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China’s Energy Development in the Era of Global Engagement Kevin Tu China Program Manager International Energy Agency Dublin, 21 April 2016
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Page 1: China’s Energy Development - IIEA · •About the International Energy Agency • Found in 1974 in wake of 1973 oil embargo. • Energy security, Economic development, Environmental

China’s Energy Development in the Era of Global Engagement

Kevin Tu

China Program Manager

International Energy Agency

Dublin, 21 April 2016

Page 2: China’s Energy Development - IIEA · •About the International Energy Agency • Found in 1974 in wake of 1973 oil embargo. • Energy security, Economic development, Environmental

• About the International Energy Agency • Found in 1974 in wake of 1973 oil embargo.

• Energy security, Economic development, Environmental awareness, Engagement worldwide

• IEA new ED’s first official mission to China • Vision speech in CASS in September 2015.

• 2015 IEA Ministerial Meeting • Activation of IEA Association along with Indonesia

and Thailand in November 2015.

• 20th Anniversary Ceremony of IEA-China Engagement (30 March 2016) • IEA-China Energy Cooperation Centre.

• Chinese senior official to work at the IEA.

• China launch of WEO 2016 special report

• WEO 2017 special report on China

China and the IEA

Page 3: China’s Energy Development - IIEA · •About the International Energy Agency • Found in 1974 in wake of 1973 oil embargo. • Energy security, Economic development, Environmental

Shifting global energy landscape

59.0%

37.2% 27.4%

7.1%

22.2%

22.4%

33.8% 40.6%

50.2%

0%

25%

50%

75%

100%

1974 2013 2040

Others

China

IEA

China’s ascendance in the energy sector has brought both opportunities and challenges in terms of global energy governance.

Page 4: China’s Energy Development - IIEA · •About the International Energy Agency • Found in 1974 in wake of 1973 oil embargo. • Energy security, Economic development, Environmental

Comparison of energy mix

The convergence of energy mixture between China and world average has profound implications on global energy & environmental agenda

68%

29% 20%

16%

31% 36%

4.7%

21% 28%

2.6% 2.4% 1.1%

8.3% 11.3% 5.6%

1.0% 4.8% 10%

0%

25%

50%

75%

100%

China World U.S.

Nuclear

Other renewables

Hydro

Gas

Oil

Coal

Page 5: China’s Energy Development - IIEA · •About the International Energy Agency • Found in 1974 in wake of 1973 oil embargo. • Energy security, Economic development, Environmental

0

10

20

30

40

50

60

1990 2000 2010 2020 2030 2040 2050

GtC

O2

Other OECD 9%

United States 13%

European Union 7%

Other non-OECD 15%

Other emergingeconomies 14%India 13%

China 29%

Post-COP21 reality check

About 70% of the decarbonisation actions need to take place in non-OECD countries especially China

Page 6: China’s Energy Development - IIEA · •About the International Energy Agency • Found in 1974 in wake of 1973 oil embargo. • Energy security, Economic development, Environmental

Paris

16 March 2014 – index 43/100

Pictures courtesy of AirParif

14 March 2014 – index >100

2 days later

Beijing

6 days earlier

Los Angeles Photochemical Smog, 1940s

Great London Fog, 1952

Air pollution as key policy driver

Page 7: China’s Energy Development - IIEA · •About the International Energy Agency • Found in 1974 in wake of 1973 oil embargo. • Energy security, Economic development, Environmental

Vehicle, 22% Coal, 17%

Adjacent Regions, 24.5%

Construction, 16%

Solvent, 16%

Agriculture, 4.5%

PM2.5 Emissions by Source

Beijing China

Coal & Secondary Emissions, 45%

Vehicle, 20%

Construction/ Industrial, 20%

Others, 15%

Source: Deutsche Bank & Beijing Municipal Government.

Page 8: China’s Energy Development - IIEA · •About the International Energy Agency • Found in 1974 in wake of 1973 oil embargo. • Energy security, Economic development, Environmental

Governance structure & 13th FYP

“New normal” of GDP growth: 7% in 12th FYP, 6.5-7% in 13th FYP.

Energy intensity and carbon intensity reduction targets: 16% & 17% in 12th FYP, and 15% and 18% in 13th FYP.

First ever absolute national energy consumption cap at 5 billion tce by 2020.

Page 9: China’s Energy Development - IIEA · •About the International Energy Agency • Found in 1974 in wake of 1973 oil embargo. • Energy security, Economic development, Environmental

0

500

1000

1500

2000

2500

3000

35001

97

8

19

80

19

82

19

84

19

86

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00

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Has coal use in China already peaked?

After the take off in 2001 and a golden decade of average annual growth around 10%, a new era for coal in China has started

China joined the WTO Coal demand

declined two years in a row

The end of two digit growth

Mtce

Peak coal in China?

