Barbara Finamore China Program Director Natural Resources Defense Council 2012 International Energy Perspective Summit Taipei, Taiwan July 25, 2012
Barbara Finamore China Program Director
Natural Resources Defense Council
Presentation to Taiwan Green Trade Project Office July 26, 2012
The U.S.-China Low Carbon Development Race:
Business Opportunities for Taiwan
The U.S.-China Low Carbon Development Race: Business Opportunities for Taiwan
• Current status of the low carbon race
• Future outlook for low carbon development in the U.S. and China
• Clean energy trade disputes between the U.S. and China as well as the areas of cooperation
• Implications for business in Taiwan
– Sector by sector breakdown
• Recommendations for Taiwan RE industry
Current status of the low carbon race
• Recent reports indicate that China currently leads the world in installed RE capacity, with the U.S. behind by 40GW.
TOP 10 IN INSTALLED RENEWABLE ENERGY CAPACITY (GW) AS OF 2011
Source: The Pew Charitable Trusts
Finance, investment, and installation of low carbon technologies
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China United States
Progression of wind development between 2001 and 2010 in the U.S. and China
0%
20%
40%
60%
80%
100%
120%
140%
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Meg
awat
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Newly added wind capacity, 2001-2010
U.S. New Capacity China New Capacity
U.S. Growth Rate China Growth Rate
Source: Global Wind Energy Council, Bloomberg New Energy Finance
Distribution of investment over various sectors (2005-2011)
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Outlook for RE in the United States
• It is estimated that U.S. funding for clean tech will drop a staggering 75% between 2009 and 2014. • On the positive side, higher fuel economy standards for cars and light trucks will save 1/10th of current U.S. oil usage. • Despite lapsing subsidies, solar energy is still expected to grow within the next 20 years. •Proposed CO2 standards for power plants upheld by DC Court of Appeals
Source: The Pew Charitable Trusts
State-level RE development in the U.S.
Source: Database of State Incentives for Renewables and Efficiency
Outlook for RE in China
• China will account for 40% of global RE growth by 2017
• Reducing carbon intensity by 45% by 2020 compared to 2005 levels – Increase non-fossil energy to 15% of total energy
consumption by 2020
• 12th Five Year Plan highlights the importance of low carbon development.
• Seven strategic industries,including: – Energy efficiency and environment
– New energy
– New energy vehicles
• Recently began experimenting with domestic carbon trading.
• The central government plans to spend 170 billion RMB this year on energy conservation, emissions reductions, and renewable energy.
Source: The Pew Charitable Trust
Renewable energy trade conflicts increasing
• In March of 2012, in response to CASM petition, the U.S. Department of Commerce announced plan to impose 3%-5% countervailing duties tariff on Chinese solar cell imports.
• In May, the DOC proposed anti-dumping tariffs averaging 30% on solar cell imports from China– final ruling in November.
• Solar World may bring similar trade complaint in Europe.
• China announced in July that it will begin an investigation into polysilicon imports from the U.S. and South Korea.
• China also alleges that RE subsidies in five US states violate WTO rules.
• Indian manufacturers of solar equipment are seeking anti-dumping duty on imports from China, Malaysia, Taiwan and the US
• A petition from a coalition of U.S. wind power companies filed in late December 2011 seeks an investigation into dumping by Chinese and Vietnamese manufacturers of utility-scale wind towers.
• Rare earth trade dispute
Reaction of other US solar industry members to RE trade disputes • "The solar industry calls upon the U.S. and Chinese governments to immediately
work together towards a mutually-satisfactory resolution of the growing trade conflict within the solar industry. While trade remedy proceedings are basic principles of the rules-based global trading system, so too are collaboration and negotiations. "Importantly, disputes within one segment of the industry affect the entire solar supply chain--and these broad implications must be recognized. In addition, the U.S. solar manufacturing base goes well beyond solar cell and module production and includes billions of dollars of recent investments into the production of polysilicon, polymers, and solar manufacturing equipment, products which are largely destined for export. If the U.S.-China solar trade disputes continue to escalate, it will jeopardize these U.S. investments. "Given these broader implications, it is imperative that the U.S., China, and other players in this dynamic global market work constructively to avert or resolve trade disputes that will ultimately hurt consumers and businesses throughout the solar value chain.“
Source: Solar Energy Industry Association
U.S.-China cooperation
• Series of MOUs signed by Presidents Obama and Hu in 2009
– U.S. China Energy Cooperation Program
– Shale Gas Initiative
– 21st Century Coal
– U.S.-China Renewable Energy Partnership
– U.S.-China Energy Efficiency Action Plan
– U.S.-China Electric Vehicles Initiative
– U.S. China Clean Energy Research Center
• Micro-grids Cooperation
RE Cooperation: Solar Industry Commitment to Environmental & Social Responsibility
• New initiative (2012) seeks global participation among solar energy manufacturers
• Currently, Chinese and U.S. solar firms (along with other global solar manufacturers) are signatories.
