Promoting Energy Efficiency in China: The Status Quo and Way Forward

Xianli ZhuCopenhagen Centre on Energy Efficiency

Copenhagen, 14 June 2016C2E2 and DIIS Joint Seminar: Improving EE in Emerging Asia

Outline

• About Copenhagen Centre on Energy Efficiency (C2E2)

• China Energy Status and Trends

• Energy efficiency policy framework in China

• Energy demand prospects and EE policy initiatives

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Overview of C2E2The Copenhagen Centre on Energy Efficiency (C2E2) is a research and advisory institution dedicated to accelerating the uptake of energy efficiency policies, programmes and actions globally. 

C2E2 serves as the Energy Efficiency Hub of the Sustainable Energy for All (SE4All) Initiative. The Centre's prime responsibility is to support SE4All's objective of doubling the global rate of energy efficiency improvement by 2030. 

Objectives:

• Accelerated adoption of energy efficiency policies, programmes and actions in countries.

• Progress towards achieving the SE4All objective of doubling the global rate of energy efficiency improvement by 2030.

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Copenhagen Centre on Energy Efficiency

Launched in September 2013

www.energyefficiencycentre.org

Starting Point for SE4All Goals

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Proxy indicator

Universal access to modern 

energy services

Doubling global rate of improvement of energy efficiency

Doubling share of renewable energy in global 

energy mix

Percentage of population with electricity access

Percentage of population with 

primary reliance on non‐solid fuels

Rate of improvement in energy intensity

Renewable energy share in TFEC

1990 76 47–1.3

16.6

2010 83 59 18.0

2030 100 100 –2.6 36.0

• The market for energy efficiency investments is very large – estimated between USD 310 ‐ 360 billion in 2012 

• USD 1‐1.2 trillion in investment is required each year until 2050

Selected C2E2 Publications

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China's energy consumption ‐ continous growth

Based on data in BP Statistical Review of World Energy data

Energy consumption in China versus other countries

Dramatic energy intensity declines since 1980 in China

tCe/10,000 RMB

Source: China Statistical Yearbook 2015

China's GDP energy intensity in 2014 was 74% lower than the level in 1980 and 29% lowerthan the level in 2000.

Trends of EE improvement in ChinaRate of primary energy intensity improvement, CAGR (%)

Level of primary energy intensity, (MJ/$2005 PPP)

Cumulative energy savings (PJ)

1990‐2000

2000‐2010 1990‐2010 1990 2010 990‐2010

China –7.07 –2.18 –4.65 30.5 11.8 1,319,738

Northern America

–1.65 –1.78 –1.71 10.1 7.1 368,527

Europe –1.41  –1.10  –1.25 6.5 5.0 223,096

World –1.61  –0.99  –1.30 10.0 7.7 2,275,646

Source: SE4All Global Tracking Framework, 2014

• During 1990 ‐ 2010, China consumed around 21% of the global energy, and contributes about 58% of the world energy saving

Major energy efficiency improvements in key energyintensive sectors since 1980

In 2013, the average energy use for producing major energyintensive products:• Per kWh of electricity at coal‐fired power plants: down by 26.9%• Per  tonne of steel: down by 44.9%• Per tonne of cement: down by 42.9%• Per tonne of ethylene:  down by 56.3%¤Resulting in 1.1 bn tCe of energy saving in 2013 based on the 1980 energy efficiency level from coal‐fired power supply (540 MtCe), cement production (230 MtCe) and steel (420 MtCe)

China's energy consumption in 2014

Rising importance of energy conservation in Chinese energystrategies

1980s: laying equal stress to energy development and conservation, giving priority to energy conservation in the near Mid‐1990s: simultaneously promoting energy conservation and development, giving priority to energy conservationAfter 2000: energy conservation the top priority in energy development strategyIn 2006: resource efficiency was included as a fundamental national strategy, and energy efficiency targets were included as binding targets in the national Five‐year Plans

The position of energy conservation in energy supply policy: equal stress → simultaneously 

promoting→Top priority →Binding target for social and economic development

• Fiscal subsidies

• Tax reduction and exemption• Differentiated electricity price• Financing support

• Energy Conservation Law enactedin 1997, amended in 2007

• Supporting standards and regulations to the law

• Mandatory EE labelling for someproducts

• EE assessment for gov. approval of fixed asset investment

• Enhancing law enforcement

Energy efficiency policies and measures

Lgislation Economicincentives

• Binding EE improvementtargets for local governmentsand included in chief governorperformance assessement

• Forced closure of inefficientand polluting power plants, steel and iron plants, cement factors etc.