Page 10: China’s Energy Development - IIEA · •About the International Energy Agency • Found in 1974 in wake of 1973 oil embargo. • Energy security, Economic development, Environmental

Has coal use in China already peaked?

Source: CERS (2016) China Energy Outlook 2030.

2011 2012 2013 2014 2015 2020 2025 2030

Demand 3.89 4.12 4.24 4.12 3.94 4.08 3.70 3.61

Growth % 11.4 5.9 3.1 -3 -4.3 -0.9 -2 -0.5

-9

-6

-3

0

3

6

9

12

15

18

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

National Coal Consumption (billion tonnes)

Growth Rate (%)

Page 11: China’s Energy Development - IIEA · •About the International Energy Agency • Found in 1974 in wake of 1973 oil embargo. • Energy security, Economic development, Environmental

Oil and Gas Sector Reform in China

Document Not known yet

Date Near future

Authority Not known yet

Key issues

on Reform

(Expected)

Liberalization of crude import licensing Further deregulation in pricing Futures and spot trading of Chinese oil and gas Third party access of pipeline infrastructure Opening upstream oil and gas exploration Reform on resource taxation system Mineral rights of unconventional gas

Page 12: China’s Energy Development - IIEA · •About the International Energy Agency • Found in 1974 in wake of 1973 oil embargo. • Energy security, Economic development, Environmental

Nuclear development after Fukushima

0 20 40 60 80 100 120

Operational capacity in 2010

NDRC (2007)

Before Fukushima Low

Before Fukushima Medium

Before Fukushima High

State Council (2014)

China’s operational nuclear capacity target in 2020 (GW)

Post-Fukushima political reality: higher safety standards, technological uncertainties, public attitude towards inland nuclear construction, rapid development of renewables, and overcapacity of coal-fired power plants

Page 13: China’s Energy Development - IIEA · •About the International Energy Agency • Found in 1974 in wake of 1973 oil embargo. • Energy security, Economic development, Environmental

China alone is expected to add more renewable power capacity than all OECD countries together, and than all other non-OECD countries together

China leads global Renewable growth

Shares of net additional renewable capacity, 2014-20

EU - 28

13%

United States

9%

Japan

5%

Rest of OECD

8%

China

38%

India

9%

Brazil

5%

Africa

4%

Rest of

non - OECD

9%

Page 14: China’s Energy Development - IIEA · •About the International Energy Agency • Found in 1974 in wake of 1973 oil embargo. • Energy security, Economic development, Environmental

Historical Development Period

Level of engagement

Milestone events

Pre-1980s

No engagement

• Beginning of oil exports, without direct contacts with international energy governance bodies.

1980s Start of engagement

• Became a member of the WEC in 1983.

• Joined IAEA in 1984.

1990s More active engagement

• Together with Hong Kong and Chinese Taipei, joined the APEC Energy Working Group in 1991.

• Signed UNFCCC treaty in 1992.

• Signed a MOU with IEA in 1996.

Since 2000

More influential engagement

• Became a founding member of JODI in 2001.

• Established co-operation relationship with Energy Charter in 2001.

• Founding member of IEF in 2002.

• Established co-operation relationship with OPEC in 2005.

• Founding member of SCO Energy Club in 2007.

• Founding member of IFNEC (International Framework for Nuclear Energy Cooperation) in 2010.

• Engaged in in-depth energy discussions under the G20 process since early 2010s.

• Joined IRENA in 2014.

• Activation of Association with the IEA in 2015

Increasingly closer energy interdependence between China and the world;

Bilateralism -> multilateralism;

China’s evolving views and practices in global governance;

Transitions in global energy landscape;

Global and local environmental challenges especially climate change and air pollution.

Driving forces

Overview of China’s Engagement in Global Energy Governance

Page 15: China’s Energy Development - IIEA · •About the International Energy Agency • Found in 1974 in wake of 1973 oil embargo. • Energy security, Economic development, Environmental

Concluding remarks

Alleviating air pollution ASAP and peaking carbon emissions around 2030

are two most important energy policy drivers in China.

Coal is expected to continuously fuel China’s economic growth in the

foreseeable future, cleaner coal technology, air pollution control and

lower carbon energy transition are key to coal’s future in China.

Comprehensive energy sector reform is the prerequisite to realize the full

potential of natural gas utilization and renewable development in China.

Large scale nuclear development could move China’s climate agenda

forward, but has to face post-Fukushima political reality including less

supportive public attitude and overcapacity of coal-fired power plants.

Recent progress between China and the IEA has laid a solid foundation for

China’s engagement in global energy governance, the future of bilateral

relations depends on efforts at both sides.

Page 16: China’s Energy Development - IIEA · •About the International Energy Agency • Found in 1974 in wake of 1973 oil embargo. • Energy security, Economic development, Environmental

Thank you very much !

Kevin Jianjun Tu

China Program Manager

International Energy Agency

[email protected]


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