Eco design presentation Helmut Yabar

Scenarios to Design a Resource-circulating Society in Asia: Case Study in Yangtze Delta

Industrial Sector

Helmut Yabar, Michinori Uwasu, Keishiro Hara and Haiyan Zhang Research Institute for Sustainability Science (RISS) Osaka University e-mail: [email protected]

Social Injustice

Resource security

Ecology damage

Socio-economic development

Circular Economy

Rationality, Preservation

CHALLENGES

STRATEGY

VISION

Chinese Approach towards a Harmonious Society

Circular Economy frame in China : Eco Industrial Development promotion at different stages

Region

City

Industry

EIP 拠

Mid-sized circulation

(Industrial Ecology)

Regional circulation

(Integrated Resource Management)

Small-sized circulation

(Cleaner Production)

Resource Conservation

Environmental Protection

Eco Efficiency

Harmonious Society

China GDP growth and Energy Consumption Link

G DP by sector (100 m illion Yuan)

0

50000

100000

150000

200000

250000

1995 1997 1999 2001 2003 2005 2007

prim ary_gdp secondary_gdp tertiary_gdp gdp

Energy consum ption by sector (10000 Ton SC E)

0

50000

100000

150000

200000

250000

300000

1995 1997 1999 2001 2003 2005 2007

prim ary_energy secondary_energy

service_energy total_energy

While 2nd Industry and Services are both the main contributors to China’s GDP The energy consumption in the 2nd Industry is by far the largest

Data source: Chinese Statistical Yearbook

Energy Intensity Trends in China

Basically two factors affect the overall energy intensity: •  The energy intensity changes within each sector •  The structural changes among the three industrial sectors After 20 years of continuous improvement the energy intensity started to increase in the

early 2000 Sector G D P share

0

0.1

0.2

0.3

0.4

0.5

0.6

1995 1997 1999 2001 2003 2005 2007

s_prim ary s_secondary s_service

Energy consum ption by sector (10000 Ton SCE)

0

50000

100000

150000

200000

250000

300000

1995 1997 1999 2001 2003 2005 2007



Energy Intensity Trends by Sector

0

0.5

1

1.5

2

2.5

3

3.5

1995 1997 1999 2001 2003 2005 2007

EI (10^-4 Ton SCE/Yuan)

P rim ary Secondary Service Total

6

The Impact of Energy intensive industries (steel, cement)

Crude steel production trends by region

0

100000

200000

300000

400000

500000

600000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

1000 Metric Tons

EU 27 O ther Europe CIS North Am erica

South Am erica Africa M iddle East China

Japan O ther Asia

Steel an cem ent production trends in C hina

0

200

400

600

800

1000

1200

1400

1990 1992 1994 1996 1998 2000 2002 2004 2006

Production output (million

tons)

C rude steel C em ent

•  Since 2000, the steel production has increased from 127 million tons to 502 million tons (4 fold). Steel production accounts for 38% of global production.

•  Since 2000 the cement production has increased from 597 million tons to 1350 million tons (2.25 fold). Cement production accounts for 50% of global production

G lobal Cem ent Production

0

400000

800000

1200000

1600000

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Amount (kt)

U S A Brazil China Egypt France

Germ any India Indonesia Iran Italy

Japan Korea M exico Pakistan Russia

Saudi Arabia Spain Thailand Turkey Vietnam

Source: USGS Minerals Information: Mineral Commodity Summaries (2009)

Source: China Statistical Yearbook (2007)

6

-

500

1,000

1,500

2,000

2,500

3,000

Total Industry Top-1000 Enterprises

Prim

ary

Ener

gy C

onsu

mpt

ion

2005

(mill

ion

tce)

Commercial

Residential

Transport

Industry

Agriculture

Other Industry

Ethylene/AmmoniaPaper

Cement

Iron and Steel

Aluminium30% of total energy Consumption 48% of industrial energy consumption

Linking Secondary Industry and Steel and Cement: The biggest Energy Consuming Sectors

Source: Berkeley National Laboratory (2007)

Case Study: Yangtze River Delta

Case Study Area：Yangtze delta region

Land area (10^4 km2)

Population (10^4perso

ns)

