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Best Practice and Success Stories on Energy Efficiency in Best Practice and Success Stories on Energy Efficiency in SE China India pot ctoral Enhancing Energy Efficiency in India: Assessment of Sectoral Potentials High Impact Opportunities for Energy Efficiency in China High Impact Opportunities for Energy Efficiency in India EN t I al S | ch | IN a E a NE rgy Eff rgy I c IEN cy S cy E r IES

Copenhagen Centre on energy effiCienCy ISBN: 978-87-93458-16-1 www.energyefficiencycentre.org

chINa ENErgy EffIcIENcy SErIES

978-87-93458-16-1

Enhancing Energy Efficiency in China: Assessment of Sectoral Potentials china Energy Efficiency Series

June 2017

Edited by Zhiyu Tian Energy Research Institute, National Development and Reform Commission Xiliang Zhang Tsinghua University, Beijing Xianli Zhu Copenhagen Centre on Energy Efficiency, UNEP DTU Partnership, Copenhagen ©2017 Copenhagen Centre on Energy Efficiency This publication may be reproduced in whole or in part and in any form for education or non-profit purposes without special permission from the copyright holder, provided acknowledgement is made. The Copen- hagen Centre on Energy Efficiency would appreciate receiving a copy of any publication that uses this publication as a source. No use of this publication may be made for resale or for any other commercial purposes whatsoever without prior permission in writing from the Copenhagen Centre on Energy Efficiency. Disclaimer This publication is an output of Copenhagen Centre on Energy Efficien- cy. The findings, suggestions, and conclusions presented in this publication are entirely those of the authors and should not be attributed in any manner to UNEP or the Copenhagen Centre on Energy Efficiency. Photo credit: Cover Photo credit: Courtesy of www.shutterstock.com for all the photos on the cover. Traffic photo at upper left: Photo ID 17319595—Traffic in downtown Bei- jing, taken by sunxuejun Big photo in centre: Photo ID 475659958—A factory of bathroom products in Jiujiang, China, taken by humphery Building photo on right: Photo ID 552094787—Bei- jing from above aerial shot, taken by SvedOliver Power plant on the right: Photo ID: 426327793—Coal fired power station with cooling towers releasing steam, taken by xiao yu Industrial photo at lower left: Photo ID 610770569—A Chinese worker examines natural gas pipes and valves at a gas pressure regulating station in Jiujiang city, East China's Jiangxi province, taken by humphery Traffic photo at lower right: Photo ID 524545297—Traffic jam in downtown Beijing, taken by testing Layout: Magnum Custom Publishing, New Delhi Copenhagen Centre on Energy Efficiency UNEP DTU Partnership Marmorvej 51 2100 Copenhagen Ø Denmark Phone: +45 4533 5301 www.energyefficiencycentre.org Email: [email protected] This book can be downloaded from www.energyefficiencycentre.org Please use the following reference when quoting this publication: Tian, Z., Zhang X., Zhu X. (Eds.) (2017) Enhancing Energy efficiency in China: Assessment of sectoral potentials Copenhagen: Copenhagen Centre on Energy Efficiency, UNEP DTU Partnership. ISBN: 978-87-93458-16-1 Contents

List of Figures ...... vii List of Tables ...... x Foreword...... xi Acknowledgement...... xii LIST OF abbreviations...... xiii Executive Summary...... 1

1. Role of energy conservation in achieving China’s climate pledge | Yuyan Weng, Xiliang Zhang, Sheng Zhou 4 1.1 Scenarios ...... 5 1.2 Model and macroeconomic assumptions ...... 6 1.3 Results and discussion ...... 11 References...... 14

2. General Introduction of Energy Efficiency Development in China | Jingru Liu 15 2.1 General result of energy conservation in China in the 12th FYP...... 16 2.2 Energy efficiency improvements in key energy end-use sectors in theth 12 FYP...... 16 2.3 Outlook on energy conservation opportunities in the 13th FYP...... 20 2.4 Methodology...... 20

3. Energy Efficiency Policy and High Impact Opportunities for the Industrial Sector | Guanyun Fu, Huawen Xiong 22 3.1 The Characteristics of Energy Consumption in the Industrial Sector and Progress with Energy Efficiency...... 23 3.2 Outlook of Energy Consumption in Industrial Sectors...... 27 3.3 Identification of Key Opportunities for Energy Efficiency as well as Analysis on Technical Economy...... 31 3.4 Policy recommendations...... 44 References ...... 48

4. Energy Efficiency Policy and the High Impact Opportunities of the Building Sector in China | Jianguo Zhang 49 .4.1 Review of Achievements and Policies regarding Energy Efficiency Improvements in the Chinese Building Sector...... 50 4.2 Prospects for Energy Consumption in the Building Sector...... 56 4.3 Identification of HIOs in the Building Sector in China...... 61 4.4 Policy Recommendations...... 70 References...... 72

5. Energy Efficiency Policy and High Impact Opportunities in the Transportation Sector in China | Wenjing Yi 74 5.1 Review of Achievements and Policies Regarding Energy Efficiency Improvements to Transportation in China...... 75

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | v 5.2 Prospect for Energy Consumption in the Transportation Sector (two scenarios, by 2050)...... 79 5.3 Identification of HIOs in the Transportation Sector in China...... 89 5.4 Policy Recommendations ...... 96 References...... 97

6. Energy Efficiency Policy and High Impact Opportunities in the Power Sector in China | Qingbing Pei, Quan Bai 98 6.1 Review of Achievements and Policies Regarding Energy-Efficiency Improvements to Power Generation in China...... 99 6.2 Prospects of Energy Consumption in the Power Generation Sector (two scenarios, by 2050)...... 104 6.3 Identification of HIOs of the Power Generation Sector in China...... 117 6.4 Policy Recommendations...... 123

7. Conclusions and Discussion | Zhiyu Tian 125 7.1 Conclusions...... 126 7.2 Discussion...... 127

vi | CHINA Energy Efficiency Series List of figures No. FIGURE PAGE Figure 1‑1. Changes in China’s carbon intensity of GDP, energy intensity of GDP, and carbon inten- 5 sity of energy during 1980-2015 Figure 1‑2. Economy-wide circular flow of goods and services in the C-GEM 7 Figure 1‑3. Regions in the C-GEM 8 Figure 1‑4. Forecasts of China’s economic growth rate in the literature 10 Figure 1‑5. Assumptions about China’s economic structure 11 Figure 1‑6. World population projections from the United Nations 11 Figure 1‑7. Primary energy consumption in China under different scenarios 12 Figure 1‑8. Carbon dioxide emissions trajectories in China under different scenarios 13 Figure 1‑9. The contribution of energy conservation and energy substitution to emissions reduction 13 under different scenarios Figure 1- 10. The contribution of energy conservation and energy substitution to emissions reduction 14 under the 2025 Peak CO2 Scenario Figure 3‑1. Total energy consumption and the growth of industrial energy consumption during 2001- 23 2014 Figure 3‑2. Energy consumption growth in high-energy-consuming industries during 2001-2014 24 Figure 3‑3. Variations in energy consumption indexes for China's major energy-intensive industries 25 during 2000-2014 Figure 3‑4. Changes in the industrial energy structure 25 Figure 3‑5. Improvements in the unit consumption of major energy-intensive products 26 Figure 3‑6. Comparison between the unit consumption rates of major energy-intensive products and 26 the advanced international level in 2014 Figure 3‑7. The basic structure of the energy consumption analysis model for various industrial sec- 27 tors Figure 3‑8. The changing trend in China's economic structure in the future (%) 28 Figure 3‑9. The industrial sector's internal structure under different scenarios in 2050 based the their 28 shares in the added-value of the industrial sector Figure 3‑10. Variation trend of the yields of major energy-intensive products under different scena- 29 rios Figure 3‑11. The energy efficiency improvement potentials of energy-intensive industries under dif- 30 ferent scenarios Figure 3‑12. The development trends of industrial final energy consumptions under different scena- 30 rios Figure 3‑13. The penetration rates of major industrial waste-heat utilization technologies in the fu- 33 ture (%) Figure 3‑14. The penetration rates of major industrial efficient combustion technologies in the future 36 (%) Figure 3‑15. The available quantity and consumption of steel scrap in China in 2000-2030 and relevant 40 predictions Figure 3‑16. The capacity utilization rates of major energy-intensive industries (2014, %) 42 Figure 3‑17. Industrial ‘ecological linkage’ development mode 43 Figure 3‑18. Potential assessment of major energy efficiency opportunities by 2050 46 Figure 4‑1. Structural diagram of the building energy demand module of LEAP model 56

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | vii Figure 4‑2. The outlook for final energy consumption and direct CO2 emissions in the building sec- 60 tor in China Figure 4‑3. The final energy savings potential for the building sector in China in 2050 under the 61 Intensified Energy-saving Scenario Figure 4‑4. Comparison of the improvements in energy efficiency of equipment and appliances 64 Figure 5‑1. Energy intensity changes of the transportation sector 75 Figure 5‑2. Transportation Model Framework 80 Figure 5‑3. Establishing the connections between turnover, energy consumption and vehicles 81 Figure 5‑4a. Change in transportation energy demand and energy mix in the reference scenario 83 FIGURE 5-4b. Final energy use of the transportation sector Figure 5‑5. Historical trends and projections of future oil production and consumption 85 Figure 5‑6. Energy conservation potential and pathways in the IEC scenario 86 Figure 5‑7. Final energy demand of the transportation sector under different scenarios 87 Figure 5‑8a. Fuel mix of China's transportation sector 88 FIGURE 5-8b. Final energy demand and fuel mix under the IEC Scenario Figure 5‑9. Final energy demand and carbon emissions in the transportation sector under the IEC 88 scenario Figure 5‑10. Overall energy efficiency evolution of the transportation sector under the IEC Scenario 89 Figure 5‑11. Energy-saving potential from inmproving truck fuel economy under the IEC Scenario 90 compared to the Reference Scenario Figure 5‑12. Cost curve of truck fuel economy improvements 90 Figure 5‑13. Improvement in fuel economy in various countries and outlook 91 Figure 5‑14. Fuel economy improvement of the private vehicles and taxi fleets under the IEC Scenario 91 Figure 5‑15. Cost curve for the fuel economy improvement of light duty vehicles 92 Figure 5‑16. Energy saving potential from replacing ICE-based vehicles with EVs in the IEC Scenario 93 in comparison with the Reference Scenario Figure 5‑17. Comparison of annual costs among ICEs, PHEVs and BEVs 93 Figure 5‑18. Energy-saving potential of railway electrification in the IEC Scenario compared with the 94 Reference Scenario Figure 5‑19. Share of trip modes in major cities in the world 95 Figure 6‑1. Installed power generation capacity in China since 2000 99 Figure 6‑2. Installed capacity in China (in 2015) and some developed countries (in 2010) 100 Figure 6‑3. Per capita power consumption in China (in 2015) and some developed countries (in 2013) 100 Figure 6‑4. Schematic diagram of the LEAP Model 105 Figure 6‑5. Positioning of the the power sector model in the entire energy model 106 Figure 6‑6. Structure of the LEAP Model for power sector 106 Figure 6‑7. Power generation efficiency of coal-fired units under the Reference Scenario and the IEC 108 Scenario Figure 6‑8. Efficiency levels of the gas-fired power generation units under the Reference Scenario 108 and the IEC Scenario Figure 6‑9. Efficiency levels of coal-fired power plants at different classes in 2010 109 Figure 6‑10. Initial investment costs of different power generation technologies 111 Figure 6‑11. Fuel cost changes of different power generation technologies 111 Figure 6‑12. Future terminal power demand and heat demand in China 112

viii | CHINA Energy Efficiency Series Figure 6‑13. Installed power-generation capacity under the Reference Scenario in China 113 Figure 6‑14. Installed capacity of wind power and solar PV in China under the Reference Scenario 113 and the IEC Scenario Figure 6‑15. Fossil fuel consumption in China under the Reference Scenario and the IEC Scenario 114 Figure 6‑16. Different mixes of fossil fuel consumption under the Reference Scenario and the IEC 114 Scenario Figure 6‑17. Energy saving from improved grid efficiency 115 Figure 6‑18. Energy saving from improved power generation efficiency of pure condensing units 115 Figure 6‑19. Energy saving from expended application 116 Figure 6‑20. Energy saving from higher installed capacity of renewable energy sources and nuclear 116 power generation Figure 6‑21. Waterfall chart of energy efficiency improvement potential in the power sector 117

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | ix List of Tables No. TABLE PAGE Table 1‑1. Policy description the Reference Scenario, 2030 Peak CO2 Scenario and 2025 Peak CO2 6 Scenario Table 1‑2. Definition of regions in the C-GEM 8 Table 1‑3. Descriptions of the 21 sectors in the C-GEM 9 Table 1‑4. GDP growth rate assumptions for China in the C-GEM 10 Table 2‑1. Total energy consumption and energy intensity of China's GDP from 2010 to 2015 16 Table 2‑2. Industrial Value-added and energy consumption in the 12th Five-year Plan Period 17 Table 2‑3. Energy efficiency changes in key energy intensive products and production processes 17 Table 2‑4. Building energy conservation targets set in the Energy Conservation and Emission Miti- 18 gation Plan for the 12 FYP period Table 2‑5. Energy conservation targets set in the Energy Conservation and Emission Mitigation 19 Plan for the Transport Sector for the 12th FYP period Table 2‑6. Progresses in realizing the road and waterway transportation energy conservation targets 19 in the 12th Five-year Period Table 2‑7. Energy conservation performances of public institutes 20 Table 2‑8. Macroeconomic drivers and assumptions for both scenarios 21 Table 3‑1. Summary of key power-saving technologies in the industrial sector 32 Table 3‑2. Division of coke dry quenching investment costs for #6 and #7 coke furnaces in L steel 33 coking plant Table 4‑1. Policy documents related to building energy efficiency improvement during the 12th 53 Five-year period Table 4‑2. Standards for energy efficiency in buildings issued during the 12th FYP period 54 Table 4‑3. The macroeconomic parameter assumptions 58 Table 5‑1. Achievement of main indicators in the 12th FYP for energy consumption and emissions 76 reduction of roads and waterways Table 5‑2. Main targets for railways and civil aviation energy efficiency improvement 76 Table 5‑3. Reductions in Corporate Average Fuel Consumption (CAFV) 77 Table 5‑4. Energy consumption for each type in transportation sector after adjustment in2010: 81 1,000t (tce) Table 6‑1. Power generation and per capita power consumption in China 100 Table 6‑2. Installed capacity of power generation from various sources in China and share changes 101 since 2005 Table 6‑3. Total power generation and mix changes in China 102 Table 6‑4. Efficiency of China’s power sector since 2005 102 Table 6‑5. Elimination of outdated capacity in China's power sector during 2011-2014 102 Table 6‑6. Efficiency levels of the thermal power generation units at different capacity classes in 107 some large power enterprises in China in 2012 Table 6‑7. Actually measured emission performance of the ultra supercritical generation unit at 120 Shanghai Waigaoqiao Third Power Plant

x | CHINA Energy Efficiency Series Foreword Improving energy efficiency is critical to achieving the ambitious goals of the Paris Agreement under the UN Fra- mework Convention on Climate Change. Most global and regional studies show that enhanced energy efficiency policies and actions can dramatically reduce energy use and associated greenhouse gas emissions. This is reflected in the fact that 167 countries included action on enhanced energy efficiency in the Intended Nationally Determined Contributions they submitted as the foundation for the Paris Agreement. Energy efficiency delivers not only reductions in energy consumption and emissions, if implemented properly, it will also provide opportunities for many economy-wide benefits, such as improved health and well-being, cleaner air and more jobs. In spite of the political ambition and potential for deriving multiple benefits from action, there are many common barriers and market failures that often prevent countries from moving at the expected pace in implementing the actions on energy efficiency that have been identified. Many of these barriers and failures need to be overcome in by individual countries and cities, but best practice examples of proven solutions are extremely useful in showing what works and how it can be made to happen. This report presents an analysis of energy-efficiency opportunities and actions in a number of key sectors in China aimed at inspiring other countries. The assessment highlights some of the conditions for success that will be essential for replication in other parts of the world. In terms of the future growth of energy and related greenhouse gas emissions, China and India stand out from other countries due to their rapid economic development, large populations, rapid urbanization and growing industrial sectors. Both countries are focused on decoupling both energy use and emissions from economic growth. In their Intended Nationally Determined Contributions, submitted under the Paris Agreement, both countries have included strategies to pursue improved energy efficiency across the main sectors of their economies. This report is part of the China and India Energy Efficiency series that has emerged from the High Impact Opportuni- ties studies that the UNEP DTU Partnership has supported in China and India. In China, the study was carried out by the Energy Research Institute under the National Development and Reform Commission and the Institute of Energy, Environment and Economy at Tsinghua Institute. The other two reports published on China are under the study:Best Practice and Success Stories on Energy Efficiency in China, and High Impact Opportunities for Energy Efficiency in China. All the reports can be downloaded for free at www.energyefficencycentre.org. China is the second-largest economy in the world and the biggest greenhouse gas emitter. Whether it can continue the rapid improvements to its energy efficiency, and how, are critical not only to fulfilling the country's international climate targets and domestic five-year plan targets, but also key to realizing the global goals of climate change and clean and sustainable energy development. This report,Enhancing Energy Efficiency in China: Assessment of Sectoral Potentials, uses energy and economic models to assess the potential for further energy-efficient improvements in the transport, building, industry and power sectors. The report starts with a modelling assessment of the role of energy efficiency in supporting China to achieve its Intended Nationally Determined Contribution (INDC) of reaching a peak in its greenhouse gas (GHG) emissions by around 2030. It concludes that the contribution of improvements in energy efficiency to China reducing its GHG emissions is between 67% and 80%, depending on whether the country reaches this peak in 2025, 2030, or 2035. The report continues to use the Long-Range Energy Alternatives Planning (LEAP) model to assess the potential for improvements in energy efficiency in the four key sectors. For each sector, the study identifies key high-impact opportunities (HIOs) for improvements in energy efficiency, some technical, others structural. The technical HIOs are those based on specific technological improvements, such as more energy-efficient housing and more fuel-efficient cars. The structural HIOs involve changes in product mix and service mix, such as reducing the overcapacity in energy-intensive industries and increasing the use of public transit for passenger transport. Moreover, for each sector, the report also identifies barriers to the realization of the HIOs and offers a set of recommendations for how to address them. I would like to thank the national experts and practitioners who have contributed the eight best practice and success stories included in this publication. I am sure that the publication will be of value to policy-makers, practitioners and researchers in the two countries, as well as providing inspiration to other countries on how to move forward with energy-efficiency policies and action paving the way to further gains in efficiency. John Christensen Director UNEP DTU Partnership

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | xi Acknowledgement We thank the authors of the different chapters for their insightful contributions. We appreciate the inputs received from Surabhi Goswami and Mette Annelie Rasmussen on the layout design. We would also like to thank Robert Par- kin for proof-reading the English language in this publication. Finally, we would like to thank the Copenhagen Centre on Energy Efficiency for providing the opportunity to undertake the study Zhiyu Tian Xiliang Zhang Xianli Zhu

xii | CHINA Energy Efficiency Series LIST OF abbreviations 3D 3-dimentional LNG Liquefied natural gas ADB Asian Development Bank LPG Liquefied petroleum gas BEV Battery electric vehicles M2 Square meter BRT Bus rapid transit MOHURD Ministry of Housing and Urban-Rural Development C2E2 Copenhagen Centre on Energy Efficiency Mtce million ton carbon equivalent CAFV Corporate average fuel consumption MW million Watt CBRC China Banking Regulatory Commission NDRC National Development and Reform Commission CCPP Combined cycle power plant NGCC Natural gas combined cycle CCHP Combined cooling, heating and power NGOA National Government Offices C-GEM China-in-Global Energy Model Administration CGE Computable general equilibrium NOx Nitrogen oxides CHP Combined heat and power OLED Organic light emitting diode CO2 Carbon Dioxide PHEV Plug-in hybrid electric vehicles ERI Energy Research Institute of the PM National Development and Reform Particulate matter Commission PV Photovoltaics EU European Union RMB Renminbi EV Electric vehicles SAM Social accounting matrix FIRR Financial internal rate of return SO2 Sulfur dioxide FYP Five-year Plan THUBERC Building Energy Research Centre, Tsinghua University GEA German Energy Agency US$ US dollars GDP Gross Domestic Product USA United States of America Gt Gigaton VAT Value-added tax GW Gigawatts WB World Bank HIO High Impact Opportunities HEV Hydrogen fuel battery vehicles HTHP High temperature and high pressure ICE Internal combustion engines IEC Intensified Energy Conservation Scenario Scenario IEA International Energy Agency INDC Intended Nationally Determined Contribution kgce Kilogram coal equivalent kV Kilovolts kWh Kilowatt-hour L/km Liter/kilometer LCD Liquid crystal display LEAP Long-Range Economy Alternatives planning model

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | xiii

Being the world’s largest developing country, China cur- Executive rently finds itself in a rapid development stage involving extensive industrialization and urbanization and is faced Summary with multiple challenges such as economic transforma- Supported by the UNEP and the Copenhagen Centre tion, environmental protection and tackling climate on Energy Efficiency (C2E2), Tsinghua University and change. In 2015, China released its Intended Nationally the Energy Research Institute (ERI) of the National Determined Contribution (INDC), which promised that

Development and Reform Commission jointly conduc- China's CO2 emissions will peak in around 2030, that ted a research project on high-impact energy efficiency China will strive to reach this peak value as early as pos- opportunities. Based on a review of progress in energy sible, that CO2 emissions per unit of GDP will decline conservation across China during the 12th Five-year Plan by 60% to 65% against the 2005 level, and that the pro- (FYP) period and assumptions about future macro-eco- portion of non-fossil energy in China's primary energy nomic development, industrial structure upgrading and consumption will reach about 20% by 2030. Energy effi- energy conservation technological improvement trends, ciency is one of the most important solutions for climate the research group adopted the method of quantitative change mitigation. To achieve its voluntary targets by analyses, using the LEAP model (Long-Range Energy Al- 2030, China needs to adopt further energy efficiency and ternatives Planning model) and C-CGE (China - Global emission-reduction policies and measures on the basis Energy) model to analyze the role of energy conservation of previous experience. Our modeling results show that in achieving China’s international climate pledges for China could achieve its INDCs targets by intensifying 2030. It also sought to provide detailed insights into the its energy conservation and low-carbon transformation high impact opportunities for energy efficiency across efforts. Compared to the reference scenario, carbon emis- industry and the building, transportation and power sec- sions in 2030 have to be 15% lower if China is peak its tors under both the reference scenario and the intensi- greenhouse gas emissions around 2030. Under the inten- fied energy-saving scenario. By conducting a comparative sified energy-saving scenario, carbon emissions in 2030 analysis and a sensitivity analysis of the two scenarios, the could be 27% lower compared to the reference scenario. research group identified future high impact energy-effi- Energy efficiency and conservation played a vital role in ciency opportunities from both technical and structural both scenarios in achieving the climate pledge, contribu- angles. Lastly, policy recommendations were provided for ting about three quarters of total emission reductions. technical and systematic obstacles in the popularization This report focuses on the role of energy efficiency and process of the High Impact Opportunities (HIOs). Du- conservation in realizing the CO emissions reductions ring the project execution period, the research group em- 2 under the intensified energy-saving scenario. We define ployed multiple methods such as a literature review, field energy efficiency and conservation as any action that investigations and expert interviews to provide a scienti- reduces energy demand through the improved use of fic and reliable model analysis. materials and better energy efficiency or through struc- Energy efficiency and energy conservation have beena tural shifts from energy-intensive activities to more ser- long-term priority for China, bringing about multiple vice-oriented activities. Through the LEAP model-based benefits, including the maximum utilization of energy re- quantitative analysis, this report identified 26 HIOs in sources, improving environmental quality and ensuring the industrial, building, transportation and power sec- energy security. Since 2006 the Chinese government has tors, of which sixteen are technical HIOs and ten struc- set mandatory targets to cut energy intensity per unit of tural ones. Given the joint effects of technical improve- GDP in its economic and social development plans, with ments and economic structure optimization, these HIOs strong legal measures, regulatory policies and financial could realize energy savings of over two Gtce in 2050. incentives being put in place. By 2015, energy use per unit Based on key criteria for HIO selection, the research of GDP declined by 18.4% compare to that in 2010, far ex- group, after calculation and discussion, selected six key ceeding the established target of 16% in the 12th FYP. From HIOs from the sixteen technical HIOs in the industrial, 2010 to 2015, energy efficiency and conservation have al- building, transportation and power sectors. Of the six lowed China to avoid the equivalent of 865 megatonnes HIOs chosen, one belongs to the industrial sector: in- of coal equivalent (Mtce) of energy use, equivalent to a dustrial waste heat recovery and utilization technology, reduction of 1.82 gigatonnes (Gt) in CO emissions. Ef- 2 which is estimated to save an energy amount of about 200 forts in energy efficiency and conservation in China have Mtce in 2050; two belong to the building sector: passive contributed a lot to the global sustainable transforma- building and air source heat pump, which are estimated tion, accounting for more than half of the world’s entire to save an energy amount of 220 Mtce and 50 Mtce res- energy savings in the past thirty years. pectively in 2050; another two belong to the transportation sector: improvement of fuel economy of trucks and

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 1 promotion of electric vehicles, which are estimated to sary to strengthen capacity building to promote passive save an energy amount of 45.94 Mtce and 49.22 Mtce res- housing, tighten the minimum requirements regarding pectively in 2050; and the last one belongs to the power energy-efficiency standards of appliances, conduct deep sector: transformation of coal-fired power plants, which energy-conservation retrofitting for existing buildings, is estimated to save an energy amount of 56 Mtce in 2050. and reinforce planning for using industrial waste heat to For the key energy-intensive sectors, the main findings heat cities and towns. are summarized as follows. Under the intensified energy-saving scenario, energy Under the intensified energy-saving scenario, energy consumption in the transportation sector is expected consumption in the industrial sector is expected to peak to peak around 2035. Four technical and three structu- from 2015 to 2020 and to be halved in 2050, compared to ral HIOs will contribute energy savings of 650 Mtce. the reference scenario. Four technical and three structu- Technical HIOs include upgrading the fuel economy of ral HIOs will result in an energy saving of over 1 billion trucks, improving the fuel economy of light-duty passen- tce in 2050. The selected technical HIOs included indus- ger vehicles, developing and popularizing battery electric trial waste heat recovery technology, advanced industrial and plug-in hybrid electric vehicles, and enhancing elec- combustion/calcination technology, high-efficiency and trification of the railways. In 2050, energy savings from environment-friendly industrial boiler, and raw material the above HIOs will stand at 45.94 Mtce, 12.39 Mtce, route-based process adjustment and energy use optimiza- 49.22 Mtce and 11.28 Mtce respectively. Structural HIOs tion. It is estimated that in 2050, the four technical HIOs include improving the share ratio of public transport, will produce an energy saving of 580 Mtce, of which improving the proportion of railway use and promoting nearly 200 Mtce through industrial waste heat recovery vehicle sharing. In 2050, energy savings from the above technology. The structural HIOs included the ‘de-capaci- HIOs will stand at 14.85 Mtce, 8.06 Mtce and 0.3 Mtce ty’ and transformation development of energy-intensive respectively. To seize the above HIOs, we need to boost industries, the industrial ‘eco-link’ development mode the transformation and upgrading of transportation and a subversive industrial production technical revo- sector management, quicken the pace of the reform of lution. In 2050, the three structural HIOs are estimated railway marketization, periodically release and update to save an energy amount of about 500 Mtce, of which fuel economy standards in a timely fashion, expedite the nearly 200 Mtce will saved by ‘de-capacity’. In order to construction, investment and financing of public trans- realize the above HIOs, we need to widen the channels port infrastructure, and continue with R&D and the for enterprises to acquire information and application promotion of advanced technology in the transportation about examples of energy-saving technologies, improve field. standard systems related to energy-saving production Under the intensified energy-saving scenario, energy processes, technologies and equipment, remove system consumption in the power sector will peak around 2030. and mechanism barriers across departments and indus- Four technical and three structural HIOs will contribute tries, and establish an institutional environment that is energy savings of 340 Mtce in 2050. Technical HIOs in favorable to the optimization and upgrading of industrial this sector include the transformation of pure conden- structure and to the improvement of industrial competi- sing steam turbine units to realize cogeneration, compre- tiveness. hensive energy-conservation transformation technology Under the intensified energy-saving scenario, energy for coal-fired power plants, the adoption of high-capa- consumption in the building sector is expected to peak city and high-parameter coal-fired generation units for around 2039 and be restricted to below 750 Mtce in 2050. newly built units, and the implementation of power grid Four technical HIOs and one structural HIO will contri- energy-saving technological transformations. Structural bute energy savings of over 700 Mtce in 2050. Energy sa- HIOs include accelerating the development of renewable vings in the building sector will mainly be produced by energy power generation, promoting the scale develop- technical HIOs including promoting passive housing, po- ment of nuclear power and developing natural gas power pularizing high energy efficient equipment, carrying out generation. The biggest fossil-fuel energy-saving potential deep energy conservation retrofit to existing buildings, in the power sector under the intensified energy-saving and using low-grade industrial waste heat for heating. scenario in 2050 comes from the substitution of fossil en- The first three HIOs will contribute energy savings of ergy by renewable energy and nuclear power for power 220 Mtce, 200 Mtce and 120 Mtce respectively in 2050. generation and heating, which can save energy by 248 The structural HIO is mainly about promoting building Mtce; improvements to the power generation efficiency industrialization. Energy savings in 2050 will stand at 30 of thermal power units can contribute energy savings of Mtce. Moreover, building industrialization can save ma- 56 Mtce; the popularization of cogeneration can contri- terials, indirectly lowering the energy consumption of the bute 32 Mtce in energy savings; and improvements to industrial sector. To realize the above HIOs, it is neces- power grid efficiency will contribute 15 Mtce in energy

2 | CHINA Energy Efficiency Series savings. To seize the above HIOs, we need to encourage cogeneration promotion according to local circumstances, encourage coal-fired power plants to improve power-generation efficiency, explore new-generation high-performance and low-cost power-generation technologies, boost energy conservation transformation and renewable energy absorption of power grids, and speed up power system reforms.

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 3 hapter 1c Role of energy conservation in achieving China’s climate pledge Yuyan WENG Xiliang ZHANG Sheng ZHOU

4 | CHINA Energy Efficiency Series China announced its Intended Nationally Determined 1.1.1 The history of China’s carbon Contribution (INDC) target before the United Nations intensity of its GDP Climate Conference in Paris in 2015. In the INDC, China The core of the transition toward a low-carbon energy committed to peak its CO emissions around 2030 and 2 economy is to improve carbon productivity, which can making best efforts to peak it early. In achieving this tar- be measured by average annual reduction rates of car- get, China intends to lower its CO emissions per unit of 2 bon emissions per unit of GDP. In the past thirty years, Gross Domestic Product (GDP) by 60% to 65% from the China's energy intensity and carbon intensity have both 2005 level, and increase the share of non-fossil fuels in achieved substantial reductions. Since 1980, the Chinese its primary energy consumption to around 20% by 2030. economy's carbon intensity has declined by 4.9% per year In order to fulfil these commitments, China’s energy due to improvements in labor productivity and the de- and economic systems need to undergo a deep low-car- velopment of energy-saving technologies. However, after bon transition. This chapter focuses on the quantitative 2000, the energy-saving efforts started to be offset by the analysis of the transition pathway toward a low-carbon boom in heavy industries and the increase in the propor- energy economy under different scenarios by deploying tion of industry in the economy, resulting in a rise in car- the China - Global Energy Model (C-GEM), and exami- bon intensity instead of a fall. After 2005, the central go- ning the role of energy conservation in achieving China’s vernment significantly intensified its reduction measures climate pledge. and introduced various new policies for effective energy- saving and emission reduction. The energy efficiency has 1980=100 1.1 Scenarios1980 1981 1982 been further1983 improved and1984 the average annual1985 reduction 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 rate of carbon intensity reached almost 5% in the decade Energy consumptio 100 94 90 86 80 76 74 71 69 69 67 65 60 56 52 50 47 43 40 39 37 36 36 38 41 42 40 39 36 35 34 33 32 31 29 28 It is necessary to look back the history of the carbon in- thereafter (China National Bureau of Statistics, 2015) (see Carbon emissionstensity p and energy 100 intensity of China's94 GDP during89 the Figure 1‑1).86 80 77 74 71 69 69 67 65 60 56 52 50 46 42 39 38 36 35 35 37 39 40 39 37 35 33 32 32 30 29 27 25 Carbon emissionspast pthree decades 100 before talking 100about low-carbon100 tran- 99 100 100 100 101 100 100 100 100 100 100 99 99 99 98 98 98 96 95 96 97 97 97 97 97 96 96 94 95 94 93 92 91 sitions in order to analyze the relationship between eco- 1.1.2 Scenario description

nomic growth, energy consumption and CO2 emissions, Three scenarios are designed in this study to reflect dif- 来源：Nationaland Bureau then to design of Statistics. appropriate scenarios(2015). accordingly. China Energyferent Statistical levels of policy Yearbook effort: a Reference 2014. Scenario, China a Statistics2030 Press.

Figure 1‑1. Changes in China’s carbon intensity of GDP, energy intensity of GDP, and carbon intensity of energy during 1980-2015 120

100

80 Reducing by 60 4.8%/year 1980=100 40 Reducing by 4.9%/year 20

0 1980 1985 1990 1995 2000 2005 2010 2015 Energy consumption per unit of GDP Carbon emissions per unit of GDP Carbon emissions per unit of energy

FIG 1.1

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 5 Table 1‑1. Policy description of the Reference Scenario, 2030 Peak CO2 Scenario and 2025 Peak CO2 Scenario

Reference Scenario 2030 Peak CO2 Scenario 2025 Peak CO2 Scenario I. Low-Carbon Energy System Transformation Targets Carbon Intensity 3% reduction per annum after 4% reduction per annum after 5% reduction per annum 2015 2015 after 2015 II. Policies Carbon price mechanism The intensity reduction targets are imposed using a carbon price mechanism, and the price is derived endogenously. Gas subsidy Encouraging the development of natural gas and subsidizing its use. Feed-in tariff for wind, solar Subsidizing renewable energy on top of the current benchmark grid-connection tariff for coal- and biomass electricity fired power plants through a renewable energy surcharge imposed on electricity consumption.