• Focuses on the industry’s responsibility to manage the impacts of solar production on a range of social and environmental issues in a transparent manner
• Supply chain also covered: – requires participants to require next tier suppliers to
acknowledge and strive to meet Commitment
What does this mean for Taiwan?
• Given the competition among the U.S. and China in terms of the development of renewable energy, there are clear opportunities for the Taiwanese renewable energy and clean tech industries to profit.
• However, the benefits may be short lived, and Taiwan solar cell producers are also being brought into global trade disputes.
• A long term sustainable RE strategy is needed
Wind: Still Room for High Quality Products in Crowded Market • Increasing demand in China for
wind farm retrofits
• Need technological solutions for improving wind farm efficiency
• Need technologies for stronger and lighter wind turbine blade materials to increased wind turbine efficiency.
• New government priority on smaller distributed wind projects in southern provinces far south of traditional wind bases.
Solar: Poised to take off? Industry woes are normal growing pains of maturing industry
Key areas of growth over next 20 years:
• Off-grid applications
• Residential and commercial retail customers in sunny areas where power prices rise steeply at times of peak demand
• Residential and commercial retail customers in areas with moderate sun conditions but high retail electricity prices.
• Peak capacity in growth markets.
• New large-scale power plants
Dominant technologies:
• Distributed rooftop generation in OECD countries,
• Distributed ground-mounted generation in non-OECD countries.
Key success factors:
• Achieve operational excellence in manufacturing.
• Developing diferentiated and scalable technologies
• Addressing the Balance of Systems
• Downstream segments of value chain will become increasingly attractive
Source: McKinsey& Company
Green Buildings: Enormous Opportunity • China’s rapid urbanization
– 350 new city residents over next two decades; buildings will = 40% of total energy consumption
• New Chinese government goal is for energy-efficient buildings to account for 30% of all new construction projects by 2020 to be achieved by:
• Stepping up incentives for green buildings
• Improving industry standards
• Developing related industries
• MOHURD says only 23 percent of China’s buildings met EE standards last year
Smart grid
• New technologies for improving grid function and reliability with the use of efficiency and renewable energy resources will be increasingly important
• Areas for joint ventures with foreign firms more common and opportunities are likely to continue to increase
Microgrid Development
• China is piloting microgrids as a way to connect and control efficiency, renewable (such as solar) and CHP resources within a single unit that can be grid-connected or independent when necessary.
• China has a goal to develop ~30 micro-grid pilots in the current Five Year Plan. •Definition: A microgrid is a group of interconnected loads and distributed energy resources within clearly defined electrical boundaries that acts as a single controllable entity with respect to the grid. A microgrid can connect and disconnect from the grid to enable it to operate in both grid-connected or island-mode (U.S. Department of Energy Microgrid Exchange Group, 2010).
Courtesy of Lawrence Berkeley National Laboratory, Environmental Energy Technologies Division
What is a microgrid?
Limited or intermittent generation
Security
CHP
Hot water/ice, rocks, concrete
Batteries
Dispatchable generation
Energy storage
Point of common coupling
Macro grid
Controllable load
Critical load
Life support
Data center
Heating/cooling
Refrigeration
Lighting
Microturbines
Heat pumps
Wind
Solar
Hydro
Active or passive
microgrid controlsBiogas
Fuel cell
Diesel gensets
Courtesy of Lawrence Berkeley National Laboratory, Environmental Energy Technologies Division
Microgrid programs to date – international review
EU Japan US (RDSI, SPIDERS) Asia (China, Korea, Singapore)
NEDO program(2003-20XX)
Jeju islandHangzhou
Dianzi Univ.Xiamen Univ.