Gross Product Output of industries (100 million Yuan) Cultivated

areas (1,000 ha)

Floor space of building

(10^4m2) Total 1st Industry

2nd industry

3rd industry

Yangtze Delta Area*

11.0 8212.0 28775 1324.7 16073.4 11377.4 3396.2 36208.8

% to National

Total 1.1 6.3 21.1 6.4 22.2 30.0 2.6 17.5

Source: China Statistical Year book for Regional Economy, 2005

Yangtze: GDP and energy consumption trends by Sector

Energy Consumption trends (Shanghai)

0

2000

4000

6000

8000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

Energy (10^4 Ton SCE)



Energy consumption trends (Jiangsu)

0

4000

8000

12000

16000

20000

2000 2001 2002 2003 2004 2005 2006Energy (10^4 Ton SCE)

prim ary_energy service_energy


GDP trends (Shanghai)

0

2000

4000

6000

8000

10000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005

10^8 Yuam


GDP trends (Jiangsu)

0

5000

10000

15000

20000

25000

2000 2001 2002 2003 2004 2005 2006

GDP (10^8 Yuan)


Data source: Shanghai and Jiangsu Statistical Yearbook

The Energy Intensity is shaped by two factors 1.  Energy Intensity in the industrial sectors 2.  The relative outputs of the industrial sectors

Tracking Energy Consumption Changes: Divisia Index

E: the total energy consumption and Y: the total production in a country/region Ek: energy consumption level in the kth sector Yk: production level in kth sector Define for sector k: Ik = Ek/Yk the energy intensity of sector k Sk = Yk/Y Production share of sector k Then The Aggregate Energy Intensity I = E/Y can be decomposed as:

Change in I may be due to changes in the 1.  sectoral energy intensity Ik and 2.  the product mix Sk. The primary objective of an energy decomposition analysis is to quantify these two

effects and to interpret their energy policy implications.

Shanghai energy intensity trends: decomposition analysis

Aggregation of energy intensity difference: Shanghai

-0.25

-0.20

-0.15

-0.10

-0.05

0.00

0.05

0.10

1996 1998 2000 2002 2004

D ivisia I D ivisiaS D ivisia Aggregate


0

2000

4000

6000

8000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005


prim ary_energy secondary_energy service_energy total_energy

Energy Intensity Trends (Shanghai)

0

0.5

1

1.5

2

2.5

3

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005


P rim ary Secondary Tertiary Total

Jiangsu energy intensity trends: decomposition analysis

Energy Intensity Trends (Jiangsu)

0

0.5

1

1.5

2

2000 2001 2002 2003 2004 2005 2006Intensity (10-4̂ Ton/Yuan)

I_prim ary I_secondary I_tertiary I_total


0

4000

8000

12000

16000

20000

2000 2001 2002 2003 2004 2005 2006Energy (10^4 Ton SCE)



Aggregation of energy intensity difference: Jiangsu

-0.03

-0.02

-0.02

-0.01

-0.01

0.00

0.01

2001 2003 2005


Now

TIME

INDICATORS

2010 2015 2020 2007 1990

Road maps

BAU

RCS

11FYP

-resource use optimization -Energy intensity and overall reduction -Environmental impact minimization

inte

rven

tions

Scenarios Research Assessment Frame: Scenarios

BAU Policy

Policy

RCS

15

Description of three scenarios (urban/industry systems) Description of Scenarios (Industry sector)

BAU Scenario (BAU case with China’ FYP prospect)

Following of current rapid economic growth (BAU): Ø  Current trends of GDP growth forecast, population growth and economy structure Ø  Estimate energy and GDP trends

Ø  Based on past trends (time series data) Ø  Based on forecasts by Government, International bodies

Scenario (2) (Policy-based scenario)

Short (11th FYP) and Mid-term Target Ø  Five Year Plan (20 % energy intensity reduction 2005 – 2010 )

Ø  7.5% GDP growth for this period Ø Include the 2000-2020 government target (i.e. quadruple GDP while double energy consumption)

Ø  7.2% GDP growth and hence 3.6% energy consumption growth

Scenario (2)’ (Industry Symbiosis model to address policy targets)

Society with Industries Equipped with Best-available Technologies Ø Introduction of the best available technologies for steel and cement industries.

