Energy Program at the World Resources Institute, a Washington-based environmental think-tank. There, she managed the GHG Protocol’s projects in China, which focused on capacity-building on greenhouse gas accounting and reporting standards for Chinese government and businesses.
Greetings from Copenhagen! I, along with seventy Yale students, have descended upon Denmark’s capital to participate in the Fifteenth Conference of Parties (COP-15) climate talks that will hopefully result in a clearer picture of what a post-Kyoto agreement would be. This “China in Copenhagen” series of blog posts featured on The Green Leap Forward will follow China’s negotiating position during the next few weeks. We’ll shadow China’s negotiating team, speak with key experts, and report back to GLF on a daily basis.
While China has long established its negotiating position for Copenhagen, we’ve identified a set of major issues for the Chinese negotiating team at Copenhagen. A team of masters students and I (call us “Team China” if you will), have carefully reviewed the negotiating texts (non-papers in policy-speak) and developed a series of policy scenarios and strategic recommendations for how China can act as a leader in this talks to achieve an outcome that is optimal for both themselves and the global climate regime.
What are these issues?
- Legal structure: what are the options for the legal nature (or “bindingness”) of a post-Kyoto agreement and what would be most optimal for China?
- Financing: how will China ensure appropriate funding for its mitigation and adaptation actions? Read the full story
“We cannot pursue GDP with blood.” Li Zhanshu, Governor of Heilongjiang province
Pictured right, rescuers get ready to go down into the pit to search for survivors at the site of the accident at the Xinxing Coal Mine in Hegang City, northeast China’s Heilongjiang Province on Nov. 22, 2009. (Photo credit: Xinhua, via China Daily)
Over the weekend, a tragic deadly coal mine blast in northeast China’s Heilongjiang province, claimed, at the time of writing, 104 coal miner’s lives. Another four remain missing. [Update: the death toll has risen to 106.] Coal mining in China has been understandably dubbed the world’s deadliest profession, with a coal mine explosion seeming to take place every week. Usually, these blasts are small, claiming half a dozen to a dozen lives. The blast occurred at the Xinxing Coal Mine under the state-owned Heilongjiang Longmei Mining Holding Group’s subsidiary in Hegang City. Some 528 miners were working underground at the time of the blast. The Hegang accident is the most deadliest in China in two years since 105 perished in December 2007 in an explosion in a Shanxi coal mine [Update: now the deadliest since 181 perished in Shandong in August 2007]. In fact, one of The Green Leap Forward‘s first posts precisely discussed this fatal Shanxi blast two years ago as as a stark reminder of the price that China pays with its voracious appetite for coal.
Some things in China, it seems, just don’t change.
The mining accident in Heilognjiang comes in the wake of an earlier-than-usual onset of a cold hard winter, coupled with a notable uptick in national GDP growth in the third quarter of this year, which is probably sustaining itself well into this final quarter. With coal accounting for 80 percent of China’s power needs, it is no stretch of the imagination that these combination of factors means that Chinese miners are now working much harder than usual. “If the coal mine shuts down, the lights go out in Beijing,” says a miner just outside of the classic coal towns, Datong, Shanxi.
As a state-owned mine, the Xinxing mine in Heillongjiang is supposed to be a relatively safer mine. But that’s not necessarily Read the full story
As expected, the U.S.-China presidential summit in Beijing yielded an agreement on clean energy and climate change that focused on collaboration rather than emissions target setting (see my comments in Time.com and China Daily). Here’s a run-down on what this cooperation entails, in a piece published simultaneously at Climate Progress with my colleague Andrew Light.
“Very exciting day here in Beijing. There’s enormous interest in both governments in working together to fight climate change. The package announced today is far-reaching and can make a real difference in cutting emissions.” - David Sandalow, Assistant Secretary of Energy for Policy and International Affairs
Today, a comprehensive plan for U.S.-China cooperation on clean energy and climate change was announced in Beijing by President Barack Obama and President Hu Jintao. The overall plan is much more ambitious in scope and depth than we had anticipated and contains directives to create various institutions and programs addressing a wide array of cooperation on clean-energy technologies and capacity building, including very important efforts on helping China build a robust, transparent and accurate inventory of their greenhouse gas emissions.
These efforts include cooperation in the following areas:
1. Greenhouse Gas Inventory. A memorandum of cooperation between the U.S. Environmental Protection Agency and China’s National Development and Reform Commission sets out avenues for collaboration on capacity building in climate change, with an initial focus on helping China to develop a robust, transparent and accurate greenhouse gas emissions inventory.
2. Joint Clean Energy Research Center. Originally announced this July, more details were provided on the joint center that will “facilitate joint research and development of clean energy technologies by teams of scientists and engineers from the United States and China, as well as serve as a clearinghouse to help researchers in each country.” Financial support from public and private sources of at least $150 million over five years, split evenly between the two countries, will be provided. The Center’s research will initially focus on building energy efficiency, clean coal including carbon capture and storage, and clean vehicles. (Factsheet)
3. Electric Vehicles. Those initiative will “include joint standards development, demon Read the full story
Guest blogger Tristan Edmondson (right), partner at Mint Research, a clean tech consultancy, describes China’s growing Energy Service Company (ESCO) industry.
China has one of the worst ratios of energy use to GDP in the world, two and a half times the world average. This undoubtedly creates investment opportunities for a country that is awash in capital. But despite the huge potential of China’s ESCO industry, it has yet to approach the size of the ESCO industry in the US where it is an industry worth six billion dollars a year.
What is an ESCO?
Under an energy performance contract, ESCOs install energy saving technologies and methodologies and then share the resulting savings with the customer, so paying off the capital investment. Here are some examples:
- Honeywell International, acting as an ESCO, helped Asahi’s Shenzhen brewery become more energy efficient. Energy saving methods included upgrades to heat recovery, cooling and control systems, with the resulting energy cost savings shared between the Honeywell and Asahi. After the energy performance contract expires Asahi will continue to enjoy reduced energy bills at no additional cost.
- The production of electricity using energy that would otherwise be discarded is also organised along ESCO lines. Dongying Shengdong EMC Ltd (DSE) installs electricity-producing boilers that burn waste gases, such as coal mine methane or waste gas from coking plants. Clients of DSE provide waste gas free of charge to act as a feedstock, and buy the on-site electricity from DSE at a lower cost than grid electricity. Revenue-sharing arrangements usually lasting 10 years enable DSE to recoup its capital in about two years, and then maintain a profitable operation and maintenance relationship for the rest of the contract.
- Beijing PowerU is a provider of chilled water cool storage technologies that save energy. The company has installed solutions under energy performance contracts for a variety of customers including Shanghai’s Pudong Airport, LG Philips’ electronics factories, semiconductor manufacturing plants, five-star hotels and other large-scale air conditioning users.
Although energy is relatively cheap and often subsidized in China, the sheer scale of energy inefficiency means there are Read the full story
Here’s a 7 minute television interview I did with the US television foreign policy program “Foreign Affairs”, discussing China’s clean energy policies. If you based in the U.S., it may not be too late to catch this on the TV (check schedule).
(p.s. not sure what the first visual on “a new direction for Hong Kong” means!)
I suspect there may be some questions regarding my remarks about Read the full story