Peak CO2 Scenario and a 2025 Peak CO2 Scenario. The competition, the environment and the economy within Reference Scenario targets at a 3% per year reduction in a global context. carbon intensity, the 2030 peak CO scenario at a 4% per 2 The C-GEM is a computable general equilibrium (CGE) year reduction, and the 2025 Peak CO Scenario by a 5% 2 model with supplemental accounting for energy and per year reduction. emissions quantities. Its basis structure derives from the These carbon intensity reduction targets are imposed in Walrasian General Equilibrium Theory formalized by Ar- each scenario using a carbon price mechanism, and the row and Debreu (Arrow and Debreu, 1954; also Sue Wing, price of carbon emissions is derived endogenously in the 2004). A key advantage of the CGE framework is its abili- model. In addition, we simulate other supporting mecha- ty to capture policy impact across the interlinked sectors nisms in the model. For example, natural gas is subsidized of the economy, including interactions with goods and in order to increase the production and supply of it and factor markets and bilateral trade relationships between a Feed-in tariff mechanism is exploited to expand the de- regions. CGE models are now well-established tools used velopment of renewable energy such as wind, solar and to undertake quantitative analysis of the economic im- biomass electricity. pacts of energy and environmental policies (Böhringer et al., 2003; Sue Wing, 2004). Brief descriptions of the Reference Scenario, 2030 Peak

CO2 Scenario and 2025 Peak CO2 Scenario are shown in The CGE model simulates the circular flow of goods and Table 1-1. services in the economy, as shown below. The arrows in Figure 1-2 show the flow of goods and ser- 1.2 Model and vices in the economic system in each world region. Com- panies (producers) purchase factor inputs (such as labor, macroeconomic capital and land) from factor markets and intermediate assumptions goods and services from product markets, which they then use to produce final goods and services. Consumers (households) purchase these final goods from the product 1.2.1 China-in-Global Energy Model markets and sell their labor, capital and other resources (C-GEM) in the factor markets to obtain an income. In each re- (1) Overview gion, the producers maximize profits given input costs, and consumers maximize their utility while being subject The China-in-Global Energy Model (C-GEM) is a mul- to a budgetary constraint. Relative prices are adjusted en- tiregional, multi-sector, recursive–dynamic, computable dogenously to maintain equilibrium across product and general equilibrium (CGE) model of the global economy. factor markets. The model is one of the major analytical tools developed by the China Energy and Climate Project (CECP), a coo- Households allocate income to private consumption and perative effort of the Massachusetts Institute of Techno- savings with substitution across these two categories as logy’s (MIT) Joint Program on the Science and Policy of defined by the consumer utility function. In the recur- Global Change and the Tsinghua Institute of Energy, En- sive–dynamic model framework, the household savings vironment, and Economy. The primary goal of the model decision is based only on current period variables. House- is to analyze the impact of existing and proposed energy holds in the C-GEM are assumed to be homogenous, so and climate polices in China on technology, inter-fuel that one representative household in each region owns all

6 | CHINA Energy Efficiency Series Figure 1‑2. Economy-wide circular flow of goods and services in the C-GEM

Factor Market Labor Capital

Consumption

HOUSEHOLD PRODUCER lncome

Final Products Product Market Region 1

INTERNATIONAL TRADE

HOUSEHOLD PRODUCER HOUSEHOLD PRODUCER

Region 2 Region n the factors of production and receives all the factor pay- States, European Union, Japan, Canada, Australia) and ments. Tax is imposed in almost all transactions as speci- major developing countries (China, India, Russia, Bra- fied in the base year data and is collected by government. zil, South Africa), as well as major oil suppliers (mainly the Middle East) are explicitly represented. We further Savings and taxes raise fund for investment and govern- disaggregate the major economies around China, inclu- ment expenditure. The government in the C-GEM is mo- ding South Korea, Japan and Southeast Asia’s developing deled as a passive entity that collects tax revenues and countries, as well as developed Asia, as individual regions recycles money to households in the form of a lump-sum in the C-GEM. supplement to their income from factor returns (Sue Wing, 2004). The government’s expenditure in each re- Production in each of the 19 regions in the C-GEM is gion is fully funded by households. Different regions are comprised of 21 production sectors. This aggregation in- linked to international trade in that their products can cludes a detailed representation of the energy production be exported to the rest of the world, and imported goods sectors and the energy intensive industries. As shown are also sold in the domestic product market following in Table 1-3 below, five energy production sectors (coal, the Armington Assumption (Armington, 1969). In the crude oil, natural gas, refined oil, and electricity), and C-GEM, international trade is limited to the product four energy-intensive sectors (non-metallic mineral pro- market; factors such as labor and endowments are not ducts, iron and steel, non-ferrous metals products, and mobile across regions. The international capital flows chemical rubber products) are described in detail. that account for the trade imbalances between regions in the base year are assumed to gradually disappear. As a multiregional CGE model, the C-GEM is paramete- rized and calibrated based on a balanced social accoun- (2) Model structure ting matrix (SAM). The SAM is an array of input-output accounts that quantifies the flow of goods and services The C-GEM disaggregates the world into 19 regions and in the benchmark period (Sue Wing, 2004). The C-GEM 21 sectors, as shown in Table 1-2 and Figure 1-3 below. is based on the latest version of the Global Trade Analy- We aggregate the C-GEM regions on the basis of econo- sis Project database (GTAP 9) and China’s official eco- mic structural similarities, membership in trade blocs nomy and energy data set (Narayanan et al., 2012). It is and geographical relationships. The regional aggregates also formulated and solved as a Mixed Complementarity can be separated into two distinct groups, namely deve- Problem (MCP) using MPSGE, the Mathematical Pro- loped economies and developing economies, according to gramming Subsystem for General Equilibrium (Mathie- the definitions used by the International Monetary Fund sen, 1985; Rutherford, 1999), and the Generalized Alge- (IMF, 2012). The major developed economies (United braic Modeling System (GAMS) mathematical modeling

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 7 Table 1‑2. Definition of regions in the C-GEM

Regions in the C-GEM Detailed Countries and Regions Included Developed Economies United States (USA) United States of America Canada (CAN) Canada Japan (JPN) Japan South Korea (KOR) South Korea Developed Asia (DEA) Hong Kong, Taiwan, Singapore Europe Union (EUR) Includes EU-28 plus Countries of the European Free Trade Area (Switzerland, Norway, Iceland) Australia-New Zealand (ANZ) Australia, New Zealand, and rest of the world (Antarctica, Bouvet Island, British Indian Ocean Territory, French Southern Territories) Developing and Undeveloped Economies China (CHN) Chinese mainland India (IND) India Developing Southeast Asia (SEA) Indonesia, Malaysia, Philippines, Thailand, Vietnam, Cambodia, Laos, rest of Southeast Asia. Rest of Asia (ROA) Rest of Asia countries Mexico (MEX) Mexico Middle East (MES) Iran, United Arab Emirates, Bahrain, Israel, Kuwait, Oman, Qatar, Saudi Arabia South Africa (ZAF) South Africa Rest of Africa (AFR) Rest of Africa countries Russia (RUS) Russia Rest of Europe (ROE) Albania, Croatia, Belarus, Ukraine, Armenia, Azerbaijan, Georgia, Turkey, Kazakhstan, Kyrgyzstan, rest of Europe. Brazil (BRA) Brazil Latin America (LAM) Rest of Latin America countries

Figure 1‑3. Regions in the C-GEM

very sensitive to economic scale. Though the economic outputs are endogenously decided in the CGE model, it is language (Brooke et al., 1992). The C-GEM keeps track of still necessary to calibrate the parameters to ensure that the physical flows of carbon-based fuels and resources in economic growth has the trajectory as expected. Howe- the economy through time and also tracks the associated ver, future economic growth rates are very hard to pro- greenhouse gas emissions. ject, as so many uncertain factors may have impacts on growth, especially as China is now in a phase of rebalan- 1.2.2 Literature review on China’s cing the economy. The current government is determined future GDP growth to give up the traditional approach of investment-driven growth, and to shift to a more sustainable growth path The economic growth rate is an important parameter of the model as energy consumption and CO2 emissions are

8 | CHINA Energy Efficiency Series Table 1‑3. Descriptions of the 21 sectors in the C-GEM

Type Sector Description Agriculture Agriculture (AGR) Crops, forest, livestock Energy Coal (COAL) Mining and assemblages of hard coal, lignite and peat Sectors Oil (OIL) Extraction of petroleum Gas (GAS) Extraction of natural gas Petroleum Product (ROIL) Refined oil and petro chemistry product Electricity (ELEC) Electricity production, collection and distribution Energy- Non-Metallic Minerals Products (NMM) Cement, plaster, lime, gravel, concrete Intensive Industry Iron and Steel (I_S) Manufacture and casting of basic iron and steel Non-Ferrous Metals Products (NFM) Production and casting of copper, aluminum, zinc, lead, gold, and silver Chemical Rubber Products (CRP) Basic chemicals, other chemical products, rubber and plastic products Other Food and Tobacco (FOOD) Manufacture of foods and tobacco Industries Mining (MINE) Mining of metal ores, uranium, gems. other mining and quarrying Construction (CNS) Building houses factories offices and roads Electronic Equipment (ELE) Electronic equipment Textile (TWL) Textiles, wearing apparel and leather products Transport Equipment (TEQ) Transport equipment Other Machinery (OME) Other machinery Other industries (OTHR) Other industries Service Transportation Services (TRAN) Water, air and land transport, pipeline transport Commercial and Public Services (SER) Commercial and public services Dwelling (DWE) Dwelling that is consumption-based and driven by the creation of 2016’. The European Union (EU, 2015) predicted 6.3% for value. the same period. The Organization for Economic Coope- ration and Development expected in its ‘Economic Out- Based on a different understanding of the prospects for look: Long-term Baseline Projections’ (OECD, 2014) that China's future reforms, the international community China’s economy would grow by 6.7% in 2016 and 6.2% in has different expectations of China's recent economic 2017, probably falling to 5.1% in 2020. A comparison of growth. The International Monetary Fund (IMF, 2015) these expectations is summarized in Figure 1-4. gave a pessimistic forecast for China’s economic growth of 6.3% in 2016, because of the difficulties in China's Most of the growth forecasts are only short-term, re- transition to a new growth model. Relatively upbeat fo- search on the medium- and long-term growth of China's recasts from the World Bank (WB, 2015), on the other economy being covered less. The Energy Information Ad- hand, assumed that China's economy will grow by 6.9% in ministration, in its ‘International Energy Outlook’, assu- 2017. The Asian Development Bank (ADB, 2015) forecast med China’s economic growth to be 5.8% in 2020-2025, 6.7% growth for 2016 in its ‘Asian Development Outlook 5.5% in 2025-2030 and 4.3% in 2030-2035 (EIA, 2014). The 2015 update’. The United Nations (UN, 2015a) expected International Energy Agency in its ‘World Energy Out- China’s growth rate to be 6.8% in 2016. In its Internatio- look 2016’ forecast economic growth in China to be 5.2% nal Energy Outlook, the Energy Information Adminis- annually in 2020-2030 and 3.2% in 2030-2040 (IEA, 2016). tration’s (EIA, 2014) assumption of China's GDP annual The Organization for Economic Cooperation and Deve- growth was 6.5% in 2015-2020. The International Energy lopment has conducted detailed research on the growth Agency (IEA, 2016) assumed China’s economic growth factors for China’s medium- and long-term economic rate to be 6.2% in 2015-2020 in ‘World Energy Outlook growth, including population growth, employment rate

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 9 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2025 2030 2035 China 12.7% 14.2% 9.6% 9.2% 10.4% 9.3% 7.7% 7.7% 7.4% IMF-WEO 6.8% 6.3% 6.0% 6.1% 6.3% 6.3% WB-GEP 7.1% 7.0% 6.9% UN-WESP 6.9% 6.8% OECD-EO 6.7% 6.5% EIA-WEO 6.5% 6.5% 6.5% 6.5% 6.5% 6.5% 5.8% 5.5% 4.3% OECD-EFS 6.8% 6.8% 6.8% 6.8% 6.8% 6.8% OECD-China EFS 6.7% EIU-ECF 6.8% 6.5% 6.1% 5.9% 5.6% EU-EO 6.8% 6.3% 6.0% 6.0% 6.3% 6.3% OECD-LBP 7.3% 6.7% 6.2% 5.8% 5.5% 5.1% 4.4% 3.7% 3.4% ADB-ADO 6.8% 6.7% IEA-WEO 6.2% 6.2% 6.2% 6.2% 6.2% 6.2% 5.2% 5.2% 3.2%

来源： FIG 1.4 IMF. (2015). World Economic Outlook Update. Washington, DC. Figure 1‑4. Forecasts of China’s economic growth rate in the literature WB. (2015). Global Economic Prospects: The Global Economy in Transition. Washington, DC. 16.0% UN. (2015a). World Economic Situation and Prospects 2015. New York. China IMF-WEO OECD. (2016b). Global Economic Outlook. http://www.oecd.org/eco/outlook/economicoutlook.htm 14.0% WB-GEP UN-WESP EIA. (2014). International Energy Outlook 2014. Washington, DC. OECD-EO EIA-WEO 12.0% OECD. (2015). Economic Outlook for Southeast Asia, China and India 2015. http://www.keepeek.com/Digital-Asset-Management/oecd/development/economic-outlook-for-southeast-asia-china-and-india-2015_saeo-2015-en#page24OECD-EFS OECD-China EFS OECD. (2016a). China-Economic forecast summary. http://www.oecd.org/economy/china-economic-forecast-summary.htm EIU-ECF EU-EO 10.0% EIU. (2015). Economic and Commodity Forecast. https://cn.knoema.com/loqqwx/china-gdp-growth-forecast-2015-2020-and-up-to-2060-data-and-chartsOECD-LBP ADB-ADO IEA-WEO EU. (2015). China: Economic Outlook. Belgium. 8.0% OECD. (2014). Economic Outlook No 95 - Long-term baseline projections. http://stats.oecd.org/Index.aspx?DataSetCode=EO95_LTB ADB. (2015). Asian Development Outlook 2015 Update. Manila. 6.0% IEA. (2016). World Energy Outlook 2016. Paris. 4.0%

2.0%

0.0% 2005 2010 2015 2020 2025 2030 2035

and total factor productivity, concluding that China’s terized by the transformation of its development mode economic growth rate in 2020-2025 would be 4.4%, 3.7% in from investment-driven growth to intensive growth 2025-2030 and 3.4% in 2030-2035 (OECD, 2014), as shown driven by consumption and innovation, with significant in Figure 1-4 (ADB, 2015; EIA, 2014; EIU, 2015; EU, 2015; changes in economic structure. With social development IEA, 2016; IMF, 2015; OECD, 2014; OECD, 2015; OECD, and incomes rising, the proportions of primary and se- 2016a; OECD, 2016b; WB, 2015; UN, 2015a). condary industries in GDP tend to decline, and the proportion of the tertiary industry tends to increase, while 1.2.3 Social and economic industry’s internal structure will change from the low development assumptions side to the high side by achieving industrial upgrading. (1) Economic growth Therefore, we made some basic assumptions about China's Based on the forecasts in the literature and by research future economic structure. We calibrated China’s future groups, we design a scenario for future economic growth mode of consumption, especially the respective shares for China, set out in Table 1-4. The annual growth rate du- of agriculture, food and services in total consumption ring the ‘13th Five-year Plan’ is 6.5%, which is in agreement with reference to the proportion of final consumption in with the central government’s strategic plan. The assump- total spending by major countries in the world. Similar tions for GDP growth rate after 2020 are all within the to the consumption mode, we also calibrated China’s in- range of the expectations expressed in the literature. vestment structure and the input-and-output structures of major sectors such as iron and steel, machinery, transportation and so on. The assumptions regarding China’s Table 1‑4. GDP growth rate assumptions for China in economic structure are shown in Figure 1-5. the C-GEM (3) Population growth 2015-2020 2020-2025 2025-2030 2030-2035 The population values are assigned using the World Po- GDP 6.5% 5.8% 4.8% 3.8% pulation Prospects of the United Nations (UN, 2015b), as Annual shown in Figure 1-6. According to this projection, much Growth of this growth will happen in developing regions such as Rate Africa and India. The population of Africa is also projected to grow rapidly and is estimated to double between 2010 and 2040. India is projected to surpass China in po- (2) Economic structure pulation to become the world’s most populous country China’s economic development has entered the ‘New Nor- between 2020 and 2025. China’s population is predicted mal’ in the context of the low-carbon transition, charac- to peak at around 1.4 billion around 2030.

10 | CHINA Energy Efficiency Series 2010 2015 2020 2025 2030 2035 Agriculture 10% 9% 9% 8% 7% 7% Industry 46% 41% 35% 32% 30% 28% Service 44% 50% 56% 60% 63% 66%

来源：模型预测假定 FIG 1.5 Figure 1‑5. Assumptions about China’s economic structure

100%

80%

60% 人口单位：百万人 2011 2015 2020 2025 2030 2035 Brazil BRA40% 201 208 216 223 229 233 Canada CAN 34 36 38 39 40 42 China CHN20% 1348 1376 1403 1415 1416 1408 India IND 1247 1311 1389 1462 1528 1585 Japan JPN 127 127 125 123 120 117 Republic of Korea KOR0% 49 50 51 52 53 53 2015 2020 2025 2030 2035 Mexico MEX 120 127 135 142 148 153 Russian Federation RUS 143 Agriculture143 Industry143 Service141 139 136 United States of America USA 312 322 334 345 356 365 South Africa ZAF 52 54 Total57 primary energy58 consumption60 in the 622025 peak CO 1.3 Results and discussion 2 Rest of developed east asia DEA 13 13 scenario14 will see a15 greater decline15 at 4.9 Gtce15 in 2020 and Developing south east asia SEA 599 628 5.6662 Gtce in 2030.692 In 2030, total719 primary energy742 consump- 1.3.1 Primary energy consumption tion under the 2025 peak CO scenario will be 10% less Rest of asia ROA 504 534 576 618 6562 689 than that under the 2030 peak CO scenario and 18% less Rest of Africa (1) Total primaryAFR energy consumption1019 1132 1283 1446 1619 2 1804 than that in the reference scenario, as shown in Figure 1-7. European Union Our analysis showsEUR a remarkable change512 in the trend515 of 518 520 521 520 Rest of Europe primary energy ROEconsumption under 235these three scenarios.244 (2)251 Energy mix256 260 263 Australia - New Zealand Under the referenceANZ scenario, China’s37 primary energy39 Turning42 to the energy45 mix, in47 the reference50 scenario, the Middle East consumption willMES keep increasing from173 4.3 gigatonnes190 proportions205 of coal,219 oil, gas and232 non-fossil 245fuels in prima- Rest of Latin America of coal equivalentLAM (Gtce) in 2015 to286 7.4 Gtce in300 2035. ry 316energy consumption331 in 2030344 will be 55%,356 18%, 10% and Under the 2030 peak CO scenario, the primary energy 2 17% respectively. In the 2030 Peak CO2 Scenario, the ave- consumptions are 5.1 Gtce in 2020 and 6.2 Gtce in 2030. rage annual reduction rate of carbon intensity maintains

来源：UN. (2015b). World Population Prospects, the 2015 Revision New York: Population Division, Department of Economic and Social Affairs. Figure 1‑6. World population projections from the United Nations

10000

8000

6000

FIG 1.6 4000

2000 Populationprospects (million)

0 2015 2020 2025 2030 2035

BRA CAN CHN IND JPN KOR MEX RUS USA ZAF DEA SEA ROA AFR EUR ROE ANZ MES LAM

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 11 一次能源消费 2010 2015 2020 Coal 2495.68416 2775.5 2760.8 Oil 627.52752 778.1 943.9 Gas 144.2592 245.6 450.4 Nuclear 26.18304 64.8 174.4 Hydro 234 324.3 370.8 Wind 30 77.5 158.3 Solar PV 5 15.3 58.3 Others 43.34608 21.3 23.1 Reference Scenario 3606 4302.3 5282.4 2030 Peak CO2 Scenario 3606 4302.3 5124.4 2025 Peak CO2 Scenario 3606 4302.3 4940.0

来源：模型预测结果

Figure 1‑7. Primary energy consumption in China under different scenarios

8,000 Coal 8,000 8,000 Coal 7,000 Oil 7,000 7,000 Oil 6,000 Gas 6,000 6,000 Gas 5,000 Nuclear 5,000 5,000 Nuclear 4,000 Hydro Hydro 4,000 4,000 Wind (Mtce/Year) 3,000 Wind (Mtce/Year) 3,000 3,000 Solar PV 2,000 Solar PV 2,000 2,000 Others

Annual primary energy consumption consumption energy primary Annual 1,000 Others

Annual primary energy consumption consumption energy primary Annual 1,000 1,000 Reference Scenario 0 Reference Scenario 0 2015 0 2020 2025 2030 2035 2030 Peak CO2 Scenario

2015 2020 Annual primary energy consumption (Mtce/Year) 2015 2025 2020 2030 2025 2035 20302030 Peak CO2 Scenario

a level of 4% from 2015 through 2035. A higher carbon 1.3.3 The contribution of energy price results in a greater reduction of coal use and more conservation rapid growth of non-fossil fuel utilization. Under this According to the model results and analysis, under scenario, the proportions of coal, oil, gas and non-fossil the reference scenario, the average contribution of fuels in primary energy consumption in 2030 will change energy conservation to emissions reduction during to 49%, 20%, 12% and 20% respectively. With a stricter 2015-2035 could reach 80%, while the role of energy policy in the 2025 Peak CO Scenario, where carbon in- 2 substitution is only 20%. Under the 2030 Peak CO tensity maintains reductions of 5% from 2015 to 2035, an 2 Scenario, energy conservation could contribute about increasing carbon price results in a greater reduction in 76% of the total amount of emissions reduction, with coal use and booming development for non-fossil fuels. 24% by energy substitution. Under the 2025 Peak CO In 2030, coal, oil, gas and non-fossil fuels in primary en- 2 Scenario, energy conservation’s contribution to emis- ergy consumption will account for 42%, 21%, 14% and 23% sions reduction decreases to 72%, and energy substi- respectively. It should be noted that under this scenario tution’s role increases to 28%, as shown in Figure 1-9. coal consumption will no longer increase anymore and From the time perspective, taking the 2025 Peak CO decline thereafter, which means that coal use will reach 2 Scenario as an example, the contribution of energy its peak during the ‘13th Five-year Plan’ (2015-2020). conservation decreases from 75% to 67%, though the 1.3.2 Carbon dioxide emissions role of energy substitution grows from 25% to 33%, as trajectory shown in Figure 1-10. Thus it can be seen that, compared to energy substitu- Shown in Figure 1-8 are the trajectories of CO2 emissions from fossil fuel consumption under the three scenarios tion, energy conservation plays a more important role in during 2010-2035. Under the reference scenario, China’s the field of energy saving and emissions reduction than CO emissions will keep increasing from 8.1 Gt in 2010 to in the past, while energy substitution has a tendency to 2 increase its impact with the growing strength of trans- 13.8 Gt in 2035. Under the 2030 Peak CO2 Scenario, however, emissions will peak in 2030 at approximately 11.4 Gt formation and over time. China's low-carbon transition in its energy economy needs to rely on technological and begin to decline thereafter. Under the 2025 Peak CO2 Scenario, where the carbon intensity reduction rate is 5% improvements, energy efficiency enhancements and per year from 2015 to 2035, carbon emissions will peak in energy mix transformations, that is, when considered 2025, and the peak will be even less - around 10.0 Gt, as from the energy-conservation and energy-substitution shown in Figure 1-8. perspectives.

12 | CHINA Energy Efficiency Series 二氧化碳排放亿吨 2010 2015 2020 2025 2030 2035 Reference Scenario 81 92 108 123 134 138 2030 Peak CO2 Sce 81 92 103 111 114 112 2025 Peak CO2 Sce 81 92 97 100 97 90

来源：模型预测结果

FIG 1.8 Figure 1‑8. Carbon dioxide emissions trajectories in China under different scenarios

140

120

100

40 emissions emissions (100million ton)

2 2015—2035年间节能和能源替代对减排的平均贡献率20 CO Energy conservatiEnergy substitution Reference Scenario0 80.4% 19.6% 2010 2015 2020 2025 2030 2035 2030 Peak CO2 Scenario 76.1% 23.9% 2025 Peak CO2 Scenario Reference Scenario72.0% 203028.0% Peak CO2 Scenario 2025 Peak CO2 Scenario

来源：模型预测结果 FIG 1.9 Figure 1‑9. The contribution of energy conservation and energy substitution to emissions reduction under different scenarios

100%

80%

60%

40%

20%

0% Reference Scenario 2030 Peak CO2 Scenario 2025 Peak CO2 Scenario

Energy conservation Energy substitution

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 13 年达峰情景下 2025年达峰情景下节能与能源替代对减排的贡献率 2020-2025 2025-2030 2030-2035 Energy conserva 75.4% 73.1% 67.7% Energy substitut 24.6% 26.9% 32.3%

来源：模型预测结果 FIG 1.10

Figure 1- 10. The contribution of energy conservation and energy substitution to emissions reduction under the 2025 Peak CO2 Scenario

100%

80%

60%

40%

20%

0% 2020-2025 2025-2030 2030-2035

Energy conservation Energy substitution

References Narayanan, B., et al. (2012). Global Trade, Assistance, and Production: The GTAP 8 Data Base, Center for Global Asian Development Bank (ADB). (2015) Asian Develop- Trade Analysis, Purdue University. ment Outlook 2015 Update. Manila. OECD. (2014). Economic Outlook No 95: long-term Armington, P. S. (1969). ‘A theory of demand for pro- baseline projections. http://stats.oecd.org/Index. ducts distinguished by place of production.’ IMF Staff aspx?DataSetCode=EO95_LTB Papers 16: 159–176. OECD. (2015). Economic Outlook for Southeast Asia, Arrow, K. J. and G. Debreu (1954). "Existence of an Equilibrium China and India 2015. http://www.keepeek.com/Digital- for a Competitive Economy." Econometrica 22(3): 265-290. Asset-Management/oecd/development/economic-out- Böhringer, C., et al. (2003). Computable general equili- look-for-southeast-asia-china-and-india-2015_saeo-2015- brium analysis: Opening a black box, ZEW, Zentrum für en#page24 Europäische Wirtschaftsforschung. OECD. (2016a). China-Economic forecast summary. Brooke, A., et al. (1992). GAMS: Release 2.25: a User's http://www.oecd.org/economy/china-economic-forecast- Guide, Scientific Press. summary.htm China National Bureau of Statistics. (2015). China Energy OECD. (2016b). Global Economic Outlook. http://www. Statistical Yearbook 2014. China Statistics Press. oecd.org/eco/outlook/economicoutlook.htm Energy Information Administration (EIA). (2014). Inter- Rutherford, T. F. (1999). ‘Applied general equilibrium national Energy Outlook 2014. Washington, DC. modeling with MPSGE as a GAMS subsystem: an over- EIU. (2015). Economic and Commodity Forecast. https:// view of the modeling framework and syntax.’ Computa- cn.knoema.com/loqqwx/china-gdp-growth-forecast-2015- tional Economics 14(1-2): 1-46. 2020-and-up-to-2060-data-and-charts Sue Wing, I. (2004). ‘Computable general equilibrium European Union (EU). (2015). China: Economic Outlook. Belgium. models and their use in economy-wide policy analysis.’ International Energy Agency (IEA). (2016) World Energy Technical Note, Joint Program on the Science and Policy Outlook 2016. Paris. of Global Change, MIT. International Monetary Fund (IMF). (2012) World Eco- United Nations (UN). (2015a). World Economic Situa- nomic outlook. Washington, DC. tion and Prospects 2015. New York. International Monetary Fund (IMF). (2015). World Eco- United Nations (UN). (2015b). World Population Pros- nomic Outlook Update. Washington, DC. pects, the 2015 Revision New York: Population Division, Mathiesen, L. (1985). ‘Computation of economic equili- Department of Economic and Social Affairs. bria by a sequence of linear complementarity problems.’ World Bank (WB). (2015). Global Economic Prospects: Mathematical Programming Study 23(OCT): 144-162. The Global Economy in Transition. Washington, DC.

14 | CHINA Energy Efficiency Series hapter 2c General Introduction of Energy Efficiency Development in China

Jingru Liu

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 15 2.1 General result of energy conservation target to the key energy-consuming sectors and industries. Besides energy conservation and energy conservation in emission mitigation in the 12th Five-year Plan, at the be- th China in the 12 FYP ginning of the Plan the Ministry of Industry and Informa- tion Technology issued an Industry Energy Conservation The 12th Five-year Plan (2011-2015) for China's social and Plan, the Ministry of Housing and Urban-Rural Develop- economic development sets an energy conservation tar- ment published a Building Energy Conservation Plan, the get of 16% reduction in energy consumption per unit of Ministry of Transport issued a Highway Waterway Trans- GDP in 2015 on the level in 2010. According to the requi- portation Energy Conservation and Emissions Reduction rements of the Plan, energy use per unit of GDP had to Plan, the Ministry of Railways published a Railway En- reduce over 3.4% annually. ergy Conservation Plan, and the National Government Offices Administration issued an Energy Conservation With the Chinese economy gradually entered the New Plan for Public Institutions. Energy-conservation indi- Normal, economic growth has slowed down and adjust- cators and targets were set out in these plans, basically ment of the economic structure has gradually progressed, constituting the anticipated indicators. with the growth rate of energy consumption gradually declining to 0.98% in 2015 from 7.32% in 2011. At same time, economic development dependent on energy 2.2.1 Energy efficiency improvements consumption has continually declined as well. Therefore, in industrial sectors during the period of the 12th Five-year Plan, energy use The Energy Conservation and Emission Mitigation Plan per unit of GDP declined by 2.0%, 3.7%, 3.8%, 4.8% and and Industrial Energy Conservation Plan in the 12th Five- 5.5% in each year. year Plan have proposed targeted objectives, such as a In total, energy use per unit of GDP declined 18.4% from 21% reduction in energy use of value-added in above-scale 2010 to 2015, far exceeding the agreed target of 16% for the industries, a reduction rate of energy consumption per 12th FYP. The accumulative energy saving was 865 Mtce unit of industrial value-added in the major industries, and energy consumption per unit of key energy-intensive (see Table 2‑1), equivalent to 1.82 Gt of CO2 emission reductions.1 products. By 2014, energy consumption per unit of value-added in above-scale industries declined by 21% compared with 2.2 Energy efficiency 2010, and the 12 FYP's target of energy conservation was improvements in key achieved one year ahead of schedule (see Table 2‑2). energy end-use sectors in According to statistics from relevant experts, energy th the 12 FYP consumption per unit of main products continually declined during the 12th FYP period, the gap between China In order to meet the agreed energy conservation target in and other countries having gradually been narrowed (see the 12th Five-year Plan, the State Council has allocated the Table 2‑3).

1 The data are calculated by using the chaining method, that is, there is no single base year, but time series data are required, and for every year the previous year is used as the base.

Table 2‑1. Total energy consumption and energy intensity of China's GDP from 2010 to 2015

GDP (in Energy Energy use Reduction Annual GDP Energy use 2010 Total energy use per GDP rate of energy growth elasticity constant use(104tce) growth (tce/104 GDP energy saving rate coefficient prices) rate RMB) intensity (104tce) 2010 413,030 360,648 10.64% 7.30% 0.69 0.873 - - 2011 452,419 387,043 9.54% 7.32% 0.77 0.855 2.0% 0.80 2012 487,962 402,138 7.86% 3.90% 0.50 0.824 3.7% 1.53 2013 525,816 416,913 7.76% 3.67% 0.47 0.793 3.8% 1.64 2014 564,189 425,806 7.30% 2.13% 0.29 0.755 4.8% 2.15 2015 603,198 430,000 6.91% 0.98% 0.14 0.713 5.5% 2.52

16 | CHINA Energy Efficiency Series Table 2‑2. Industrial Value-added and energy consumption in the 12th Five-year Plan Period

Performance in the Target Main Indicators 2010 2014 first four years of in 2015 the 12th Five-year Plan Value-added of total industry (billion RMB, current price) 19,157.1 22,799.1 8% 8.31% Energy intensity (energy consumption to value-added ratio) 1.92 1.52 -21% -21% of above-scale industrial enterprises (in 2005 prices) Source: China Statistics Yearbook 2016; Ministry of Industry and Information Technology

Table 2‑3. Energy efficiency changes in key energy intensive products and production processes

China International advanced 2000 2005 2010 2011 2012 2013 2014 level Coal mining, washing and screening Gross energy use (kgce/t) 38.2 32 32.7 32.5 31.8 30.2 Power use (kWh/t) 29 25.1 24.0 24.0 23.4 25.8 24.3 17.0 Oil and natural gas exploitation Gross energy use (kgce/toe) 208 163 141 132 126 121 125 105 Power use (kWh/toe) 172 171 121 127 121 123 132 90 Co-fired thermal power generation (gce/kWh) 363 343 312 308 305 302 300 292 Coal-fired power supply (gce/kWh) 392 370 333 329 325 321 319 302 Steel production (kgce/t) -Whole industry 1475 1020 950 942 940 923 913 -Large and medium enterprises 906 760 701 695 694 682 674 -Steel comparable energy use 784 732 681 675 674 662 654 610 AC Power use of Electrolytic aluminium 15418 14575 13979 13913 13844 13740 13596 12900 manufacturing (kWh/t) Copper smelting (kgce/t) 1227 780 500 497 451 436 420 360 Cement production (kgce/t) 172 149 134 129 127 125 124 18 Wall material manufacturing (kgce/104 763 478 468 454 449 449 454 300 standard bricks) Comprehensive energy use of 8.6 8.0 7.7 7.4 7.3 7.1 7.0 3.4 architectural ceramics (kgce/m2) Flat glass manufacturing (kgce/50kg) 25.0 22.7 16.9 16.5 16.0 15.0 7.1 13.0 Oil processing (kgce/t) 118 114 100 97 93 94 97 73 Ethylene production (kgce/t) 1125 1073 950 895 893 879 860 629 Synthetic ammonia production (kgce/t) 1699 1700 1587 1568 1552 1532 1540 990 Comprehensive energy use of caustic 1439 1297 1006 1060 986 972 949 910 soda/kgce/t Soda ash production (kgce/t) 406 396 385 384 376 337 336 310 Power use for calcium carbide production 3475 3450 3340 3450 3360 3423 3272 3000 (kWh/t) Paper and paper board manufacturing -Whole industry(kgce/t) 912 528 390 380 366 353 340 - Enterprises using own made paper pulp 1540 1380 1200 1170 1128 1087 1050 580 (kgce/t) -Power use of chemical fiber (kWh/t) 2276 1396 967 951 878 849 801 800 Sources: Wang Qingyi, China Energy Data (2015), China Energy Data (2014)

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 17 Table 2‑4. Building energy conservation targets set in the Energy Conservation and Emission Mitigation Plan for the 12 FYP period

Items Unit 2010 2015 Change Floor areas of energy conservation retrofits for existing residential buildings in 108 m2 1.8 5.8 4 northern China Percentage of green building standard enforcement among new buildings (both % 1 15 14 urban and rural) Residential building energy conservation retrofits in the zones of hot summer and 108 m2 0.5 cold winter Energy conservation retrofits for public buildings 108 m2 0.6

2.2.2 Energy efficiency improvements and cold winter areas, exceeding the target set by the in the building sector State Council.3 The Energy Conservation and Emission Mitigation Plan 3. Energy conservation retrofits of public buildings. By the end of 2014, the energy audit for public buildings and the Building Energy Conservation Plan for the Buil- th had covered over 12,900 buildings nationwide, and ding Sector in the 12 Five-year Plan have set out energy energy consumption of more than 13,000 buildings conservation targeted indicators, such as the floor areas had been audited and published. A dynamic monito- of energy conservation retrofits for existing residential ring platform for the energy use of public buildings buildings in northern China and green building develop- had been created in 33 provinces (autonomous regions ment. The energy conservation targets set out in the En- and metropolitans), and the energy consumption ergy Conservation and Emission Mitigation Plan for the of over 7400 buildings was being monitored. By the 12th Five-year Plan are shown in Table 2‑4. end of 2014, energy conservation retrofits for public buildings had reached 39.28 million square meters According to statistical data from the MOHURD, infor- countrywide, and 32.64 million square meters was mation about achieving energy conservation targets is as scheduled to complete in 2015. An energy-conserva- follows: tion supervision system construction pilot has been 1. Energy conservation standards enforcement among conducted in 256 colleges and universities, 44 hospi- new buildings. By the end of 2015, the enforcement tals and 19 scientific research institutes. rate of compulsory energy-conservation standards 4. Green building development. By the end of Octo- basically reached 100% in all urban areas. Beijing, ber 2015, 3600 programs had passed assessment and Tianjin, Shandong Province, Tangshan City in Hebei obtained green building labels in the whole country, Province, Urumqi of Xinjiang etc. have already enfor- and the total floor area had reached 420 million ced local energy-conservation standards among 75% of square meters. Beijing, Chongqing, Jiangsu, Zhejiang the new buildings. By the end of 2014, the area of ac- and Shenzhen etc., have started to enforce green cumulated constructed energy-conservation buildings building standards compulsorily in newly constructed was 11.35 billion m2 in the whole country.2 buildings in cities and towns, and nearly 400 million 2. Energy conservation retrofits for existing residential square meters of green building had been compul- buildings. In the first four years of the 12th Five- sorily introduced. Affordable housing projects in year Plan, the area of heating supply metering and the above capital cities of provinces have started to energy conservation retrofits for existing residen- enforce green building standards compulsorily. It was tial buildings is 830 million m2 in urban northern predicted that the floor areas of newly constructed China, where space heating provision is a mandatory green buildings will total over 1 billion square meters responsibility for the government, exceeding the across the country by the end of 2015, thus success- target of 400 million m2 set by the State Council. In fully achieving the target set out in the 12th FYP. 2015, the target was 160 million m2, and 167 million 5. Renewable energy applications in buildings. By the m2 of retrofit had been achieved. The total area of end of 2014, areas of solar-thermal application in energy conservation retrofit floors is expected to be national cities and towns had reached 2.7 billion 1 billion m2 during the 12th Five-year period. By the m2, areas of shallow geothermal energy application end of 2014, floor areas with heating metering charges 460 million m2, and installed capacity of building had reached 1.1 billion m2. In the 12th Five-year Plan, integrated solar PV 2500 MW. 25 renewable energy energy conservation pilots were conducted on 7090 applications in building promotion had been pro- m2 of existing residential buildings in the hot summer moted at the provincial level, together with 93 pilot

2 Source: the Ministry of Housing and Urban-Rural Development. 3 Source: the Ministry of Housing and Urban-Rural Development.

18 | CHINA Energy Efficiency Series Table 2‑5. Energy conservation targets set in the Energy Conservation and Emission Mitigation Plan for the Transport Sector for the 12th FYP period

Change range/ Indicators 2010 2015 rate Gross energy efficiency of railway transport (tce/million ton∙km) 5.01 4.76 [-5%] Energy use of vehicles in operation unit transport turnover (kgce/100 ton∙km) 7.9 7.5 [-5%] Energy use of ships in operation unit transport turnover (kgce/1000 km) 6.99 6.29 [-10%] Energy use of civil aviation transport turnover (kgce/ton∙km) 0.45 0.428 [-5%] Source: Chinese Ministry of Transport

cities of renewable energy integrated in buildings, 98 In 2013, the Ministry of Transport organized a mid-term demonstration counties, 608 solar PV integrated in assessment for transport energy conservation in the 12th building pilot projects and 8 solar energy comprehen- FYP. The results show that highway and waterway trans- sive utilization pilots at the provincial level. port had already completed their energy conservation targets set out in the 12th FYP within three years. As 2.2.3 Energy efficiency improvements shown in Table 2‑6, most targets had been reached ahead in the transportation sector of schedule. The energy-conservation targets set out in the Energy As for railway transport, statistical data published by the Conservation and Emission Mitigation Plan for the trans- National Railway Corporation indicated that, compared portation sector in the 12th Five-year period is shown in to 2010, gross energy efficiency of the national railways Table 2‑5. and the major railway transport businesses in 2014 had In respect of energy conservation in relation to highways declined 10% and 7.3% respectively, far exceeding the tar- and waterway transport, the Ministry of Transport issued get of 5% reduction in five years. In the civil aviation sec- a Highway and Waterway Transportation Energy Conserva- tor, it was predicted that the average oil use per person tion and Emissions Reduction Plan in the 12th FYP, which pro- km would decline 4.2% in the 12th FYP period. poses an energy efficiency target: compared to the level in 2005, gross energy use efficiency of vehicles in operation 2.2.4 Energy conservation indicators for each transport turnover shall reduce 10% by 2010, and of public institutes that of passenger vehicles in operation and freight vehicles The Energy Conservation and Emission Mitigation Plan for the in operation will decline 6% and 12% respectively; energy 12th FYP Period and the 12th Five-year Energy Conservation efficiency of waterway transport shall decline 15%, with Plan for the Public Institutes have set out energy conserva- that of marine transport and inland waterway transport tion targets for public institutes: energy use per square decline 16% and 14% respectively; and the gross energy ef- meter of building floor in 2015 shall be 12% compared ficiency of port operation shall reduce 8%. with the level in 2010, and per capita energy use shall decline 15%.

Table 2‑6. Progresses in realizing the road and waterway transportation energy conservation targets in the 12th Five-year Period Indicators 2010-2015 Target Reduction in 2013 Accomplishment (improvement from Compared with base year 2005) 2005 level Road transport energy efficiency 10% 11.70% 117% Energy.efficiency of road passenger transport (per person.km) 6% 12.40% 207% Energy efficiency of road freight transport (per ton.km) 12% 11.80% 98% Energy efficiency of waterway transport (per ton.km) 15% 16.30% 109% Energy efficiency of marine transport (per ton.km) 16% 14.40% 90% Energy efficiency of inland waterway transport (per ton.km) 14% 19.50% 139% Energy efficiency of port operation (per ton of handling capacity) 8% 14.30% 179% Source: Chinese Ministry of Transport

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 19 Table 2‑7. Energy conservation performances of public institutes

Energy efficiency Accumulated Items 2010 2014 Target (2011-2015) reduction in 2014 Energy use per m2 of building floor areas 23.9 21.78 12% 11.05% (kgce/m2)

Per capita energy use (kgce/person) 447.4 385.11 15% 13.92%

In 2014, the floor area based energy intensity of public During the 13th FYP period, the role of economic struc- institutes was 21.78 kgce/m2, and per capita energy use ture optimization in boosting energy conservation is was 385.11 kgce/person, declining 11.05% and 13.92% res- prioritized, but technology is also expected to play an pectively from the levels in 2010. Progress in achieving important role in energy conservation. It is estimated the energy conservation target was 91.6% and 92.2% res- that to achieve the target, the total energy conservation pectively, both exceeding 80% of the established targets4 investment need will reach RMB 1.68 trillion and lead to (see Table 2‑7). 225 Mtce of energy saving.

2.2.5. Achievement of Energy Although great improvements have been made in China Conservation Investment in the 11th in energy efficiency in recent years, there is still much and 12th FYPs energy-conservation potential and many opportunities in the country. In the period of the 11th FYP, the Chinese Government stated that energy use per 10,000 RMB of GDP (on fixed It is estimated that the realizable energy-conservation po- price basis) should be 20% less in 2010 than the level in tential will be 802.28 Mtce, exceeding the requirements 2005. The GDP energy intensity actually declined 19.1% of the 716.04 Mtce of energy-conservation target for the from the 2005 level during 2006-2010, in other words the 13th FYP. All these energy-conservation opportunities country almost realized its energy conservation target in are scattered across different energy end-use sectors, in- the 11th FYP. During the five years, the government inves- cluding industry, buildings and transportation. ted 846.6 billion RMB in energy efficiency improvement. The public funds were used to support technical projects and relevant capacity-building, directly generating 339.9 2.4 Methodology Mtce of energy savings and contributed 53.8% to the 19.1% energy-use reduction achieved. The study’s vision is that, by pursuing high impact opportunities for energy efficiency, China can meet the In the first four years of the 12th FYP, the total invest- energy demand of its economic growth with a clean, ef- ment in energy conservation in China reached RMB ficient, low-carbon, safe and modern energy system. To 1547.53 billion, resulting in a total energy saving of 284.3 generate some meaningful insights into China’s energy Mtce. This directly contributed 47.1% to the 13.4% of GDP consumption, this study combines top-down analysis and energy intensity reduction achieved during the first four bottom-up analysis to research long-term energy deve- years of the 12th FYP period. lopment and energy efficiency potentials systematically and quantitatively. The top-down analysis is based on GDP size and growth rate, population and urbanization, 2.3 Outlook on and the experiences and lessons of advanced countries, energy conservation taking into account China’s specific conditions, develop- opportunities in the 13th ment stages and levels. The bottom-up analysis focuses on FYP the energy end-use sectors of Chinese economy: industry, buildings, transport and energy transformation (including both electricity and other energy-supply sectors). In the Outlines of the 13th National FYP (2016-2020) for The analysis includes assessments of sectoral energy de- Economic and Social Development, a new 15% target has mand and activity levels, structural change and technical been set to further reduce the country's GDP energy in- improvements. tensity. The Long-Range Energy Alternatives Planning (LEAP) system is used to assess future energy-demand pathways and energy-efficiency potentials. The LEAP model, de- 4 Source: National Government Offices Administration. veloped by the Stockholm Environment Institute, is an

20 | CHINA Energy Efficiency Series integrated modeling tool that can be used to track en- Two distinct scenarios are developed in preparing the ergy consumption, production and resource extraction storylines from 2010 to 2050. The Reference Scenario in all sectors of an economy and follows an end-use and considers current policies for energy efficiency, excludes demand-driven approach. In this study, given the state new ambitious policies, and envisions little or mild tech- of China’s current statistical system, the LEAP model nical improvements. Under the Intensified Energy-saving covers industry and the buildings, transport, and power Scenario, China is expected to meet its energy needs and sectors, as well as agriculture, construction, mining, oil- improve its environmental quality by tapping cost-ef- refining, coking, coal to oil/gas and some other sectors. fective energy-efficiency improvement potentials and The industry sector has 21 subsectors and distinguishes increasing renewable energy supply in the years to 2050. energy-intensive sectors from other manufacturing sec- Given the fact that China is undergoing fast industria- tors. The buildings sector is divided by climate zones and lization and urbanization, high impact opportunities of has residential, commercial and public building subsec- energy efficiency - not only from technical improvements tors. The transportation sector analyzes the demands and breakthrough, but also from economic structural for freight and passenger transport, distinguishing the change and consumer behavior change - are both cove- following transport modes: rail, road, shipping, aviation red and analyzed. For both scenarios, the same macroe- and pipelines. The transformation sector covers electri- conomic drivers and assumptions were adopted based on city, combined heat and power generation, and heat-sup- existing Chinese and international projections, as shown ply modules. in Table 2-8.

