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China beyond Copenhagen:
energy and climate change policy
Bram Buijs
21 May 2010, Milan
IEFE / Bocconi University
Clingendael International Energy Programme www.clingendael.nl/ciep
Clingendael International Energy Programme www.clingendael.nl/ciep
Presentation content
Copenhagen COP-15
China’s pivotal role in addressing climate change
Energy and climate policy in China
Questions and dilemma’s
Clingendael International Energy Programme www.clingendael.nl/ciep
• Copenhagen Accord: no binding treaty.
• No solution on the debate how to follow up on the Kyoto Protocol. Two-track negotiating system (AWG-LCA / AWG-KP) still in place.
• 2° C limit as goal, but no global emission reduction targets; let alone global emission reduction targets split up by developed/developing countries.
Copenhagen COP-15
Clingendael International Energy Programme www.clingendael.nl/ciep
• Instead: ‘bottom-up’ commitments in 2 appendices: “quantified economy-wide emission targets for 2020” and “nationally appropriate mitigation actions for developing country Parties”.
• Climate finance commitments: $30bn fast-start fund in coming 3 yrs and $100bn per year by 2020 for adaptation and mitigation.
• Very minor steps on MRV(measurable, reportable, verifiable requirement).
Copenhagen COP-15
Clingendael International Energy Programme www.clingendael.nl/ciep
• Pledges even at the high range (and implemented successfully) are not enough to give a 50 percent chance on limiting the temperature increase to 2 degrees (perhaps not even 3 degrees).
• What next? What to expect from COP-16 in Mexico?
• What to think about’s China role? And in the future?
A Failure?
Image source: Financial Times, 2009
Clingendael International Energy Programme www.clingendael.nl/ciep
Presentation content
Copenhagen COP-15
China’s pivotal role in addressing climate change
Energy and climate policy in China
Questions and dilemma’s
Clingendael International Energy Programme www.clingendael.nl/ciep
Source: International Energy Agency, WEO2008
Clingendael International Energy Programme www.clingendael.nl/ciep
Global energy-related CO2 emissions: 1990
U.S.26%
Europe23%China
8%India1%
ROW42%
Source: International Energy Agency, WEO2008
Total:
20.95 billion tons of CO2
Clingendael International Energy Programme www.clingendael.nl/ciep
Global energy-related CO2 emissions: 2006
U.S.20%
Europe15%
China20%
India5%
ROW40%
Source: International Energy Agency, WEO2008
Total:
27.89 billion tons of CO2
Clingendael International Energy Programme www.clingendael.nl/ciep
Global energy-related CO2 emissions: 2030 (IEA projection)
U.S.14%
Europe10%
China29%India
8%
ROW39%
Source: International Energy Agency, WEO2008, Ref. Sc.
Total:
40.55 billion tons of CO2
Clingendael International Energy Programme www.clingendael.nl/ciep
China’s energy system – the fundamentals
Coal70%
Hydro, Nuclear,
Wind7%
Crude oil20%
Natural gas3%
1.44
4.7
China OECD
Primary energyconsumption
(toe/per capita)
Structure of primary energy consumption
Clingendael International Energy Programme www.clingendael.nl/ciep
A. Power generation sector
• 24% of total GHG emissions worldwide.• In China, 47% of total emissions.
• Rapid expansion: 3 to 4 large (500 MW) coal-fired power plants each week, in a three year period up to the economic crisis.
• .....increasing annual emissions with 9-12 millions tons of CO2
In comparison: achieving Europe’s Kyoto target would save about 342 millions tons of CO2
Crucial sectors
Image source: www.msnbc.msn.com
Clingendael International Energy Programme www.clingendael.nl/ciep
B. Buildings / residential sector
• 30-40% of total energy use and emissions in developed countries.
• In China, 9% of total emissions.
• Half of all housing worldwide is being built in China (± 2bn m2 /year).
• Building energy efficiency is far below Western standards.
Crucial sectors
Image source: Fotosearch.com
Clingendael International Energy Programme www.clingendael.nl/ciep
C. Transportation
• 34% of GHG emissions in the U.S.• In China, only 5% of total emissions.
• In China out of one thousand people, only 24 own a car, comparedto about 500 in Europe and 760 in the United States.
• Since January 2009 car sales in China are exceeding those in the United States: China is now the largest market for automobiles.
Crucial sectors
Image source: Business Week
Clingendael International Energy Programme www.clingendael.nl/ciep
Passing opportunities...
McKinsey report China’s Green Revolution (February 2009):
• Full implementation of mitigation measures could reduce China’s GHG emissions in 2030 by 46 percent compared to BAU.
• a 5 year delay in implementation would lead to a loss of one third of the total abatement potential.
• a 10 year delay would mean losing 60 percent of the potential.
Clingendael International Energy Programme www.clingendael.nl/ciep
Main challenge...
finding a new
developmental path....