Kythnos
National Tech. Univ. of Athens
MVV Mannheim-Wallstadt
Palau UbinHuatacondo
Hartley Bay
BC Hydro microgrid
Sendai
Aichi
Hachinohe
SPIDERS(2011-2015)
RDSI grants(2008-2013)
Bornholm Island Multi Microgrid
Eigg Island
FP 5 (micro-generation) 1998-2002
FP 6 (More Microgrids) 2002-2006
FP 7 (smart grid) 2007-2011
Kyotango
1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
A*STAR
Courtesy of Lawrence Berkeley National Laboratory, Environmental Energy Technologies Division
Common microgrid technologies
Technology category Examples
Supply technologies –
Dispatchable
CHP, fuel cells, microturbines or gas turbines, reciprocating
engine gensets, macrogrid energy purchases
Supply technologies –
Intermittent/limited
Wind, solar (PV and thermal), biogas/biomass, hydropower,
heat pumps (air/ground)
Demand side
technologies
Absorption chillers, absorption refrigeration, natural gas
chillers and boilers, lighting and office equipment, other HVAC
equipment
Storage technologies Batteries, thermal (hot and cool), flywheels, super-capacitors,
precooling/ preheating
Control technologies DR, load control, islanding switches, smart meter, CERTS
Courtesy of Lawrence Berkeley National Laboratory, Environmental Energy Technologies Division
Electric vehicles • China is home to the biggest and fastest-growing vehicle market, with expected number
of annual sales of vehicles increasing to 40 million annually by 2020.
• China’s 12th Five-Year Plan supports development of clean transportation technologies and transfer of EV technology from foreign to domestic manufacturers.
– Focusing on battery cell technology
– Aiming for 1 million electric vehicles by 2020, projected to reach 5 million.
– Govt plans to spend 2 million RMB per year to develop alternative energy vehicles
• China has made progress in electric vehicles, but compared with some developed countries, the gap in core technologies and industrialization is actually widening, according to a recent report. The report said that the performance of single-power batteries made in China is close to the international advanced level, but the country trails far behind in battery pack engineering and management.
• Firms with technologies for cleaner ICE drivetrain, battery raw material supply, and commercial vehicle emissions reductions technologies needed in the Chinese market.
• In the U.S., state-led initiatives, such as those in California, are also actively promoting alternative vehicle development and deployment.
Fuel cells
• Growing U.S. market for emergency backup power due to increasingly severe storms and droughts likely due to climate change – Annual cost of power
interruptions- $80 billion – Focus on cell phone towers
switching stations and data centers
• Connecticut expanding incentives and supporting policies for fuel cell development
• Cost and stack replacement still issues
Water efficiency • As the rapid pace of urbanization continues in China,
water issues will become more vital to sustainable development. – New water treatment strategies are needed to reduce
energy use
• Natural gas drilling from shale has been developing rapidly throughout the U.S. and China as both countries look to reduce CO2 emissions and move towards cleaner burning fuels. – Hydraulic fracturing, the process by which unconventional
natural gas is extracted from shale rock formations, is extremely water intensive, requiring several million gallons of water per hydraulic fracturing job.
– This process gives rise to a growing need for advanced water treatment technology in both countries
Recommendations for Taiwan • Focus on Distributed Generation Technologies
– Consumers want greater control over the cost of their energy and water use.
• Focus on Whole System Integrated Design – Work to optimize the whole system, not just its parts.
• Develop Tailor-Made Practical Solutions for Specific Market Segments
• Marketing Clean Tech: Pool Resources For Big Impact – Market different clean technologies together for bigger impact and to
showcase synergies – Focus on key benefits of greatest interest to CEOs: reductions in fossil fuel
dependencies, waste, water usage, materials; greater visibility into future operating costs; lower volatility in pricing for fuel, electricity, core inputs, lower risks from dependence on outside markets and geopolitical instabilities. Greater certainty.
Source: http://www.greenbiz.com/blog/2012/04/09/marketing-clean-technology-we-mean-it?page=0%2C1
Focus on VERGE: The Convergence of Energy, Information, Building & Vehicle Technologies
• Energy technology is becoming decentralized, cleaner, better managed, and easier to store.
• Information technology is making every device, building, and vehicle smarter, able to connect into a vast Internet of things that can be addressed, monitored, controlled, and optimized.
• Buildings are becoming more intelligent and efficient, better able to optimize energy and resource use and enhance human comfort and productivity, with the potential of becoming net-positive, from the standpoint of their environmental footprint.
• Vehicles are getting smarter, too, able to communicate with their drivers, other vehicles, and their surroundings, becoming safer and more efficient while connecting passengers and fleet managers to a broader transportation and energy grid.
Source: Green Biz.com: http://www.greenbiz.com/blog/2011/06/13/why-verge-changes-everything
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