Table 2‑8. Macroeconomic drivers and assumptions for both scenarios

2010 2020 2030 2040 2050 Total Population (billions) 1.34 1.42 1.44 1.42 1.37 Urbanization Rate (% of population) 50% 60% 68% 74% 78% Decadal Annual Average GDP Growth Rate (%) 7.6% 5.9% 4.1% 2.9%

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 21 3chapter Energy Efficiency Policy and High Impact Opportunities for the Industrial Sector

Guanyun FU Huawen XIONG

22 | CHINA Energy Efficiency Series 3.1 The Characteristics of lization and urbanization and annual GDP growth rates of nearly 10%, total consumed energy has correspondingly Energy Consumption in shown steady growth from 1.47 gigatonnes of coal equi- the Industrial Sector and valent (Gtce) in 2000 to 4.3 Gtce in 2015, with average Progress with Energy annual growth rates of up to 7.5%. During the correspon- Efficiency ding period, the annual average growth rates of industrial value added (VA) and of industrial energy consumption respectively recorded 10.5% and 8.1%. As shown in Figure For a long time, the industrial sector has been the largest 3-1, in 2014 energy consumption in China's industrial sec- contributor to national economic development, with tor reached 2.83 Gtce, accounting for 66.6% of national more than 40% of economic outputs coming from indus- total energy consumption, and representing an increase try. However, due to low levels of energy efficiency and of 0.2% over 2001. poor treatment of pollutants, energy consumption in the industrial sector has grown in parallel with the expansion 3.1.2 Energy-intensive industry is of economic outputs. The proportion of primary energy a key field for industrial energy consumption has remained high at a level of 70%, more or consumption in recent years less, while emissions of environmental pollutants such as 5 sulfur dioxide, nitrogen oxides and smoke dust, as well as Energy-intensive industries constitute the majority of carbon dioxide, account for up to 70% above among na- industrial energy consumption. Since 2000, China’s six tional emissions. Smooth progress with energy efficiency major energy-intensive industries have recorded an an- in the industrial sector is of great strategic significance nual energy consumption growth rate of 10%, 1.4 percen- to the solution of such problems, like the constraints on tage points higher than the all industrial sectors' annual energy, the ecological restraints and the environmental energy consumption growth rate of 8.6%. In 2003 and constraints. 2004, the annual energy consumption growth rates of energy-intensive industries even exceeded 20%. In 2008, 3.1.1 Industry dominates energy under the impact of the global financial crisis, the energy consumption in China consumption growth rate of energy-intensive industries Industry is the largest energy-consuming sector in China, consistently accounting for about two thirds of the na- 5 The six energy intensive industries mentioned in this Chapter include buil- tional total energy consumed. Since 2000, with sustained ding materials, steel, non-ferrous metals, paper-making, chemical enginee- and rapid economic development, accelerated industria- ring and petrochemicals.

Figure 3‑1. Total energy consumption and the growth of industrial energy consumption during 2001-2014 FIG 3.1 Note: The amount of energy consumption is calculated using the coal equivalent calculation method

20.0% 69.5%

18.0% 69.0%

16.0% 68.5%

14.0% 68.0%

12.0% 67.5%

10.0% 67.0% Share 8.0% 66.5%

6.0% 66.0%

4.0% 65.5% Average annual growthrate(AAGR) 2.0% 65.0%

0.0% 64.5% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Year AAGR of China's total energy consumption AAGR of industrial energy consumption Industry's share in total energy consumption

Data source: China Energy Statistical Yearbook 2015 AAGR of China's total energy consum strial energy in total energy consumption

2001 5.8% 6.6% 66.4% 2002 9.0% 9.2% 66.5% 2003 16.2% 16.7% 66.8% 2004 16.8% 17.7% 67.2% Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 23 2005 13.5% 14.8% 68.0% 2006 9.6% 10.0% 68.3% 2007 8.7% 9.7% 68.9% 2008 2.9% 2.4% 68.5% 2009 4.8% 4.8% 68.4% 2010 7.3% 3.7% 66.2% 2011 7.3% 10.9% 68.4% 2012 3.9% 2.0% 67.1% 2013 3.7% 3.2% 66.8% 2014 2.1% 1.8% 66.6% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Iron & steel 100 110.72 118.37 147.48 169.62 222.37 249.33 285.70 288.70 328.26 330.95 366.46 383.14 399.03 405.40 Building materials 100 111.27 118.92 156.67 213.37 239.69 242.77 259.87 273.97 273.66 290.08 344.33 341.15 325.93 324.71 Metalurgy 100 102.42 119.89 142.65 168.21 193.76 238.52 280.84 295.03 295.03 321.74 351.46 369.87 383.28 403.82 Petrochemicals 100 101.87 107.92 122.07 151.55 155.17 166.79 185.11 184.20 209.20 200.69 219.69 220.94 224.27 232.46 Chemicals 100 103.28 120.03 142.52 186.05 208.64 229.19 249.30 247.15 248.44 272.88 306.64 318.03 330.12 357.99 Pulp & paper 100 105.26 122.55 127.00 164.17 185.51 192.03 195.36 211.14 218.70 204.48 212.93 195.94 186.51 177.39

450

400

350

300 Iron & steel 250 Building materials Metalurgy 200 Petrochemicals Chemicals 150

FIG 3.2 3.3 Energy ConsumptionGrowth Pulp & paper 100

0 Year Figure 3‑2. Energy consumption growth in high-energy-consuming industries 2000during 2001 2001-20142002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

30% 80.0%

78.0% 25%

76.0%

74.0% 20% 72.0%

15% 70.0%

68.0% 10% 66.0% Average Annual GrwothRate (AAGR) 64.0% 5% 62.0%

0% 60.0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Year AAGR of energy intensive sector's energy consumption AAGR of Energy consumption of industrial sector Share of energy intensive sector in industrial energy consumption

Data Source: State Statistics Bureau, National Energy Administration, China Energy Statistical Yearbook 2015

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 declined sharply from 11.1% in 2007 to 1.8% in 2008. Du- 3.1.3 The dominant role of coal in ring 2008 - 2014, except for 2009 and 2011, energy-inten- the final energy consumption of sive industries' annual energy consumption growth rates industry were 3% or even lower. Since 2003, the proportion of ener- In China's industrial final energy-consumption, a large gy-intensive industries in the energy consumption of all 2001 2002 2003proportion2004 is coal2005 and coke2006 and the2007 share of2008 natural2009 gas 2010 2011 2012 2013 2014 industrial sectors has remained 70% or above (as shown in AAGR of energy intensive sector's energy co 7% 10% 22%is much25% smaller.18% In 2014, 9%coal and11% coke accounted2% for7% as 3% 12% 3% 2% 3% FigureAAGR 3-2); of Energy during consumption 2003 - 2013,of industrial this proportion6.4% rose9.1% stea-17.9% 19.0% 15.9% 9.1% 9.9% 2.8% 5.7% 3.3% 10.8% 2.0% 1.9% 1.3% much as 52.7% of the final energy consumption by indus- dilyShare and ofreached energy intensive 77.5% sector in 2014. in industria 66.8% 67.1% 69.6% 72.9% 74.0% 73.9% 74.8% 74.0% 74.8% 74.9% 75.9% 76.3% 76.3% 77.5% try, while natural gas only accounted for 5.1% (see Figure In terms of energy-consumption development trends 3-4). Comparison shows that China's industrial final ener- in major energy-intensive industries, during the period gy consumption structure is almost the opposite to that from 2000 to 2013, the highest energy consumption of developed countries. In developed countries, generally growth rates appeared in steel, non-ferrous metals, che- less than 10% of the industrial final energy consumption micals and building materials industries; in 2013, energy is coal and coke. For example, the shares are only 4% in consumption in these four industrial sectors were respec- the US and less than 10% in the UK, Japan and Germany, tively 4.0, 3.8, 3.3 and 3.3 times the levels in 2000. The pe- while in China it exceeds 50%. In terms of the share of na- trochemical and pulp and paper industries recorded rela- tural gas in final energy consumption by industry, this va- tively slow increases in energy consumption, with their lue exceeds 50% in most developed countries and it is just energy consumption only doubled during the period. On 5% in China. China's industrial final energy consumption the other hand, during 2000-2013, energy consumption structure is ‘dominated by coal’ and therefore the carbon in iron and steel, non-ferrous metals and the chemical intensity of industrial energy consumption is high. and petroleum chemical industries maintained steady growth, while energy consumption in the building ma- 3.1.4 The efficiency of energy terials and pulp and paper industries peaked in 2011 and utilization is significantly improved 2009 respectively and have been falling since then (see In the past ten years, in order to improve the energy ef- Figure 3-3). ficiency of the industrial sector, the Chinese government has launched an energy-efficiency program for key enterprises in energy-intensive industries, including steel, non-ferrous metals, coal, petroleum and petrochemicals, chemicals and building materials, thus speeding up the

24 | CHINA Energy Efficiency Series 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Iron & steel 100 110.72 118.37 147.48 169.62 222.37 249.33 285.70 288.70 328.26 330.95 366.46 383.14 399.03 405.40 Building materials 100 111.27 118.92 156.67 213.37 239.69 242.77 259.87 273.97 273.66 290.08 344.33 341.15 325.93 324.71 Metalurgy 100 102.42 119.89 142.65 168.21 193.76 238.52 280.84 295.03 295.03 321.74 351.46 369.87 383.28 403.82 Petrochemicals 100 101.87 107.92 122.07 151.55 155.17 166.79 185.11 184.20 209.20 200.69 219.69 220.94 224.27 232.46 Chemicals 100 103.28 120.03 142.52 186.05 208.64 229.19 249.30 247.15 248.44 272.88 306.64 318.03 330.12 357.99 Pulp & paper 100 105.26 122.55 127.00 164.17 185.51 192.03 195.36 211.14 218.70 204.48 212.93 195.94 186.51 177.39 Figure 3‑3. Variations in energy consumption indexes for China's major energy-intensive industries during 2000-2014 450

400

350

300 Iron & steel 250 Building materials Metalurgy 200 Petrochemicals Chemicals 150

FIG 3.2 3.3 Energy ConsumptionGrowth Pulp & paper 100

50 终端能源消费量其他焦化 Natural Electric 油品合计 LNG Heat Other 万吨标准煤，电热当量 Coal Coke 焦炉煤气高炉煤气转炉煤气其他煤气产品 Gas ity 2001 76475.23 28464.23 11160.17 1195.75 3426.05 266.37 12627.500 2446.40 4207.45 12180.85 500.46 Year 2006 148012.26 59033.30 26887.11 2390.08 7294.06 563.76 16801.582000 20014200.14 2002 2003 2004 2005 2006 6028.172007 200823853.55 2009 2010 960.512011 2012 2013 2014 2010 182649.50 63653.87 37370.19 2825.86 5253.01 485.86 98.23 1059.23 22229.16 4948.53 1161.51 7419.78 34785.04 1359.21 2013 210468.23 66585.48 44353.70 3369.26 7067.17 851.84 Data103.59 source:1264.09 China21247.45 Energy7712.28 Statistical Yearbook2969.67 2015 8920.85 44362.19 1660.67 30% 80.0% 2014 213027.85 64420.63 45125.20 3368.75 7350.20 932.80 Note:114.66 energy1264.44 consumption21906.52 8058.21in 2000 is defined 3531.97as 100 9121.57 46336.78 1676.12 78.0% 25%

application of new energy-efficiency76.0% technologies, new and crude steel was significantly improved. At present, 数据来源：中国能源统计年鉴2014, processes and the manufacturing of new products, and some Chinese enterprises such as Baosteel and Anhui 电热当量法 eliminating outmoded industrial production74.0% capacities. Conch Cement have topped the global rankings in terms 20% Under the joint efforts of both government and enter- of energy efficiency. As shown in Figure 3-6, in China the 煤炭+焦72.0%炭 prises, energy efficiency has improved 39624 significantly. As overall energy efficiency in the manufacturing of energy- 15% shown in Figure 3-5, during the period70.0% from85920 2005 to intensive products such as steel, cement and caustic soda 2014, the energy efficiency of major101024 energy-intensive only fall behind the most advanced international level 110939 68.0% products was improved by 15% to 25%. During109546 the 11th by 10%, while the energy efficiency of coal-based power 10%Coal Coke and various coal g Oil Natural gas & L Heat Electricity Other FYP in particular the energy efficiency66.0% of energy-inten- generation and aluminum production has even reached 2001 285 160 126 24 42 sive122 product manufacturing,5 such as cement, plate glass leading international levels. Average Annual GrwothRate (AAGR) 2006 590 371 168 42 60 239 10 64.0% 20105% 637 471 222 61 74 348 14 2013 666 570 212 107 89 Figur444 e 3‑4. 17Changes in the industrial energy structure 2014 644 582 219 116 91 463 17 62.0%

0% 2500 60.0% 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Year AAGR of energy intensive sector's energy consumption 2000

AAGR of Energy consumption of industrial sector Share of energy intensive sector in industrial energy consumption 1500

1000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

500 Total final final energyTotal consumption(MtCe) 0 2001 2006 2010 2013 2014 2001 2002 2003 2004 2005 2006 2007 2008 2009 Year 2010 2011 2012 2013 2014 AAGR of energy intensive sector's energy co 7% 10% 22% 25% 18% 9%Other 11%Electricity 2%Heat Natural7% gas & LNG 3% Oil 12%Coke and various3% coal gases 2%Coal 3% AAGR of Energy consumption of industrial 6.4% 9.1% 17.9% 19.0% 15.9% 9.1% 9.9% 2.8% 5.7% 3.3% 10.8% 2.0% 1.9% 1.3% Share of energy intensive sector in industria 66.8% 67.1% 69.6% 72.9%Data source:74.0% China Energy73.9% Statistical74.8% Yearbook74.0% 2015 74.8% 74.9% 75.9% 76.3% 76.3% 77.5%

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 25 aluminum production has even reached leading international levels. aluminumFigure 3‑5. production Improvements has even inreached the unit leading consumption international of levels. major energy-intensive products

120 Comprehensive吨钢综合能耗 energy consumption per ton steel 120 Comprehensive吨钢综合能耗 energy consumption per ton steel Comprehensive水泥综合能耗 energy consumption for cement 110 Comprehensive水泥综合能耗 energy consumption for cement 110 Comprehensive原油加工综合能耗 energy consumption for crude oil processing Comprehensive原油加工综合能耗 energy consumption for crude oil processing 100 100 Comprehensive合成氨综合能耗Comprehensive合成氨综合能耗 energy energy consumption consumption for synthetic for synthetic ammonia ammonia Comprehensive烧碱综合能耗Comprehensive烧碱综合能耗 energy energy consumption consumption for sodium for sodium hydroxide hydroxide

90 90 Comprehensive纯碱综合能耗Comprehensive纯碱综合能耗 energy energy consumption consumption for sodium for sodium carbonate carbonate Comprehensive电石综合能耗 energy consumption for calcium carbide 80 Comprehensive电石综合能耗 energy consumption for calcium carbide 80 Comprehensive乙烯综合能耗 energy consumption for ethylene Comprehensive乙烯综合能耗 energy consumption for ethylene Comprehensive铝锭综合交流电耗 AC power consumption for ferro-aluminium 70 Comprehensive铝锭综合交流电耗 AC power consumption for ferro-aluminium 70 Comprehensive氧化铝综合能耗 energy consumption for aluminum oxide Comprehensive氧化铝综合能耗 energy consumption for aluminum oxide 60 Comprehensive铜冶炼综合能耗 energy consumption for copper smelting Comprehensive energy consumption for copper smelting 60 铜冶炼综合能耗Comprehensive铅冶炼综合能耗 energy consumption for lead smelting 50 Comprehensive铅冶炼综合能耗Comprehensive电解锌综合能耗 energy energy consumption consumption for electrolytic for lead smelting zinc

50 Comprehensive电解锌综合能耗Comprehensive平板玻璃综合能耗 energy energy consumption consumption for plate for electrolyticglass zinc 40 Comprehensive energy consumption for machine-made 机制纸及纸板综合 Comprehensive平板玻璃综合能耗paper and paperboard energy consumption for plate glass 能耗 40 ComprehensiveCoal火电供电煤耗 consumption for energy thermal consumption power supply for machine-made 30 paper机制纸及纸板综合 and paperboard 能耗 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Coal consumption for thermal power supply 30 火电供电煤耗 2005 2006 2007Figure2008 3-5. Improvements2009 2010 in the 2011unit consumption2012 2013of major 2014energy-intensive products Data source: Various industry associations; Wang Qingyi, ‘Energy data 2015’ Figure 3-5. ImprovementsData source: Various in the industry unit consumption associations; Wangof major Qingyi, energy ‘Energy-intensive data 2015’ products

Data source: Various industry associations; Wang Qingyi, ‘Energy data 2015’ Coal-based Figure 3‑6. Comparison between the unit consumption rates of major energy-intensive products and the power advanced international level in 2014 Sodium Crude steel Coal-based carbonate power Coal-based Sodium Crude steel carbonate Caustic soda Sodium Electrolytic Crude Steel aluminium

Caustic soda Electrolytic aluminiumCement synthesis ammonia

Electrolytic Caustic Soda Aluminium Ethylene Crude oil Cement processing synthesis ammonia Figure 3-6. Comparison between the unit consumption rates of major energy-intensive products and the advanced international level in 2014 Ethylene Crude oil Data source: Wang Qingyi, ‘Energy data 2015’ processing 3.2 Outlook of Energy Consumption in Industrial Sectors Figure 3-6. ComparisonS ynthesisbetween the unit consumption rates of major energy-intensive products andCement the advanced Ammonia To analyze trends in energy consumptionin ternationalin industrial levelsectors in in 2014 the future, this research adopts a ‘bottom up’ model, first analyzes and makes assumptions about the major driving factors that influence energy consumption, then forecasts the total energy consumptionData source: and Wang energy Qingyi, mix in the‘Energy industrial data sector, 2015’ as well as the energy consumption in each subsector. 3.2 Outlook of Energy Consumption in Industrial Sectors Ethylene 32 Crude Oil To analyze trends in energy consumption in industrial sectors in the future, this research adopts a ‘bottom up’ model, first analyzesData and source: makes Wang assumptions Qingyi, ‘Energy about data the 2015’ major driving factors that influence energy consumption, then forecasts the total energy consumption and energy mix in the industrial sector, as well as the energy consumption in each subsector.

26 | CHINA Energy Efficiency Series 3.2 Outlook of Energy yields of products such as crude steel, cement and electrolytic aluminum) is used as main indicator for the activity Consumption in level and the rate of physical energy efficiency (energy Industrial Sectors consumption the production of a ton of steel and a ton of cement) is used as indicator representing the energy- To analyze trends in energy consumption in industrial intensity level. For each non-energy-intensive subsector, sectors in the future, this research adopts a ‘bottom up’ the energy consumption is predicted based on industrial model, first analyzes and makes assumptions about the value added as indicator for the activity level and the en- major driving factors that influence energy consump- ergy intensity per value-added as the indicator for the tion, then forecasts the total energy consumption and energy-intensity level. energy mix in the industrial sector, as well as the energy consumption in each subsector. 3.2.2 Key assumptions 3.2.1 Methodology3.2.1 Methodology The key parameters which influence the energy consumption of the industrial sectors include the industrial struc- The key objectives in promoting energy efficiency in in- The key objectives in promoting energy efficiency in industrialture, the sectors yields areof major to optimize energy-intensive the industrial products structure and and dustrial sectors are to optimize the industrial structure energy efficiency levels. the internaland structurethe internal of structure each industrial of each industrialsubsector, subsector, improve industrial production technologies and technology levels, and encourageimprove a industrial low-carbo productionn and cleaner technologies structure and of tech industrial- The industrial energy consumption.structure and the Essentially, internal structure interventions are nology levels, and encourage a low-carbon and cleaner each industrial subsector made atstructure three levels: of industrial economic energy activity, consumption. production Essentially, technology, and energy mix. For this reason, the top-down China has entered the mid-to-late stage in the process of interventions are made at three levels: economic activity, macroeconomic model and the bottom-up LEAP model are industrialization.used to project Accordingthe future to industrial the historical energy experiences-consumption production technology, and energy mix. For this reason, under different scenarios. of developed countries, the industrial share of GDP will the top-down macroeconomic model and the bottom-up generally remain stable with slight declines. During the LEAP model are used to project the future industrial en- 13th FYP and in the coming decades, this will also be Overall structureergy-consumption of the LEAP under modeldifferent for scenarios. predicting energy consumption in the industrial sector is shown Figure 3-7. The industrial sector is divided into different subsectors, andthe the case the in China.activity Given levels the and mutual energy integration intensities of in -are then Overall structure of the LEAP model for predicting en- dustrialization and digitalization, and the integration of assumedergy for each consumption subsector. in For the each industrial energy sector-intensive is shown industrial Fi- manufacturing subsector, industry the product and the serviceyield (thesector, yields as well of as products such as crudegure 3-7. steel, The cement industrial and sector electrolytic is divided aluminum) into different is usedthe greatas main development indicator opportunities for the activity provided level by andthe inthe- rate of subsectors, and the the activity levels and energy intensi- ternet economy in such fields as finance and technical physicalties energy are then efficiency assumed for(energy each subsector. consumption For each the ener production- Research of and a tonDevelopment, of steel andthe researcha ton of group cement) made esis- used as indicatorgy-intensive representing industrial the energy subsector,-intensity the product level. yieldFor each(the nontimates-energy about- intensivethe share of subsector, industrial added the energ value yin consumption GDP is predicted based on industrial value added as indicator for the activity level and the energy intensity per value-addedFigur ase 3‑7.the T indicatorhe basic structure for the of energy the energy-intensity consumption level. analysis model for various industrial sectors

Figure 3-7. The basic structure of the energy consumption analysis model for various industrial sectors

3.2.2 Key assumptions

The key parameters which influence the energy consumption of the industrial sectors include the industrial structure, Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 27 the yields of major energy-intensive products and energy efficiency levels.

The industrial structure and the internal structure each industrial subsector China has entered the mid-to-late stage in the process of industrialization. According to the historical experiences of developed countries, the industrial share of GDP will generally remain stable with slight declines. During the 13th FYP and in the coming decades, this will also be the case in China. Given the mutual integration of industrialization and digitalization, and the integration of manufacturing industry and the service sector, as well as the great development opportunities provided by the internet economy in such fields as finance and technical Research and Development, the research group made estimates about the share of industrial added value in GDP as shown in Figure 3-8. In 2050, the shares of secondary industry and the industrial value-added in China's GDP will fall to 30% and 26% respectively.

33 70 Tertiary sector

60 Figure 3‑8. The changing trend in China's economic structure in the future (%) 7070 Tertiary sector 50 Tertiary Sector

6060

40 5050 Secondary sector

30 4040 SecondarySecondary sector Sector Sharein national (%)GDP Industry 3030 20 Sharein national (%)GDP IndustryIndustry 2020 Share in national GDP (%) in national Share 10 Primary sector 10 10 PrimaryPrimary sector Sector

0 00 2010 20102015 20152015 2020 20202020 2025 2025 2025 20302030 203520352035 20402040 2040 2045 2045 2045 20502050 2050 YearYear Note: the primary sector includes agriculture, fishery, husbandry, forestry; the secondary sector includes industry and construction; the tertiary sector is the service sector as shown in Figure 3-8. In 2050, the shares of secondary from Japan, Germany, Korea and the US, it is projected industry and the industrial value-added in China's GDP that those high value-added industries, including machi- will fall to 30% and 26% respectively. nery, transport and communication facilities, electrical equipment and the chemical product manufacturing in- Within the industrial sector, traditional industries and dustry, will account for half of value-added of the whole emerging industries will have different developmental industrial sector. Therefore, the GDP proportion of these trends under the Reference Scenario and the Enhanced industries will show significant increases. The structure Energy Efficiency Scenarios. Some resource-intensive of the industrial sectors in terms of value-added shares is industries such as mining, steel and cement will shrink shown in Figure 3-9. under the pressure of rising costs and decreasing market sizes, and there will be a significant decrease in the Key energy-intensive products GDP proportion of their industrial added values. Some labor-intensive industries, such as food-manufacturing, Having experienced a ‘golden decade’ of development printing and dyeing, and textiles, will pursue technology from 2000 to 2010, China’s energy-intensive industries Ref.and Scenar productIEC Scenario upgradation, thus increasing their industrial showed obvious declines in expansion rate during the Coal mining value-added;2.2% 1.5% however, due to limited market capacity, 12th FYP period. At present, most energy-intensive indus- Oil & gas extraction ultimately2.1% there2.0% will be a slight drop in the GDP pro- tries are struggling with excessive production capacity in Mining portion1.8% of value-added1.3% in these industries. Based on data China, with relatively low enterprise benefit margins and Food & tabacco 9.0% 8.9% Textile 6.0% 6.0% Figure 3‑9. The industrial sector's internal structure under different scenarios in 2050 based the their shares Wood processing 1.5% 1.6% FIG 3.9 in the added-value of the industrial sector Pulp & paper 0.9% 0.8% Culture & education 20.0%0.7% 0.0% Chemical & petrochem 18.0%8.8% 8.0% 16.0% Pharmaceutical 14.0%3.8% 4.2% Rubber & plastic 12.0%3.2% 3.4% Building material 10.0%3.8% 2.8% 8.0% Iron & steel 4.8%6.0% 3.8% Metallurgy 3.5%4.0% 2.6% Ref. Scenario Metal products 2.5%2.0% 2.9% IEC Scenario Machinary manufacturing 11.5%0.0% 12.8% Vehicles 11.0% 11.2% Electronics & electrical 15.0% 17.4% Other manufacturing 2.6% 2.6% Power generation & heat supply 5.0% 5.3% Fuel gas production 0.1% 0.1% Water supply 0.2% 0.2%

28 | CHINA Energy Efficiency Series profit levels. During the 13th FYP period, although China Energy efficiency is still at the mid-to-late stages of industrialization and Energy efficiency is closely related to production pro- the whole society's demand for energy-intensive products cesses, raw materials, equipment and technologies. represented by basic raw materials will remain stable, Through comparing the Chinese industrial sector with 2010 2020 2030 2040 2050 2010 2020 2030 2040 2050 then the demand is expected decline, and the yields of the international predicted the energy efficiency level Iron & steel 100% 137% 121% 94% 81% Iron & steel 100% 137% 121% 94% 81% energy-intensive products such as steel, cement and plate changes in the manufacturing of key energy-intensive Cement 100% 144% 105% 96% 85% glass will see a peakCement in their market demand.100% A drama144%- 105% 96% 85% Flat glass 100% 119% 111% 95% 81% Flat glass 100% 119% products111% during95% 2010 - 81%2050 by taking into account the tic decline in the total demand for energy-intensive pro- Aluminium 100% 173% 184% 179% 173% Aluminium 100% 173% production184% processes179% for173% different energy-intensive pro- Copper 100% 219% 252% 252% 241% ducts is predicted to appear after 2020 (see Figure 3-10). Copper 100% 219% ducts,252% as well252% as the potential241% for improving the energy ef- Amonia 100% 110% 108% 106% 104% By 2025, per capitaAmonia consumption of energy-intensive100% 110% pro- ficiency108% to these106% processes.104% The results of the predictions Caustic soda 100% 134% 129% 105% 96% ducts such as steelCaustic and sodacement will reach the100% present 134%ave- are129% shown in 105%Figure 3-11. 96%The cement and paper industries Soda ash 100% 138% 128% 99% 94% rage level of developedSoda ash countries. 100% 138% possess128% energy-efficiency99% 94% improvement potentials of 20% Calcium carbide 100% 118% 106% 94% 88% Pulp & paper 100% 143% 138% 135% 130% Calcium carbide 100% 118% 106% 94% 88% Polyethylene 100% 176% 211% 247% 282% Pulp & paper 100% 143% 138% 135% 130% Figure 3‑10. VariationPolyethylene trend of the yields100% of major176% energy-intensive211% products247% under282% different scenarios 300%

300% 250%

250% 200%

200% 150%

150% 2010 2015 2020 2030 2040 2050 Productionof different industries 100% Iron & stee 100% 131% 108% 83% 77% 64% Cement 100% 124% 138% 99% 66% 43% 2010 2015 2020 2030 2040 2050 Productionof different industries 100% Flat glass 100% 117% 111% 108% 87% 76% 50% 2010 2020 2030 2040 2050 Iron & stee 100% 131% 108% 83% 77% 64% Aluminium 100% 159% 158% 143% 117% 92% Cement 100% 124% 138% 99% 66% 43% Copper 100% 174% 208% 219% 219% 208% Iron & steel Cement Flat glass Aluminium Flat glass 100% 117% 111% 108% 87% 76% 50% Amonia 100% 105% 107% 105% 101% 99% Copper Amonia Caustic soda Soda ash 2010 2020 2030 2040 2050 Calcium carbide Pulp & paper Polyethylene Aluminium 100% 159% 158% 143% 117% 92% Caustic sod 100% 145% 115% 96% 77% 57% Soda ash 100% 123% 108% 99% 79% 64% Copper 100% 174% 208% 219% 219% 208% IronCalcium & steel ca 100% Cement147% 106% 76%Flat glass 53% 35% Aluminium Amonia 100% 105% 107% 105% 101% 99% CopperPulp & pap 100% Amonia100% 100% 90%Caustic soda82% 80% Soda ash Calcium carbide Pulp & paper Polyethylene Caustic sod 100% 145% 115% 96% 77% 57% Polyethyle 100% 127% 155% 190% 211% 197% Soda ash 100% 123% 108% 99% 79% 64% FIG 3.10 Calcium ca 100% 147% 106% 76% 53% 35% Pulp & pap 100% 100% 100% 90% 82% 80% 250%

Polyethyle 100% 127% 155% 190% 211% 197% FIG 3.10 Iron & steel 200% Cement 250% Flat glass

150% Aluminium Iron & steel 200% Copper Cement 100% Amonia Flat glass Caustic soda 150% Aluminium 50% Soda ash

Copper Productionscale of different industries Calcium carbide 100% Amonia 0% Pulp & paper 2010 2015 2020 2030 2040 2050 Caustic soda Polyethylene Year 50% Soda ash

Productionscale of different industries Calcium carbide 0% Pulp & paper Note: The Reference Scenario is shown in the upper figure, the Intensified Energy Conservation Scenario in the lower figure 2010 2015 2020 2030 2040 2050 Polyethylene Year

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 29 EE potnetiaFurther EE potential under IEC Scenario Amonia 24.3% 7.9% Calcium carbide 28.2% 34.1% Caustic soda 27.2% 7.0% Figure 3‑11. The energy efficiency improvement potentials of energy-intensive industries under different scenarios Polyethylene 9.3% 2.7% FIG 3.11 Soda ash 26.2% 7.6% 70.0% Iron & steel 36.5% 18.9% Aluminium 30.2% 22.6% 60.0% Copper 34.6% 15.5% 50.0% Cement 26.6% 9.5% 34.1% 18.9% 40.0% 22.6% 15.5% 12.1% Paper & pulp 34.4% 12.1% 30.0% 7.0% 7.6% 9.5%

potential 7.9% 20.0% 36.5% 34.6% 34.4% 28.2% 27.2% 26.2% 30.2% 26.6% 10.0% 24.3% 2.7%

Energy efficiency improvement 9.3% 0.0%

Ref. ScenarIEC Scenario 2010 1529 1529 2011 1620 1574 Further EE potential under IEC Scenario EE potnetial under Ref. Scenario 2012 1705 1615 2013 1790 1652Note: The red parts represent the additional energy efficiency improvement under the Intensified Energy Conservation Scenario 2014 1880 1685on the basis of the Referrence Scenrio 2015 1940 1700 2016 2010 1710or even higher. Due to the constraints in raw material der the Intensified Energy Conservation Scenario, with 2017 2080 1720availability and the small production scales, the poten- the reduction in the size of energy-intensive industries, 2018 2150 1715tial for improving energy efficiency in the production of the faster development of industries with lower energy 2019 2210 1715aluminum and ammonia is much smaller (see Figure 3-11). intensity and high added values, and the high penetra- 2020 2250 1705 tion rates of energy efficient technologies, the industrial 2021 2290 17003.2.3 Development trends in final energy consumption will first see slow increase then 2022 2330 1690industrial energy consumption steady declines. The energy consumption is expected to 2023 2370 1685The changes in the energy consumption level of indus- peak during the 13th FYP period, reaching a peak of only 2024 2410 1670trial sectors in the two scenarios are shown in Figure about 1.7 Gtce and the peak will take place twenty years 2025 2450 16503-12. Under the Reference Scenario, the industrial final earlier than the peak value under the Reference Scenario. 2026 2490 1635energy consumption will continue rapid growth, and the 2027 2530 1620peak value of energy consumption will occur in 2040 at 2028 2570 16102.9 Gtce, nearly twice as much as the level in 2010. Un- 2029 2610 1600 2030 2650 1585 2031 2690 1565Figure 3‑12. The development trends of industrialFIG final3.12 energy consumptions under different scenarios 2032 2720 1540

2033 2770 1520 3500 2034 2810 1500 3000 2035 2845 1485 2036 2860 1470 2500 2037 2880 1450 2000 2038 2900 1435 2039 2920 1420 1500 2040 2938 1410 1000 2041 2922 1400 500 2042 2902 1390 2043 2879 1380 0

2044 2853 1370 Industrialenergy consumption(MtCe) 2045 2822 1360 2010 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050 Year 2046 2788 1350 2047 2751 1340 Ref. Scenario IEC Scenario 2048 2710 1330 3500 2049 2666 1320 2050 2619 1311 3000

2500

2000 Series1 30 | CHINA Energy Efficiency Series Series2 1500 Series3 1000

500

0 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 3.3 Identification of Key great potential in energy-efficiency improvement; (2) low penetration rate at present, but great potential for Opportunities for Energy promotion in the future; (3) good economic returns for Efficiency as well as investment; and (4) potential to improve the energy ef- Analysis on Technical ficiency of the whole society. Based on these criteria, the Economy following high impact technologies are selected for industry (see Table 3-1). China is at the mid-to-late stage of industrialization, when After making a preliminary identification of the high im- the traditional extensive development mode no longer pact technologies in the industry, the research group clas- matches the market environment of supply and demand sified numerous technologies and carried out an analysis for factors of production. Therefore, great changes will and evaluation of four major fields, including waste-heat take place in the tasks and contents of industrial develop- recovery technologies, advanced combustion/calcination ment, and there will be major adjustments in industrial technology, efficient and environmentally friendly boi- development in the future. In the short run, the develop- lers and innovative production processes. ment of different industrial sectors will change from one of ‘Expanding production capacity and increasing market Industrial waste-heat recovery technologies share’ to ‘Controlling production capacity, improving en- China's industrial sectors abound in waste-heat resources. ergy efficiency and product quality, and environmental According to the findings of an investigation conducted protection’. In the medium and long term, China's indus- by the Energy Research Institute within the NDRC, in try will find a bigger role in social benefits generation and 2012, seven industries (including steel, cement, glass, am- provide greater support for the sustainable development monia, caustic soda, calcium carbide and sulfuric acid) of the whole society. In the whole process of industrial were producing waste heat of up to 340 Mtce, accoun- transformation, energy efficiency will play a very impor- ting for 10% of national total energy consumed in the tant role. same year. However, because of technical, economic and The high impact opportunities for energy efficiency im- conceptual limitations, only some waste-heat resources provement in the industrial sector can be divided into in China have been developed and utilized. Among the two types: ‘technological ones’ and ‘structural ones’, different industrial sectors, the steel industry and the ce- which are described in detail in the following sections. ment industry have higher utilization levels of waste heat, while there is major space for improvement for waste 3.3.1 High impact opportunities for heat use in other industrial sectors. As observed from energy efficiency in the field of the perspective of waste-heat temperatures, high-tempe- technology rature waste-heat sources enjoy higher utilization levels, the utilization of low-to-medium temperature waste-heat There are many sorts of energy-saving technologies in in- sources being more difficult.6 Intensifying the exploita- dustry, characterized by ‘scattered distribution, various tion and utilization of these resources will be significant classifications and diversified modes’. They not only infor energy efficiency and emission reductions in the include technologies in a specific field, but also cross-sector dustrial sectors of the Chinese economy in the future. technologies, and not only energy-efficiency equipment, but also production process optimization. Therefore the According to preliminary estimates and analysis, the in- research group started with setting the criteria for high dustrial waste-heat utilization technologies that are ma- impact technologies in accordance with the relevant do- ture maturity, high economic efficiency and great promo- cuments issued by government, including the Catalogue of tion potential in the market include coke dry quenching Key Energy-saving and Low-carbon Technologies for National (CDQ), sintered ore waste-heat generation, cement-kiln Promotion (2015), China's Lists of Top-ten Energy-saving Tech- low-temperature waste-heat power generation and slag- nologies and Top-ten Energy Saving Best Practices, Guidelines washing water heating etc. The predicted future penetra- for Advanced Applicable Energy Efficiency and Emission Re- tion rates of these waste heat recovery technologies are duction Technologies for the Iron and Steel Industry, and Gui- shown in Figure 3-13. Since cement-kiln low-temperature deline for Advanced Applicable Energy Efficiency and Emission waste-heat power generation technology has been widely Reduction Technologies for the Building Materials Industry. deployed among newly built cement plants, there is not The research team also selected several high impact tech- much room for further major improvements in penetra- nologies in order to carry out a technical-economic analysis and assess their promotion potential. 6 According to the investigation made by ERI, 54% of industrial waste heat Four criteria are used for the selection of high impact resources are 400°C middle-low temperature waste heat sources, most of technologies: (1) a high degree of technical maturity and which are low-quality waste heat sources with temperature of 200°C and below.