Scenario (3) (Large-scale /regional resource - circulation model )

Society with Circular Economy Concept: Ø Introduction of the best energy technologies for steel and cement industries. Ø  Introduction of wider scope of resource-circulation by including the use of the wastes from urban areas and industrial sectors in the production line of the steel and cement industries. (e.g. utilization of plastic waste, steel cans etc for the steel sector, and sewage sludge and plastic wastes for the cement sector) 15

16

Scenario: (BAU) versus Policy : Short and Mid-term target

Jiangsu Energy Consumption

10000.0

20000.0

30000.0

40000.0

50000.0

2004 2005 2006 2007 2008 2009 2010 2011

Energy Consumption (10^4

Ton SCE)

B A U Five Year Plan

Shanghai Energy consumption

8000

10000

12000

14000

2005 2006 2007 2008 2009 2010

EC (10^4 Ton SCE)

Energy BAU Energy 5 Years Plan

Scenario BAU versus Policy: 2000-2020 Government Target

Scenario Mid-term Target: Jiangsu

0

8000

16000

24000

32000

40000

20002002200420062008201020122014201620182020

GDP (108̂ Yuan)

0

5000

10000

15000

20000

Energy (104̂ Ton

SCE)

gdp policy gdp actual energy policy energy actual

Scenario Mid-term Target: Shanghai

0

4000

8000

12000

16000

20000

2000

20022004

20062008

201020122014

20162018

2020

GDP (108̂ Yuan)

(1000)

1000

3000

5000

7000

9000

11000

Energy (104̂

Ton SCE)

G D P policy forecast G D P: A ctual

Energy: policy forecast Energy: A ctual

19

Scenario 2: Energy Saving Potential in Iron Making:

Saving of 4.67 million metric tons of carbon equivalent (TCE) = 20 % of current energy consumption is estimated.

Annual capacity (104ton)

Intensity (kgce/t)

BAT Intensity (kgce/t)

Saving (kgce/t)

Total Saving (106

metric tce)

Blast furnace capacity

4721.5(total) - - - 4.67

=3000 cubic meters 607.76 466.2 414.9 51.3 0.31

2000-2999 cubic meters 957.98 483.9 414.9 69 0.66

1000-1999 cubic meters 898.56 512.8 414.9 97.9 0.88

300-999 cubic meters 2060.09 536.7 414.9 121.8 2.51

100-299 cubic meters 119.36 573.5 414.9 158.6 0.19

=100 cubic meters 77.73 573.5 414.9 158.6 0.12

Blast Furnace Process (example in Jiangsu steel)

67%

20

Scenario 3 : Concept of circular economy and Industrial Symbiosis

: Steel and Cement Industries

Source: Nippon Steel Corporation Sustainability Report

21

By-products utilization: Case in Nippon Steel

•  Production of one ton of iron usually generates 600 kg of byproducts such as slag, dust, and sludge and these by-products are used as raw material in the steel works or utilized by other industries such as cement production

•  Recently, the recycling rate of the by-products of Nippon Steel is as high as 98% due to such recycling efforts.

•  Out of 47.24 million tons of by-products, slag and fly-ash (about 77 %) are conveyed to and used in cement industry and other by-products (23 %) are reused in the steel making processes within the company.

Source: Nippon Steel Corporation Sustainability Report

22

Conclusions

•  The shift to energy-intensive sectors (steel and cement), the overall growth in the 2nd industry and the slow down in energy efficiency has been the main cause of the increase in energy intensity After 20 years of continuous improvement

•  While Yangtze Delta has shown an important improvement in energy intensity trends, the overall energy consumption has kept increasing rapidly due to the structural changes within the secondary industry

•  The application of technological efficiency of Shanghai’s industry (or BAT) in Jiangsu industrial sector could help reduce significantly the increasing trends in energy consumption in the region

•  The resource-circulating approach i.e. the exchange of by-products and wastes between the steel and cement industries and the use of urban wastes by these industries could lead the way towards a circular economy in China