Source: World Energy Council2009, adapted from Shell Scenarios
Clingendael International Energy Programme www.clingendael.nl/ciep
Presentation content
Copenhagen COP-15
China’s pivotal role in addressing climate change
Energy and climate policy in China
Questions and dilemma’s
Clingendael International Energy Programme www.clingendael.nl/ciep
China is implementing very strong policy measures to stimulate renewable energy and energy efficiency
Main drivers:
• energy security concerns: rising import dependency for oil and gas, coal supply constraints
• environmental issues: air pollution and acid rain, potential climate change effects
• economic opportunities: in renewable energy sectors and low carbon industriesImage source: China Daily
Clingendael International Energy Programme www.clingendael.nl/ciep
China is implementing very strong policy measures to stimulate renewable energy and energy efficiency
Targets for 2005-2010:
• 20% reduction of energy intensity (i.e. energy consumed per unit of GDP), estimated to save 1.5 billion tons of CO2 per year by 2010.
• Ambitious growth targets for renewable energy. China is already the world’s largest producer of renewable energy due to its large amount of hydropower.
• Implementing energy conservation programmes, such as Top-1000 Enterprises Programme to save energy at largest industrial energy users.
Image source: China Daily
Clingendael International Energy Programme www.clingendael.nl/ciep
China’s commitments in the run-up to Copenhagen
• Decarbonizing the economy, by lowering emissions of CO2
per unit of GDP by 40-45% by 2020 compared to 2005.
• Increasing the share of non-fossil fuels, i.e. renewable energy and nuclear energy, in primary energy consumption to 10% by 2010 and 15% by 2020.
Image source: China Daily
Clingendael International Energy Programme www.clingendael.nl/ciep
• China has established feed-in tariffs to stimulate renewable energy (wind/solar).
• Introduction of renewable portfolio standards that require power/grid companies to purchase renewable energy.
• China has set fuel efficiency standards for cars following European example (already stricter than the US).
European policy-making sometimes acts as an example for China
Clingendael International Energy Programme www.clingendael.nl/ciep
Stimulating hydro energy….
Three Gorges Dam: 22.5 GW = 1/4 of United Kingdom total electricity generating capacity
Image source: www.etravelblackboard.com
Clingendael International Energy Programme www.clingendael.nl/ciep
In wind power already a big player….
Total installed capacity for wind power, end 2009
Global total 158 GW. China is the world no. 3 with 25.1 GW (16%)
Image source: Global Wind Energy Council, 2010
Clingendael International Energy Programme www.clingendael.nl/ciep
…. and getting even bigger
Newly installed capacity for wind power in 2009
Global total 37.5 GW. China is the world’s largest with 13 GW (34.7%)
Image source: Global Wind Energy Council, 2010
Clingendael International Energy Programme www.clingendael.nl/ciep
New Energy Finance / UNEP, Global Trends in Sustainable Energy Investment 2009 report:
“Financial investment in developing countries increased to $36.6 billion in 2008, an increase of 27% on 2007, whilst investment in developed countries fell by 1.7% to $82.3 billion. China led investment in Asia, with $15.6 billion of new investment.”
Strong growth of clean energy in China in spite of financial and economic crisis
Clingendael International Energy Programme www.clingendael.nl/ciep
0
400
800
1,200
1,600
2,000
2,400
2,800
1980 1985 1990 1995 2000 2005
China's Electricity Production by Source(billion kilowatthours)
Conventional Thermal (97% coal)
Hydro
Nuclear
Geothermal, Solar, Wind and Biomass Electric Power
However, a huge challenge remains…
Source: U.S. Energy Information Administration
Clingendael International Energy Programme www.clingendael.nl/ciep
Presentation content
Copenhagen COP-15
China’s pivotal role in addressing climate change
Energy and climate policy in China
Questions and dilemma’s
Clingendael International Energy Programme www.clingendael.nl/ciep
Economic considerations seem to clash more and more with climate change objectives, especially in the case of China:
• Carbon leakage and unfair competition concerns -> carbon border taxes/tariffs?
• Are we willing to fund mitigation actions in China?
- discussion on funding within COP-15
- discussion on CDM funding for wind energy in China…
Example of wind sector development in China
Economic competitiveness vs
climate objectives?
Image source: CRESP, 2009
Clingendael International Energy Programme www.clingendael.nl/ciep
Wind in China:
Strong Chinese industrial policy
Localization requirements
Market share foreign companies declining
Increasing competition and shifting balances…
Clingendael International Energy Programme www.clingendael.nl/ciep
• How ambitious is it? Diverse opinions…
• Baseline scenarios by IEA and EIA already incorporate very strong energy/emission intensity improvements:
IEA, World Energy Outlook 2009 Ref. Sc.: 37% decrease in Chinese carbon intensity over 2007-2020.
EIA, International Energy Outlook 2009: decline of 44% between 2006-2020.
• Can China achieve it?
What to think of China’s
carbon intensity target?
Clingendael International Energy Programme www.clingendael.nl/ciep
What to think of China’s
carbon intensity target?
What is required according to IEA 450 ppm Scenario
Source: IEA, World Energy Outlook 2009
Clingendael International Energy Programme www.clingendael.nl/ciep
Questions on:
- UN process/procedures too cumbersome and complex?
- What will happen in the United States on energy/climate legislation?
- Are carbon border taxes/tariffs going to be established?
• Still no solution on how to follow up on the Kyoto Protocol.
• Pledges are still insufficient according to climate science.
What future for an international
climate treaty?
Thank you!
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Clingendael International Energy Programme www.clingendael.nl/ciep