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 31 Table 3‑1. Summary of key power-saving technologies in the industrial sector Industry Major critical technology Industry Major critical technology Iron and Coal moisture control (CMC) Aluminum Aluminum cell current intensifying technology Steel Coke dry quenching technology New technology for aluminum electrolysis with Sintering waste heat recovery and utilization low temperature and low voltage technology New type cathode structure aluminum cell Low temperature sintering technology technology Mini-pelletized sinter process technology New type flow-guide structure technology BF top gas dry type TRT technology Aluminum electrolysis waste heat recovery Converter fume dry dusting technology technology Converter flue gas waste heat recovery Aluminum electrolysis anode current distribution technology monitoring technology Thin slab continuous casting technology Technology for automatic control of aluminum Energy management center for steel cell roasting enterprises Cement Pure low-temperature waste heat power Calcium carbide Sealed, environment-friendly and energy-saving generation in cement kiln calcium carbide production technology Fixed grate-cooling machine technology Low voltage compensation for calcium carbide Roller mill technology for raw meal grinding furnace as well as Loesche coal mill technology Calcium carbide furnace tail gas calcined Vertical mill technology for cement finished limestone technology grinding Calcium carbide furnace gas direct combustion Roller press + ball mill combined grinding for steam generation technology Sensible heat recovery technology High solid-gas ratio suspension preheating Mechanical closed system for automatic loading decomposition technology and proportioning for calcium carbide furnace Energy management and control center for cement enterprises Alumina Technology for production of sand-like Soda ash Centrifuge secondary filtration technology aluminum oxide in sintering method Washing water and additive technology for Technology for production of sand-like vacuum alkali filter aluminum oxide in Bayer method Self-return soda ash steam calcination Sodium aluminate solution seed crystal technology decomposition technology Vacuum distillation technology Alumina calcination waste heat recovery New technology for soda ash production based technology on converted gas Fluidization calcination technology for high efficiency energy saving furnace Automatic filtration technology for refined filtration process Ethylene High temperature and radiation resistant Oil refining New type whole liquid-phase hydrogenation coating technology for cracking furnace technology Waste heat recovery, preheating and Heat high-pressure separating flow technology combustion-supporting air technology Low temperature heat recovery and utilization Optimization control technology for turbine technology compressor set Technology of heat integration and heat feeding between devices Caustic Membrane (zero) grade distance ion- Ammonia Pressurized pulverized coal gasification soda exchange-membrane electrolysis technology technology Low tank voltage electrolysis with ion- Coal water slurry grading gasification technology exchange film New type catalyzer used for gas preparation for Ultrasonic wave scale prevention & descaling synthesis ammonia technology NHD desulfurization and decarbonization Technology for optimization control of technology caustic soda evaporation process Pressure swing adsorption (PSA) Waste-heat utilization technology for decarbonization technology in two-section hydrogen-chloride synthesis method Copper Oxygen bottom-blown smelting technology Alcohol alkylation purification technology (5 items) Oxygen side-blown bath smelting Non-power ammonia recovery technology technology Three Wastes fluidized mix combustion furnace Rotary furnace refining technology technology Smelting flue gas waste heat recovery Alcohol alkylation purification synthetic technology ammonia raw gas technology Automated blowing control technology

32 | CHINA Energy Efficiency Series Low-temperature Submerged arc Electric furnace and Aromatic waste heat from furnace flue gas heating furnace waste device low Coke dry Sintering waste heat for cement kiln for waste heat heat for power temperature The 4th generation (and Heating with waste heat quenching power generation power generation utilization generation heat above) of grate cooler from slag-flushing water Current 30% 20% 80% 40% 40% 4% 25% 1% 2020 50% 40% 95% 80% 80% 40% 55% 40% 2030 75% 70% 100% 95% 85% 70% 65% 50% 2050 100% 80% 100% 100% 90% 90% 80% 60%

Figure 3‑13. The penetration rates of major industrialFIG 3.13 waste-heat utilization technologies in the future (%)

100% 90% 80%

70% 60% 50% 40%

Penetrationrate 30% 20% 10% 0% Coke dry quenching Sintering waste Low-temperature Submerged arc Electric furnace and Aromatic device low The 4th generation Heating with waste heat for power waste heat from furnace flue gas heating furnace temperature heat (and above) of grate heat from slag- generation cement kiln for waste heat waste heat for cooler flushing water power generation utilization power generation

Current 2020 2030 2050

tion rate. In contrast, coke dry quenching (in particular transferred to the next working procedure. The heated for independent coking plants), sintering waste-heat inert gases can enter the waste-heat boiler for heat ex- power generation and the fourth generation of grate coo- change, steam recovery and power generation, and then lers have considerable room for penetration rate impro- the cooled-down inert gases restart the coke-quenching vement, which should reach 80% or even higher in 2050. procedure. So-called high-temperature, high-pressure (HTHP) coke dry quenching means that the waste-heat This research includes a technical and economic analysis boiler used for coke dry quenching is an HTHP boiler, by taking coke dry quenching, sinter waste-heat genera- with the steam flow of the HTHP steam turbine at 100 - tion and efficient (the fourth generation and above) grate 410 t/h, a steam outlet temperature of 540°C and pressure coolers as examples. at 9.8 MPa. This technology is applicable to coke furnaces (1) Coke dry quenching (high-pressure, high- with an annual productive capacity of 0.6 million tons or temperature type) above, and even to coking plants directly under large and medium steel combined enterprises. Technical principle. Coke dry quenching uses inert gases to cool down the coke and recover the waste heat. When Energy-saving effect.Coke dry quenching technology can pushed out of the coking chamber, the coke falls into the recover 80% of waste heat from red-hot coke. On average, coke pot or coke tank truck used for coke dry quenching it can recover 0.45 - 0.6 ton of steam at 3.9 MPa at 450°C and enters the cooling chamber of the dry quenching per ton of coke quenched. After the process’s energy furnace through the feeding divide. Inert gases are used consumption is deducted, this technology can recover a for heat exchange with coke; the cooled down coke is net energy of 35 - 45 kgce per ton of coke. Under equi- continuously discharged by the coke discharge device and valent coke-quenching conditions, the power generation

Table 3‑2. Division of coke dry quenching investment costs for #6 and #7 coke furnaces in L steel coking plant

Proportion in total Name of engineering cost Estimated value (10,000 RMB) investment (%) Construction engineering 3039 14.34 Equipment and tools/devices 11919 56.24 Installation work fee 2949 13.91 Other capital costs and budgetary reserves 2167 10.22 Dynamic part of construction investment 417 1.97 Liquid fund 704 3.32 Total 21195 100.00

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 33 capacity of the steam generated by the HTHP boiler is (2) Sinter waste heat power generation about 10% - 15% higher than the power generation capaci- Technical principles. Sintering waste heat utilization re- ty of the steam generated by a medium-temperature and fers to technology designed for the recovery and reutili- medium-pressure boiler. Therefore, the HTHP boilers are zation of waste heat generated in the sintering procedure, more energy efficient. which is mainly divided into two major forms. The first Technical economy. Coke dry quenching transformation form is the sensible heat of sintering fumes, which ac- and matching power generation project for #6 and #7 counts for about 24% of total heat carried in the sintering coke furnaces of L Steel Coking Plant is selected here as process. The performance of physical and chemical reac- an example (annual coke-processing capacity of 1.1 mil- tions in the sintering process produces constant changes lion tons). This project requires a total funding of up to in the sintering flue gas temperature and contents; when RMB 211.95 million, and the project investment is divi- the sintering process enters its final stage, there is an ob- ded into several items, as shown in Table 3-2. vious increase in the flue gas temperature, so the temperature of the waste gas discharged from the high-tempera- A dry-quenching circulatory cooling system can process ture section of the tail bellows can reach 300 - 400°C. The 1.1 Mt of coke each year. By improving coke quality, this other form is the sensible heat of the sintered ore, which system can recover heat form red-hot coke for reutiliza- accounts for about 45% of the total quantity of heat car- tion and generate 0.6446 Mt steam at a pressure of 9.5 ried in the sintering process. The mean temperature of MPa and a temperature of 540°C each year for power hot sintering mineral discharged from the tail of the generation. In addition to reducing environmental pollu- sintering machine is 600 - 800°C. In the cooling process, tion caused by wet coke quenching, this system recovers the sensible heat of the sinter is converted into the sen- substantial heat energy and coke powder of 21600 tons/ sible heat of cooled waste gas, and the temperature of the year, which can be used in production. This system can waste gas in the high-temperature section is 350 - 420°C. also improve coke quality and produce remarkable eco- Therefore, the fumes at the tail bellows of the sintering nomic and environmental benefits. A waste-heat boiler is machine and the sensible heat of the sinter are the main used as the steam source, and a set of 25 MW condensed sources of sintering waste heat recovery. steam turbine generator units is built, with annual power generation of 140 GWh and an annual supply of power of The fumes introduced from the high-temperature fume 114.6 GWh, as a result efficient use of resources is realized sections of the sintering and cooling machines are fed and the overall benefits to the company are improved. into the top of the waste-heat boiler through the main For the purposes of this project, the annual mean pro- fume tube and discharged from the lower part of boiler. duction and operation cost is RMB 38.02 million, and the After heat exchange, the fumes are connected to a blower annual average total profit from production is RMB 17.84 fan through a pipeline; they are pressurized and then dis- million, making an after-tax profit of RMB 11.95 million. charged from the funnel, or else the tail gas enters the According to estimates, the internal rate of return on ca- recirculation and is used for sintering hot blast or sinter pital is 9.64%, and the investment payback period (inclu- cooling air, in this way the flue gas is recycled for heat ding the construction period) is 8.42 years. recovery and utilization. The high temperature fumes discharged from the sintering and cooling machines en- Prospect of promotion. At present, coke dry quenching ter the waste-heat boiler to heat the water in the heating technology has mostly been used in steel joint production surface; then the water turns into HTHP steam after heat enterprises, but the coke output of these enterprises only absorption and enters the steam turbine again to gene- accounts for about a third of total national output. Due rate power, thus forming a combined cycle. to small production scale and out-of-date equipment, many independent coking plants have not been equipped Energy-saving effect. With the adoption of sintering with coke dry quenching systems, so that large quantity fume waste-heat power-generation technology, after of waste heat from coke production is wasted each year. recovery of fume waste heat, for each of sinter produc- On the other hand, the coke dry quenching technology tion, on average it is feasible to generate up to 20 kWh used at present is mainly of the medium-temperature and of power and reduce energy consumption for producing medium-pressure type, while the proportion of HTHP a ton of steel by 8 kgce, thus enabling steel enterprises to coke dry quenching in use is only around 30%. With the achieve significant energy savings and reductions in en- development of large-scale coke furnaces, HTHP coke ergy consumption. In general, if waste gas with a tempe- dry quenching can produce higher efficiency in waste- rature of approximately 300°C is used instead of normal heat steam-power generation and thus will represent a temperature air as the combustion-supporting gas for future development trend. ignition and heat preservation, 25% - 30% of coal and gas consumption can be saved.

34 | CHINA Energy Efficiency Series Technical economy. Project case: sinter adopts sintering plates, high running rate and obvious benefits in energy waste-heat recovery technology, with an annual produc- efficiency and emission reduction. This product is used tion capacity of 1 million tons. Total investment in this for equipment renovation in both newly built and old project is RMB 12.23 million, including RMB 12 million plants. With 25% of civil engineering investments savings of construction costs and RMB 0.23 million of interest in- and the maintenance expenses lowered to 70 - 80%, this curred during construction. The annual production capa- process can produce significant economic benefits. city of the project is 18 GWh of power generation, which Technical economy. 1) A 3000 ton/day production line can provide RMB 9.18 million of additional income. To is provided with high-efficiency grate cooler techno- add sintering waste heat recovery facilities, the general logy, with investment costs of about RMB 8 million, a costs will increase RMB 5.68 million (including power construction period of three months, annual energy sa- generation costs and the costs of manufacturing, admi- vings of 3390 tce, annual economic benefits from energy nistration, finances etc.), which means a gross profit of efficiency of up to RMB 2.37 million and an investment up to RMB 3.38 million per year. The investment payback payback period of 3.5 years. 2) A 5500 ton/day cement period for this project is estimated at 3.1 years (excluding production line is provided with high-efficiency grate the construction period), with a financial internal rate of cooler technology, with investment costs of RMB 10 mil- return (FIRR) of 31.9%. lion, a construction period of three months, annual en- Prospect of promotion. At present, only a small part of ergy savings of 5330 tce, annual economic benefits from the large-scale sintering plants in China are equipped energy efficiency of up to RMB 3.7 million and an invest- with waste heat recovery and power generation systems, ment payback period of three years. 3) In the example with a 20% take-up rate of power generation technology. of a 5000 ton/day (1.5 Mt/year) cement production line, It is estimated that the penetration rate of this techno- the investment in a high-efficiency grate cooler is about logy had reached 35% by the end of the 12th FYP period. RMB 20 million, and the operational and maintenance costs are about 5 million RMB/year. This project can save (3) Efficient (fourth generation and above) grate up to 4000 - 4500 ton of coal each year, with an invest- cooler ment payback period of 3-5 years. Technical principle. The major function of the grate Prospect of promotion. The market penetration rate of cooler is to lower the high temperature of clinker with this technology is approximately 25% at present, and is cooling air. In this process, the cold air is heated and the estimated to reach 55% in 2020, 65% in 2030 and 80% or heated air enters the kiln and decomposing furnace in above in 2050. the form of high temperature secondary air and tertiary air before being used for fuel combustion. The high-ef- Advanced industrial combustion/calcination ficiency grate cooler is provided with a set of inflation technology grate plates with an air-flow self-adaptation function, With the advancement of combustion technology and which are arranged to form a static grate bed for clinker equipment, one important solution of industrial energy cooling and air supply. In addition, a set of pushing rods efficiency improvement is to increase fuel-use efficiency able to perform a reciprocating motion are used to push by improving combustion conditions and modes. For the clinker layer forward. The high-efficiency grate cooler example, oxygen-enriched combustion or total oxygen is characterized by its modular structure, high heat-re- combustion technology is adopted in the building ma- covery rate, high transfer efficiency, compact structure, terials industry (cement and glass); regenerative combus- greater energy efficiency and lack of material leakage in tion technology is used in steel and nonferrous metal in- the main body. dustries; and blast furnace gas with a lower heating value, Energy-saving effect. The power consumption of high-ef- gas-steam combined cycle power plant (CCPP) techno- ficiency grate coolers is about 4 kWh per ton of clinker. logy and stratified combustion technologies are applied The high-efficiency grate cooler can achieve a heat reco- in the steel industry. Estimates of the penetration rates very rate of 74% or above, being 4% - 6% higher than in of the said technologies in the future are shown in Figure the case of the original third generation of grate cooler. 3-14. Since the regenerative combustion technology is Compared to the third generation of grate cooler, the more cost effective and has a realistic basis for technical heat consumption of the clinker can be reduced by 60-90 application, its penetration rate is expected to improve kJ/kg. The volume and the weight of the high-efficiency from 40% at present to approximately 70% by 2020. Oxy- grate cooler are only a half to a third those of the third ge- gen-enriched combustion technology is deployed more neration, and the energy consumption of the equipment quickly in the glass and ceramics industries than in the itself is also reduced by 20% from that of the third gene- cement industry. However, by 2050, the penetration rate ration. The high-efficiency grate cooler is characterized for this technology in the building materials industry is by high cooling efficiency, long performance life of grid expected to reach 60% or more. Since CCPP is constrai-

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 35 Figure 3‑14. The penetration rates of major industrial efficient combustion technologies in the future (%)

100%

90%

80%

70%

60%

50%

40% Penetrationrate

30%

20%

10%

0% Oxygen-enriched Oxygen-enriched/ Regenerative CCPP (steel) High thrust multi- Pre-mixing re- combustion at pure oxygen combustion (steel channel burning cement kilns combustion at glass rolling) combustion… kilns

Current 2020 2030 2050 ned by the scale of production and the residual blast-fur- Energy-saving effect. For the purposes of oxygen-enri- nace gas volumes of steel plants, there is more uncertain- ched combustion, the oxygen-enriched gas with an oxy- ty in the promotion of this technology. However, with gen content of more than 21% is used as the combustion- the improvements in the production concentration of supporting air. The specific oxygen concentration varies the steel industry and progress in blast-furnace gas-reco- in the different industrial sectors and enterprises. For very technology, the CCPP penetration rate is expected example, in the cement industry, by improving the oxygen to increase to about 70% by 2050. concentration to 28% - 30%, it is feasible to reduce the temperature of the ignition point, speed up the combustion In the following section, cost-benefit estimates and ana- velocity, increase the flame temperature, achieve more lysis will be made by taking oxygen-enriched combustion complete combustion, reduce the emission of waste gas, technology and regenerative combustion technology as reduce the heat quantity carried by flue gas, and improve examples: the thermal efficiency, thus saving energy by about 10%. (1) Oxygen-enriched combustion technology Technical economy Technical principle. Oxygen-enriched combustion technology can be described as a secondary revolution in Case 1. A cement manufacturer makes a technical change the field of combustion. Its principle is to improve the to its rotary kiln by using oxygen-enriched combustion concentration of oxygen in the air (oxygen concentra- technology and the additional equipment is a membrane tion is generally increased to 28 - 30%), so that the vola- method-based oxygen-producing device. According to tile contents and the unburned carbon particles in the the actual operational effects, after process change, the fuel are sufficiently burned in the oxygen-enriched air. coal-saving ratio may reach 8-12%. Based on conservative This technology can improve the flame temperature by estimates (a coal-saving ratio of 8% and an annual coal 100-350°C, speed up the combustion process and rapidly consumption of 0.276 Mt), this project can save the en- improve thermal radiation. It is designed to strengthen terprise 22,080 tons of raw coal consumption annually, combustion, reduce the excess air coefficient, reduce the or 15,771 tce. Since the price of raw coal is 620 RMB/ air displacement and dust volume after combustion, de- ton, this can lead to an annual coal cost saving of 22,080 crease the carbon dioxide content, improve combustion ton×620 RMB/ton =13,689,600 RMB. In addition, the efficiency, effectively convert the fuel in oxygen-enriched annual actual power consumption of oxygen-producing combustion into heat energy, and thus effectively im- equipment is 7,920,000 kWh, the power rate is 0.61 RMB/ prove the combustion efficiency of the fuel. kWh, the annual electricity cost is 7,920,000 kWh×0.61

36 | CHINA Energy Efficiency Series RMB/kWh = 4,831,200 RMB. As a result, the oxygen-en- Energy-saving effect. By applying the regenerative com- riched combustion technology can generate a cost saving bustion technology to the steel rolling heating furnace, of 13,689,600 RMB - 4,831,200 RMB = 8,858,400 RMB for it is feasible to cool of the high-temperature flue gas the enterprises through energy efficiency improvement. discharged from the heating furnace to below 150°C, thus achieving a heat-recovery rate of 85% or above and Case 2. A cement plant introduces a technical innovation an energy-efficiency rate of 30% or above. It is feasible to its 3000 ton/day production line by using membrane to preheat air and coal gas to 700 - 1000°C and reduce rich oxidation combustion-supporting technology, with the oxidation burning loss, so that the rate of loss is less a total project investment of RMB 3.85 million and the than 0.7%. By preventing poor-oxygen combustion, this power of the oxygen-producing equipment being 412 technology can greatly reduce the NO in flue emissions kW. When the energy use during the three months prior x by more than 40%. In addition, thanks to its outstanding to the introduction of oxygen enrichment is compared energy-efficiency improving effect, emissions of CO can with the energy use during the 50 days after oxygen en- 2 be reduced by 10%-70%. In the heat-storage mode, the re- richment is used, the average energy efficiency improve- generative combustion technology can realize the maxi- ment exceeds 5.0%. This leaves to an annual coal saving of mum recovery of waste gas heat generated by the heating 130,000×5% =6500 tons; at a coal price of 600 RMB/ton, furnace and preheat the combustion-supporting air and this leads to a reduction in coal costs of RMB 3.9 million. coal gas to a high temperature, thus greatly improving the The annual power consumption cost of the equipment is heat efficiency of the heating furnace, leading to a 10% RMB 1.3 million. Hence the enterprise can obtain a eco- - 15% increase in production efficiency. In addition, the nomic benefit of RMB 3.9 million – RMB 1.3 million = low calorific value fuels (such as blast furnace gas, gene- RMB 2.6 million from energy efficiency improvement by rator gas, low calorific value solid fuels and low calorific using oxygen-enriched combustion technology. value liquid fuels) may achieve a higher temperature of Prospect of promotion. Since the cement industry has combustion with the aid of high-temperature preheated just started using oxygen-enriched combustion technolo- air, so that the application range of low-calorific value gy, the market penetration rate of this technology is less fuels is enlarged. than 1% at present, but it can be improved to about 10% Technical economy. Project case. A steel rolling heating by 2020, to 30% by 2030 and to 50% above by 2050. In the furnace with an annual productive capacity of a million glass industry, the penetration rate of oxygen-enriched tons is equipped with regenerative combustion techno- combustion technology is expected to reach 30% by 2020. logy. The total investment of this project is RMB 10.18 (2) Regenerative combustion technology million, including RMB 10 million of construction investment and RMB 0.18 million of interest incurred du- Technical principle. Regenerative combustion techno- ring construction. The project leads to an energy saving logy is a flue gas waste heat recovery technology, with of 10 kgce per ton of steel and can generate RMB 17.09 high-temperature air-combustion technology at its core. million of energy cost saving annually. Applying the re- High-temperature flue gas is used to preheat combus- generative combustion technology leads to increases in tion-supporting air and/or coal gas. When the air-pre- depreciation costs, maintenance expenses management heating temperature reaches 1000°C, air with an oxygen expenses and financial expenses and the total additio- concentration of 2% is combustible; in other word, the nal expenses is RMB 2.3 million and the project’s annual higher the air-preheating temperature, the lower the mi- gross profit is RMB 14.47 million. It is estimated that the nimum oxygen concentration to keep combustion stable. investment payback period of the project (not including When fuels combust in a poor-oxygen environment, the the construction period) is one year, and the financial in- combustion process is a diffusion control-type reaction. ternal rate of return is 107.8%. In comparison with the traditional combustion phenomenon, the distance from the root of the flame to the Prospect of promotion. The penetration rate of this tech- combustion nozzle is reduced, the common flame incan- nology is about 40% by 2010, and its deployment ratio is ex- descence zone disappears, and the volume of the flame pected to reach 70% by 2020, 95% by 2030 and 100% by 2050. zone multiplies and can even expand to the whole hearth. At this moment, the whole hearth becomes a black body 3.1.3 High-efficiency and for high-temperature intense radiation with a relatively environmentally friendly industrial even distribution of temperature (the minimal tempera- boilers ture difference can be reduced to 10°C). As a result, the In 2010, 584,700 boilers were in use in China, the average heat-transfer efficiency of the hearth is significantly im- capacity of boilers had increased from 2.4 t/h before 1990 proved and the NOx emissions can be reduced by dozens to the present 5.8 t/h, and the annual consumption of raw of times, hence energy efficiency and environmental pro- coal is about 640 million tons (450 Mtce), accounting for tection can be achieved. 15% of national total energy consumption (CNIS 2015).

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 37 There are about 490,000 coal-fired industrial boilers, and ciency pulverized coal-fired boilers can achieve high ope- mechanized laminar-burning boilers account for more ration efficiency and low emissions. than 70% of the capacity of all coal-fired industrial boi- Energy-saving effect. The new type of high-efficiency lers. 60% of the laminar-burning boilers are chain-grate pulverized coal-fired boiler technology can achieve a coal boilers, the major type of industrial boiler combustion combustion rates of 98% and boiler heat efficiency rates equipment. of 90% or higher, thus 30% less coal use than traditional Through efforts over many years, the energy efficiency le- coal-fired boilers. By using the new type of high-efficien- vel and emissions index of China's industrial boilers have cy pulverized coal-fired boiler technology, it is feasible to gradually been improved, but there are still gaps with save the annual fuel costs by more than 20% against the the corresponding values in the developed countries. The usual coal-burning boiler technology and by more than average operating efficiency of China's coal-fired indus- 70% against the oil-burning boiler technology. In addi- trial boilers is 65% - 70%, 10 - 20% lower than the most tion, the emission of smoke dust (TSP) is less than 20 mg/ 3 3 advanced international level, and the emissions of pol- Nm (the national standard is 100 mg/ Nm ), and the SO2 lutants remain high. In 2012, industrial boilers emitted emissions are less than 500 mg/Nm3 (the national stan- about 4.1 million ton of smoke dust, 5.7 million tons of dard is 900 mg/ Nm3). Various technical indicators have sulfur dioxide, and 2 million tons of nitrogen, accounting reached advanced international levels. for 32%, 26% and 15% of total national emissions respec- Technical economy. In spite of a slightly higher unit price tively. (due to the necessity to turn coal into pulverized coal), For a very long period into the future, coal-fired indus- high-efficiency pulverized coal-fired boilers still have trial boilers of medium-to-large capacities (unit set steam better technical economy that traditional coal-burning output ≥ 10t/h) will continue being widely used in China. boilers due to their higher combustion efficiency and However, coal-fired boilers produce serious environmen- heat efficiency. According to tests conducted by the Coal tal pollution. With the changes in energy supply struc- Science Research Institute, to generate a ton of steam, ture and the increasingly strict requirements for energy the pulverized coal-fired boiler only requires 111 kg of saving and environment protection, the development pulverized coal, while the traditional chain-grate boiler and use of natural gas will speed up and small coal-fired requires 188 kg. If unit set operation efficiency is 20t/h industrial boilers will be removed from central urban and the annual operation duration is 6000 h, the annual areas. Some boilers using clean combustion technology, fuel cost for the operation of pulverized coal-fired boilers such as circulating fluid bed boilers, will witness high- is RMB 14.66 million, much less than the RMB 18.11 mil- speed development. Gas-fired boilers will see rapid ex- lion for traditional chain grate boilers. pansion, while the boilers combusting domestic garbage Prospect of promotion. At present, the market share of and biomass enjoy enormous market potential. There- high-efficiency pulverized coal-fired boiler systems is less fore, the high-efficiency, energy-saving and low-pollution than 1%. Assume these boilers can replace 20,000-30,000 industrial boilers based on clean fuels and clean combus- sets of existing small and medium-size coal-burning boi- tion technologies will represent the development trend lers (average capacity 6 t/h) and that boiler hot efficien- of industrial boilers. cy is improved by about 25%, it can help China save 9 million tons of coal consumption each year, reduce 0.5 (1) High-efficiency pulverized coal fired boiler million tons of SO2 emissions, reduce 50,000 tons of dust Technical principle. Pulverized coal-fired boilers are sus- emissions, and greatly reduce the emissions of inhalable pension combustion boilers using coal dust as their fuel. particles, thus producing significant energy-efficiency In these boilers, the hearth is a large enclosure with wa- and environmental benefits (Fan 2012). The penetration ter-cooled hearth fireplace walls. After mixed with air rate of this technology in industries is expected to reach through the spray burner, pulverized coal (particle dia- 10% by 2020, 25% by 2030 and 35% or above by 2050. meter of about 0.05-0.1 mm) is sprayed into the hearth for combustion. The combustion of pulverized coal is (2) Coal water slurry boiler divided into a preparation stage prior to ignition, a com- Technical principle. The coal water slurry boiler uses coal bustion stage and an after-combustion stage. Based on water slurry as a fuel for combustion. Coal water slurry such advanced technologies as concentrated preparation is a new coal-based liquid fuel, in which coal accounts for of pulverized coal, precision powder supply, air-staged 70%, chemical additives for about 1% and water for the combustion, in-furnace desulfurization, boiler shell (or rest. Coal water slurry can be stored in the same manner water tube)-type boiler heat exchange, efficient bag-type as petroleum, can be transported through pipelines and dust removal, flue gas desulphurization and denitrifica- has the performance of highly efficient combustion. In tion, as well as an entirely automatic control, high-effi- addition, it is characterized by fewer emissions, good sa-

38 | CHINA Energy Efficiency Series fety features, strong stability and lower prices. As an ideal tons per year. Based on an oil substitution quantity/ coal alternative fuel that can replace oil and coal, coal water substitution quantity ratio of 1:9, it is estimated that, slurry can be extensively used in civil and industrial boi- by 2015, 2020 and 2030, annual coal water slurry use will lers and is an internationally recognized clean-coal fuel. reach 55 million tons, 80 million tons and 130 million China has completed engineering tests and production tons respectively and the annual oil savings will be 2.2 operations on the use of coal water slurry for combustion million tons, 3.2 million tons and 5.2 million tons. The an- in multiple types of boilers and furnace kilns, including nual SO2 emission reductions will be respectively 201,300 industrial boilers, power plant boilers and industrial fur- tons, 292,800 tons and 475,000 tons; the annual cost sa- naces (steel rolling heating furnaces, annealing furnaces, vings will reach RMB 8.84 billion, RMB 12.85 billion and calcination furnaces, tunnel-drying furnaces, ceramic RMB 20.86 billion (Liang et al. 2012). spray-drying tower hot-blast furnaces, and tunnel-sintering kilns for brick manufacture and ceramic wares) (Liu 3.1.4 Optimization of process route 2014). and optimization of energy use mode The innovation of production processes and the substi- Energy-saving effect. A coal water slurry boiler can tution of fuels belong to solutions for energy efficiency achieve even efficient utilization of coal resources, so improvement in the broad sense. Since these measures that the heat efficiency of the boiler system can reach 85% can fundamentally change the efficiency of energy utili- or above, and the burn-off rate 97% or above. By using a zation in industrial production, they constitute another coal water slurry boiler instead of a traditional coal-fired important field for improving industrial energy efficien- steam boiler, it becomes feasible to reduce coal consump- cy in the future. For example, when the short process of tion. Furthermore, with respect to environmental pro- electric furnace steelmaking is used to replace the long tection, since coal water slurry contains about 30% water process of converter steel-making, energy consumption content, the combustion temperature of slurry is lower for producing a ton of steel can be reduced by more than than the pulverized coal flame temperature by 150°C; 70%. And when a natural gas boiler is used to replace the The water vapor in coal water slurry generates a produ- traditional coal-burning boiler, energy efficiency can be cing action in the combustion process and thus reduces improved by nearly 30%, and pollutant emission can also NO into N components, so that exhaust emissions of X 2 be significantly reduced. nitrogen oxides are greatly reduced. According to actual findings, the emissions of smoke dust, sulfur dioxide and (1) Use short-process steel-making to replace long- nitrogen oxides discharged from coal water slurry boiler process steel-making are only 70%, 15% and 39% respectively of the emissions discharge from the traditional coal-burning boiler (Yi et Steel production uses two types of basic process flows. al. 2012). The first type is the blast furnace - converter - hot rolling - deep processing flow, with iron ore and coal as raw Technical economy. Many scholars have conducted com- materials, called the long process flow. The second type parison analysis on coal-fired steam boilers and coal wa- is the electric furnace - hot rolling - deep processing flow ter slurry steam boilers in terms of their economic effi- using steel scrap as raw material, called the short process ciency. The results indicate that to produce the same scale flow. For the production of 1 ton of crude steel using the of steam, and taking such costs as fuel, labor, operation short process instead of the long process, it is possible to and maintenance into comprehensive consideration, coal save 1.3 tons of fine iron powder, reduce energy consump- water slurry steam boilers have an annual costs 10-15% tion by 350 - 450 kg coal equivalent (an energy saving of than traditional coal-fired steam boilers. If the economic 74%) and reduce emissions of carbon dioxide by 1.4 ton benefits of pollutant emissions reduction are also taken or 58% (China Iron and Steel Association 2015). Further- into consideration, the economic benefits of coal water more, 80% of energy resources consumed in long-process slurry boilers will be even more significant (Liang et al., steel-making are coal resources, while the energy resource 2012). Furthermore, coal water slurry boilers have high consumed in short-process steel-making is entirely elec- combustion adjustability, are simple and convenient to tric power. Therefore, the increase in the steel-scrap use control, can realize stable combustion under low load, scale is important in saving resources, reducing energy and are even suitable for operating conditions characte- consumption, including coal, reducing the consumption rized by load fluctuation. of raw materials, decreasing environmental pollution, cutting the costs and increasing employment. Prospect of promotion. Given the increase in energy demand and the increasingly strict requirements for envi- Sources of steel scrap include staple commodities such ronmental protection, it is estimated that the installed as spent automobiles, spent machineries, obsolete ves- capacity of coal water slurry use will increase 5 million sels and waste appliances, the cutting steel scrap from

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 39

3-15). DueFigur toe 3‑15.continuous The available industrialization quantity and development,consumption of available steel scrap steel in China scrap in resources 2000-2030 will and constantly relevant increase, reachingpredictions 250 million tons in 2020 and exceeding 300 million tons in 2030.

Available quantity Consumption of of steel scrap steel scrap

Data source: World Steel Association Report on the Energy Efficiency Potential in the Utilization of Steel Scrap (2012) Figure 3-15. The available quantity and consumption of steel scrap in China in 2000-2030 and relevant predictions machining processes in machinery manufacturing and a long period of time.7 As the major equipment for in- Data source:self-made World steel Steel scrap Association such as top cropsReport and on tank the bottomsEnergy Efficiencydustrial coalPotential consumption, in the Utilization industrial of boilers Steel andScrap kilns, (2012). produced in steel mill production. In the future, the gene- which are small in scale and widely scattered, result in ration and utilization quantities of domestic steel scrap low energy efficiency and high environmental pollution. With thein increaseChina will in be available closely related quantities to the domestic of steel steel scrap, pro prices- for it will fall, which is favorable to increasing the The terms ‘coal-to-gas’ and ‘coal-to-electricity’ refer to the duction level, the mean life of steel products and the ef- proportion of electric furnace steel output and optimizingutilization the process of natural route gas for and steel electricity production. to replace In 2014, coal the fective planning of scrap recovery. The World Steel Asso- proportion of China's electric furnace steel yields was 12%. consumption.This value is They expected are both to importantincrease toapproaches about 16% to re -- 18% ciation has estimated the available quantity of steel scrap ducing the end-use of coal and thus reduce environmen- by 2020,and reach scrap 25% consumption - 30% by in 2030China and in the 40% future or above(as shown by 2050. tal pollution. For example, SO , NO and dust emissions in Figure 3-15). Due to continuous industrialization de- 2 x discharged from gas-fired boilers are respectively 1.7%, velopment, available steel scrap resources will constantly 15.8% and 8.7% of the emissions from coal-burning boilers increase, reaching 250 million tons in 2020 and exceeding (2) Promoting coal-to-natural gas and coal-to-electricity fuel(Chinese switch Academyprojects of Sciences, 2012). The pollutant emis- 300 million tons in 2030. sions from natural gas combustion are remarkably lower In developedWith the countries, increase inthe available proportion quantities of coal of consumptionsteel scrap, than in industrial coal combustion. end energy Electric use boilersis generally hardly 10% generate or even lower. Inprices contrast, for it will coal fall, has which thus is far favorable played to contributed increasing the the majorityany pollutant of China's emissions industrial in their use; energy they also consumption, enjoy such the proportionproportion of coal of use electric remaining furnace at steel 50% output or above and foroptimi a long- multiple period ofadvantages time.7 As as thesmall major space equipment requirements, for noise- industrial zing the process route for steel production. In 2014, the free performance, high heat efficiency, and simplicity in coal consumption,proportion of industrial China's electric boilers furnace and steel kilns, yields which was 12%.are smallinstallation, in scale operation and widely and maintenance.scattered, result in low energy efficiencyThis and value high is environmentalexpected to increase pollution. to about 16% - 18% by Existing projects have proved that the fuel switch from 2020, reach 25% - 30% by 2030 and 40% or above by 2050. The terms ‘coal-to-gas’ and ‘coal-to-electricity’ refer to the coalutilization to natural of gasnatural in the gas ceramic and andelectricity glass industries to replace can coal produce outstanding environmental benefits and can im- consumption.(2) Promoting They are coal-to-natural both important gas approachesand coal-to- to reducing the end-use of coal and thus reduce environmental electricity fuel switch projects prove product quality and technological level. Therefore, pollution. For example, SO2, NOx and dust emissions dischargedit is necessary from to gaspromote-fired coal-to-gas boilers aretechnology respectively upgrade 1.7%, In developed countries, the proportion of coal consump- in these industrial sectors. For example, a glass plant lo- 15.8% andtion in8.7% industrial of the end emissions energy usefrom is generally coal-burning 10% or boilerseven (Chinese Academy of Sciences, 2012). The pollutant emissionslower. from In naturalcontrast, gas coal combustion has thus far areplayed remarkably contributed lower than coal combustion. Electric boilers hardly generate any pollutantthe majority emissions of China's in theirindustrial use; energy they alsoconsumption, enjoy such 7 The multiple coal consumption advantages mentioned as here small includes space the requirements, consumption ofraw the proportion of coal use remaining at 50% or above for coal, cleaned coal, other washed coal and coke.

7 The coal consumption mentioned here includes the consumption of raw coal, cleaned coal, other washed coal and coke. 40 | CHINA Energy Efficiency Series 49 cated in Xingtai City, Hebei Province, has switched from duction were 70% or even lower. In addition to serious coal to natural gas; as a result, its annual coal consump- excess capacity in traditional industries, in recent years tion is reduced by nearly 65,000 tons, emissions of sulfur some emerging industries, such as solar PV and LED, are dioxide by 275 tons, emission of nitrogen oxides by 190 also increasingly facing excess capacity issues, which will tons, and emission of smoke dust by nearly 32 tons. Fur- inevitably result in decreases in profit rates for industries thermore, this glass manufacturer also uses natural gas to and enterprises, while low-level price competition will produce glass ceramics with high added values. The mar- cause a decline in the overall benefits of industrial deve- ket price of glass ceramics is tens of times that of ordi- lopment. nary glass.8 In the future, natural gas use will become an In fact, the excess capacity problem in China is a ‘struc- even more attractive option due the reform of gas pricing tural issue’, namely the excess productive capacity of mechanisms and stable supplies of natural gas, coal-to- low-quality products, with supply far exceeding market gas technology switch will become a strategic option for demand (see Figure 3-16). On the other hand, the mar- the low-carbon development of industry which is both ket increasingly demands for high-quality and high va- feasible and profitable. lue-added products, which are in seriously short supply. The coal-to-electricity technology switch involves an Therefore, China has to rely on imports to meet market induction heating technology used for metal materials, demand. For example, China's steel production accounts featuring high heating efficiency, high heating speed and for nearly half of the world total, but the Chinese steel low energy consumption. Furthermore, electric heating industry mainly produces low-quality products. Due to can realize the automatic and remote control of tempe- excess competition, the profit margin of these ordina- rature, and therefore enjoy extensive application poten- ry steel products is very small. In contrast, high value- tial in many industrial sectors. For example, in heating added steel products enjoy high selling prices and profits. furnace equipment with low temperatures and moderate However, for technical reasons, the domestic production heating volumes in the building materials sector, coal-to- of high value-added steel products is very small, therefore electricity technology upgrade can remarkably improve China has to import such products from Japan and Ger- the heating efficiency of furnaces as well as the finished many at high prices. product ratio and quality of products, generating enor- The primary tasks with which energy-intensive industries mous economic benefits. It is worth mentioning that, if will be confronted in the future include ‘de-capacity’ and heat-accumulating electrical boilers are used to replace transformation. ‘De-capacity’ is a painful process that in- coal-burning boilers, it can convert electric power into dustries and enterprises have to undergo to eliminate the heat energy for storage in time of low power load and excessive capacity. The low-quality and low value-added benefit from low power prices during low-load periods, production capacities have to be eliminated in order to so as to achieve the ‘win-win’ results of both economic make capital, labor and land available for enterprise deve- benefits and social benefits. lopment. Meanwhile, to remove the market gaps caused by structural surpluses and shortages, enterprises will 3.2 High impact have to attach greater importance to investment in R&D and analysis of market demand, expand their product opportunities in mixes towards the high end of the industry chain and industrial structure both ends of the ‘Smile Curve’, and adjust and upgrade optimization their product structure in response to market changes. 3.2.2 Industrial ‘eco-link’ 3.2.1 The ‘de-capacity’ and development mode transformation of energy-intensive industries Apart from promoting advanced energy-efficiency technologies, developed countries are also making efforts Under the combined actions of periodical, structural and to explore the social outreach effects of industrial en- systematic factors, China's excess production capacity terprises, open up the physical boundaries of industrial problem has started to spread from traditional industries plants, and establish ‘eco-links’ with different sectors and to emerging industries. Statistics indicate that in 2014 the fields within the whole of society. One concrete measure average utilization rate of industrial productive capacity is recovering the residual heat, residual pressure and ex- was only 75%, the lowest level since 2009; the capacity cess materials generated in the production processes of utilization rates for crude steel, cement and coke pro- industrial enterprises and using them in the household living and commercial fields, thus achieving the savings 8 The marketing price of common glass is less than 10 RMB/m2, while that of of energy and resources at a greater, broader and higher glass ceramics is up to 280 RMB/m2. level.