Command and control

China's Energy Efficiency and CO2 emission reduction targetsfor the 12th Five‐year Plan Period (2011‐2015)

• GDP energy intensity redeuction: 16%• GDP CO2 emission intensity: 17%• Share of non‐fossil fuel in energy mix: increasing to 11.6%• Main pollutant emission: 

– Reduction in Chemical Oxygen Demand and SO2 emissions: 8% each– Reduction in Ammonia and NOx emissions:  10% each

Decomposition of the national EE intensity reductiontarget target of ‐16% among provinces for 2011‐2015

‐18% ‐17% ‐16% ‐15% ‐10%Tianjin   ShanghaiJiangsuZhejiangGuangdong

BeijingHebeiLiaoningShandong

Shanxi, Jilin, Heilongjiang, Anhui, Fujian, Jiangxi, Henan, Hubei, Hunan, Chongqing, Sichuan, Shannxi

Inner Mongolia, Guangxi, Guizhou, Yunnan, Gansu, Ningxia

HainanTibetQinghaiXinjiang

Factors considered in target setting: • local economic development levels,• past EE improvement records, • potential for EE improvement

• The targets are further decomposedto government at lower levels

• The local performance in achievingthese targets are included in performance assessment for localgovernors

Success stories ‐ Subway in Beijing

• Till 2006, 2 subway lines, total length 54 km

• By Dec 2015, 18 subway lines, total length 554 km

• Currently 26 Chinese cities have rail‐based public transport, total length 3618 km (of which 73% underground)

• It is estimated that by 2020 over 50 cities will have rail transport, and total rail length more than6000 km

High‐speed trains

• International definitions: min. 250km/hour• China started research in high‐speed trains

in 1990s• Example: Zhengzhou ‐ Beijing: 700 km, 2.5 

to 3 hours• By 2015, it has built 20,000 km of hgih‐

speed railways, accounting for over half of the high‐speed railways in the world

• China plans to increase the length of its fast speed railway to 30,000 km by 2020

Target for High‐speed railway development by 2030

EE targets in the 13th Five‐year Plan and China's INDC

2014 2020 2030

Peaking of CO2 emissions CO2 emissions peakingaround 2030, and tryingfor early peacking

GDP energy intensityreduction based on 2005 level

33.8% 40‐45% 60‐65%

Share of non‐fossil fuel in primary energyconsumption

11.2% 15% 20%

Challenges 

• Slowing down in GDP growth rate. In 2015, China's GDP grew by 6.9%, the slowestgrowth since 1990

• Taget: by 2020, GDP and per capita rural and urban income shall double on the basis of 2010 level

• Overcapacity in iron and steel, coal mining, and other energy intensive sectors. Ironand steel production is around half the global total. Big price falls. China has set targets to reduce the overcapacity, which can lead to over 1.8 million jobs losses in iron, steel, and coal mining sectors alone. Resistence from labors

Challenges during the 13th Five‐year Plan (2016‐2020)

• The economic development mainly relies on resource input, lack of innovation, and some industries face severe overcapacity, continuous declines in business profit levels, and frequent big accidents in working place

• Tight resource constraints, continuing degradation in ecological environment; 

• Economic gaps among different regions, rural areas and country side

• Shortage of basic public services, big income gaps, rapid aging of the population, and big challenges in eliminating poverty.

National Strategies for the 2016‐2020 period• Energy efficiency rennovation for the coal‐fired power plants: 

EE targets for existing power plants: max. 310 g coal/kWh; new power plants: max. 300 g coal/kWh

• Discouraging wasteful energy use, and including EE in all areasand processes of social and economic development

• Economic structuring ‐ reducing the share of energy intensive sectors in economy

• Sustainable consumption and lifestyle

• Pollution control and curbing degradation of ecosystems, seeking green growth and sustainable development

• Seeking international energy cooperation

Key points• China has made remarkable progress in energy efficiency improvement since 1980s• The country's existing economic development pattern heavily relies in energy and 

other ressource input• This has to change to peak the country's energy consumption and CO2 emissions• The country has a set of effective policies for energy efficiency improvement• It has set some moderately ambitiouse target for energy efficiency improvement by 

2030• The country faces some big challenges in the transition toward more energy efficient

and environmentally sustainable growth• Denmark, EU, and other countries are supporting China's efforts for energy efficiency

improvement• Realising the SE4All targets of doubling global annual rate of energy efficiency

improvement requires faster EE improvement faster in China,  how to make thishappen?

ThanksXianli Zhu, xzhu@dtu.dk

www.energyefficiencycentre.orgUN City