APPENDIX

8th FYP 1991-1995

Water management, Air pollution, solid waste

Sectoral plan to address pollution

Problem/ driver

response

Features “reactive” Provisions to

strengthen environmental management

9th FYP 1996-2000

Environmental Policy Trends in China

Env. Mngmt. and Legislative

system

Environmental degradation caused by industry

“responsive” Establish an env. Management and legislative system

10th FYP 2001-2005

Lifestyle change (from uniform to diverse demand): increase in waste variety

Integrating environmental issues in broad

policy DM

“constructive” Local governments

take the lead in environmental conservation

11th FYP 2006-2010

Circular Economy

“Proactive” Promote sustainable

lifestyle, improve QOL, decoupling, going green (production,

consumption)

Challenge of security and resilience, QOL, global issues (GHG, trans-boundary　pollution)

No other developing country has witnessed declining energy intensity (elasticity<1). In the early stage of economic development, industrialization and urbanization tend to lead to extensive infrastructure and housing development: both are energy- and material-intensive activities. As a result, energy intensity tends to increase. In the later stage of economic development, demand for services often grows faster than demand for goods, leading to a shift in economic structure towards the service sector which has much lower energy and material intensity.

China’s Impressive decoupling of 1980-200

China’s experience was due to two main policy reforms: §  allocation of capital investment to energy efficiency and §  the creation of a network of energy conservation service centers throughout China (Wang,

1995).

First step: Divisia analysis (energy intensity and structural changes)

26

Technically, the energy demand in the production sector can be decomposed into the total output and

energy intensity of each sector (A subscript t denotes year.):

where αp is energy intensity of sector p, Y is GRP, Yp is the added value of sector p, and sp is the output

share of sector p in GRP. Dividing both sides by Y yields the energy intensity decomposition equation:

We then determine the sources of energy intensity changes using a “Divisia” index approach (Choi

and Ang, 2003):

where Sp* and Ip* are weight functions (For detail, see Choi and Ang 2003). This equation indicates that

energy intensity changes can be decomposed into intensity change and change in the output share

(structural change).

∑∑∑∈∈∈

⋅===Pp

ptt

pt

Pp

ptp

t

pt

Pp

ptt sYY

YE

EE α

∑∈

⋅=≡Pp

pt

ptt

P

t

t sIYE

α

)()( 1*

1* p

tp

tpp

tPp

pt

p ssIIISI −+−=Δ +∈

+∑

Condition settings for scenario writing

Time horizon ・　Base year：2000　　・　Target: 2010, 2020 (11th FYP ends in 2010)

Targeted region Yangtze River Delta region (including, Shanghai city, provinces of Zhejiang and Jiangsu)

Dimension setting ・Promotion of Resource-circulating society and energy conservation, preservation of environment, socio-economic development

・ Resource-circulation within and between the three systems; Urban system, industrial system, biological production system

Envisioned materials/resources

•  Energy consumption •  Resources/ materials consumed in steel, cement

Driving forces

GDP, population, steel/cement production trends, technology development, environment status

28

BAU: Energy consumption estimation: regression model (Shanghai)

1978 - 2005 Data

Vector auto-regression model

28

Energy demand Forecast

0

10000

20000

30000

40000

50000

1970 1980 1990 2000 2010 2020 2030

10000 tons SCE

O bserved BAU

GDP Forecast

100

1000

10000

100000

1970 1980 1990 2000 2010 2020 2030

Bil Yuan

gdp(observed) gdp(projected)

22110 υµααα ++++= −− tttt GRPGRPGRP 22110 υµβββ ++++= −− tttt PopPopPop

ti

tit

regionpopgdpregionpopgdppopEnergy

εα

αααα

+×+

+++=

)/(

/

4

3210

Yangtze: GDP and energy consumption trends by Sector (indexed)


0

2000

4000

6000

8000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005





0

5000

10000

15000

20000

2000 2001 2002 2003 2004 2005 2006




1.  Notes: GDP of Shanghai almost the same with half the energy use 2.  Include the intensity at the end of the divisia analys 3.  Check the possibility to include both steel and cement trends in shanghai and jiangsu 4.  Include the scenarios figure

GDP trends (Jiangsu)