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 41 Figure 3‑16. The capacity utilization rates of major energy-intensive industries (2014, %)

Production capacity utilization rate 100.0% Coal 70.4% coke 70.0% 90.0% Iron & stee 70.9% 80.0% Aluminium 78.6% 70.0% Cement 68.8% 60.0% Flat glass 58.7% 50.0% Oil refinery 77.3% 40.0% Ethylene 73.5% 30.0% Amonia 77.0% 20.0% Caustic sod 75.0% 10.0% Productioncapacity utilisation rate Soda ash 76.2% 0.0% Methanol 55.0% Calcium 62.1% Solar PV un 72.9%

数据来源：王庆一，能源数据2015 Data source: Qingyi WANG, ‘Energy data 2015’ FIG 3.16

If the boundaries of industrial enterprises can be opened wastes are sent to the decomposition furnace for com- up and an industrial ‘eco-link’ established in accordance bustion; the combustible wastes can replace some fuel with the characteristics of the participants, the indus- consumption. The advantages of this method are that, trial energy efficiency improvement will develop from due to the high temperature, alkaline environment, high individual enterprise's optimum effect to society's overall thermal intensity and long duration of combustion in a optimal effect, genuinely achieving the ‘best use of eve- cement rotary kiln, using the cement kiln to co-process rything’. As shown in Figure 3-17, in the entire social ‘eco- domestic garbage can avoid the generation of dioxin. In link’ system, large quantities of low-temperature waste addition, the incineration ashes to be used as feed-pro- heat generated by steel enterprises in the production proportioning materials enter the cement clinker through cess can be used for the space heating of nearby residen- calcination, or else are used as blending materials mixed tial and commercial buildings, while coke-oven gas is an into the cement product. By using cement kilns for the ideal raw material for nearby chemical enterprises. Many incineration of urban domestic garbage and the co-pro- waste materials and wastes generated in paper-making cessing of hazardous wastes, it is feasible not only to and the chemical industries can be used in agriculture. make full use of the heat value of garbage to replace coal The social outreach effects of cement factories are signifi- combustion, but also to address the problem of garbage cant, since the wastes generated by such sectors as power disposal. For the future, this technology will be an impor- generation, steel, coal and chemical engineering can be tant direction in the transformation and development of used for the production of cement. On the other hand, cement enterprises. cement kilns can be used to treat municipal wastes and Energy-saving effect. As compared with other methods sludge; hence the industrial eco-link development mode for processing wastes, the use of cement kilns for co-pro- is superior to traditional processing methods such as cessing domestic garbage and different kinds of waste has waste incineration in terms of cost benefits and environ- advantages in terms of energy-saving, environmental pro- mental effects. Since this mode of development for city tection and economic efficiency. Rough calculations show and industry integration and construction of the compo- that if a new or existing cement production line is used site factory can not only improve the efficiency of energy for co-processing garbage, investment in this solution is utilization and the economic efficiency of products in a lower than investment in building new waste incineration broad sense, but also address such problems of urban de- power plants at the same waste processing scale. Further- velopment as garbage and sewage treatment to a conside- more, domestic garbage can replace some of the raw ma- rable extent, there will be more space for its development terials and fuels used in cement production. For example, in the future. Anhui Conch Cement Company located in Tongling has Technical principle. The technical principle for using ce- built a 5000t/d cement clinker production line based on ment kilns to co-process combustible waste is not com- garbage combustion. With a daily capacity of burning 300 plex. After garbage preprocessing, the waste is sorted or - 600 tons of garbage, this cement clinker production line the heat generated by different types of garbage incine- can save 13500 - 27000 tce of energy use annually (the exact rator (including gasifiers) is used and the combustible quantity depends on the heat value of garbage).

42 | CHINA Energy Efficiency Series Figure 3‑17. Industrial ‘ecological linkage’ development mode

Agriculture City Methane biomass fuel

Metallurgical slag Low Low temperature temperature waste heat waste heat

Red mud Ammonium- Steel sulfate

Hydrogen from coke furnace Lubricating oil Petrochemical Metallurgical silt Steel slag FGD FGD gypsum gypsum Red mud and Building tailings in materials Biomass fiber dressing and smelting White mud Nitrogen, Nonferrous phosphonium Coal ash, FGD Paper- metal and potassium Fly ash gangue gypsum and making compounds slag Pulping waste liquor

High Al-containing, aluminum powder coal ash Chemical Electric High power temperature stream

Technical economy. Since different garbage-combustion pacity is 636.51 RMB/ton; the electricity consumption for based cement production lines have their own features the processing is 29.91kwh/ton; the unit cost of garbage and the garbage can also vary, their investment requi- processing is 74.04 RMB/ton; and this project can save 3 rements and economic returns are also different. One hectares of land for waste landfilling each year. example is the Tongling Conch Cement. This project is Prospect of promotion. Compared with the other ways of based on the dry-process cement clinker production line waste disposal, using cement kiln co-processing to com- of Tongling Conch Cement Company, which has a daily bust domestic waste has advantages in terms of energy cement production capacity of 5000 tons; it has a daily efficiency, environmental protection and economic re- garbage processing capacity of 600 tons and an annual turns. It can partially replace the fuel and raw materials processing capacity of up to 0.2 million tons. This project required for cement production, reduce the consumption was started in October 2008 and was officially completed of natural mineral resources, help the low-carbon deve- and put into service in 2010, with a total project invest- lopment of the cement industry, and save the land use for ment of RMB 160 million. The total cost of processing a garbage disposal and land filling. Therefore, using cement ton of garbage is RMB 200, and the enterprise can obtain kilns for the co-processing of domestic garbage and va- allowances worth RMB 190 from the local government rious wastes is an internationally accepted approach for for the combustion of each tone of garbage. Based on a garbage disposal. At present, the penetration rate of the daily garbage-processing capacity of 300 tons, this pro- cement kiln co-processing of domestic waste is only 1%, ject can save 13500 tce of energy comsuption annually. but it is expected to reach 10% by 2020, 25% by 2030 and Another example is the Jiangsu Liyang Tianshan Cement 45% or above by 2050. Plant. The Liyang Domestic Garbage-Processing Project can process 450 tons of urban domestic garbage daily and 3.2.3 Emerging disruptive has an annual processing capacity of 164,300 tons. Sinoma technologies International Engineering Co., Ltd and Xinjiang Tians- han Cement Co., Ltd are joint investors of this project. At present, the whole world is planning a new industrial For this project, the investment in garbage-processing ca- revolution based on artificial intelligence, digitization

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 43 and networking. Disruptive technologies represented and energy sources. Through system integration and the by 3D printing, industrial robots and cloud computing development of embedded software, China's industrial will not only change the modes of industrial production sectors will optimize the production links or manage- and the forms of industrial organization, but also create ment modes of enterprises, realize the automation and industrial sectors with significant opportunities for im- integration of design and production, shorten the pro- proving the efficiency of energy and resource utilization. cess flows and improve production efficiency. Accordin- gly, the efficiency of resource and energy utilization in Driven by revolutionary technical breakthroughs in such relevant industries will be significantly improved, while fields as the Internet, information communication and progress with the transformation from traditional indus- transfer, and intelligent control, information network tries to modern, intensive and efficient industries will be technology and traditional manufacturing industries greatly promoted. have achieved mutual penetration and in-depth fusion. The changes in production modes, including material additive manufacturing and digitized embedded pro- 3.3 Analysis of the energy- duction, will produce active influences on industrial sec- saving potential of HIOs tors for improving product quality and reducing energy consumption. On the one hand, intelligent and refined Under the Reference Scenario, in 2050, industrial final industrial production greatly save the consumption of energy consumption will exceed 2.6 Gtce. However, un- energy and raw materials and improve the utilization der the Intensified Energy Conservation Scenario, final efficiency of energy. For example, the ‘material additive energy consumption will be only 1.3 Gtce, 15% lower than manufacturing’ mode represented by 3D printers can re- the level of 1.5 Gtce recorded in 2010. The industrial sec- duce raw material consumption by 80% and even realize tors will reach leading global levels in terms of energy and zero waste production. Cyber-physical systems (CPS) resource efficiency, intelligent manufacturing and pollu- can change the production environment in real time and tant disposal capacity. As shown in Figure 3-18, among achieve the optimal matching of conditions such as tem- the ‘high impact opportunities for energy efficiency’ in perature, humidity and pressure in industrial processes. the industrial sector, four are technology-based opportu- On the other hand, the most important function of the nities, namely waste heat recovery, advanced combustion/ new industrial revolution is to realize the large-scale pro- calcination, high-efficiency and environmentally friendly duction of individualized products. ‘Personally tailored’ boilers and process-route optimization, will have combi- products will replace mass products manufactured on ned energy-saving potential of 580 Mtce. Three HIOs are streamline. This means that the competitiveness and structure-based opportunities, namely de-capacity and added values of end products will be substantially impro- transformation development, industrial eco-link and the ved, while significant increases in economic efficiency in application of disruptive technologies, will have a combi- energy utilization will also be achieved. ned energy-saving potentials of 490 Mtce. In conclusion, In 2015, the Chinese government issued ‘Made in China in the future implementation of energy saving actions, 2025’, which specified the dominant position of industry the industrial sectors should attach equal importance in the nation’s future economy and established a vision to both technology-based and structure-based energy- for industrial transformation and development and for saving opportunities. While promoting advanced tech- adapting to and leading the world’s new industrial re- nologies and equipment to improve energy efficiency, volution. In order to achieve transformation and deve- the industrial sectors should also devote more efforts to lopment and further improve energy efficiency, China's industrial structure adjustment and product structure industrial sectors are expected to make full use of the optimization, as well as to improvement in production technological dividends released from the Internet, big processes and modes of industrial development, so as to data and cyber physical systems. With the support of improve social benefits. new technologies such as information, communication and intelligent control, China's industrial sectors should pursue fundamental transformations in industrial pro- 3.4 Policy duction modes and organizational forms, realize the recommendations transition from local single-point processes to systematic optimization to entire process flows, and ‘leapfrog’ deve- Although many energy-efficiency technologies have good lopment. By applying precision control and automation investment returns, they have failed to receive enough at- technologies, China's industrial sectors will promote the tention or to achieve the anticipated penetration rates. standardized and procedure-based management of pro- The penetration rates of advanced energy-efficiency duction processes, improve production quality, reduce technologies are still plagued by the obstacles of systems defect rates, and thus reduce the waste of raw materials and mechanisms, in addition to asymmetric informa-

44 | CHINA Energy Efficiency Series manufacturing and digitized embedded production, will produce active influences on industrial sectors for improving product quality and reducing energy consumption. On the one hand, intelligent and refined industrial production greatly save the consumption of energy and raw materials and improve the utilization efficiency of energy. For example, the ‘material additive manufacturing’ mode represented by 3D printers can reduce raw material consumption by 80% and even realize zero waste production. Cyber-physical systems (CPS) can change the production environment in real time and achieve the optimal matching of conditions such as temperature, humidity and pressure in industrial processes. On the other hand, the most important function of the new industrial revolution is to realize the large-scale production of individualized products. ‘Personally tailored’ products will replace mass products manufactured on streamline. This means that the competitiveness and added values of end products will be substantially improved, while significant increases in economic efficiency in energy utilization will also be achieved.

Box 1. Material additive manufacturing: 3D printing technology Introduction Topic: energy demand reduction through material efficiency improvement Company: General Electric (GE Aviation and GE Healthcare) Region: United States Sector: manufacturing Year: 2014

Summary. Box 1. Material additive manufacturing: 3D printing technology 3D printing or additive manufacturing is the manufacturing of an object by adding ultrathin layers of Introduction shown strong growth in adopting 3D printing techno- materials. Currently it is in the transition stage, moving from rapid prototyping to high-value Topic: energy demand reduction through material effi- logies. . manufacturing. In particular, the aerospace and medical implants industries have shown strong ciency improvement General Electric (GE) has established a full-scale ad- Company:growth General in adopting Electric 3D (GE printing Aviation technologies. and GE Heal - ditive manufacturing facility in Cincinnati, Ohio, thcare) General Electric (GE) has established a full-scale United additive States. manufacturing Overall, more facility than 300 in 3D Cincinnati, printing ma - Region: United States chines have been deployed in GE's facilities. GE Avia- Sector:Ohio, manufacturing United States. Overall, more than 300 3D printingtion is exploringmachines the have use beenof 3D deployedprinting on in titanium,GE's Year:facilities. 2014 GE Aviation is exploring the use ofaluminum, 3D printing and nickel-chromium on titanium, aluminalloys. Itum, plans and to use Summary.nickel-chromium alloys. It plans to use 3D-printed 3D-printedfuel nozzles fuel on nozzles its newest on its aircraft newest engine aircraft (the engine 3D printing or additive manufacturing is the manufactu- (the CFM LEAP engine) by 2016. By 2020, GE Avia- ringCFM of an objectLEAP byengine) adding by ultrathin 2016. layersBy 2020, of materials. GE Aviation tion is isexpected expected to to manufacture manufacture 100,000 additive additive parts Currentlyparts it through is in the 3Dtransition printing. stage, In moving addition, from GE rapid Healthcare through is 3D manufacturing printing. In addition, 3D-printed GE ultrasound Healthcare is prototyping to high-value manufacturing. In particu- manufacturing 3D-printed ultrasound transducers and transducers and probes for use in ultrasound machines. lar, the aerospace and medical implants industries have probes for use in ultrasound machines.

Left: LoadingLeft: metal Loading foil to metalan additive foil tomanufacturing an additive weldingmanufacturing machine welding(source: Fabrisonic) machine (source: Fabrisonic) Right: Prototypes ofRight: brackets Prototypes for airplane of enginesbrackets (source: for airplane MIT Tech engines Review) (source: MIT Tech Review) BenefitsBenefits • Material savings: -500 kg of potential reduction in weight of a single aircraft engine; possibly up to 90% in reduction of material needs 54 • Energy savings: 75-98% energy savings • Co-Benefits: reduced time in manufacturing and increased flexibility Challenges • Achieving cost-effectiveness and economies of scale. • Ensure product resilience • Meet quality and safety standards • Protect intellectual property rights

tion, high technical thresholds and the reluctance among 3.4.1 Widen the channels for enterprises to accept new technologies. Therefore, ad- enterprises to acquire information dressing such problems through innovative and market- and examples of the application of oriented policy measures is urgently needed. energy-efficiency technologies With the in-depth promotion of energy efficiency, general energy-efficiency technologies have basically been saturated and the ‘low-hanging fruit’ are gathered. In the future, enterprises will face increasing difficulties in carrying out energy-efficiency actions, and there will be higher requi-

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 45 2050 - Ref. Scenario Waste heat recovery Figure 3‑18. Potential assessment of major energy efficiency opportunities by 2050

High efficiency 3000 160 200 178 2500 120 230 2050 IEC Scenario 2000 0

1500

1000

500

0 2010 2050 - Ref. Waste heat Advanced High efficiency Process route De-capacity Industrial Subversive Other technical 2050 IEC Scenario recovery combustion adjustment and ecological technical measures Scenario calcination transformation linkage revolution development

rements for talent, technologies and information. In re- turers, energy-efficiency service companies, energy-using cent years, the Chinese government has implemented a enterprises and relevant market service agencies, perfect series of policy measures to support enterprises in energy the energy-efficiency information exchange mechanism, efficiency improvement, including publishing a catalogue and regularly publish information on the applications of of energy-efficiency technologies, educating energy ma- advanced energy-efficiency technologies both abroad and nagement talent for enterprises, implementing energy- at home among enterprises engaged in similar business efficiency benchmarking actions and promoting energy activities or of the same industry. management systems, which have all played a certain role in promoting energy efficiency in industrial enterprises. 3.4.2 Complete the energy-efficiency However, given the increasing difficulties associated with standard system related to energy efficiency improvement, the existing policy mea- production processes, technologies sures are gradually losing their effects and even becoming and equipment disconnected from the demands of enterprises. After over ten years of efforts in energy-efficiency im- Recommendation: improve policies for energy efficien- provement, China's industrial energy efficiency has been cy-related information services. Organize comprehensive substantially improved, but the potential tapping also assessment on the efficiency and energy-efficiency bench- creates pressures and challenges to the continuous de- marking actions, regularly amend and update the cata- velopment of energy efficiency in the future. With the logue of energy-efficiency technologies, encourage and high penetration of routine energy-efficiency technolo- support enterprises in carrying out energy audits, and gies and equipment, the energy-efficiency programs of actively push forward the evaluation and certification of enterprises have gradually stepped into a ‘deep water energy management systems. Promote energy manager area’. Advanced production processes, efficient technolo- systems. Mobilize industry associations, colleges, univer- gies and equipment generally involve higher application sities and scientific research institutions to train specia- thresholds and major uncertainties. In addition, enter- lized talents for energy management for different indus- prises have lowered their ambitions to achieve further tries and at different levels. Implement energy-efficiency energy efficiencies due to the falls in energy prices and top-runner actions and define best energy-efficiency difficult market situations the ‘new normal’ of economic practices. Regularly choose the best enterprise in terms circumstances. Therefore, in addition to promote energy of energy efficiency from the major products and ener- efficiency through information publicity and introduc- gy-intensive industries as the top runner, and set upa tion of examples, it is also necessary to adopt a standard long-term mechanism for improving energy efficiency by mode to encourage, guide and force enterprises to intro- establishing benchmarks for energy efficiency improve- duce advanced and efficient production processes, tech- ment, complete compliance measures and improving en- nologies and equipment. ergy-efficiency standards. Encourage the relevant parties to establish energy-efficiency credit-evaluation systems, Suggestion: Assess the actual progress made by industries energy-efficiency cooperation networks and information and enterprises in energy efficiency improvement and ti- exchange platform. Create platforms for ‘public com- mely update and revise the energy-efficiency standards ments’ and ‘Alipay’ to establish market-oriented evalua- for energy-intensive products. Properly improve the tion systems for energy-efficiency equipment manufac- minimum requirements for energy-efficiency standards,

46 | CHINA Energy Efficiency Series raise the energy efficiency threshold for new energy-in- fic research institutions to make and draw up compre- tensive projects to ensure energy efficiency, environmen- hensive evaluations, instructions, training regimes and tal protection and safety. In accordance with the physi- consultations for major allocations of productive forces, cal conditions of industrial energy efficiency, improve the design of industrial parks and actual production the advanced value of energy-efficiency minimum stan- links between enterprises. Complete the construction dards and use them as an important basis for selecting of infrastructural facilities that are favorable to the op- the ‘top runner of energy efficiency’ and demonstration timal utilization of resources and energy. Devote more enterprises for energy efficiency. Gradually improve the efforts to the construction of logistical transportation standards for the construction and design of enterprises pipe networks related to the recovery of wastes and the in energy-intensive industries. In accordance with the cascaded utilization of energy. production characteristics of different industries, study the application domains, range of advanced production 3.4.4 Establish an institutional processes and high-efficiency environmentally friendly environment favorable to the equipment. In combination with actual cases, gradually optimization and upgrading incorporate them into the standard system of factory of industrial structures and design. Normalize the market order and complete the the improvement of industrial technical standards for the production of energy effi- competitiveness ciency equipment. For innovative and disruptive techni- Optimizing and upgrading the industrial structure and cal equipment, technical standards should be adopted to rebuild competitive industrial advantages are fundamen- ensure the ‘lower limits’ of its energy efficiency, quality tal ways of improving the energy production capacity of and security. industrial sectors and are of great significance in making improvements to the energy efficiency of industrial sec- 3.4.3 Remove the system and tors. In addition, and in response to the rises in labor mechanism barriers across costs and resource and environmental costs, as well as departments and industries increases in international competition, these two mea- The experiences of developed countries indicate that fu- sures are inevitable candidates for readjustment to the ture industrial enterprises will not only act as the ma- industrialization mode. This is a major proposal relating nufacturers of industrial products but also as composite to whether China can carve out a new road to industria- and socialized enterprises. Taking into account the social lization by taking into account speed, quality, scale and benefits of industrial enterprises is not only an important benefits. aspect of achieving energy efficiency in the whole of so- Suggestion: establish market-oriented pricing mecha- ciety, it also provides another ‘rich ore’ for Chinese ener- nisms for production factors in order to guide energy-in- gy efficiency in the future. However, being restricted by tensive industries to ‘de-capacity’ in a market-based way. the existing fragmented administration system, many en- Gradually remove the administrative measures whereby ergy-efficiency measures across departments, industries the government intervenes directly or indirectly in the and even enterprises are proving difficult to implement. configuration of factors of production such as land and Suggestion: strengthen organizational leadership and energy resources, allow the relationship between market establish coordination mechanisms across departments supply and demand and the competitive mechanism to and industries. China should further establish the system determine the prices of factors of production, and in for the recovery of waste resources, establish leadership turn eliminate backward capacities. Reduce unnecessary and coordination mechanisms, make clear who the spe- government regulations, carry out ‘negative list’ mana- cialized agencies and staff are, establish the departmental gement, and exploit the investment channels for social coordination mechanism, and make clear responsibilities capital. Adopt public-private partnerships to guide social in creating joint workforces. Establish and perfect the re- capital to enter the fields of public services and infras- levant standard system for the development of venous tructure construction, and guide social capital to enter industries. Speed up the establishment of relevant stan- such fields as finance, insurance, medical treatment and dards for the recovery of industrial wastes, reclamation education. Encourage R&D and the protection of intel- of wastes and pollutant emissions, and perfect the pro- lectual property. Support the construction of a founda- duct standards for energy efficiency, water conservation tional scientific research capacity, continue to carry out and the comprehensive utilization of resources. Establish key scientific and technological projects, establish an a consulting service system to strengthen technical ins- integrated platform for ‘researching-learning-producing’, tructions regarding the cyclic utilization of resources and strengthen the protection of intellectual property. and energy. Mobilize experts in the relevant fields from Integrate the application of such measures as fiscal subsi- industry associations, colleges, universities and scienti- dies, tax preferences and financing guaranties to support

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 47 the development of tertiary industries, in particular the productive service industry.

References

China Iron and Steel Association, 2015. Research on the control of total coal consumption in steel industry. Chinese Academy of Sciences, 2012. Special research on the causes and control measures for atmospheric haze[M]. 2012. CNIS (China National Institute of Standardization) 2015. White Paper for the Energy Efficiency of China 2014 [M]. 2015. Fan Wei. Development status of industrial pulverized coal boiler industry as well as investment analysis [J]. Clean coal technology. 2012,18(4). Liang Xing, Yan Lili and Xu Yao. Analysis on the status and development direction of coal water slurry technology [J]. Clean coal technology. 2012 volume 18, issue 6. Liu Xiwu. Coal water slurry fired boiler application technology and its market outlook [J]. Construction technology 2014 volume 4, issue 16 Yi Wei, Lang Dongfeng and Wang Jianwei. Prospect of coal water slurry fired boilers [J]. Gansu Water Resources and Hydropower Technology. 2012 volume 48, issue 8.

48 | CHINA Energy Efficiency Series hapter 4c Energy Efficiency Policy and the High Impact Opportunities of the Building Sector in China

Jianguo ZHANG

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 49 4.1 Review of the development of green buildings, and the penetration of high-efficiency electrical appliances, all of which have Achievements and achieved remarkable results. Policies regarding During the 12th FYP period (2011 - 2015), China launched Energy Efficiency a nationwide Green Building Action Programme to open a Improvements in the new era in the development of energy efficient buildings Chinese Building Sector and green buildings. To further improve the energy efficiency level of new buildings, higher energy-efficiency design standards for buildings have been implemented in 4.1.1 Energy Efficiency Improvements an all-round manner for new urban buildings in all parts in the Building Sector of the country. Great efforts have been devoted to the The building sector is an important energy-consuming development of green buildings, so that the total floor sector in China. In 2013, total energy consumption in the area of buildings with a green building label in the whole sector (i.e. commercial energy, exclude biomass energy) country had reached 415 million square meters as of Au- was recorded as 756 Mtce, accounting for about 20% of to- gust 2015. China has also developed eight country-level tal national energy consumption. During 2000-2013, total green ecological urban areas. If the green buildings in energy consumption increased by 2.2 times, indicating a these green ecological urban areas are taken into count, high growth rate. Meanwhile, the floor area of buildings more than 22.34% of new urban buildings had met the re- is huge and continues rapid growth. In 2013, the natio- quirements of the green building standard by the end of nal stock of buildings recorded a floor area of about 54.5 2015 (Han et al 2013). China has completed heat metering billion square meters, with floor area of urban residences, and energy conservation retrofits to approximately 960 rural residences and public buildings of 20.5 billion million square meters of existing residential buildings in square meters, 23.8 billion square meters and 9.9 billion North China where district space heating is compulsory square meters respectively; the floor area of buildings is in urban areas. It has also rolled out the energy efficiency growing at an annual speed of nearly 2 billion square me- supervision system for government office buildings and ters (THUBERC 2015). However, the energy efficiency large-scale public buildings, as well as energy conser- of the Chinese building sector as a whole is relatively vation retrofits to public buildings with high energy low. Among the urban buildings, only one third are en- consumption. Twelve demonstration projects for energy ergy-efficient ones. In addition, requirements in China's conservation retrofits to public buildings have been im- existing standards for energy-efficient buildings are only plemented in major cities, with a total floor area of 44.41 equivalent to the standards in European countries twenty million square meters. Moreover, the government has years ago. On the other hand, due to relatively low energy launched the large-scale application of renewable energy service levels, the energy consumption per capita and the based on buildings, and nominated 97 demonstration ci- energy consumption intensity per square meter of floor ties and 198 demonstration counties for the application area in the building sector are much lower than the those of renewable energy based on buildings. In combination of the developed countries. with rehabilitation of dilapidated housing in rural areas, The energy-efficiency initiative for buildings began in the China has also carried out pilot demonstration projects late 1980s in China, while the overall strategy for energy for energy efficiency in buildings in rural areas, esta- efficiency in buildings have been gradually implemented, blished 842 demonstration pilot counties (county-level with the priorities starting with the easier items, then the cities and districts) for energy efficiency improvement more difficult items, first urban areas, then rural areas, among rural housing, and nominated 825,800 rural house- first new buildings, then existing buildings, first resi- holds as energy-efficient residences (MOHURD 2015). dential buildings, then public buildings, and first in the Almost 100% of the new urban buildings throughout the north of the country (cold and severe cold regions) and country conform to the compulsory energy-efficiency then to the south. Through over thirty years of efforts, standards. During the 12th FYP period (2011-2015), the China has conducted a series of programs to improve residential buildings in the north have generally followed the building design standards, laws and regulations, as the standard of ‘energy saving by 65%’ (Design Standard for well as the organization and administrative systems for Energy Efficiency of Residential Buildings in Severe Cold and energy efficiency in buildings. Compulsory energy effi- Cold Zones, JGJ26-2010), while some regions like Beijing, ciency standards have been established for new buildings, Tianjin, Tangshan in Hebei Province and Urumqi in Xin- government incentives are provided to carry out energy jiang have started to implement a compulsory standard conservation retrofits to existing buildings. Various mea- for ‘energy saving by 75%’. For residential buildings in the sures are put in place to encourage the large-scale appli- hot summer and cold winter zones or the hot summer cation of renewable energy sources based on buildings, and warm winter zones, the revised standard ‘energy sa-

50 | CHINA Energy Efficiency Series ving by 50%’ has been implemented, and for public buil- the 12th FYP period. With an emphasis on the building dings, the standard is ‘energy saving by 50%’. However, envelope improvement, heat supply metering and heat since October 1, 2015, the newly revised Design Standard balance transformation to pipeline networks, northern for Energy Efficiency of Public Buildings has been implemen- China has actively implemented a project called Energy ted in an all-round manner, to improve the energy effi- Conservation and Warm House. During 2011-2014, China ciency of new buildings. By the end of 2014, in the design completed heating supply metering and energy conser- and construction phases of new buildings in urban areas, vation retrofits to residential buildings with an accumu- the implementation rates of the compulsory energy-effi- lated building area of 960 million square meters, thus ciency standards reached 100% and 98.98% respectively. more than fulfilling the objective of 400 million square In the super-large cities, the proportion reached 100%. meters set by the State Council. Heat supply metering China has completed 1,017 demonstration buildings fea- has been also promoted in a comprehensive manner. At turing low or ultralow energy consumption (MOHURD, present, in the north, 116 cities at the prefecture level or 2015). In the first four years during the 12th FYP period, above have introduced metering-based heat pricing and the total floor area of new energy-efficient buildings in charging mechanisms, accounting for 93% of cities at the urban areas is expected to exceed five billion square me- prefecture level or above in this region. By the end of ters, meaning that the accumulated area of energy-effi- 2013, China had increased its floor areas subjected to heat cient buildings in urban areas would exceed ten billion metering to 991 million square meters (MOHURD 2015). square meters, accounting for approximately a third of With windows and doors, external shading and natural the stock of urban buildings. ventilation as priorities, China has carried out pilot projects for energy conservation retrofits to the residential Green buildings are being developed rapidly. Since the buildings in the hot-summer-and-cold-winter regions, as General Office of the State Council issued theGreen Buil- well as regions of hot summer and warm winter. By the ding Action Programme in January 2013, 28 provinces and end of 2013, retrofit project with a total floor area of up to cities in China have issued their on schemes for Green 11.75 million square meters had been completed in these Building Action in accordance with local circumstances regions (MOHURD 2014). to make clear the development objective, key tasks and major measures for local green buildings, and 22 pro- Promote the development of green housing in rural areas. Du- vinces (autonomous regions and/or municipalities di- ring the 12th FYP period, governments at all levels have rectly under the central authority) have published their actively carried out pilot projects on energy conservation own local evaluation criteria for green buildings. Since retrofits to dilapidated rural housing and promoted the 2014, the national requirements for public buildings prefabrication of energy-efficiency buildings in rural such as government office buildings, schools and hospi- areas, thus making new progress in energy efficiency im- tals have to take the lead in meeting the standards for provement of rural buildings. By the end of 2014, fifteen green buildings. As of August 2015, a total of 3,605 pro- provinces (autonomous regions and municipalities di- jects have been awarded the green building label, with rectly under central government administration), inclu- gross building area up to 415 million square meters, in ding Heilongjiang, Jilin and Liaoning, have carried out which there are 3,407 projects with a green building de- demonstration projects of energy efficient buildings in sign label, 198 projects with a green building operation combination with the rehabilitation of dilapidated rural label, 1,469 one-star projects, 1,484 two-star projects, 652 housing, nominated 842 demonstration pilot counties three-star projects. The labels cover 1,745 residential buil- (county-level cities and districts), for building energy dings, 1,833 public buildings and 27 industrial buildings. conservation retrofits to rural housing and supported In 2014 alone, 780 projects were awarded a green building 825,800 farmer households as energy efficiency demons- evaluated label, with a total building area of up to 8,762 tration projects (MOHURD 2015). In the demonstration square meters (MOHURD 2015). At present, except in projects of energy efficiency for rural housing, fabrica- Tibet, projects with green building labels can be found in ted buildings, the integration of thermal insulation with all provinces (autonomous regions and municipalities di- building structure, the fabricated energy-efficient houses rectly under the central government administration) and with compound walls in lightweight steel structures and all the prefecture-level cities under the administration of the structure system of a wall body with EPS cavity mo- Beijing, Shanghai, Tianjin, Chongqing, Jiangsu, Shannxi, dules have been introduced in batches. Local governments Hebei, Zhejiang and Shanxi. In all the prefecture-level have started to identify typical technological packages cities under the administration of Shandong, Henan, Fu- for energy conservation retrofit to rural housing, thus jian, Anhui, Inner Mongolia, Jilin and Guangdong, over promoting the development of emerging enterprises to 50% of the projects are labeled as green buildings. supply rural energy efficiency materials, energy-efficient products and fabricated buildings. At present, more than China exceeded its targets for conducting energy conser- thirty manufacturers are specialized in improving the en- vation retrofits to existing residential buildings during ergy efficiency of rural housing throughout the country.

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 51 China has developed a supervisory and administrative China has also carried out large-scale development of system for the energy efficiency of public buildings, acti- renewable energy in buildings. During the 12th FYP pe- vely carried out energy conservation retrofits to large pu- riod, by following a strategy of ‘project demonstration, blic buildings, and started pilot projects for energy-effi- regional demonstration and all-round promotion’, China cient campuses. During the 12th FYP period, all provinces actively promoted the introduction of renewable energy and cities have collected data on the energy consump- in buildings. Supported by regional demonstrations, this tion, energy audits, published information on public policy has gradually produced scale benefits, and signifi- buildings' energy performance. The governments calcula- cant progress has been made in improving technologies, ted the energy consumption for 213,073 public buildings, policies, labor skills and standards. During the 12th FYP performed energy audits for 12,976 public buildings, pu- period, China also implemented 398 demonstration pro- blished data on the energy performance for 13,656 buil- jects for the introduction of solar PV on buildings, 25 dings, and conducted continuous monitoring of energy provincial-level projects to promote the introduction of consumption for 7410 buildings (MOHURD 2015). In renewable energy in buildings, 97 demonstration cities, addition, 33 provinces and cities have established energy- 198 demonstration counties, 6 demonstration districts, 16 efficiency monitoring platforms for public buildings. Se- demonstration towns and 21 technical R&D and indus- ven provincial level platforms, including those in Beijing, trialization projects. Eight provinces (regions), including Chongqing and Shandong, have been built and passed Jiangsu, Ningxia, Qinghai and Xinjiang, were identified inspection. China has actively carried out energy conser- as comprehensive demonstration zones for the introduc- vation retrofits to large-scale public buildings, focusing tion of solar PV on buildings. As of the end of June 2014, on such key components of energy conservation retrofits the total area of solar PV installed in buildings in urban as heating, air-conditioning, ventilation and lighting,. regions had reached 2.7 billion square meters, the total Through such measures as fiscal subsidies, tax preferences floor area of buildings equipped with shallow-layer geo- and incentive policies for contracted energy management thermal energy had reached 400 million square meters, project, the central government has encouraged energy and the installed capacity of solar PV among the comple- conservation retrofits to be made to public buildings, and ted buildings and those under construction had reached local governments have also launched similar incentive 1875 MW (MOHURD 2015). As compared with the levels policies to support such retrofits. Twelve cities, including recorded in 2010, these figures increased respectively by Tianjin, Chongqing, Shanghai, Shenzhen, Qingdao, Jinan, 1.22 billion square meters, 173 million square meters and Fuzhou, Xiamen and Xining, have been listed as key can- 1024.4 MW, indicating rapid growth in all three aspects. didates for energy conservation retrofits to public buil- The energy efficiency of public institutions also has been dings. China also has started pilot projects to create ener- improved. In the whole country, China has preliminarily gy-efficient campuses in more than two hundred colleges established an administration system, a legal and regulatory and universities. At present, demonstration projects for system, a meter-monitoring and inspection system, a techni- energy efficiency supervision systems in buildings have cal support system, an awareness-raising and training system, been launched in 256 colleges and universities throughout and a market-oriented service system for energy efficiency the country, and projects from nearly a hundred colleges improvement in public institutions. Energy conservation and universities have passed acceptance, resulting a 13% retrofits to the office buildings of public institutions and- de saving in electricity consumption and 12% saving in water monstrations of energy efficiency in public institutions have consumption on average; the savings in energy resource been carried out. In the first four years of the 12th FYP pe- expenditure per school is US$ 476,000 or RMB 3 million riod, the state agencies completed heat metering and energy (MOHURD 2015). the experiences of colleges and uni- conservation retrofits to office buildings with a total area of versities in energy efficiency are gradually replicated in 2.52 million square meters, while various provinces (regions other public agencies. At present, 44 hospitals affiliated and municipalities) carried out energy conservation retrofits to various ministries have implemented pilot energy effi- to 82 million square meters of office buildings of public ins- ciency projects to build themselves into energy-efficient titutions, and implemented energy conservation retrofits to hospitals, and nineteen scientific research institutes have 170,000 square meters of data center buildings (NGOA 2015). participated in the program for creating energy-efficient The per capita energy consumption and energy consumption institutes. Some state administrative departments have per square meter of public institution buildings have stea- also launched campaigns for creating energy-efficient of- dily declined. In the first four years of the 12th FYP period, fices and carried out comprehensive energy conservation energy consumption per unit building area of public institu- retrofits to their office buildings, achieving remarkable tions dropped by 11.05% nationwide and reached a record low effects in energy conservation and emissions reductions, value of 21.22 kgce/m2 in 2014. The total energy consumption as well as economic benefits. per capita decreased by 13.92% and reached a record low of 385.11 kgce/person in 2014 (NGOA 2015).