0

2000

4000

6000

8000

2000 2001 2002 2003 2004 2005 2006

GDP (10^8 Yuan)


G DP trends (Shanghai)

0

1000

2000

3000

4000

5000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006

GDP (10^8 Yuan)

G D P _prim ary G DP_secondary G DP_tertiary G DP

Shanghai energy intensity trends: decomposition analysis

-0.080

-0.060

-0.040

-0.020

0.000

0.020

0.040

1996 1998 2000 2002 2004

Structural effects on energy intensity: Shanghai

prim ary secondary service

-0.200

-0.160

-0.120

-0.080

-0.040

0.000

0.040

0.080

1996 1998 2000 2002 2004

Intensity effects on energy intensity: Shanghai



-0.25

-0.20

-0.15

-0.10

-0.05

0.00

0.05

0.10

1996 1998 2000 2002 2004



0

2000

4000

6000

8000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005




Energy Intensity Trends (Shanghai)

0

0.5

1

1.5

2

2.5

3

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005


P rim ary Secondary Tertiary Total

Jiangsu energy intensity trends: decomposition analysis


0

0.5

1

1.5

2

2000 2001 2002 2003 2004 2005 2006Intensity (10-4̂ Ton/Yuan)

I_prim ary I_secondary I_tertiary I_total

-0.040

-0.020

0.000

0.020

2001 2002 2003 2004 2005 2006

Intensity effects on energy intensity: Jiangsu


-0.020

-0.015

-0.010

-0.005

0.000

0.005

0.010

0.015

2001 2002 2003 2004 2005 2006

Structural effects on energy intensity: Jiangsu



0

4000

8000

12000

16000

20000

2000 2001 2002 2003 2004 2005 2006Energy (10^4 Ton SCE)




-0.03

-0.02

-0.02

-0.01

-0.01

0.00

0.01

2001 2003 2005


Shanghai energy intensity trends: decomposition analysis (indexed)

Energy intensity by sector: Shanghai

0

1

2

3

4

5

6

1995 1997 1999 2001 2003 2005

gdp intensity Prim ary Secondary Service

-0.300

-0.200

-0.100

0.000

0.100

0.200

1996 1998 2000 2002 2004

Intensity effects on energy intensity: Shanghai

prim ary secondary service-0.150

-0.100

-0.050

0.000

0.050

0.100

1996 1998 2000 2002 2004

Structural effects on energy intensity: Shanghai



-0.40

-0.30

-0.20

-0.10

0.00

0.10

0.20

1996 1998 2000 2002 2004


Jiangsu energy intensity trends: decomposition analysis (indexed)

-0.020

0.000

0.020

0.040

2001 2002 2003 2004 2005 2006

Intensity effects on energy intensity: Jiangsu


-0.020

-0.015

-0.010

-0.005

0.000

0.005

0.010

0.015

0.020

2001 2002 2003 2004 2005 2006

Structural effects on energy intensity: Jiangsu



-0.02

-0.02

-0.01

-0.01

0.00

0.01

0.01

0.02

0.02

2001 2003 2005



0

1

2

3

4

5

2000 2001 2002 2003 2004 2005 2006

Intensity (10-4̂ Ton/Yuan)

P rim ary Secondary Service Total

Scenario 2: Energy saving potential by replacing the low energy efficient technologies

Energy Saving

(TCE)

Unit energy saving

(TCE/Ton) X

Production

(Ton) X

Target Current Diffusion Diffusion

(%) (%) - =

Estimation of Energy savings for each energy efficiency technology

Source: Tanaka et al (2006) Industry expert review meeting to the 4th assessment WG3, IPCC

Factor 1: High levels of GDP (prosperity) are possible at different levels of material use and thus waste generation

GDP/CAPITA (1000 US$ at constant 1990 prices)

TMR

/CA

PIT

A (T

ON

S)

Background for resource-circulating scenario design

Factor 2: The world hasn’t run out of fossil fuels and minerals, as the price mechanism has regulated scarcity

World production (2006) World reserves (2006)

Oil 30.722 billion barrels/year (1) 1317.447 billion barrels (2)

Natural gas 120.345 trillion cubic feet (1) 6182.692 trillion cubic feet (2)

Source: 1. Energy Information Administration-Department of Energy USA 2. PennWell Corporation, Oil & Gas Journal, Vol. 104.47 (December 18, 2006). Oil includes crude oil and condensate.

Oil and natural gas reserves (worldwide)

World production (1999) million tons

World reserves Million tons

Iron 535 71000

Zinc 8 190

Lead 3 64

Copper 12 340

Nickel 1.1 49

Metal Reserves (worldwide)

Source: European Commission (2002)


Factor 3: Even though there won’t be scarcity of non renewable resources in the short term, it is very important to promote material resource efficiency because of the environmental pressures and impacts associated with the use of those resources　（the problem is not the use itself but the environmental impacts associated with the use of resources).

0

5000

10000

15000

20000

25000

Am ount(10000 tons)

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Year

C onsum ption of Coal as Fuel in Yang-tze

Zhejiang

Jiangsu

Shanghai

0

5000

10000

15000

20000

25000

Am ount (100m illion m 3)

1993 1995 1997 1999 2001 2003

year

Exhaust G as from Fuel C om bustion in Yang-tze

Zhejiang

Jiangsu

Shanghai

It is not the use of coal but the impacts associated with its use

0

500000

1000000

1500000

2000000

2500000

am ount(tons)

1995 1997 1999 2001 2003

year

SO x em ission from fuel com bustion in Yang-tze

Zhejiang

Jiangsu

Shanghai


Factor 4: A bigger immediate problem is the over-exploitation and pollution of renewable resources and the environment (we need to preserve the environmental systems and minimize environmental stresses)

Data source: UNEP GEO data

0

200000

400000

600000

800000

1000000

1200000

CO D(tons)

1998 1999 2001 2002 2003 2004

Year

CO D discharge in urban dom estic sewage (Yang-tze Delta)

Zhejiang

Jiangsu

Shanghai

0

100000

200000

300000

400000

500000

Am ount (10000tons)

1998 1999 2001 2002 2003 2004

Year

Urban Dom estic Sewage Discharge in Yang-tze region

Zhejiang

Jiangsu

Shanghai

Sewage discharge pollutes The rivers and oceans


Sustainable use of natural resources: Measuring decoupling for key commodities (Country, Region)

Environmental impact

Economic activity

2005

Resource use

2030

1.  . Decoupling of resource use from economic growth

Resource productivity: Yen/kg (factor 4/10)

2. Decoupling of environmental impact from resource use

Resource specific impacts: Impact/kg by means of LCA (from base materials to final products)

3. Integration: Eco-efficiency: Yen/Impact

Eco-efficiency (Yen per impact) = resource productivity (Yen per kg) resource-specific impact (impact per kg)

China Energy Intensity Background •  From 1980-98, energy intensity fell to 40% of its 1980 level, at an average rate of 5% per

year. •  Basically there are three possible explanations for the decline, all of which were at work:

1.  changes in the structure of the economy, 2.  enhanced efficiency of energy use within certain sectors, and 3.  improvements in the efficiency with which energy was supplied.

•  Initially debate raged over whether structural shifts and efficiency improvements accounted for the bulk of the improvement.

•  A consensus of statistical studies that the steady decline of energy intensity during the 1980s and 1990s can be attributed mainly to efficiency and productivity changes within certain industries, and that these gains were achieved through 1.  technological improvements, 2.  research and development, and 3.  innovation.

•  In the 1990s efficiency improvements were particularly marked in energy-intensive industries such as metallurgy, cement, paper, textiles, oil and coal processing, and electricity generation.

•  Though efficiency gains within industries were the main drivers for this decline of energy intensity, the changing mix of energy supply also made a contribution. Two trends were particularly important: the growing use of electricity in end-use and the reduction of the proportion of coal in the primary energy supply during the 1990s, as industries and households switched to other fuels

•  The sustained improvement of energy efficiency within different sectors of the economy may be attributed to systematic policy measures launched in the 1980s to enhance energy efficiency and to the gradual marketization of the economy, especially since 1993

China Energy Intensity Background

•  In the early 80’s the government establish policy to encourage energy saving. Industry and commodities were subject to government planning and they could use quotas and targets to encourage the savings.