52 | CHINA Energy Efficiency Series 4.1.2 Review of the Main Policies The 12th FYP for Building Energy Efficiency Improvement set Promoting Energy Efficiency in out an overall target of achieving 116 Mtce of energy effi- Buildings ciency improvement in buildings by the end of the 12th fYP period. This includes a target of achieving 45 Mtce of Strengthen the planning guidance for energy energy efficiency improvement through the development efficiency in buildings of green buildings and energy efficiency improvement of During the 12th FYP period, the Chinese government is- new buildings. Another specific target is to speed up the sued a series of policies, made plans, specified the govern- reform of the heating supply system, to comprehensively ment agencies and entities responsible implementing the carry out metered heat-supply charging and promote the plans and target tasks, and strengthened the assessment heats metering and energy conservation retrofit to the and inspection of progress with plan implementation, existing buildings in the northern heating regions, so as thus effectively guiding the nationwide work of impro- to achieve energy efficiency of up to 27 Mtce. Another ving the energy efficiency of buildings and building green action area is to strengthen the energy efficiency super- buildings. During the 12th FYP period, the State Council vision system for public buildings and push forward the issued a series of policy documents (see Table 4‑1), in- management of energy conservation retrofits and opera- cluding the overarch plan for energy conservation and tions, so as to achieve 14 Mtce of energy saving. The final emission reductions and other specific plans to support action area is to promote the integrated application of the realization of the overarch plan. Among them, the renewable energy in buildings, so as to substitute 30 Mtce 12th FYP for Building Energy Efficiency Improvement and the of traditional fossil fuel use. Green Building Action Program are major policy documents providing specific guidance for working on energy effi- The Green Building Action Program provided a framework ciency in buildings during the 12th FYP period. plan for actions to improve energy efficiency in buildings

Table 4‑1. Policy documents related to building energy efficiency improvement during the 12th Five-year period

Policies Issued by Issued The 12th FYP for Energy Conservation and Emission Reductions The State Council Aug., 2012 The Comprehensive Work Plan for Energy Conservation and The State Council Aug., 2011 Emission Reductions during the 12th FYP Period Green Building Action Program General Office of the State Council Jan., 2013 National Plan for New Urbanization (2014 - 2020) The Central Committee of the March, 2014 Communist Party in China, The State Council The 12th Five-year Development Plan for Energy Efficiency and The State Council June,2012 Environmental Protection Industry The 12th Five-year Development Plan for National Strategic The State Council July, 2012 Emerging Industries The Strategic Action Plan for Energy Development (2014-2020) The State Council Nov., 2014 National Plan for Addressing Climate Change (2014- 2020) The State Council Sept., 2014 Action Program for Energy Conservation, Emission Reduction and General Office of the State Council May, 2014 Low-carbon Development during 2014-2015 The 12th FYP for Building Energy Efficiency Improvement MOHURD May, 2012 The 12th Five-year Development Plan for Green Buildings and MOHURD April, 2013 Green Ecological Urban Areas Outlines of the 12th FYP for Urban Green Lighting MOHURD Nov., 2011 The 12th FYP for Energy Efficiency Improvement in Public National Government Offices Aug., 2011 Institutions Administration. Action Program for Promoting the Production and Application of Ministry of Industry and Information Aug., 2015 Green Building Materials Technology, Ministry of Housing and Urban-Rural Development Specialized Action Program of Promoting the Science and Ministry of Science and Technology, March, 2014 Technology for Energy Conservation and Emission Reductions Ministry of Industry and Information during 2014-2015 Technology

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 53 and to develop green buildings during the 12th FYP pe- In addition, relevant sectors have also prepared the Green riod and it specified the goals, tasks and measures, and Assessment Standard for Transformation to the Existing Buil- required that all new buildings should be designed and dings, Assessment Standard for Green Eco-district and Techni- built in strict compliance with the compulsory energy- cal Specification for the Operation and Maintenance of Green efficiency standards. The Program's target is to complete Building. In particular, a comprehensive update has been new green buildings of up to a billion square meters du- made to the Design Standard for Energy Efficiency of Public ring the 12th FYP period. By the end of 2015, 20% of new Buildings, so as to raise the compulsory standards for the buildings in urban regions should meet the requirements insulation performance of building enclosures, as well as of the standards for green buildings. In the meanwhile, the cold/heating equipment and system. this action program requested that government agencies So far, China has established a national standard system at all levels to effectively introduce energy efficiency in for energy efficiency in buildings which covers different new buildings, devote great efforts to carry out energy climatic zones, different building types and different en- conservation retrofits to existing buildings, carry out re- ergy categories, and has preliminarily established a tech- trofits to the heating systems in urban areas, push forward nical standard system for green buildings, ranging from the large-scale application of renewable energy in buil- a one-star level to a three-star level. In addition, more dings, strengthen the energy efficiency management of than twenty provinces all over the country have esta- public buildings, speed up research, development and blished more than a hundred local standards for building promotion in relation to green building-relevant tech- energy efficiency in accordance with their local condi- nologies, energetically develop green building materials, tions. For example, Beijing and Tianjin have established push forward prefabricated buildings, strictly observe and implemented a standard of ‘energy saving by 75%’ the management procedures for demolishing buildings, for new buildings; Hebei and Heilongjiang have issued and promote ten key tasks, including the conversion of standard specifications for the design and evaluation of building wastes into resources, as well as relevant suppor- green buildings with ultra-low energy consumption; and ting measures. Hebei Province has issued a Standard for Energy Efficiency Perfect the energy efficiency standards system for of Passive Low Energy Consumption Residential Buildings (ta- buildings king effect from May 1, 2015), which is not only the first Chinese standard for passive buildings, but also the se- Since the beginning of the 12th FYP period, the Chinese cond such standard in the world after Sweden issued the government has issued and implemented multiple stan- Specification for Passive Low Energy Residential Buildings, dards for energy efficiency in buildings and for the eva- creating a new milestone in the Chinese history of passive luations of green buildings, as shown in Table 4‑2. building development.

Table 4‑2. Sstandards for energy efficiency in buildings issued during the 12th FYP period

Coming into Name of standard Number of standard Force Design Standard for Energy Efficiency of Residential Buildings in Hot JGJ75-2012 April 1, 2012 Summer and Warm Winter Zone Design Standard for Energy Efficiency of Rural Residential Buildings, GB/T50824-2013 May 1, 2013 Standard for Energy Efficient Building Assessment GB/T50668-2011 May 1, 2012 Evaluation Standard for Urban Green Lighting Energy Efficiency JGJ/T307-2013 February 1, 2014 Assessment Standard for Green Buildings GB/T50378-2014 January 1, 2015 Evaluation Standard for Green Industrial Buildings GB/T50878-2013 March 1, 2014 Evaluation Standard for Green Office Buildings GB/T50908-2013 May 1, 2014 Evaluation System for Green Hospital Buildings CSUS/GBC2-2011 July, 2011 Evaluation System for Green Campus CSUS/GBC04-2013 April 1, 2013 Code for Green Design of Civil Buildings JGJ/T229-2010 October 1, 2011 Evaluation Standard for Green Construction of Buildings, Technical GB/T50640-2010 October 1, 2011 Guideline for Green Affordable Housing (Trial) General Technical Rules for Measurement and Verification of Energy GB/T28750-2012 January 1, 2013 Saving Amount Design Standard for Energy Efficiency of Public Buildings GB50189-2015 October 1, 2015

54 | CHINA Energy Efficiency Series Implement economic incentive policies rials is 30% or above, VAT is exempted. For VAT realized by selling partial new wall building materials, a refunding Fiscal subsidy. During the 12th FYP period, the central of 50% of VAT upon collection is offered. For clay solid government provided financial subsidies for key cities bricks and/or clay tiles manufactured by a general VAT and higher institutions of learning to introduce energy taxpayer, VAT should be levied according to the appli- conservation retrofits to public buildings. The subsidy cable tax rate, but the VAT shall not be calculated by standard was fixed at 3.2 US$/m2 (20 RMB/m2) in prin- using the simple calculation method. For the purposes of ciple and took into account such relevant factors as the selling one’s own gravel aggregates combined with buil- workload of energy conservation retrofits, their contents ding (structure) waste and gangue as raw materials, VAT and effects. To promote heat metering and energy conser- is exempted, provided the proportion of building (struc- vation retrofit projects to existing residential buildings in ture) waste and gangue in the raw materials for produc- the northern heating regions, during 2011-2014, the incen- tion may not be less than 90%. The preferential sales tax tives provided by central government remained the same is mainly applicable to the contract energy management levels as those fixed in 2010, namely 8.7 US$/m2 (55 RMB/ project. In December 2010, the Chinese government m2) for severe cold zones and 7.1 US$/m2 (45 RMB/m2) issued a Notice on the Value Added Tax, Business Tax and for cold regions. After 2014, these standards were lowered Corporate Income Tax Policies for Promoting the Development moderately in accordance with particular circumstances. of Energy Efficiency Service Industry. The Notice stipula- According to the Tentative Measures for the Management ted that, if an energy efficiency service company realizes of the Financial Incentive Fund for Contract Energy Mana- some taxable income from implementing a contract ener- gement jointly printed and issued by the Ministry of Fi- gy management project, it will be temporarily exempted nance and the NDRC in June 2010, the financial incentive from paying business tax. If an energy efficiency service should be provided as a one-off award to the contract en- company meeting the conditions implements a contract ergy-management project based on the levels of annual energy management project, it may qualify for the arran- energy saving s and specified standards, with the award gement whereby ‘corporate income tax on energy effi- funding jointly contributed by the central government ciency projects is exempted for the first three years and and provincial governments. The subsidy from the cen- levied at 50% in the next three years’. In 2013, the Public tral government budget is 38 US$/tce (240 RMB/tce), and Notice on Collection Management Issues Relating to Preferen- that from the provincial government budget shoud be at tial Corporate Income Tax Policies on Contract Energy Mana- least 9.5 US$/tce (60 RMB/tce). In addition, local govern- gement Projects Implemented by Energy Efficiency Service En- ments, where the actual economic conditions allow, were terprises was issued to further improve the operability of encouraged to raise the incentive standard moderately preferential tax policies on contract energy management. based on local circumstances. In 2012, the MoF and the MOHURD jointly issued a Notice on Improving the Policies Preferential financial policy. In 2012, the China Banking on the Application of Renewable Energy in Buildings as Well Regulatory Commission (CBRC) issued the Guidelines as Regulating the Fund Allocation and Administration. To for Green Credit to supervise and urge banks and finan- support the provincial-level demonstration projects for cial institutions to give more loans to such green pro- the introduction of renewable energy in buildings, MoF jects as energy conservation and emissions reductions transferred a partial subsidy fund to provincial finance from the strategic perspective. In 2013, CBRC released and the provincial authority on housing and urban-ru- the Opinions on Green Credit Work to further promote the ral development for unified planning and administration development of green credit. CBRC took the lead in es- coordination. However, since May 2015, the original fi- tablishing a statistical system for green credit to include nancial incentives for energy conservation retrofits and projects for energy efficiency improvement in buildings contract energy management and the subsidy for energy and green building development in the twelve categories conservation retrofits to existing buildings in the hot of energy efficiency and environmental protection pro- summer and cold winter zones have been abolished. jects and services, thus improving the examination and evaluation system for green credit. In the Guidelines for Tax preferences. The preferential taxation policies for Energy Efficiency Credit (Revised)’, CBRC clearly listed en- energy efficiency in buildings mainly covers preferential ergy efficiency improvement in buildings as a key field to corporate income tax, preferential value-added tax and be supported by energy efficiency credits and requested preferential business tax. The current Corporate Income banks and financial institutions to give more credit aid to Tax Law provides some preferential policies For enter- green building projects that comply with the Green Buil- prises and projects that adopt environmental protection ding Action Program. equipment, make comprehensive utilization of resources and engage in projects for environmental protection, en- Pricing policy. In 2011, China started to pilot a tiered ergy efficiency and/or water savings. For specific building pricing policy for residential electricity, divided the materials, if the waste residues blended in the raw mate- monthly electricity consumption of households into

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 55 three levels, increased the free level for low-income fa- 4.2 Prospects for Energy milies, and started to charge higher rates for residential power consumption exceeding local standards to discou- Consumption in the rage wasteful use and ensure meeting a basic demand for Building Sector power consumption by households. In 2013, the Chinese government also issued a Notice on Improving the Tiered 4.2.1 Methodology Pricing System for Household Electricity Use, requesting the all-round promotion of a peak-valley electricity pri- In this study on the energy consumptions of the building cing system for residential electricity consumption. All sector, the focus is on urban residential buildings, rural regions were required to set up and start to implement residential buildings and public buildings. The research peak-valley electricity pricing system for residential elec- team adopts the Scenario approach to identify the fac- tricity consumption latest by the end of 2015 and the elec- tors driving changes to the energy consumption of buil- tricity prices shall be differentiated for households with dings and to project changes in the energy consumption levels of electricity consumptions. In regions where such of the building sector in the future. In the process of systems have been introduced, the system had to be re- scenario analysis, the team combines qualitative analysis gulated and perfected in a timely manner in accordance and quantitative analysis, top-down and bottom-up ap- with the implementation conditions and the changes in proaches, and domestic and international comparison, the electric power load. to conduct research into the energy consumption of the building sectors in different climatic zones and with different building types.

Figure 4‑1. Structural diagram of the building energy demand module of LEAP model

Building Building Building composition 建筑构成Building Final energy 终端用能Final energy 建筑 Climate zone 建筑建筑构成终端用能 type 1 气候区 type 2 (existing/newly built) composition consumption consumption 类型1 类型2 （既有/新建）（节能水平）(energy saving level) 项目project equipment/technical设备/技术类型 type

No transformation 不改造燃煤区域供热Coal-fired regional heating Existing North Urban 既有buildings Common transformation Gas-fired district heating 北方 region 城镇普通改造燃气区域供热地区建筑 distributed coal-fired boiler 深度改造Deep transformation 分散燃煤锅炉居 Heating Transitional 采暖分散燃气锅炉Distributed gas-fired boiler

过渡area Common newly built 住新建New 普通新建 refrigeration 地区 buildings 制冷电加热器Electric heater 建建筑 Ultra low energy 超低能耗 Illumination 筑 consumption 照明空气源热泵Air source heat pump Residential Buildings Buildings Residential South 南方 Cooking 建 region Non-near-zero 炊事 Ground source heat pump 非近零能耗地源热泵地区 energy consumption 筑农村Rural Hot water Near-zero energy 热水 Coal煤炉 furnace 部近零能耗consumption Household electrical appliances Building sector 家电 Wall燃气壁挂炉-mounted gas boiler 门北方North Office region 办公buildings 地区 Electric电热水器 water heater 公零售Retail Heating 共 No不改造 transformation 采暖燃煤锅炉Coal fired boiler Transitional过渡建 region Hospital Refrigeration 医院 Existing 制冷 Oil-burning boiler 既有buildings Common 燃油锅炉 Public Buildings 地区筑普通改造transformation 建筑 Illumination 照明燃气锅炉Gas fired-boiler 学校School 深度改造Deep South transformation 热水Hot water 南方region 太阳能热水器solar water heater New Common newly built 地区酒店Hotel 新建普通新建 Equipment buildings 设备空气源热泵Air source heat pump 建筑超低能耗Ultra low energy 其他Other consumption Distributed分布式能源 energy sources

Figure 4-1. Structural diagram of the building energy demand module of LEAP model 56 | CHINA Energy Efficiency Series Ranging from building types to types of final energy consumption equipment and technologies, the structure of the LEAP model is divided into six layers. By calculating layer upon layer, accumulation and addition, the total energy consumption of the building sector can be obtained, as shown in Figure 4-1.

In this model, civilian buildings all over the country are first divided into two major categories, namely residential buildings and public buildings. Based on their climate conditions, the country is divided into the northern region, the transitional region and the southern region. The northern region includes the cold area and the severe cold area in the thermal design construction zone and covers Beijing, Tianjin, Hebei, Shanxi, Inner Mongolia, Shandong, Henan, Liaoning, Jilin, Heilongjiang, Shaanxi, Gansu, Qinghai, Ningxia, Xinjiang and Tibet. The transitional area comprises the hot summer and cold winter zones and moderate climate zone and consists of Shanghai, Jiangsu, Zhejiang, Anhui, Jiangxi, Hubei, Hunan, Chongqing, Sichuan, Guizhou and Yunnan. The southern region is the hot summer and warm winter zones, including Fujian, Guangdong, Guangxi and Hainan.

In calculating the energy consumption of residential buildings, given the differences between rural residential buildings and urban residential buildings in their energy consumption characteristics, the relevant values are separately calculated and then added up to arrive at the total energy consumption of residential buildings. In calculating the energy consumption of public buildings, the public buildings are divided into office buildings, stores, hospitals, schools, hotels and other types. Both residential buildings and public buildings are then further divided into existing buildings and new buildings. In this model, the existing buildings are those built before and in 2010, while new buildings are those built after 2010. The existing buildings are further divided into three types, namely non-transformed buildings, the present efficiency buildings (meeting the requirements of the current design standard for the energy efficiency of buildings), and the best possible efficiency buildings (in-depth transformed building, technically feasible but not always economically feasible). They differ in energy demand load densities and the non-transformed buildings have the highest energy intensity. The new buildings are further divided into the present efficiency buildings (meeting the requirements of the current design standard for the energy efficiency of

69 The process includes two stages, scenario setting and sce- ghai, Jiangsu, Zhejiang, Anhui, Jiangxi, Hubei, Hunan, nario calculation. At the scenario-setting stage, in light Chongqing, Sichuan, Guizhou and Yunnan. The southern of the current economic and social situation in China region is the hot summer and warm winter zones, inclu- and the development trend in the future in combination ding Fujian, Guangdong, Guangxi and Hainan. with expert predictions of future industrial develop- In calculating the energy consumption of residential ments, the team first made some assumptions on future buildings, given the differences between rural residential macroeconomic parameters, including GDP, population, buildings and urban residential buildings in their energy urbanization rates and building area per capita etc. on consumption characteristics, the relevant values are se- the amount of building activity. Secondly, the team made parately calculated and then added up to arrive at the some estimates on the changes to load intensity, techni- total energy consumption of residential buildings. In cal- cal equipment efficiency and technical proportions regar- culating the energy consumption of public buildings, the ding the intensity of building activity. Different activity public buildings are divided into office buildings, stores, and activity intensity levels result in different energy hospitals, schools, hotels and other types. Both residen- consumption projections. It is crucial to make reasonable tial buildings and public buildings are then further di- judgments on the activity amount and activity intensity. vided into existing buildings and new buildings. In this In general, comprehensive assessment must be made re- model, the existing buildings are those built before and in garding historical data, development trends, and interna- 2010, while new buildings are those built after 2010. The tional comparisons and based on the expert judgement. existing buildings are further divided into three types, In the scenario calculation, models and tools of quantita- namely non-transformed buildings, the present efficien- tive analysis are used to input the parameters for scenario cy buildings (meeting the requirements of the current setting, and the parameters in the base year are checked design standard for the energy efficiency of buildings), according to the energy balance sheet. Model calcula- and the best possible efficiency buildings (in-depth trans- tions can only be made upon the completion of checks, formed building, technically feasible but not always eco- followed by analysis of the results. Meanwhile, if needed, nomically feasible). They differ in energy demand load it is feasible to adjust the input parameters to analyze and densities and the non-transformed buildings have the compare the influences of different factors on the results. highest energy intensity. The new buildings are further In this research, the energy demand analysis module of divided into the present efficiency buildings (meeting the the LEAP model is used for quantitative analysis. The requirements of the current design standard for the en- LEAP model is an energy-environment model developed ergy efficiency of buildings) and buildings with ultralow by the Boston/Dallas branch of the Stockholm Environ- energy consumption (building with technically realizable ment Research Institute (SEI). Over the past three de- ultralow energy consumption), which are different in en- cades, more than 1000 organizations from more than 190 ergy demand load intensities, that of the present efficien- countries have adopted the LEAP model to carry out na- cy buildings higher than that of buildings with ultralow tional and/or regional energy strategy research projects energy consumption. The rural buildings only include and evaluation research on GHG emissions reductions. two types, namely existing rural residential buildings and buildings with near-zero energy consumption. For Ranging from building types to types of final energy the sake of simplicity, under the Reference scenario (the consumption equipment and technologies, the structure benchmark scenario) the existing buildings are divided of the LEAP model is divided into six layers. By calcu- into two types, namely non-transformed buildings and lating layer upon layer, accumulation and addition, the the present efficiency transformed buildings. The new total energy consumption of the building sector can be buildings only refer to the present efficiency buildings, obtained, as shown in Figure 4‑1. namely the new buildings that meet the present design standard for the energy efficiency of buildings. The rural In this model, civilian buildings all over the country are buildings only include the existing rural residential buil- first divided into two major categories, namely residenti- dings. The other building types are only applied under al buildings and public buildings. Based on their climate the selected scenario when the in-depth transformation conditions, the country is divided into the northern re- to the existing buildings, the ultralow energy consump- gion, the transitional region and the southern region. The tion or near-zero energy consumption of new buildings is northern region includes the cold area and the severe taken into consideration. cold area in the thermal design construction zone and covers Beijing, Tianjin, Hebei, Shanxi, Inner Mongolia, In this model, the final energy uses of urban-rural resi- Shandong, Henan, Liaoning, Jilin, Heilongjiang, Shaanxi, dential buildings are divided into six categories, namely Gansu, Qinghai, Ningxia, Xinjiang and Tibet. The tran- heating, cooling, lighting, cooking, domestic hot water sitional area comprises the hot summer and cold winter and household electrical appliances. The final energy zones and moderate climate zone and consists of Shan- consumption of public buildings is divided into five ca-

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 57 tegories, namely heating, cooling, domestic hot water, 4.2.2 Key Assumptions lighting and equipment. Diversified forms of energy sup- In making predictions of the future final energy demand ply (or energy consumption equipment) may be adopted of the Chinese building sector by using the LEAP model, to meet the same building energy service demand. Howe- the team set two scenarios, namely a Reference Scenario ver, different energy supply may have different fuel types and an Intensified Energy-saving Scenario. In the Refe- and energy efficiency levels, resulting in different energy rence Scenario, which is also the benchmark scenario, consumption levels, which should be distinguished. the relevant policies for building energy conservation The final energy demand of the building sector is calcu- and emissions reductions established prior to 2010 are ex- lated based on the following equation. The building floor pected to be continually implemented, and no major new area, the final available figure for energy consumption policies is expected to be introduced after 2010. The na- intensity, the technical proportion and the figure for tural progress in energy efficiency technologies for buil- equipment efficiency are the major input parameters for dings are considered, and but it assumes no major tech- this model. Through calculation and accumulation layer nical breakthrough prior to 2050. People's requirement by layer, this model can finally work out the total energy for the comfortable buildings and good building service demand of the building sector. levels will be further satisfied through urbanization as     well as economic and social development. The Intensified   ECB = ∑ACBn × ∑ Pq,n × ∑ Intensityq,n × Sharek,q,n / Efficiencyk,q,n  n  q   k  Energy-saving Scenario, also called the target scenario and the scenario that is expected to be achieved, expects Wherein: a series of policy measures to be adopted to push forward ECB - The energy consumption of the building sector the enhanced energy saving and maximum application of the existing advanced building energy conservation and k - The energy /technical category emission reduction technologies. In addition to meeting q - The type of final energy consumption the higher requirements for comfort levels, the Scenario aims to significantly reduce the future energy demands n - Building type of the building sector and realize its sustainable development. By comparing the projected energy demand in ACBn --The building area of building type n the two scenarios, it is feasible to evaluate the energy- P -- The coverage and application extents of final use q q, n efficiency potential of the building sector under the In- in building type n tensified Energy-saving Scenario and identify the major energy-efficiency opportunities. Intensityq, n--The available energy intensity of final use q in building type n The macroeconomic parameters relating to the energy Sharek, q, n -- The proportion of the applications of energy consumption equipment/technology k in final energy demand of the building sector are mainly population, ur- consumption item q in building type n banization rate, GDP, number of persons per household and the proportion of persons employed in tertiary in- Efficiency -- the energy consumption efficiency of en- k, q, n dustry. The population size and urbanization rate affect ergy consumption equipment/technology k in final en- urban and rural population distribution as well as the ergy consumption item q in building type n urban and rural residential building area; the number of persons per household affects the number of urban and

Table 4‑3. The macroeconomic parameter assumptions

Index Unit 2010 2020 2030 2040 2050 Population billion 1.34 1.41 1.43 1.42 1.37 Urbanization rate % 50 60 68 74 78 Per capita GDP US$ 4,400 8,700 15,400 23,200 32,200 Size of urban household People 2.88 2.88 2.80 2.73 2.65 Size of rural household People 3.95 3.66 3.40 3.14 2.88 Proportion of employment in % 41.0 47.2 53.1 59.4 65.2 tertiary industry Note: per capita GDP is the 2010 statistical data; the proportion of employed persons in tertiary industry in 2010 is adjusted based on the statistical data, but taking into account the migrant workers

58 | CHINA Energy Efficiency Series rural households; GDP per capita and number of house- be devoted to carrying out energy conservation retrofits holds jointly influence possession of household electrical to existing buildings. Therefore, among the new buil- appliances; and the proportion of employed persons in dings, the proportion of ultralow-energy consumption the tertiary industry will affect the quantity of employed buildings, the retrofit rate of existing buildings and the persons in such industry as well as the area of public proportion of deep retrofit projects will increase signifi- buildings (see Table 4-3). The macroeconomic parameter cantly.10 Under the Reference Scenario, the proportions assumptions are the same under the Reference Scenario of new urban residential buildings, of ultralow-energy and the Intensified Energy-saving Scenario. consumption buildings in new public buildings and of rural near-zero-energy consumption buildings always The building activity parameters in this model mainly co- remain 0; under the Intensified Energy-saving Scenario, ver building area per capita, the housing vacancy rate and the said three proportions will constantly increase to 60% ownership of electrical appliances per capita. The buil- by 2050. Under the Reference Scenario, both the urban ding activity level is mainly related to the stage of econo- residential buildings and the public buildings expect very mic and social development. Since the macroeconomic low retrofit rates and no deep retrofit. Under theIn- parameter settings are the same under both scenarios, the tensified Energy-saving Scenario, the retrofit rates of all building activity parameter assumptions are the same. types of buildings will quickly increase and reach 75% by According to data from the China Statistical Yearbook, in 2050; among the retrofitted buildings, the proportion of 2010 the per capita urban residential building, per capita buildings under deep retrofit will gradually increase and rural residential building and the public building area reach 100% by 2050. per employee in the tertiary industry were respectively 26.8 square meters, 31.6 square meters and 38 square me- For the types of final energy uses of buildings which dif- ters.9 Since the per capita GDP in China will reach US$ fer in climatic regions, functions and energy conservation 30,000 by 2050, approaching the present average level of levels (the extent of energy conservation retrofits and the European countries, it is assumed that in China in 2050 followed energy efficiency design standards), this model the per capita urban residential building area will be 46 sets different energy intensities. Under both scenarios, square meters, the per capita rural residential building all the available energy intensity parameters of buildings area 46.3 square meters, and the public building area per are consistent. employee in tertiary industry 50 square meters. In addi- According to the energy-efficiency levels, this model dition, on the assumption that in 2010 the national vacancy vides each energy consumption system or piece of equip- rate of urban residential buildings was 15% (in projecting ment in a building into two types, namely the existing energy demand, it is assumed that vacant housing has no type and the high efficiency type. The existing type re- energy consumption), it is expected that, with the self- presents the national average energy-efficiency level of regulation of the housing market and the guidance of the the system/equipment in the base year, while the high- relevant policies, the housing vacancy rate will gradually efficiency type represents the most advanced energy- decrease in the future, drop to 0% in 2025 and remain efficiency level of the system/equipment at present. In unchanged thereafter. For rural residential buildings and 2010, the popularity rate of high-efficiency equipment rural public buildings, their vacancy rate will not be ta- was 0; in the future, this will increase gradually. Under ken into consideration for the time being. the Reference Scenario, due to the lack of effective po- Under the Reference Scenario, because of the continua- licies for product promotion, and with the development tion of the existing policies, new buildings do not include of market, the penetration rate of high-efficiency equip- buildings with ultralow energy consumption, existing ment will only reach 40% by 2050. Under the Intensified buildings do not include in-depth energy conservation Energy-saving Scenario, relevant policy measures will be retrofits, and the retrofit rate of existing buildings is adopted to speed up the deployment of high-efficiency relatively low. Under the Intensified Energy-saving Sce- equipment, so the penetration rate of high-efficiency nario, a series of policy measures will be adopted to ex- equipment will reach 100% by 2050. tensively promote passive buildings (passive houses) with ultralow energy consumption, while greater efforts will

9 Note: According to data from the China Statistical Yearbook, in 2010 the 10 Note: The proportion of ultralow energy consumption buildings is an ac- per capita urban residential building area was 31.6 square meters (exclu- cumulated proportion, which represents the accumulated area of ultralow ding collective households). If such factors as collective households and the energy consumption buildings, accounting for the accumulated area of new migrant population are taken into account, it is estimated that the per ca- buildings; the retrofit rate of existing buildings refers to the proportion of pita urban residential building area was about 26.8 square meters in 2010. the accumulated area of retrofitted buildings, accounting for the total area In 2010, the public building area per employees was calculated according to of existing buildings; and the proportion of deeply retrofitted buildings re- the total area of public buildings and the number of persons employed in fers to the accumulated area of deeply retrofitted buildings, accounting for tertiary industry. the accumulated area of retrofitted buildings.

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 59 Figure 3-2 The outlook of final energy consumption and the direct carbon dioxide emissions in building sector in China 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 2047 2048 2049 2050 Demand: Energy Demand Primary Units (IPCC) Units: Million Tonnes of Coal Equivalents Final energy consumpti4.2.3 Analysis of the Modeling Results Under the Intensified Energy-saving Scenario, various 545.8 571.7 599.3 627.7 658 690 713.6 740.8 768.8 795.5 826.9 854.3 886 918.8 949 984.5 1010.7 1042.9 1070.7 1105.1 1134.4 1157.6 1174.3 1197.4 1220.5 1236.9 1259.1 1281.5 1304 1326.6 1341.3 1361.3 1380.5 1391 1410.1 1428.7 1437 1444.6 1461.3 1468 1484.2 on-- According to the modeling results, in the future the fi- energy conservation measures will be adopted, including reference nal energy consumption of buildings in China will show the promotion of prefabricated buildings, the promotion scenario entirely different development trends under the two sce- of integrated and passive designs, improvements to the Final narios (see Figure 4‑2). Under the Reference Scenario, efficiency of energy consumption systems and equipment energy the final energy consumption of buildings will constantly used in buildings, the development of intelligent systems consumpti grow from 550 Mtce in 2010 to 1.48 Gtce in 2050, an in- and the cleaning of the final energy consumption of buil- on-- 545.8 563.7 583.1 603.1 624.4 646.3dings. Different658.9 measures674.5 have690.4 different704.5 energy efficiency722.5 734.5 749.9 765.9 778.8 795.8 803.8 816.3 824.4 837.9 846.3 850 847.8 850.7 853.4 851.1 852.5 853.6 854.8 856.3 852.1 843.8 835.4 820.6 812 803.1 787.1 770.9 760.9 743.7 733.3 intensifiedcrease of 172%, during which there is no peak value. Un- energy- der the Intensified Energy-saving Scenario, in 2050 the improvement potentials. The distribution of energy-effi- saving final energy consumption of buildings will only be 730 ciency potentials in the building sector in China in 2050 scenario Mtce, representing an increase of 34% against that in 2010. is shown in Figure 4‑3. The greatest energy efficiency im- In 2039, the final energy consumption of buildings will provement potential is the penetration of integrated and CO2 Emissionsreach (Million a peak tonnes value of CO2)860 Mtce, 1.6 times that in 2010. It is passive design, which accounts for 40% of the total energy-efficiency improvement potential. The next impor- Final observed that, under the Intensified Energy-saving Scena- carbon rio, in 2050 the final energy consumption of the building tant energy efficiency potential is improvements to the dioxide sector will be 51% than under the Reference Scenario, efficiency of energy consumption systems and equipment emission with- an energy-efficiency potential of up to 750 Mtce. In used in buildings, contributing 27% of total energy effi- reference addition, the two scenarios will also see remarkable dif- ciency improvement potential. The optimization of the scenario 1049 1072 1098 1125 1152 final1181 energy1197 consumption1217 mode of1236 building 1253and improve1275- 1291 1312 1332 1349 1370 1379 1393 1402 1417 1425 1427 1423 1424 1424 1417 1415 1413 1410 1407 1396 1391 1385 1372 1365 1358 1342 1324 1315 1297 1287 ferent development trends of direct final CO2 emissions Final of the building sector. Under the Reference Scenario, the ments to the renewable energy utilization e and electrifi- carbon cation level contribute 20% of the total energy efficiency direct final 2CO emissions will first increase, then fall, dioxide reaching a peak in 2031. However, under the Intensified potential. The vigorous development of such technologies emission -- as intelligent control systems and micro-nets contributes Energy-saving Scenario, the direct final2 CO emissions intensified about 9% of the energy efficiency improvement potential. energy- will constantly fall after 2015 and decrease to 280 Mt by saving 2015, representing 26% of the 1,050 Mt recorded in 2010. The promotion of prefabricated buildings will only di- scenario 1049 1051 1055 1059 1063 1067 1057 1051 1043 1033 1026 1012 1001 989 974 962 940 921 898 880 857 830 798 771 744 713 686 658 631 604 573 541 510 475 446 417 385 355 329 300 277

Figure 4‑2. The outlook for final energy consumption and direct CO2 emissions in the building sector in China

1600 1600

） 2

1400 1400 ） MtCO （

1200Mtce 1200 （

1000 1000

800 800

600 Final energy consumption--reference scenario 600

400 Final energy consumption--intensified energy-saving scenario 400 Final enegry Finalenegry consumption Direct carbon Direct dioxide emission Final carbon dioxide emission - reference scenario 200 200 Final carbon dioxide emission -- intensified energy-saving scenario 0 0 2010 2015 2020 2025 2030 2035 2040 2045 2050

Note: As shown in this Figure, in calculating the carbon dioxide emissions of building sectors, the carbon dioxide emission fac-

tors of coal, coal gas, LPG, natural gas and oil products are determined respectively as 2.88 tCO2/tce, 1.3 tCO2/tce, 1.85 tCO2/ tce, 1.64 tCO /tce and 2.27 tCO /tce. The CO emissions generated in electric power production and heating power production are 2 2 2 FIG 4.2 counted into the processing conversion sector, and the final CO2 emissions of the electric power sector and heating power sector are calculated as 0

60 | CHINA Energy Efficiency Series Figure 4‑3. The final energy savings potential for the building sector in China in 2050 under the Intensified Energy-saving Scenario

1600 Commercial building 13 16 Residential building 61 1400 124 Energy saving from material industry 178 1200

124

1000 80 29 40 1484 42 800 105

600 PV power in building Final energy Finalenergy consumption(Mtce)

733 400

546

200

0 2010 Actual Reference scenario Building Integrative and Super efficient Smart system Final energy Intensified energy- in 2050 prefabrication passive design equipment and consumption saving scenario in houses appliances cleaning 2050 rectly contribute 4% to the total energy efficiency impro- adopted to achieve a comfortable indoor thermal and hu- vement potential of the building sector in 2050. However, mid environment as well as a lighting environment, mi- since building industrialization will improve building nimize dependence on the active mechanical heating and quality, extend the life of buildings, reduce the quantity cooling system, or completely eliminate such facilities. of new buildings and cut down the demand for building Since the world's first genuine passive house was built materials, this measure can indirectly reduce the final en- in Darmstadt, Germany in 1991, passive houses have de- ergy consumption of the industrial sector by about 90 monstrated their huge potential for development. By the Mtce, making considerable energy efficiency improve- end of 2013, about 50,000 passive houses had been built ment contributions to the whole of society. globally, half of them in Germany (MOHURD and GEA 2013). Up to now, passive houses have become the buil- 4.3 Identification of HIOs ding standard with the most extensive extension coverage in Europe. Germany has established clear requirements in the Building Sector in for the airtightness of passive houses, the total energy China consumption of a passive building, the heat requirement for heating, the heating load, and the cooling and indoor comfort levels. For example, total energy consumption of 4.3.1 Technical HIOs the building (primary energy) is ≤120kWh/m2/year, and HIO 1 Promote passive houses the heat requirement for heating ≤15kWh/m2/year (MO- HURD and GEA 2013). A passive house is a building in which all kinds of energy efficiency technologies have been introduced to optimize Since 2009, the MOHURD has carried out ‘China pas- the envelope structure and indoor environment, maxi- sive low-energy consumption building demonstration mize the thermal insulation, heat insulation and airti- projects’ in cooperation with the German Energy Agency. ghtness of the building and minimize the requirements At present, some passive houses, including Qinhuang- for heating supply and cooling. In addition, different dao ‘Zaishuiyifang’, Harbin ‘Chennengxishu courtyard’, kinds of passive building measures, such as natural venti- Zhuzhou ‘Huitianran Urban Park Phase II’ and Qinghai lation, natural lighting, solar irradiation for heat gain and ‘Lishuiwan community’, have been completed and put indoor non-heating supply heat source for heat gain, are into use. Passive house pilot projects under construc-

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 61 tion can be found in different climatic zones all over the China is facing the following major obstacles in promo- country. The existing pilot projects in China have shown ting passive houses. First, there is the awareness issue. that the penetration of passive houses under existing Due to the brief history of passive house development conditions can significantly reduce the energy consump- in China, the whole of society has a low degree of awa- tion of buildings in addition to improving the living en- reness of the benefits of passive houses. Second, there vironment, and that these passive houses are technically is the technical issue. An integrated design concept feasible and economically affordable. Technically, it is and high expertise is generally needed to design passive essential to adhere to the principle of ‘giving priority to houses, and there lacks of qualified technical personnel passive design, and perform active optimization for eco- for the design of such houses. Third, there is the stan- nomic and practical results’. In addition to meeting the dards issue. The current building codes in China mainly local climatic and natural conditions of the construction specify the requirements for the thermal performance of site, the building sector should, through reasonable plane the building envelope and special energy consumption layout, effectively utilize natural lighting and natural ven- equipment such as heating and air-conditioning, not re- tilation to improve the heat insulation and airtightness of quirements for the energy-efficiency level of the whole the building envelope and adopt various passive techno- building. In addition, the current building code lacks en- logical measure, including a solar utilization technique couragement to use such passive solutions as natural ven- and an indoor non-heating supply heat source for heat tilation, natural lighting and solar energy to reduce the gain to maximize building energy efficiency and obtain building’s energy demand. Fourth, there is the building a comfortable quality of indoor physical environment. materials issue. Energy-efficient building materials, such The Qinhuangdao ‘Zaishuiyifang’ pilot project has a hea- as high-performance windows and air-sealing products, ting demand that is only a quarter of the standard for are in short supply in the market currently, thus affec- the heating energy consumption in residential buildings ting the effective implementation of integrated designs. as specified in the local building code: ‘energy saving by Fifth, there is the construction issue. Passive houses have 65%’. In other words, about 70% of energy consumption high demands for the knowledge, skills, and expertise of for heating can be saved (MOHURD 2013). construction workers.

So far, the per capita building area in China is still on HIO 2 - Popularize super-efficient equipment and the low side. Given economic and social development appliances and improvements to living standards, per capita buil- Given the progress in economic and social development, ding area will further increase in China. If by 2050, the the intensity and scale of economic activities in the ser- per capita urban residential building area, the per capita vice sector will increase, and with it an ever-increasing rural residential building area and the per employee buil- requirements for energy services, hence the energy ding area per of the tertiary industry are respectively 46 consumption demands of office equipment and lighting square meters, 46.3 square meters and 50 square meters, will further increase. The growth of household incomes in 2010- 2050, the total residential building area will in- will also stimulate the continuous increase in the stock of crease from 40.8 billion square meters to 63 billion square energy-consuming equipment such as household electri- meters, and the public building area will increase from 12 cal appliances and lighting facilities. With technological billion square meters to 23 billion square meters. In the progress, the energy-efficiency level of building equip- next four decades, the number of urban residential buil- ment has improved. At present, most energy consuming dings will annually increase by more than 1 billion square equipment in buildings have some more energy efficient meters on average (ERI, MRI and LBNL 2016). Under substitutes. For example, organic light emitting diode the Intensified Energy-saving Scenario, the proportion (OLED) TV sets can save energy by 30% against the pre- of ultralow energy-consuming passive houses among new sent conventional liquid crystal (LCD) TV set. However, buildings will be significantly improved. On the assump- on the whole, the penetration rates of super-efficient tion that in 2050 the accumulated area of ultralow en- equipment and appliances are relatively low; therefore ergy-consuming passive houses will account for 60% of increasing the penetration rate of super-efficient equip- the accumulated area of new urban buildings (residential ment and appliances in the building sector will bring buildings and public buildings), the accumulated area of about more opportunities for energy efficiency. Certain- near-zero energy-consuming buildings will account for ly, it is very important to select the appropriate energy 60% of the stock of rural residential buildings, as estima- consumption mode, as well as necessary to promote su- ted according to model, the residential buildings and the per-efficient equipment and appliances based on the ap- public buildings will save 112 Mtce and 104 Mtce of final propriate mode of energy consumption. energy consumption respectively against the Reference Scenario, indicating great energy efficiency improvement According to the investigation, the efficiency of the potential. present major building energy-consuming equipment

62 | CHINA Energy Efficiency Series Box 2. Case Study: Qinhuangdao ‘Zaishuiyifang’ passive house pilot project The Qinhuangdao ‘Zaishuiyifang’ passive house pilot project is located in Harbor district in Qinhuangdao City and its nine buildings have a total building area of 80,344 square meters. The ‘Zaishuiyifang’ No. C15 Building was the first building constructed according to the German standard for passive houses, with a height of 18 floors and a building area of 6,467 square meters. This project has received a two-star green building label and is certified under the China-Germany passive house standard. According to an evaluation of four aspects of this project (overall energy performance, primary energy demand, envelop structure design and parameters of energy consumption equipment ), the heating energy demand, cooling energy demand and the total demand for primary energy are 13kWh/ m2/year, 7kWh/m2/year and 110kWh/m2/year respectively, fully in compliance with the comprehensive evaluation requirements specified in the standard for the passive house as a low energy-consuming residential building. The space heating demand of this project is about a quarter that for residential buildings as specified in local standard ‘energy saving by 65%’. Its construction costs are only RMB 596 /m2 (or a 12% premium) higher than those for normal residential buildings. In addition, the indoor PM2.5 level is lower than in the neighborhood of the buildings during periods of heavy haze.

Qinhuangdao passive house project The major technical features of the Qinhuangdao Passive Houses are as follows: 1) There is no thermal bridge in the high-efficiency external thermal insulation system and the heat-transfer coef- ficients of the roof, external wall and basement roof are K≤0.15W/m2·k; the non-transparent external building envelope is completely covered by thick heat-insulating materials; the external layer of insulation materials on the external wall are more than 200mm thick; and blocking measures are used to prevent the formation of thermal bridges by metallic connecting pieces; 2) Double-layer external windows with low-emissivity and high thermal insulation performance are adopted, which have good lighting, thermal insulation and heat-insulating performances, with a heat-transfer coefficient of k≤ 0.8W/m2·K, a total solar energy transmittance of g ≥0.35, and a selectivity coefficient of glass s≥1.25. The external window has the selective transmission for light rays with different wavelengths, which can isolate outdoor solar heat in summer, reflect the near-infrared rays that are radiated by glass indoors in winter, and can also make full use of natural light to meet indoor lighting needs. 3) The buildings have a high level of airtightness. Each building and each residential unit has a continuous and integral air-retaining layer that encloses the whole heating space. When the pressure difference between the indoor and outdoor environments reaches 50Pa, the air exchange ratio per hour does not exceed 0.6 time. 4) Makes full use of renewable energy sources, using solar energy to meet the requirement for indoor heating in winter, use sunlight to meet the requirements for lighting during the day, and install solar water heaters to meet the demand for domestic hot water; 5) In the special indoor energy environment system, space conditioning is provided by a variable-refrigerant-flow air-source heat pump, and the central air-ventilation system includes 75% efficient energy recovery; 6) Perform refined construction, pay special attention to details, and adopt the corresponding measures for thermal bridge blocking, moisture protection, waterproof protection and nose protection. (Source: MOHURD 2013)

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 63 is compared with the high energy efficiency level (the ergy-consuming office equipment in China are generally energy efficiency of the advanced products which have lower than the most advanced international levels. In appeared in internal markets), as shown in Figure 4-4 general the awareness of energy efficiency labels among (ERI, RMI and LBNL 2016). It is visible that most energy- Chinese consumers is low. Moreover, energy efficiency la- consuming equipment in buildings still has potential for bels are available for a few types of appliances and equip- improvements to energy efficiency. At present, the po- ment and they fails to provide adequate information to pularization rate of high energy efficiency equipment is enable consumers to select the most energy-saving pro- almost 0, but in the future this will gradually increase. In ducts. Furthermore, higher sales price often discourage the reference scenario, due to a lack of effective policy on consumers from purchasing super-efficient appliances product popularization, and with the self-development and other energy-consuming equipment. of market, it is assumed that the popularization rate of high energy efficiency equipment can only reach 40% by Air source heat pump technology provides a good 2050. In the intensified energy-saving scenario, relevant example about the barriers in China for the wide disse- policy measures are adopted to speed up the populariza- mination of super-efficient appliances. tion of high efficiency equipment, and it is assumed that Heat pumps are designed to move thermal energy in the the population rate of such equipment will reach 100% by opposite direction of spontaneous heat transfer by absor- 2050. According to the results of the model’s estimates, bing heat from a cold space and releasing it to a warmer in 2050 in the intensified energy-saving scenario, due to one. The air source heat pump is designed to extract heat the popularization of energy-consuming equipment with from outdoor air, use a blower fan to drive the outdoor Equipment Efficiency Factor Assumptions high-energy efficiency, the building sector can save final air to flow through the heat-collecting device (evapora- energy consumption of about 200 Mtce against the refe- Normal EffHigh Eff iciency tor of heat pump) installed outdoors, prepare hot water rence scenario. or hot wind through an indoor heat exchanger (conden- Coal-fired central heating 80% 91% There are many kinds of energy-consuming consumption ser of heat pump) and supply hot water or hot wind to Electric heater 95% 98% equipment in buildings. On the whole, the current en- use for indoor heat supply. In its actual operation, given Distributed coal-fired boiler 57% 89% ergy efficiencies of appliances, lighting facilities and en- the efficiency factors of such components as the motor, Distributed gas-fired boiler 78% 94% Air source heat pump 257% 364% Ground source heat pump 280% 420% FIG 4.6 Figure 4‑4. Comparison of the improvements in energy efficiency of equipment and appliances Room air conditioner 257% 364% Electric cooking appliance 81% 90% 4.5 Natural gas kitchen 55% 70% Normal Efficiency LPG kitchen 55% 70% 4 Coal furnace 40% 65% High Efficiency Gas furnace 60% 96% 3.5

Electric water heater 89% 93% 3 Natural gas water heater 60% 96% LPG water heater 60% 96% 2.5 Solar water heater 100% 100% 2 Washing machine 100% 160% TV 100% 170% 1.5 Refrigerator 100% 127% Other appliances 100% 197% 1 Biomass furnace 17% 47% 0.5 Wall-mounted gas furfance 78% 94% Biomass(methane) furnace 47% 65% 0 Central air-conditioning system 284% 410% Gas-fired central air-conditioning syst 80% 260% Commercial lighting 100% 300% Commerical equipment 100% 150% Residential lighting 100% 300%

Note: The high-energy efficiencies of washing machines, TV sets, refrigerators, other electric appliances, commercial lighting, commercial equipment and residential buildings refer to relative energy efficiencies in comparison with ordinary energy efficiencies and the virtual efficiency improvements caused by the reduction of energy consumption required to provide unit service

64 | CHINA Energy Efficiency Series compressor and heat exchanger, air source heat pumps In the Yangtze River Basin region in China, which covers can generally reach a heating efficiency, Coefficient of Shanghai, Anhui, Jiangsu, Zhejiang, Jiangxi, Hunan, Hu- Performance (COP), of 3 or 4. As compared with that of bei, Sichuan and Chongqing and falls within the hot sum- direct electrical heating, to meet the same heat supply re- mer and cold winter climate zone, there are six billion quirement, the power consumption of the air source heat square meters of urban residential buildings and about pump is only 1/3-1/4 that of direct electric heating, indi- 200 million urban residents. For a long period, the resi- cating a very remarkable energy efficiency improvement. dential buildings in this region have generally featured low indoor temperatures and poor thermal comfort in Air source heat pumps are highly applicable to multiple winter. With improvement in living standards, local re- climatic regions in China and are the best technology so- sidents increasingly demand higher indoor temperatures lution for providing heating for buildings in regions wi- in winter, so space heating energy consumption can be- thout access to a central heating system. Since they can come a major driver to building energy demand increase take heat directly from the outdoor air, air source heat in this region in the future. To meet the space heating pumps may be continently installed for each house or needs in this region, it is not advisable to adopt the large- apartment and save building space. In the regions with a scale district heating systems as in North China. A better minimum winter outdoor air temperature between -10°C option is decentralized heating modes such as the decen- and +10°C, an air source heat pump can be used for space tralized adjustable air source heat pump and the gas-fired heating. Air source heat pumps can have many indoor wall-hanging stove. terminal heating modes. Floor radiant heating and/or indoor machine terminals can be adopted, or a fan coil can According to a recent survey, at present most urban be used to direct hot wind to the indoor environment. households in the Yangtze River Basin region use elec- When floor radiant heating is adopted, the temperature tric power or gas-driven decentralized and local heating of the hot water heated by the heat pump is controlled modes in winter. The indoor temperature in the heating at 35°C or so and can meet demand, so that the energy space are only 14°C-16°C in general, while the energy utilization efficiency of the air source heat pump can consumption intensity for heating in winter is about be significantly improved. The indoor thermal comfor- 2-4kWh/m2 - much lower than the energy consumption tability realized by the floor radiant heating mode can intensity for heating in urban areas in North China be more easily guaranteed than direct hot air supply, so (THURBERC 2013). According to the investigation, if the mode of ‘air source heat pump with floor heating’ has air source heat pump technology is used for heating, the more advantages in terms of system energy conservation power consumption in each winter is about 6-8 kWh and indoor thermal comfortability. per square meter, equivalent to 2-3 kgce. If a gas-fired wall-hanging furnace is used for heating, average energy For the very cold regions, low-temperature heat-pump consumption per square meter of building area is 3-5 m3, technology can be used to improve reliability, safety and equivalent to 3-5 kgce (THUBERC 2013). If a large-scale energy efficiency for space heating. For example, the air central-heating mode is used for residential buildings source heat pump technology based on a two-stage en- with a total area of 6 billion square meters in this region, hanced vapor injection variable frequency compressor the heating energy consumption intensity in each winter can be used to enhance vapor injection and change the can reach 8-12 kgce per square meter, which is 3-5 times displacement ratio through the two-stage compression of that of a decentralized heating mode mainly providing a single compressor and significantly improve the capaci- electric heating, so that the total energy consumption for ty of the heat pump. Being able to expand the application heating in this region will increase by 50 Mtce (THU- range of the air source heat pump and significantly im- BERC 2013). In other words, for the purposes of heating prove heating and cooling capacity and energy efficiency urban residential buildings in the Yangzi River Basin re- under a -25°C to +54°C outdoor environment, this tech- gion, as compared with using large-scale district heating, nology can be used extensively in cooling in hot areas and air source heat pump technology can save 50 Mtce. As heating in cold areas. As compared with the conventional compared with the adoption of a direct electric heating air source heat pump technology, this technology can im- technology, on the assumption that the heating efficiency prove energy efficiency by 5% t010% under rated heating COP of the air source heat pump reaches three, this tech- (outdoor 7°C) conditions. At an indoor environment nology can save two-thirds of power consumption and temperature of -20°C, it can improve heating quantity by thus save 24 Mtce of heating energy consumption every 50% to 100% and energy efficiency by 5% to 20% (NDRC year. In addition, it can also help the users save heating 2016). This technology has a high adaptability to outdoor expenses. The cost of heating a residential building of ambient temperatures and can be promoted in most of 100 square meters with an air source heat pump is RMB China’s climate areas. 500-600 per winter, while the costs of using gas-fired wall-hanging furnace is RMB 800-1000 per winter. If

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 65 the district heating is adopted, a householder has to pay lighting, hot water and electric elevator, so as to improve a heating cost of about RMB 1500 for a heating season their operation efficiency. For residential buildings in the (THUBERC 2013). It is obvious that using air source heat hot summer and warm winter and the hot summer and pump to provide heating for urban residential buildings cold winter climate zones, it is necessary to give priority in the Yangzi River Basin region is the best solution as to promote insulation of doors and windows, increasing it is technologically feasible, most cost-effective, and has external shading and increasing the use of natural ventila- tremendous energy-saving potential. tion. Since urban buildings in northern areas in China are major energy consumers. For example, the primary ener- For the purposes of the air source heat pump used in the gy consumption for space heating for urban buildings in Yangzi River Basin Region, the applications for air condi- the northern region accounted for about 24% of national tioning in summer and heating in winter have very simi- total building energy consumption in 2013 (THUBERC lar compression ratio requirements for a vapor compres- 2015). The energy conservation retrofit to urban buildings sion refrigeration cycle, so the Yangzi River Basin Region in the northern region can also help improve people's li- is most suitable for winter and summer shared air source ving standards; hence energy conservation retrofit to the heat pump technology. However, when an air source heat existing buildings should be further enhanced. pump is used for heating in winter in this region, it is necessary to take into account condensation from the ou- In general, energy conservation retrofit to the existing tdoor evaporator in the heat pump. In addition, since the buildings cannot be completed by using a single tech- residential buildings in this region generally have poor nology; it always involves the integration, optimization heat-insulating and airtightness performances, these per- and organic combination of multiple techniques with formances must also be improved so as to reduce the heat technological strategies, including demand minimization requirement of buildings and address the heating needs. and supply optimization. For residential buildings, the key strategies are improving the thermal properties of HIO 3 - Carry out deep energy conservation the buildings' envelope structures and reducing the avai- retrofits to existing buildings lable energy loads such as building heating and cooling. Energy conservation retrofits to existing buildings are In recent years, the Chinese market for building envelope retrofitting activities performed for the envelope struc- structure technologies such as high-performance heat-in- ture, heating, air-conditioning, ventilation and lighting sulating materials, Low-E glass, variable sun-shading and systems of existing buildings which do not comply with airtight sealing have been developing rapidly, providing the compulsory standards for the energy efficiency of ci- technical support for tapping the energy-efficiency po- vilian buildings. China has a huge stock of existing buil- tential of buildings. For example, an intelligent window, dings. In 2013, the total area of civilian buildings all over a selective ‘thermo-color’ window, has been developed the country (not including industrial buildings and pro- and used in the National Renewable Energy Laboratory ductive houses in rural areas) exceeded 54 billion square building in the American Department of Energy. It can meters. However, so far, there are only ten billion square change the transmitted heat quantity according to tem- meters of energy-efficient buildings in urban areas, ac- perature changes on the external window pane while en- counting for just a third of the total stock of buildings. suring the normal transmission of equivalent visual light. In addition, in due course, partially energy-efficient buil- The amount of solar heat transmitted in cold winter day dings will need another retrofit. Some practices in the is more than five times the amount of solar heat transmit- world have shown that, through deep energy conserva- ted at noon in hot summer. tion retrofits to existing buildings using integrated de- There are major differences among different regions signs, in particular in northern heating areas, it is feasible in the costs of energy conservation retrofits to existing to reduce buildings’ energy consumption by more than buildings. In the northern regions of China, the costs 30% and significantly improve their indoor comfortabi- of envelop structure retrofit, heat supply metering and lity as well as their market values. the thermal balancing of pipeline networks are generally For the purposes of energy conservation retrofits to more than 35 US$/m2 (RMB220/m2). According to an in- existing buildings, there are different focus points for vestigation on the actual costs, in Beijing, Tianjin, Hebei different climatic regions and building types. For urban and Heilongjiang, the costs of energy conservation retro- residential buildings in the northern region, the focus fits to existing urban residential buildings range from 40 should be on improving the building envelope structure, US$/m2 (250 RMB/m2) to 67 US$/m2 (420 RMB/m2). The promoting heat supply metering, and disseminating the energy conservation retrofit to Hebei No.1 Community thermal balance transformation to pipeline network. For in Tangshan City is an example. The building area of this commercial buildings, the main efforts should be devoted project is about 11,000 square meters; after the retrofit, to the energy conservation retrofit of energy-consuming the heating area reduced to 10,180 square meters. The systems, including heating, air conditioning, ventilation, specific energy conservation measures and the per square

66 | CHINA Energy Efficiency Series meter total costs were as follows: thermal insulation pro- lect relevant information about existing buildings, fail to ject outside the external wall: 14.4 US$/m2 (91 RMB/m2); make adequate analysis of the necessity, feasibility, in- roofing transformation work: 8.7 US$/m2 (55 RMB/m2); vestment to output ratio and investment payback period doors and windows modification: 12.5 US$/m2 (79 RMB/ of energy conservation retrofit projects, and fail to make m2); indoor heating system modification: 14.3 US$/m2 (90 clear the key objectives of such projects. Fourthly, there RMB/m2); other works: 8 US$/m2 (50 RMB/m2); and to- are technical problems. Relevant professionals often lack tal cost for energy conservation retrofit: about 58 US$/ the integration design concept, which is important to m2 (365 RMB/m2). The space heating consumption of this guide energy conservation retrofits to existing buildings. project before and after retrofit are 25.9 W/m2 and 12.0 W/m2 respectively; the retrofit reduced the building's HIO 4 - Use low-grade industrial waste heat for energy consumption for heating by 50%, indicating an space heating outstanding energy conservation effect (Liu et al 2012). Low-grade industrial waste heat mainly refers to the heat The energy-efficiency potential of energy conservation quantity included in flue gas with a temperature below retrofits to existing buildings can be estimated with a 200°C and liquid with a temperature below 100°C, dis- model. Assuming that, in the Intensified Energy-saving charged in the industrial process. Due to the low energy Scenario, by 2050, most existing urban buildings will grade of such energy resources, it is difficult to use low- have undergone an energy conservation retrofit. Among grade industrial waste heat in production processes or the building existing in 2050, 75% will have undergone en- power generation, so the utilization rates are generally ergy conservation retrofits, and 100% of buildings existed low. In the power sector, for example, only 40% of coal- in 2010 will have undergone deep energy conservation re- fired thermal power generation is converted into electri- trofits. The results of the modelling are that, the residen- city, the rest being discharged as waste heat. The other tial buildings and the commercial buildings will be able industrial sectors, such as steel and petrochemicals, also to respectively save 86 Mtce and 32 Mtce of final energy discharge substantial amounts of waste heat. Most indus- consumption of against the Reference Scenario by 2050, trial enterprises merely recover residual heat and use it and residential buildings have much bigger energy-saving for domestic hot water and plant building heating and potential than commercial buildings. only a very small proportion of the total waste heat available is collected and utilized. The demand for low-grade There are certain obstacles to making energy conserva- industrial waste heat is seasonal; the demand is relatively tion retrofits to existing buildings. First, fund raising is low in summer and high in winter. a problem. Such retrofits require a huge investment, so funding is a key issue. In addition, China's existing buil- Urban heating in the north is an important part of ding stock is huge, with a wide distribution range, at building energy use in China. In 2013, the total energy various stages of their use life, different design conside- consumption for space heating to urban buildings in the rations and standards, a variety of structural forms and northern regions was 181 Mtce, accounting for 24% of complicated property ownerships. For residential buil- total national building energy consumption in the same dings in particular, it is very difficult to determine who year. Among the heat sources for space heating in the should be responsible for raising the funds for energy northern regions, cogeneration accounted for 42%, coal- conservation retrofits. Secondly, the market for building fired boilers 48%, gas-fired boilers 8%, and other heat retrofit services is still small and weak. In general, single sources 2% (THUBERC 2015). The wide use of coal-fired projects of energy conservation retrofits to existing buil- boilers for space heating is a major cause of high energy ding can only generate small amounts of energy savings consumption and heavy air pollution in Chinese cities. and the investment payback periods are often long. There At the same time, the northern regions have abundant lacks innovation in the investment and financing models, industrial waste heat resources. It is estimated that the and the market has no strong enthusiasm for such invest- amount of low-grade industrial waste heat discharged in ments. At present, domestic projects of energy conserva- the heating season in this part of the country (the hea- tion retrofits to existing residential buildings are mainly ting season is calculated at four months on average) is dominated by the public sectors, and the size of govern- about 100 Mtce (THUBERC 2015). As an important sup- ment subsidies has an obvious influence on the speed and plementary energy resource, low-grade industrial waste scale of energy conservation retrofits to existing residen- heat can be used in combination with thermal power tial buildings. Third, the foundations for policy making plants and boilers for the central heating of urban buil- and decision making are weak. The relevant government dings, which is of great significance in reducing energy departments fail to make sufficient investigations or consumption through central heating and reducing air analyze the present energy consumption and retrofit po- pollution in northern areas. In fact, urban central heating tential of existing buildings, while regional government is the ideal way of using low-grade industrial waste heat departments fail to make sufficient investigations to col- in winter. Being compatible and complementary with in-

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 67 dustrial waste heat, the regulation and buffering capaci- heat supply networks are created, the total investment ties of urban central-heating systems can to some extent needs will be between US$ 28.6 billion (RMB 800 billion) accommodate the discontinuous and unstable supply of and US$ 158.7 billion (RMB 1 trillion). These large-scale low-grade industrial exhaust heat. heat supply network projects can supply heat to about 10 billion square meters of buildings, replace the consump- Since the heat sources with high waste heat resource po- tion of 150 million tons of dirty coal and save 1 billion tential are often kept away from downtown areas, the tons of water evaporation each year (Jiang et al 2014). economic feasibility of the long-distance heat transmis- Compared with natural gas-fired heat supply, this project sion is a key factor affecting the usability of waste heat can save more than 100 billion cubic meters of natural gas resources. Tsinghua University has now developed a consumption each year (Jiang et al 2014). ‘central heating technology based on absorption heat exchange’, which can improve the heat-generation efficien- At present, there still exist some mechanism and techno- cy of heat sources (such as thermal power plants) by 40%, logy obstacles to using low-grade industrial waste heat and improve the transportation capacity of heat-supply for heat supply. Using waste heat for heat supply repre- networks by more than 50% (Jiang et al 2014). According sents a major opportunity for energy-conservation and to a report issued by the Chinese Academy of Enginee- CO2 emissions reduction and it can bring about multiple ring, depending on major temperature differences, the benefits to the national economy and people's livelihoods. heat exchange technology is able to double the economic But building such a huge inter-provincial and inter-city transport distance of traditional heat-supply networks. infrastructure project needs huge investment, involves In addition, the research has also demonstrated that the enormous interests for various stakeholders, and is very transportation costs of heat-supply pipe networks (inclu- difficult to coordinate, thus strong high-level coordina- ding investment in pipe networks, energy consumption tion is needed. The innovative heat-supply mode requests during the heat carrier transportation process, and heat changes to the traditional perception of urban heat sup- radiation loss) decrease with the increase in transport ply and energy conservation. However, China lacks heat- capacity. If the transport capacity is 5000 MW (able to supply planning based on low-grade heat sources and the meet the heat supply demand for buildings with an area supportive mechanisms for waste-heat based heat sup- of 100 million square meters) and the cost for collecting ply projects, for example, a pricing mechanism that can industrial waste heat is less than 2.4 US$/GJ (15 RMB/ objectively reflect the heat supply costs. There are also GJ), the heat supply cost for the long-distance transpor- multiple technical problems to be solved, including how tation (300 km) of waste heat is lower than that of a natu- to collect heat from each single waste heat source, inte- ral gas boiler. When the heat supply distance is less than gration among multiple waste heat sources, the distribu- 100 km, waste heat based heating supply is more cost-ef- tion and transportation of heat, as well as the operational fective heating supply based on a coal-fired boiler (Jiang regulation of the industrial waste heat system, so as to et al 2014). In general, the waste heat resources within a promote the harmony cooperation between industrial distance of 100 km are sufficient to meet a city’s heating enterprises and the central heating system. demand. 4.3.2 Structural HIOs Based on investigations in the Beijing-Tianjin-Hebei region, there are 95GW of industrial waste heat resources HIO 1 Promote building prefabrication in this region. If a unified large heat-supply network As part of the transformation of the building industry is built to utilize the waste heat resources from power from scattered and outdated handicraft production to plants and industries, combined with natural gas-based massive industrial production based on modern techno- heat supply for peaking hours, there is enough waste logy, building prefabrication involves constructing in- heat to provide heat supply to 2.5 billion square meters dustrial and civilian buildings by means of massive indus- of buildings, offering clean heat supply to all the cities at trial production. This is a change to the production mode county level or above, part of the villages and towns in of the building industry with technical and management the periphery of the large heat supply network and even innovations as its core elements and an effective way to some rural areas. The investment needs of such a project improve the utilization efficiency of energy resources at are estimated at US$ 28.6 billion (RMB 180billion). Such the building construction stage. The traditional practice a project can replace 30 million tons of highly polluting of wet mixing on site usually requires template erection, coal consumption each year, save 200 million tons from of reinforcement assembling and cast-in-place concrete, water being discharged into the atmosphere in the form which leads to low levels of labor efficiency, high resource of steam, and reduce the heat-supply costs to only half consumption, serious environmental pollution and hid- of the natural gas-based heat supply costs. If industrial den problems in building quality and production safety. waste heat is used for heat supply all over the northern In the case of prefabricated buildings, component factory regions and multiple inter-province large-scale regional

68 | CHINA Energy Efficiency Series Box 3. Case Study: low-grade industrial waste heat utilized for urban central heating in Qianxi County, Hebei Province There are three major heat sources in Qianxi County, Hebei Province. All of them are small-size coal-fired boilers featuring small boiler system capacity, low heat efficiency, high pollution emissions and high operating costs. Two large-scale steel plants, Jinxi and Wantong, are located a little more than 10 km away from Qianxi County to the northwest. In their production process, the steel plants discharge large amounts of low-grade industrial waste heat, including waste heat from blast furnace washing, steelmaking, continuous casting and cooling, circulating water for cooling blast furnace walls and the desulfurization workshop section. These waste heat sources, in combination with the low-pressure waste heat steam in steel plants, can basically meet the short-term heat demand of house in Qianxi County. As for meeting the heat demand of further increases in building area of the city, absorption heat pumps can be installed at the heating station in the county to reduce the return water temperature of the primary network. The temperature difference between supply water and return water is increased to reduce energy loss in distribution and transmission and to increase the waste heat recovery rate. Industrial waste heat sources can also be used to address long-term heat supply in Qianxi County. In 2014, Qianxi County implemented a project to use low-grade industrial waste heat in urban central heating, thus achieving a ‘green heat supply’ without increasing coal and natural gas use. This project is running with ‘network-source integrated’ commercial operation model, with a total investment of US$ 89 million (RMB 560 million), and is implemented in three phases. In phase I, the heat supply area reaches 3.6 million square meters, with a heating capacity of 150 MW. In phase II, the heat supply area is expected to be 6.84 million square meters, with a heating capacity of 361 MW. In phase III, the heat supply area will be 10.84 million square meters, with total heat supply capacity of up to 561 MW. Phase I of the project has been operational for more than a year, and it can supply heat for 3.6 million square meters of buildings in the whole of Qianxi country, replacing seven sets of 40-ton coal-fired boilers. The industrial waste heat recovery and use is able to save 63,512 tce of coal each year and thus can realize CO2 emissions reductions by 167,580 ton/year, SO2 emissions reductions 543 tons/year, N2O emissions reductions 473 tons/year, and water saving 0.56 million tons/year, with an overall energy-saving rate of over 85%. This project can significantly reduce the PM 2.5 emissions in Qianxi County in winter. As the next step, Qianxi will make full use of the waste heat from blast furnace slag washing water and from flash steam, install absorption heat pumps in the steel plants, and extract the waste heat from steelmaking, continuous casting and cooling, circulating water for cooling blast furnace walls and desulfurization workshop sections, so as to meet the county's increasing heat load demand. In addition, the building heat exchange station, with its newly increased area at the terminal of the heat-supply network, is required to adopt absorption-type heat-exchange technology to gradually decrease the return water temperature to below 25°C. By increasing the temperature difference between supply water and return water in the primary heat-supply network, it is possible to make better use of the various low-grade waste-heat resources in the steel plants. Qianxi County is the first demonstration city in Hebei Province, or even in China, that has completely utilized low-grade industrial waste heat for central heating for urban buildings. The practice of Qianxi County has proved that using long-distance low-grade industrial waste heat resources for urban heat supply is technically and economically feasible. production is a precondition of factory fabrication. Such Considering energy consumption in buildings, building reinforced concrete components as columns, girders, prefabrication is mainly designed to perfect the perfor- walls, floors, stairs, galleries and parapets are produced mance of the building envelope. It can also improve buil- in modern factories in advance and the finished compo- ding quality, reduce the useful energy load, and decrease nents are then transported to the construction site for the life-cycle energy consumption of buildings by exten- fabricated construction, which requires for high levels of ding buildings' service lives. Moreover, building prefabri- technical matching and integration but greatly reduces la- cation can remarkably reduce the consumption of ener- bor intensity, speeds up construction, saves resources and gy-intensive construction materials and hence indirectly improves build quality. Building prefabrication requires reduce the energy consumption in the industrial sector. design standardization, factory production, assembly at construction sites, and the integration of electrical fit- Existing examples of building prefabrication at home and ment work and process management digitalization such abroad have shown that the prefabrication buildings' use as building design standardization based on final design. life is 10-15 years longer than that of an ordinary buildings, construction material wastage is reduced by 60%,

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 69 construction waste by 80%; and that construction can be construction stages can lead to longer construction time greatly speeded up while the construction quality is im- and higher costs. More specifically, the EPC management proved. For instance, it only took fifteen days to finish mode of integrated design, production and construc- building a thirty-story hotel building in Xiangyin in Hu- tion of building structure, electromechanical and fit- nan Province (Smith 2016). In China, construction waste ment works are not followed. The technical system and is huge, being estimated at 1 billion tons in 2013, of which construction method are not renovated for prefabricated 26% is produced in the building construction process, 74% part design except ‘splitting’ the traditional cast-in-situ in the construction demolition process and only 5% can buildings into components for production and proces- be recycled (Zheng 2015). Therefore building prefabrica- sing, resulting in coexistence of prefabrication and cast in tion is of great importance in saving resources. situ in the same project. The degree of standardization of the modular design of construction products is not high, It is assumed that, in the Intensified Energy-saving Sce- and the components are not standardized and prefabrica- nario, new buildings in cities and towns will be gradually tion cannot take advantage of automatic production lines constructed with building prefabrication after 2010 and and scale production (. An industrial supply chain with that all buildings in cities and towns will be constructed the integrated development of related industries such as in this way in 2050. It is also assumed that the life of buil- building components and fittings has not be formed, and dings constructed in the period from 2011 to 2020 will be parties involved in building sector and the industrial sec- extended from the traditional forty years to fifty years tor cannot collaborate with each other effectively. and after 2020 from fifty years to seventy years. Besides, China’s average per capita floor area in 2050 will reach the lower current levels in developed countries. Accor- 4.4 Policy ding to the model, the longer building use life will reduce the area of new urban buildings to be built between 2010 Recommendations and 2050 by 3.41 billion square meters, thus decreasing the demand for such construction materials as steel and 4.4.1 Strengthening the capacity to cement and avoiding the energy consumption associated promote passive housing with the production of steel and cement. The construc- Establish and perfect the technical standards for pas- tion of 240 million square meters of new buildings in sive housing in China and set up standards, specifica- cities and towns can be avoided in 2050, indirectly redu- tions and construction methods for passive buildings in cing 60 Mtce for final energy consumption in the indus- various climatic regions as soon as possible. Carry out trial sector. Moreover, 30 Mtce of final energy consump- awareness-raising campaigns and training, popularize tion in the building sector will be directly reduced due to the idea of ‘integrated design’ and the design methods of building prefabrication in 2050. passive buildings, improve awareness of the importance Pursuing building prefabrication became a priority of of energy efficiency among real estate developers, buil- China's building energy conservation during the 12th ding designers and energy efficiency assessment person- FYP. At present, more than fifty national prefabricated nel for improving the potential, methods and earnings bases for buildings have been established for the creation of building efficiency. Summarize the experience of ‘in- of over two hundred national demonstration projects of tegrated design’ and select successful cases, develop com- comfortable districts and the Standard of Evaluating In- prehensive building energy efficiency assessment tools, dustrialized Building (GB/T51129-2015) has been enacted. and regularly update real estate developers and building According to a preliminary investigation, the total floor designers about national progresses in building energy ef- area of fabricated buildings in China had reached 35 mil- ficiency improvement, so as to encourage stakeholders to lion square meters in 2015. In the past two years, local take actions as early as possible. Meanwhile, strengthen governments have set out clear requirements for building the professional training of passive building builders and prefabrication development, making prefabrication in- assess their building qualifications. Enhance research and creasingly popular. development into technical products related to passive building, including research and optimization of design However, big hurdles remain in pursuing building pre- procedures, construction and quality control methods fabrication in China. The current technical standards for ultra-low energy-consuming passive building systems and guidelines for buildings are not compatible with the and develop advanced building envelope components technical requirements of building prefabrication, and such as vacuum thermal baffles, double-layer Low-E glass, most current administration systems are applicable to glass window film, light-operated glass windows and air- the traditional construction mode, which requires less tight products. Encourage the development of industries government intervention and coordination. Besides, lack producing green building materials, high-performance of close coordination during the design, production and building envelope components and efficient energy

70 | CHINA Energy Efficiency Series Box 4. Case Study: Building Prefabrication Practice of T30 Hotel in Xiangyin, Hunan Province It took only fifteen days to build a thirty-story hotel with 358 guest rooms in Xiangyin, Hunan Province, by means of prefabrication and installation. A steel-frame structure and curtain wall were used in the hotel construction, 90% of the components being prefabricated and produced in factories. High energy efficiency and low carbon emissions have been pursued throughout the whole construction process, resulting in 10% to 20% reduction in steel use and 80% to 90% decreases in concrete use in comparison similar buildings. During the construction process, there was no fire, water, dust, welding operation on site and concrete or emery cloth polishing was used in the whole construction process, and the construction waste was less than 1% of that produced in traditional construction. The hotel is designed and built to withstand a magnitude 9.0 earthquake, the average building cost is about 1000 US$/m2, 30% lower than that of similar buildings in the same areas in China, and 80% to 90% lower than that of similar buildings in western countries (BSB 2013).

Building Prefabrication Practice of T30 Hotel in Xiangyin of Hunan Province equipment to provide the industrial support for the mass facture more energy-efficient products in advance. The promotion of passive buildings. government should distribute public resources to make people aware of the development roadmap of energy-effi- 4.4.2 Improving the minimum cient appliances and equipment in time. The government requirements for energy-efficiency should create the conditions and provide more financial standards of appliances services to encourage consumers to buy more energy-effi- Gradually improve the energy-efficiency standards of cient appliances and energy-consuming equipment. appliances and other energy-consuming equipment so as to reach optimal international energy-efficiency levels. 4.4.3 Exploring the deep energy Establish the lowest energy-efficiency standard for com- conservation retrofit mode in mon household appliances. Eliminate the low-efficiency relation to existing buildings appliances and carry out regular assessments continually Focus on building external wall insulation, high-perfor- to raise the lowest energy-efficiency standard. Implement mance heat-insulation external windows, air tightness re- a ‘pacemaker’ system for energy-efficiency standards. Im- trofits and efficient heat-recovery fresh air systems with prove the energy-efficiency labeling system of appliances the aim of achieving ‘integrated design’. Give priority to and other energy-consuming consumption equipment adopting passive energy-efficient technologies such as and expand the coverage area of energy-efficiency labeling natural lighting and ventilation. Optimize the active en- products. Agree a series of milestones close to world-class ergy efficiency technology, and implement deep energy appliance markings and send the signals to household conservation retrofit experiments for residential and appliances and energy-consuming equipment manufac- public buildings in cold areas. Explore the appropriate turers to encourage them to research, develop and manu- retrofit mode and technical route, summarize the expe-

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 71 rimental experience in timely fashion and promote it in References other suitable areas. Meanwhile, perfect a market mechanism to facilitate building energy conservation retrofits, Building Energy Research Center of Tsinghua Univer- control the energy efficiency of buildings by means of sity (THUBERC). (2015) Annual Report on China Building modernized information technology such as big data, Energy Efficiency 2015[M]. China Building Industry Press, and encourage an innovative investment and financing Beijing. mode for building efficiency projects. The government has introduced finance and taxation incentive policies Building Energy Research Center, Tsinghua University to promote building energy conservation retrofits, such (THUBERC). (2013) Annual report on China building en- as revenue or cost relief, grants or discounts, as well as ergy efficiency 2013. China Building Industry Press, Beijing. soft loans, to create incentives to offset the partial costs Broad Sustainable Building (BSB). (2013) Modular pre- of building energy conservation retrofits and attracting fabricated housing construction: limitations and op- energy management companies into the building energy portunities. http://www.greenindustryplatform.org/ conservation retrofit market. wp-content/uploads/2013/07/Broad-Group-BSB-T30- 4.4.4 Strengthening the planning of Tower-Hotel_Technical-Briefing.pdf using industrial waste heat for city Energy Research Institute, Rocky Mountain Institute, heating supply and Lawrence Berkeley National Laboratory (ERI, RMI, Scientifically analyze the heat supply potential of indus- and LBNL). (2016) Reinventing Fire China: A Roadmap for trial waste heat in the northern heating area, introduce China’s Revolution of Energy, Production and Consumption to industrial waste heat as a heat source into local heat- 2050. Sept.,2016. supply planning, and create a new model of heat supply Jinran Zheng. (2015) 57-Floor Building Goes up in 19 Days. with cogeneration and industrial waste heat as the heat China Daily USA. May 5 2015. Available at: http://usa. supply base, with gas-fired boilers being responsible for chinadaily.com.cn/epaper/2015-05/05/content_20626039. pitch peak as well heat pump heating and other efficient htm. scattered heat supply methods as the supplementation. Carry out pilot projects involving cross-region waste-heat IEA, Tsinghua University. (2015) Building Energy Use supply, such as the ‘integrated’ heat-supply experiments in China: Transforming Construction and Influencing in the Beijing-Tianjin-Hebei regions. Establish the spe- Consumption to 2050, OECD/IEA, Paris. 2015. cial leading group to coordinate the relevant sectors and Ministry of Housing and Urban-Rural organizations. Work out and introduce a supporting me- Development(MOHURD). (2013) Feasibility study report chanism to guarantee implementation of the new mode on popularization of passive residential buildings in China. De- of heat supply, such as adjusting the settlement mecha- cember, 2013. Science and Technology Promotion Center, nism of the heat source units and heat-supply network Ministry of Housing and Urban-Rural Development. units to encourage them to work together in reducing the Ministry of Housing and Urban-Rural return water temperature. Institute the deep recycling of Development(MOHURD). (2014) Report of National Buil- low-grade industrial waste heat, with sub-building mea- ding Energy Efficiency Inspection Situation on Specialized Su- surements and household apportioning mechanisms in pervision and Inspection on Energy Conservation and Emission favor of implementing heat metering and charging sys- Reduction in The Field of Housing and Urban-rural Develop- tems. Develop the relevant technologies and facilities ment in 2013. Building Energy Efficiency and Science & for low-grade waste-heat supply such as absorption heat Technology Division, Ministry of Housing and Urban- pumps, remote transmission and the distribution of mas- Rural Development sive industrial waste heat, as well as the optimization and adjustment of waste heat systems. Ministry of Housing and Urban-Rural Development (MOHURD). (2015) Report of National Building Energy Efficiency Inspection Situation on Specialized Supervision and Inspection on Energy Conservation and Emission Reduction in The Field of Housing and Urban-rural Development in 2014. Building Energy Efficiency and Science & Technology Division, Ministry of Housing and Urban-Rural Deve- lopment. Ministry of Housing and Urban-Rural Development (MOHURD), German Energy Agency (GEA). (2013) Handbook for Passive Low-energy Consumption Building De-

72 | CHINA Energy Efficiency Series monstration Projects (China-German cooperation). Octo- ber 2013. National Development and Reform Commission (NDRC). (2016) Description of Chinese ‘Double Top-ten’ best energy-saving technologies and practices. http:// www.cecol.com.cn/news/20160106/01301706.html.http:// www.cecol.com.cn/news/20160106/01301706.html. National Government Offices Administration (NGOA). (2015) Annual Statistical Analysis Report on Energy Consump- tion of Public Institutions in 2014. December 2015. Ryan E. Smith. (2016) Off-Site and Modular Construction Explained. https://www.wbdg.org/resources/site-and- modular-construction-explained Wenke Han, Jianguo Zhang, Lijing Gu. (2013) Green Buil- ding Actions in China[M]. Beijing: China Economic Pu- blishing House. 2013. Yi Jiang et al. (2014) Suggestions on how to comprehensively popularize the use of industrial waste heat for heating to significantly reduce the haze in winter in northern areas. Chinese Academy of Engineering, 2014. Yueli Liu, et al. (2012) Energy Conservation Retrofit to the Existing Residential Buildings[M]. Beijing: China Building Industry Press, 2012.