•  Quotas for energy were set for industries and individual plants, and the cost of energy that exceeded the quotas was 2-3 times higher than basic price

•  The Gov. established energy conservation technology centers to provide information and training

•  Low interest loans and tax credits available for investment in energy conservation. As a result the investment in energy conservation rose in 1981-95

•  Two things in parallel occurred: •  Government adjusted mechanisms for setting Energy prices •  Larger sections of the economy were subject to market forces: growth in the private

sector and state sector was commercialized and commodities prices liberalized •  Combination of higher prices, market forces and diversified ownership provided ideal

environment for innovation and investment in R&D for energy efficiency •  Three factors identified

Proportional increase in Energy intensive sectors •  Expansion of secondary industry focused on energy intensive sectors •  Proportional increase in energy intensity greater for coal and electricity which are

fuels of the industry than for oil which is transport fuel •  Total investment in fixed assets jumped to 47% of GDP from 36% over the period

2002-05 •  Output of key energy intensive products grew fastly: World’s largest producer of steel,

cement, plate glass and aluminum


Slow technological advances •  At national scale slowdown and reversal of technological improvements •  Overall investment in energy remained lower than at anytime during 1981-1995 Increase of coal in the energy mix •  Coal increase at the expense of oil and hydro electricity •  Burst in construction of new power plants at a rate of up to 100 gigawatts each of

which some 90% was coal fired New Campaign •  The Development Research Center of the State Council published a report with main

priorities for China energy policy: •  Placing greater emphasis on energy conservation and energy efficiency, especially

in industry. •  Integrating environmental priorities into energy policy. •  Maintaining domestic primary energy resources as the main source of energy supply,

but improving the management of these resources. •  Enhancing the role of the market within the domestic energy sector. •  Increasing the use of hydro-electricity, renewable, nuclear energy and natural gas, in

order that reliance on coal may be reduced. •  Developing alternative transport fuels. •  Constructing emergency oil storage.

•  The goal of 2004 medium and long term energy conservation plan was to reduce energy intensity by 20% between 2005-2010, or 3.6% per year and continue this decline at the same rate until 2020

China Energy Intensity Background •  There were also subsequent targets for each province and for individual energy intensive

industries •  A revised version of the 1997 Energy Conservation Law was approved in 2007 •  Energy Policy white paper in December 2007 •  1000 enterprises program: account for 1/3 of total energy consumption and 50% of

industrial energy demand. The aim is to save 100 million tce by 2010 •  1008 enterprises identified: management groups, setting targets for all units within

enterprises, procedures for energy audits, energy saving plans, investing in energy saving technologies, and introducing internal incentives to save energy

•  Roles to government departments. Local governments monitor, guide and supervise the performance of these enterprises

•  State Statistical Bureau collects and publish information on its website •  State-owned assets supervision and administration commission is to use energy saving

as a measure of enterprise performance •  Closing down small scale and inefficient plants in steel and power sector •  Power: decommission 50 GW of coal fired capacity and up to 10 GW of oil-fired capacity

during 2006-2010. By July 2008, 26GW of coal-fired capacity closed •  Lower the tariffs for power dispatched from plants with capacities of less than 50 MW as

well as from some plants in the 100-200 MW range •  In the iron and steel sector, 10 local governments in major steel producing areas have

agreed to close small-scale rolling mills, blast furnaces, converters and electric furnaces below a certain capacity and set new lower limits for new plants capacity


•  Reform the structure of the economy •  Energy bureau created in 2003 (within national development and reform commission) •  National Energy Commission created in 2008 (state council level) •  The success of the last three years:

•  focus on heavy industry (short term results) •  Effective instruments: command and control targets, penalties

•  Constrains to keep the progress: •  Unwillingness to use economic and financial instruments to complement the

administrative approach. No incentive to save energy when prices are controlled. Industries wishing to invest in new equipment/technology have problems to finance access and tax incentives are inadequate

•  Economic and social policies which affect consumption: Chinese policy has focused on heavy industry, infrastructure and manufacturing

•  Political decision-making. Lack of long term commitment •  Lack of skills related to energy efficiency

Documents

Eco design presentation Helmut Yabar