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 73 5chapter Energy Efficiency Policy and High Impact Opportunities in the Transportation Sector in China

Wenjing YI

74 | CHINA Energy Efficiency Series At present, energy consumption in the transportation 5.1 Review of Achievements sector accounts for 10% of national final energy use. Along with economic development and the improve- and Policies Regarding ments in living standards, demand for transportation Energy Efficiency will also increase rapidly. The energy consumption of Improvements to the transportation sector in the developed countries ge- Transportation in China nerally stands at 20%-40% of their final energy consumption. Similarly, the share of transportation energy use in China is bound to increase, and this sector will become 5.1.1 Improvement to Energy a key sector contributing to energy consumption growth. Efficiency in Transportation There is also a gap between China and the developed The Chinese government set out forward the mandatory countries in per capita transportation energy consump- targets of energy conservation and emissions reduction tion. In the major developed countries, per capita trans- during the1.2 11th FYP, breaking down the national target port energy consumption is generally above 0.6 ton of oil and setting local targets for all provinces and sectors. The equivalent (toe), while in China it was only 0.16 toe in transportation吨 1 sector began to intensify its efforts and 标 2010, less than 1/13 that in USA. If the per capita trans- measures煤 for0.8 energy conservation and emission reduction portation energy use in China reaches 0.6 toe, the current measures/ during the 11th FYP period, implemented key 万 0.6 average level in the developed countries, total transpor- energy吨 conservation projects, and made remarkable pro- tation energy consumption will amount to 840 million gresses 公in improving0.4 the technology and management of 里 toe, assuming the total population remains the same, energy conservation.0.2 However, the effects of these mea- imposing severe strains on energy security and environ- sures and efforts are not sufficient to reverse the overall mental protection. Therefore, the targets for transporta- trend that the0 transportation sector is heading toward a tion development should not only be focused on meeting system of high energy intensity. The shares of the railways mobility demand, but also on introducing the notion of and waterways in transport in China are still declining, an energy revolution in order to achieve a breakthrough and the share of public transport is still shrinking due to in energy consumption. This chapter will describe the en- rapid growth in private cars.Energy Construction consumption per of unit comprehen of turnover- ergy conservation achievements and policies in China’s sive transportation1.2 systems remains weak. The institutio- transportation sector, seek to project the country's trans- nal barriers to freight transport modal shift and the esta- 1 portation energy demand in the coming decades and de- blishment of a seamless transition system for passenger

sign some pathways for achieving high energy efficiency. transport0.8 have not been eliminated. In recent decades,

0.6 FIG 5.1 F. igure 5‑1. Energy intensity changes of the transportation sector0.4 tce/10000 tkm tce/10000 0.2 Average energy intensity of transport sector 0 0.28 Average energy intensity 1995 0.15 0.26 1996 0.18 1997 0.2 0.24 1998 0.22 1999 0.23 0.22 2000 0.24 km) 2001 0.23 - 0.2 2002 0.23 2003 0.26 0.18

2004 0.24 (tce/1000t 2005 0.22 0.16 2006 0.22 2007 0.21 0.14 2008 0.21 2009 0.19 0.12 2010 0.18

2011 0.18 Average operatingenergy intensify of transportationsectorin China 0.1 2012 0.18 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2013 0.2 Year 2014 0.19 Source: based on data in the China Statistical Yearbook and China Energy Statistical Yearbook

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 75 Table 5‑1. Achievement of main indicators in the 12th FYP for energy consumption and emissions reduction of roads and waterways

2015 Accumulative Indicators 2010 target 2014 (%) achievement (%) Reduction rate of energy consumption per ton∙km of road transport (%) 6.2 10.0 12.3 123% Of which, passenger vehicles (per person∙km) 5.8 6.0 12.4 207% freight vehicles (ton∙km) 6.4 12.0 12.6 105% Reduction rate of energy consumption per ton∙km of shipping (%) 8.9 15 18.74 125% Of which, inland shipping 10.1 14 21.85 156% Ocean shipping 8.29 16 16.87 105% Energy consumption per ton of port throughput (%) 7.55 8 16.02 200% Note: The reduction rates listed in the table are compared with those in 2005, in percentage points. The levels for 2011-2013 are calculated based on data from the Mid-term Evaluation Report for the 12th FYP of Transportation Development (document JGHF No.2013). The levels for 2014 are calculated based on data from theStatistical Bulletin of the Development of Transporta- tion Sector in 2014

Table 5‑2. Main targets for railways and civil aviation energy efficiency improvement

2015 Value in Indicator Unit 2010 2015 Target Target 2015 Energy efficiency of railway transport tce/ million ton∙km 5.01 4.76 5% 4.68 132%

Energy efficiency of air transport kgce/ ton∙km 0.450 0.428 5% - - Data Source: 2015 Railway Statistical Bulletin; 12th FYP for Energy Conservation and Emission Reduction the overall energy efficiency level of freight and passen- The energy consumption of the national railways in 2015 ger transport has changed from increase to decrease, and amounted to 15.70 Mtce, reduced by 834,000 tons from the downward trend is slow.11 Energy consumption per the previous year, down by 5%. Comprehensive energy ton∙km of transport in 2012 was higher than the level in consumption per transport turnover was 4.68 tce/million 1995, but compared with 2005, when the national binding ton∙km, up by 0.13 tce/million ton∙km from the previous target for energy conservation and emissions reduction year, at a growth rate of 2.9%. Energy consumption of began to be implemented, it has been greatly reduced. main transport businesses per transport turnover stood at 4.05 tce/million ton∙km, 0.15 tce/million ton∙km higher During the 12th FYP period, the transportation sector than the previous year, or a growth rate of 3.8% (see Table has made steady progress in technical energy conserva- 5-1 and Table 5-2). tion, which is mainly reflected in the following factors. In order to address the energy and environmental pro- As of 2014, the overall energy efficiency levels of road pas- blems caused by the constant growth of vehicle ownership senger transport and inland waterway transport, and per and to further improve the fuel efficiency levels of vehi- port throughput all surpassed the improvement goals set cles, the Chinese government introduced the Phase IV in the 12th FYP and the achievement rates of the goals are Standard for Passenger Vehicle Fuel Efficiency at the end 207%, 156% and 200% respectively. Energy consumption of 2014, which came into effect on January 1, 2016. The per ton∙km turnover of freight vehicle and ocean-going Phase IV Standard introduced the concept of Corporate shipping achieved their target levels both by 105% (see Average Fuel Consumption (CAFC) and automobile ma- Figure 5-1). nufacturers are required stay below the maximum limits for CAFC. The CAFC of each manufacturer is calculated based on the fuel efficiency of each type of passenger 11 The passenger and freight turnovers are combined according to the method vehicles they produce and the vehicle type structure of of the China National Statistics Bureau, which the research group has mo- their vehicle production. The CAFC standard ensures dified based on literature review, with following ratios are used to convert the overall fulfillment of the vehicle energy conservation passenger transport volume in person∙km into freight transport turnover ton∙km: railways 1.5:1, aviation 10:1, waterways 3:1, roads 10:1. objective, and leaves greater flexibility to vehicle manu-

76 | CHINA Energy Efficiency Series factures on their compliance strategy. Hence, it helps ning Railway Energy Conservation, and released the Energy promote technical progress and vehicle type mix optimi- Conservation and Comprehensive Utilization Plan for Rai- zation in the auto-manufacturing industry, as well as the lways during the 11th FYP Period and the Environmental Pro- coordinated development of traditional vehicles and new tection Plan for Railways during the 11th FYP Period. These energy vehicles. documents set the following targets: energy consumption per RMB of transportation revenue should be reduced Table 5‑3. Reductions in Corporate Average Fuel by 20% compared during the 11th FYP period from the Consumption (CAFV) level in 2005, water consumption per person∙km and per ton∙km of transport turnover should be reduced by 30%, Ratio between Actual and gross emissions of main pollutants should be reduced Year CAVP and the target level by 10%. In 2008, the Ministry of Transport enacted the of CAFV Measures for the Roads and Waterways Transportation Sector 2012 109% to Implement the Law of Energy Conservation, and released a 2013 106% Medium and Long-term Development Program for the Energy Conservation of Road and Waterway Transportation. The 2014 103% documents set the following main objectives of energy 2015 and after 100% conservation and emissions reductions for road and wa- Data source: Standard for Improving the Fuel Efficiency Le- terway transport: compared with 2005, by 2010 and 2020, vels of Passenger Vehicle the energy consumption per ton∙km of road freight transport should decrease by 5% and 6% respectively; the ener- Statistics indicate that the CAFC of new passenger vehi- gy consumption per ton∙km of waterway transport shall cles made in China was 7.22 L/100 km in 2013. In particu- be reduced by 10% and 20% respectively. In particular, the lar, the level of joint venture brands was 7.30 L/100 km, energy consumption per ton∙km transport turnover of the level of Chinese brands 6.95 L/100km, and imported sea-going ships should be reduced by 11% and 20% respec- automobiles 9.05 L/100 km. To achieve the target of lowe- tively; while those for inland shipping are 8% and 20% ring the fuel consumption level of passenger vehicles to respectively. The comprehensive energy consumption per 5 L/100 km by 2020 set by the Chinese government for ton of port cargo throughput should be reduced by 5% the 13th FYP period, the fuel consumption level of new and 10% respectively. The Civil Aviation Administration vehicles should be reduced by 6%-7% annually on average. established a leading group for energy conservation and Without the contribution of new energy vehicles, howe- emissions reduction in August 2008 and released the No- ver, this objective will be hard to realize (see Table 5-3). tice on Comprehensively Carrying out Energy Conservation and Emissions Reduction of Civil Aviation and the Energy Conservation and Emission Reduction Plan for Civil Aviation 5.1.2 Review of Main Policies in during the 11th FYP Period. Energy conservation and emis- Promoting Transportation Energy sions reduction was carried in every aspect of civil avia- Efficiency tion. In accordance with the 11th Five-Year Development The transportation sector has experienced some leapfrog Plan for Civil Aviation, by 2010, the energy efficiency of development after the reform and opening-up. Rapid civil aviation should be improved by 10% from the 2005 development also brings about many problems in en- level (per ton∙km oil consumption for airliners and per ergy conservation and emissions reduction, such as poor person/time electricity consumption level for airports), transportation mode mix, high energy intensities, incom- striving to reach 20% improvement by 2020. plete energy consumption standards and labels, etc. To tackle these problems, the Chinese government has enac- Improving transportation energy conservation ted various policies to promote energy conservation and standards and labeling emissions reductions in the transportation sector. Fuel economy assessment is organized for all vehicles in operation. In 2007, the Ministry of Transport proposed Institutional setup the Special Action Plan for the Fuel-efficiency-based Market TheLaw on Energy Conservation, revised in 2007, specified Access and Exit of Operating Vehicles. Afterwards, the Mi- the energy conservation tasks of the transportation sec- nistry of Transport also issued supporting policies for the tor. In order to implement the relevant requirements of implementation of the Special Action Plan, including the the revised Law on Energy Conservation, relevant transpor- Administration Measures for Inspecting and Monitoring the tation sub-sectors have made their own energy conserva- Fuel Efficiency Levels of Road Transport Vehicles and further tion and emissions reductions plans and set their energy defined the working procedures and specific require- conservation objectives. In 2007, the Ministry of Railways ments of all stages in the implementation process, which issued the Suggestions on the Implementation of Strengthe- provided institutional guarantees for the inspection, su-

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 77 pervision and administration of the fuel efficiency per- The restrictions on small-engine vehicles were abolished. formance of on-road vehicles. The Ministry of Transport Based on the suggestions of the NDRC and other govern- released the Scheme for Economic Incentive Policies for the ment agencies, the General Office of the State Council Early Phase-out of Energy Inefficient Vehicles(draft). announced the government policy of encouraging the use of small-engine vehicles for energy conservation and Another important policy is improving the fuel economy environmental protection in December 2005. The sugges- standard system of vehicles and implementing the fuel tions proposed the formulation of relevant supportive consumption transparency and labeling system. In 2005, policies and measures and requested local governments the Limits of Fuel Consumption Levels for Passenger Vehicle to abolish various restrictions on small engine vehicles, were jointly enacted by the General Administration of which are often of high energy efficiency and low pollu- Quality Supervision, Inspection and Quarantine and tion emission. the Standardization Administration. In 2007, the Stan- dardization Administration released the Limits of Fuel Phasing out outdated vehicles and equipment. The Mi- Consumption Levels for Light Commercial Vehicles. In 2009, nistry of Transport issued the Announcement on Launching the Ministry of Industry and Information Technology the Implementation Scheme on Early Elimination of Single- enacted the Administrative Provisions for the Fuel Consump- hull Oil Tankers for Domestic Voyages in 2009. This docu- tion Labeling of Light Duty Vehicles. These provisions clearly ment provides basis for the compulsory elimination of defined the inspection, reporting, filing, labeling, publi- inefficient and outdated ships, further shortens the ser- cation, supervision and penalties, etc. regarding the fuel vice lives of single-hull oil-tankers, and encourages ship- consumption level labeling of vehicles, further improving owners to construct and use oil tankers that comply with the automobile oil consumption transparency and labe- international standards and the national inspection cri- ling system. teria for domestic shipping.

The implementation of pilot and demonstration Another priority area is strengthening the energy conser- projects vation management of transportation. Road transportation management is optimized to achieve the targets of a. A program of building pilot cities for low-carbon energy conservation and emissions reduction through transportation systems was implemented. As many as 26 the following measures: developing express cargo delivery cities have participated in the pilot work and shared their and the construction of logistics information platforms, experiences. b. The green and low-carbon transportation improving the mileage and capacity utilization rates of regional and thematic pilot work. Ten cities, including freight vehicle, enhancing the actual load rate of passen- Chongqing and Xiamen, have been selected for the regio- ger vehicles through intensive management, and imple- nal pilot work. Four ports, including Tianjin and Qing- menting electronic toll collection networks for highway dao, and six highways, including Guangdong’s Guang- usage. The fuel efficiency of civil aviation is increased by zhou-Zhongshan-Jiangmen Expressway and Yunnan's retrofitting aircraft, accelerating aircraft upgrading, and Maliuwan-Zhaotong Expressway, have been included in phasing out highly energy-inefficient and obsolete air- thematic pilot programs. c. Special low-carbon action crafts. for Top 1,000 Enterprises in respect of vehicles, shipping, roads and ports. d. The pilot project of energy consump- Fiscal and tax policies. The Chinese government has tion data collection and monitoring of key enterprises. enacted a subsidy policy to promote energy efficiency. The pilot project was coordinated by four provincial Approved by the State Council, the special fund for the transportation departments and the participants in- retrofitting of obsolete ferries in rural areas has been es- cluded 27 road transport enterprises, 14 waterway trans- tablished and the funding source is the vehicle purchase port enterprises, and 42 port operation enterprises. The tax. A document on the Management Measures for the Use energy consumption of these enterprises was monitored, of the Special Subsidy Fund for Obsolete Ferries in Rural Areas and the data collected and analyzed. has been published. The Ministry of Finance and the Mi- nistry of Science and Technology had enacted a Notice on Policy measures for key fields Carrying out the Demonstration, Promotion and Pilot Work of Energy Conservation and New Energy Automobilesand the Priority is given to public transit development. The Gene- Interim Methods for the Management of the Fiscal Subsidy ral Office of the State Council forwarded the suggestion Fund for the Demonstration and Promotion of Energy Conser- of the Ministry of Construction to give priority to the vation and New Energy Vehicles. development of public transit in September 2005, and issued suggestions for improving public transit infrastruc- Advance the development of road swap trailer trans- ture, optimizing public transit structure, guaranteeing portation. Actively coordinate with relevant sectors and road use priority public transit vehicles. establish the special fund for pilot swap trailer transportation, remove the barriers to the mandatory traffic lia-

78 | CHINA Energy Efficiency Series bility insurance system for trailers, select and release two Along with continuous improvement in the transport sys- batches totaling 75 recommended models of swap trailer tem, the future growth momentum of energy consump- transportation, determine two batches of 95 projects in- tion in China’s transportation sector will be strong. This corporated into the national pilot swap trailer transpor- study to project the future energy consumption forecasts tation, driving eight provinces (autonomous regions and for the Chinese transportation sector is mainly based on municipalities directly under the central government), scenario analysis using the Long-term Energy Alternative including Shandong, Jiangsu, Fujian, and Guangdong, to Planning (LEAP) system. The scenarios are designed to initiate provincial pilot swap trailer transportation. take full consideration to the following factors: the social and economic development targets set in government Promote the application of natural gas equipment in the plans, the latest progresses in resources, environment transportation sector. The government organizes pilot and technology, geopolitics both home and abroad, the for the promotion of natural gas automobiles in intercity selection of different industrialization and urbanization passenger and freight transport and explores the poten- pathways, and expert judgments and analyses regarding tial of using LNG as a fuel for shipping, including a re- potential levels and trends in transportation energy search project and pilot operations of LNG-based inland consumption and carbon emissions.12 shipping. This study divides the Chinese transportation system Establishing a special fund mechanism into urban passenger transportation, intercity passenger The government has established and is improving a spe- transportation and freight transportation, and conducts cial fund incentive mechanism for energy conservation a comprehensive analysis of the demand for transporta- and emissions reduction in transportation. The Ministry tion energy consumption. In the case of urban passenger of Finance and the Ministry of Transportation jointly transportation, the analysis focuses on the energy conser- established the special fund for energy conservation and vation and emissions reduction potential from the opti- emissions reduction of transportation in 2011 and selec- mization of the transportation model in different city ted the priority areas for implementation. Since the es- types, fuel switch and technical advances. For intercity tablishment of the special fund, the concept of offering passenger transportation and freight transportation, the rewards, instead of subsidies, has been implemented for analysis focuses on the energy conservation and emis- a total of 413 projects. The total amount subsidy fund dis- sions reduction potential from the optimization of and tributed is RMB 750 million, realizing an annual energy changes to roads, railways, waterways, aviation and other conservation of 158,000 tce, 262,000 toe of fuel consump- modes of transportation and technical advances. Accor- tion switch to less carbon intensive forms of fuel, and dingly, the projection of energy demand in the transportation sector also divides into energy consumption 699,000 tons of CO2 emissions reduction. During the 12th FYP period, the central government allocated in its bud- for urban passenger transportation, intercity passenger get a total of RMB 3.23 billion for energy conservation transportation, and freight transportation (see Figure and emissions reduction in transportation. Jiangsu, Shan- 5-2). Railway transportation includes energy consump- dong, Hubei and a few other provinces also established tion during transportation (traction and auxiliary tra- a special fund for energy conservation and emissions re- vel), but excludes energy consumption during auxiliary duction in local transportation. This gives full play to the processes (while in stations); road transportation energy crucial role of the special fund for energy conservation consumption refers especially to the fuel consumption and emissions reduction in social and economic develop- of operational road vehicles; waterway transportation ment, effectively bringing about the in-depth promotion energy consumption mainly refers to the fuel consump- of transportation energy conservation and emissions re- tion of inland river, coastal and ocean-going ships; avia- duction work. tion transportation energy consumption refers to the fuel consumption of civil aircraft; and urban passenger transportation energy consumption refers to the energy 5.2 Prospect for Energy consumption of public transit in urban areas (buses/elec- Consumption in the tric buses, taxis), rail transportation, private vehicles and Transportation Sector motorcycles. (two scenarios, by 2050) Transportation energy consumption in China’s existing statistics only includes the energy consumption of operational vehicles, including public transport, private vehi- 5.2.1 Methodology cles, and vehicles of industrial enterprises. However, en- Along with economic and social development and impro- ergy consumption in stations, like the supply of heating, vements in living standards, passenger and freight transportation demand will see sustained and steady growth. 12 The base year of this research is 2010.

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 79 Figure 5‑2. Transportation Model Framework China's transportation System transportation China's

lighting and buildings, is also included. In order to better tonnage, annual trip distance, empty trip ratio, and ac- reflect energy consumption in transportation, data from tual load rate of different types of trucks with the freight the energy balance sheet are adjusted based on technical turnover (4.4 trillion ton kilometers in 2010). Then a parameters, including vehicle fuel economy, annual travel correction is made to diesel consumption in the energy mileage of vehicles, empty trip ratio, load rate, etc. By lin- balance sheet in accordance with the total annual vehi- king energy consumption to the number of vehicles and cle kilometers traveled (VKT) on the basis of the annual the relationships between transportation activity levels, mileage of the vehicle and the number of vehicles, as transportation structures and energy consumption inten- well as fuel consumption per hundred kilometers, actual sities, data for the base year are adjusted for projections load rate, etc. Through this method, a connection is esta- of future energy consumption. During the data adjust- blished between vehicle, turnover and energy consump- ment process, different energy types are checked against tion data. In the future, the energy consumption of road the number of vehicles, running mileage, fuel consump- freight can be added bottom-up on the basis of the variation per hundred kilometers, turnover, overload, and tion trend and the potential of a series of physical para- empty trips. The connection between transportation meters such as number of vehicles, fuel consumption per turnover and vehicle energy consumption is analyzed. hundred kilometers, annual running mileage, actual load For example, when calculating the diesel consumption of rate, etc. (see Figure 5-3). freight trucks, it was found out that in 2010, there were After adjustment, the energy consumption of the trans- 10.5 million trucks in operation in China, including 9.96 portation sector in China in 2010 was estimated as 306 million ordinary trucks and 540,000 special trucks. The Mtce, accounting for 10% of the national final energy correlation is made by combining the average figure for consumption. Based on the quantity of equipment, fuel

80 | CHINA Energy Efficiency Series kilometers, actual load rate, etc. Through this method, a connection is established between vehicle, turnover and energy consumption data. In the future, the energy consumption of road freight can be added bottom-up on the basis kilometers, actualkilometers, loadkilometers, rate, actual etc. actualload Through rate, load etc.this rate, Through method, etc. Through thisa connection method, this method, ais connection established a connection is between established is established vehicle, between turnover between vehicle, and vehicle, turnover turnover and and of the variation trend and the potential of a series of physical parameters such as number of vehicles, fuel energy consumptionenergy energy consumptiondata. In consumption the future, data. Inthe data. the energy future,In the consumption future,the energy the energy consumptionof road consumption freight of can road be of freight added road freight canbottom be canadded-up be on bottomadded the basis bottom-up on -theup basison the basis consumptionof the variation perof hundred the tren of variationd the and variationkilometers, the tren potentiald and tren d the annual of and potentiala seriesthe running potential of of physical a series ofmileage, a parametersseries of physical actual of physical such parameters load as parameters numberrate, such etc of as such. vehicles,(see number as Figure number offuel vehicles, 5 of-3) vehicles,. fuel fuel consumption consumptionper hundredconsumption kilometers,per hundred per hundred annual kilometers, running kilometers, annual mileage, annualrunning actual running mileage, load mileage, rate, actual etc .loadactual (see rate, Figure load etc rate, .5 (see-3) etc. Figure. (see Figure5-3). 5-3). Figure 5‑3. Establishing the connections between turnover, energy consumption and vehicles

Energy consumption by Activity level Energy consumptionEnergyEnergy consumptionby consumptionPhysical by Physical byparameter Physical pPhysical arameter parameter parameter Activity levelActivity Activity level level typetype type type

Number of vehiclesNumberNumber of ofvehiclesNumber vehicles of vehicles DieselDiesel Diesel Diesel Annual running mileageAnnual of running vehicleAnnual mileage running of mileage vehicle of vehicle Gasoline Gasoline Gasoline Fuel consumptionAnnual Fuelperrunning hundred consumptionFuel mileage consumption per ofhundred vehicle per hundred GasolineAviation kerosene Aviation keroseneAviation kerosene Fuel consumption per hundred Ton-kilometer Ton-kilometerTon-kilometer kilometers kilometerskilometers Passenger-kilo PassengerTonPassenger-kilo-kilometer-kilo AviationNatural gas kerosene Natural gasNatural gas Load capacity andLoad number kilometerscapacity ofLoad andcapacity number and of number of Natural...... gas ...... meter meterPassenger meter -kilo passengersLoad capacity passengers and numberpassengers of trips trips trips ...... Unloaded ratio UnloadedUnloaded ratio ratio meter passengers trips Unloaded ratio

Figure 5-3. EstablishingFigureFigure 5-3. Establishing the 5- 3connections. Establishing the connectionsbetween the connections turnover, between betweenenergy turnover, consumption turnover, energy energy consumption and vehicles consumption and vehicles and vehicles

AfterFigure adjustment,After 5-3 the .adjustment, AfterEstablishing energy adjustment, consumption the energy the energy consumptionofconnections the consumptiontransportation of the between transportationof sector the transportation in turnover, China sector in 2010 insector energyChina was in estimatedinChina 2010 consumption in was 2010as 306estimated was Mtce, estimated and as 306 vehicles asMtce, 306 Mtce, accounting forTaccountingabl 10%e 5‑4.accounting of Ethe fornergy national 10% consumptionfor of 10% finalthe nationalof energy the for national consumption.finaleach energytype final in energyconsumption. transportationBased consumption. on the Based quantity sector Basedon after ofthe equipment, onquantity adjustment the quantity of fuel equipment, in efficiency, of2010: equipment, 1,000tfuel efficiency, fuel (tce) efficiency, load rate, unloadedload rate, loadratio, unloaded rate, actual unloaded loadratio, rate actual ratio, and loadactual other rate loadphysical and rate other parameters,and physical other physical totalparameters, energy parameters, consumptiontotal energy total energy consumptionis allocated consumption tois allocated is allocated to to After adjustment,Gasolin the eenergy Diese lconsumption Kerosene Fofue thel oil transportation LPG Coal sectorNatural in gasChina He atingin 2010 El ewasctric estimated Total as 306 Mtce, each transportationeach transportation eachmode transportation and sub mode-sector andmode by sub a andcombination-sector sub- bysector a combinationof by top a- combinationdown andof top bottom- downof top-up -anddown met bottomhods and bottom-(seeup met Table-uphods met5- 4)(seehods. Table (see 5 Table-4). 5-4). accountingTable for 5- 499,20010%. EnergyTable of consumption 5theTable-154,0404. Energynational 5-4 . Energy consumption23,560for finaleach consumption type energy18,380 for in transportationeach forconsumption. type 580each in type transportation sector250 in transportation afterBased4,490 adjustment sector on aftersectorthe in adjustmentquantity559 2010after :adjustment 1,000t in2,850of 2010 (tce)equipment, in : 1,000t2010306,330: 1,000t(tce) fuel (tce) efficiency, load rate, unloaded ratio, actual load rate and other physical parameters, total energy consumption is allocated to Natural NaturalNatural each transportationGasolineefficiency, DieselGasoline mode Gasoline load Keroseneand rate,Diesel sub unloaded Diesel- sectorFuelKerosene oil ratio, byKerosene actualaLPGFuel combination loadoil Fuel rateCoal oilLPG and ofnoverLPG topCoal of-down the HeatingCoal transportation and ElectribottomHeating sectorc Heating-up Total inElectri met China hodscElectri by 2050.Total (seec The TotalTable 5-4). other physical parameters, total energy consumption is factorsgas affectinggas passenger gas and freight turnover also in- Table99,200 5-4. allocatedEnergy 154,04099,200 toconsumption each 99,200 23,560 154,040transportation 154,040 18,380for23,560 modeeach 23,560 and type58018,380 sub-sector in18,380 transportation250 580by clude4,490580250 changes sector 250559 in4,490 the after national 4,4902,850 adjustment559 economic 306,3305592,850 structure, in 2,8502010306,330 optimi : 1,000t306,330 - (tce) a combination of top-down and bottom-up methods (see zation of industrial mix, and emerging new technologies Table 5-4). like 3D printing.Natural The changes in economic structure and Gasoline5.2.2 Key Assumptions 5.2.2Diesel Key5.2.2 Assumptions KeyKerosene Assumptions Fuel oil LPG theCoal transformation in growthHeating patterns mayElectri reducec the Total 5.2.2 Key Assumptions freight transportationgas demand for such basic materials as This99,200 study makesThis154,040 studytheThis following makes study 23,560 makesthe assumption following the following18,380 aboutassumption economic assumption about580 and economic about socialsteel economic 250development and cement social and4,490 developmentsocialcomparedbefore development 2050. with before559By the that Reference before2050. year,2,850 By 2050. Scenario, that By year, that306,330 year, This study makes the following assumption about eco- China will reachChina the willChina economic reach will the reachlevel economic ofthe a economicmo levelderately of level adeveloped mo ofderately a mo countryderately developedand at developed thatthe country time,contents country withat thatand a GDP attime,distances that of with time, US$ of a withGDPfreight44 trillion, aof GDP transportation US$ of 44 US$ trillion, 44 trillion, nomic and social development before 2050. By that will also be changed. After the possible optimization a per capita GDPa per of capita aUS$ per 32,000GDPcapita of GDP (at US$ constant of 32,000 US$ prices32,000 (at constant in (at 2010), constant prices and in pricesan 2010), urbanization in 2010),and an andurbanizationrate anof urbanization78%; andrate theof rate 78%;environmental of and 78%; the and environmental the environmental year, China will reach the economic level of a modera- of industrial mix, the distance between the production quality will betelyquality fundamentally developedquality will be willcountry fundamentally improved. be fundamentally at that China improved.time, will with improved. realize Chinaa GDP the will Chinaof visio US$ realize willn ofand realizeBeautifulthe visio consumption then China: ofvisio Beautifuln blueof areas Beautiful sky, China: can green be China:blue shortened.land, sky, blue green green sky, Production land, green green land, green 5.2.2 hills,Key clear Assumptions water,44hills, trillion, livable clearhills, awater, environment,clearper capita livablewater, GDP livable environment, and of high US$environment, work 32,000 and satisfaction. (athigh and constant work high Chinasatisfaction. workand will satisfaction. consumption construct China willChina a modern willconstruct will be energyconstruct conducted a modern production a modern locallyenergy energyandproduction near production prices in 2010), and an urbanization rate of 78%; and the and utilizationand system utilizationand with utilization advancedsystem system with concepts, advanced with advancedhigh concepts,-efficiency, concepts, high low-efficiency, high-carboneach-efficiency, another,emissions, low-carbon low to cle reduce-carbon emissions,an and theemissions, environmentally demand clean and cle for anenvironmentally long-distance and environmentally environmental quality will be fundamentally improved. This friendly,study makesadvancedfriendly, the infriendly, technology, advancedfollowing advanced in and technology, assumption cost in technology,-effective. and cost about and-effective. cost economic-effective. and andlarge-scale social transportation development of goods. before Technologies 2050. ofBy that year, China will realize the vision of Beautiful China: blue sky, the third industrial revolution like 3D printing can help China will reachgreen the land, economic green hills, level clear ofwater, a mo livablederately environment, developed country at that time, with a GDP of US$ 44 trillion, Economic andEconomic socialEconomic development and social and developmentsocialis a major development driver is a formajor is transportation a drivermajor fordriver transportation demand.promote for transportation In local the demand. productionfuture, demand. Inenergy the and future,In consumption reducethe future,energy freight energy consumptionin transporta consumptionin in and high work satisfaction. China will construct a mo- a per thecapita transportation GDPthe of transportation sectorUS$the transportation 32,000will mainly sector (at be sectorwillconstant related mainly will to mainly prices betransportati related be in related to2010),on transportati demand, to tion andtransportati demand. includingonan demand,urbanizationon The activitydemand, includingrapid level, developmentincluding rate activity transportation of 78%;activity level,of information and transportationlevel, the transportation environmentaland dern energy production and utilization system with ad- communication technologies may reduce the demand for structure andstructure efficiencystructure and of efficiencyequipment. and efficiency of equipment. of equipment. quality will be vancedfundamentally concepts, high-efficiency, improved. China low-carbon will realize emissions, theintercity visio passengern of Beautiful travel services. China: In addition, blue sky, ICT green tech- land, green clean and environmentally friendly, advanced in techno- hills, Activityclear water, levelActivity is livablethe Activitymost level importantenvironment, is level the most is factorthe important most affecting and important factorhigh future affectingworkfactor energy affecting satisfaction. future consumption nology,energyfuture energy consumption inChina homeChina’s consumption will offices,transportation in construct China’s in improvements China’s transportation sector. a modern transportation The in sector.logistics, energy sector.The better production The logy, and cost-effective. urban planning and layout and other factors will affect leading driverleading of activityleading driver levels ofdriver activity is GDP.of activity levels This islevelsstudy GDP. mainlyis This GDP. studyadopts This mainly study the methods mainly adopts adoptsofthe historical methods the methods trendof historical regression, of historical trend elastic regression, trend regression, elastic elastic and utilization Economicsystem withand social advanced development concepts, is a major high driver-efficiency, for the travel low activity-carbon levels emissions, of urban citizens. cle an and environmentally analysis andanalysis referenceanalysis and to reference international and reference to international experience, to international toexperience, determine experience, to the determine freight to determine and the freightpassenger the freight and turnover passenger and passenger of turnover the turnover of the of the friendly, advancedtransportation in technology, demand. Inand the cost future,-effective. energy consump - Optimization of transportation structures may bring transportationtransportation sectortransportation in China sector by 2050. insector China The in by Chinafactors 2050. by affecting The2050. factors The passenger factors affecting affectingand passenger freight passenger turnover and freight and also freightturnover include turnover changesalso include also in include changes changes in in tion in the transportation sector will mainly be related about huge energy savings, but it has a longer implemen- Economicthe national and tosocialeconomicthe transportation nationalthe development structure,national economic demand, economic optimization structure, isincluding a structure,major optimizationof activity industrial driver optimization level, ofmix,for transindustrial transportationand of- industrialemergingtation mix, cycleand mix,new emerging anddemand. technologiesand faces emerging newmore In technologies likethe difficulties.new 3Dfuture, technologies printing. like energyDue 3D tolike printing.the consumption3D cur- printing. in The changesportation Thein economic changesThe structure changes structurein economic and in andeconomicefficiency structure the transformation structure ofand equipment. the and transformation in the growth transformation patternsrent in growth status may in growth of patternsreduce the transportationpatterns the may freight reduce may tra reduce thensportationinfrastructure freight the freighttra nsportation and tra thensportation the transportationdemand for suchActivitydemand sectorbasicdemand for level materials such will is for thebasic suchmainly as most steelmaterials basic importantand bematerials cementasrelated steel factor ascompared and steelto cement affectingtransportati and with cement compared thegrowing Referencecomparedon with servicedemand, the withScenario, demandReference the including Reference andin China,Scenario, the contents Scenario,thereactivity and is andthegreat and contentslevel, potential the contents transportationand and structuredistances and ofefficiency futuredistances freight distances energy transportation of of freight equipment. consumption of freight transportation will transportationalso in be China’s will changed. also will transportation be After also changed. thebe changed. possiblefor After changing the optimizationAfter possible the the transportation possible optimization of industrial optimization structure. of mix, industrial the of The industrial mix,leading the mix, the sector. The leading driver of activity levels is GDP. This directions of change include replacing road freight trans- Activity level isstudy the mainlymost adoptsimportant the methods factor of affecting historical trend future re- energyportation consumption with railways and in waterwaysChina’s transport,transportation impro- sector. The gression, elastic analysis and reference to international96 ving96 freight96 vehicle structure by promoting larger trucks, leading driver ofexperience, activity to levels determine is GDP.the freight This and study passenger mainly tur- adoptsincreasing the the methods role of pipeline of historical transportation, trend replacing regression, elastic analysis and reference to international experience, to determine the freight and passenger turnover of the transportation sector in China by 2050. The factors affecting passenger and freight turnover also include changes in the national economic structure, optimization of industrial mix, and emerging new technologies like 3D printing. The changes in economic structure and the transformation in growth patterns may reduce the freight transportation Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 81 demand for such basic materials as steel and cement compared with the Reference Scenario, and the contents and distances of freight transportation will also be changed. After the possible optimization of industrial mix, the

96 civil aviation and road transportation with high-speed disruptive change or major technical breakthrough will railways in intercity passenger transportation, increasing appear in the Chinese economic system, industrial mix, the share of public transit in urban passenger transpor- passenger or freight transportation structure, the energy tation, reducing use of private vehicles and taxis, and efficiency level in different transportation modes, as well discouraging the ownership and use of private vehicles. as the development of alternative fuel technologies, al- The transportation structure of the future is analyzed by though some gradual advancement is expected. taking full consideration of the existing traffic infrastruc- Intensified Energy Conservation Scenario (the IEC ture plan, experiences in developed countries, domestic Scenario). Compared with the Reference Scenario, this resource endowment and geographic conditions. scenario includes important breakthroughs in energy Efficiency improvements provide an effective instrument conservation and low-carbon technologies and their wide for slowing down the increases in the energy consump- application. Important measures are also taken to guide tion of the transportation sector. The influence of effi- consumer behavior change for sustainable consumption, ciency improvements on energy consumption comes promote improvements in energy efficiency, optimize not only from the efficiency improvements to trans- mode of transportation, encourage the use of clean and portation equipment, but also from the influence of high-efficient transportation equipment, and promote advanced management technologies such as swap trailer technology progress in the transportation sector. Ano- transportation, logistics information technology on en- ther assumption is that the government’s policies for the ergy consumption in the transportation sector. Drop and economic structure optimization and promotion of the pull transportation can improve the intensity of road energy revolution will achieve remarkable effects. In this freight transportation, reduce the vacancy and improve scenario, the international environment is more suppor- the utilization rate of logistics infrastructure, including tive for the development of clean and low-carbon techno- vehicles, parking areas, and warehouses, and reduce the logies. International technical and funding cooperation energy consumption of vehicles, infrastructure construc- will lead faster progresses in the research and develop- tion, maintenance and operation. Modern information ment of new technologies for low-carbon development. network-based intelligent transportation systems can im- Also, it is assumed that the Chinese transportation sector prove efficiency, reduce the empty trips of vehicles and realizes revolutionary transformation: under the precon- achieve the goals of energy conservation. dition of meeting the established economic and social objectives, the sector also sees great improvements in its In order to better grasp the developing trend of trans- activity level, model structure, and energy conservation portation energy demand in China and discuss the in- technologies. fluence of policies on that demand, and in designing the scenario, the research group has compared the evolution 5.2.3 Analysis of the Modeling Results of the transportation sector at home and abroad and fully considered the evolution of the new technologies. The po- Transportation energy consumption and oil use licy implementation rate is also increased to increase the maintains constant growth in the Reference Scenario energy efficiency of the Chinese transportation sector in In line with the existing pattern of economic and social the future. Based on these factors, the research team de- development, more people will move into large cities and signed two scenarios: eastern coastal regions, and no breakthrough is achieved in industrial transformation or upgrading. To meet the The Reference Scenario. This scenario assumes that the mobility demand, the growth rates in transportation tur- main social and economic objectives of the government nover will be doubled. In order to meet the demand for can be realized smoothly, and that urbanization and in- transportation services, by 2050, the freight turnover will dustrialization will be the main features of China's socio- increase 3.9 times, passenger turnover 4.9 times, and the economic development during the 13th FYP period and ownership of private vehicles 5.9 times (see Figure 5-4). the decades to come. In the transportation sector, such a Scenario has the following implications: the construc- By 2050, energy consumption in the transportation section of infrastructure such as roads, bridges, railways, ci- tor will reach 1.35 Gtce, an increase of 3.4 times from 306 vil aviation, will progress smoothly; high-speed railways Mtce in 2010. The average annual growth rate between and expressways will maintain the current trends of rapid 2010 and 2050 is 3.8%; specifically, the speed of growth growth; the construction of regional aviation will conti- before 2030 will be faster and the annual growth rate will nue at high speed; and the ownership of private vehicles exceed 6%. The growth speed during 2030-2050 will be- will constantly rise as residents' incomes increase. After come slightly lower, with an annual growth rate of about industrialization generally completes by 2030, the growth 1.5%. Energy consumption in transportation is unlikely in passenger and freight transportation service demand to peak before 2050. In the final energy consumption will be slow down. Within the modelling period, no mix, the consumption of diesel will be 617 Mtce by 2050,

82 | CHINA Energy Efficiency Series double the diesel consumption in 2010 and accounting Mtce in 2050, accounting for 11.0% of final transportation for 45.7% of final transportation energy consumption; energy consumption. Growth of electricity consumption the share is slightly lower than the level of 50.3% in 2010. will be limited, only accounting for 3.0% of final traffic Although private vehicle ownership increases 5.9 times, energy consumption in 2050, mainly due to the absence the consumption of gasoline only increases 1.2 times, with of technology breakthroughs in electric vehicles. In addi- gross consumption at 273 Mtce, the second largest fuel tion, bio-fuel use will see a slight increase. Oil products type in transportation energy consumption. This reflects remain the main fuel for transportation sector. The pro- improvements in fuel economy and fuel substitution. Na- portion of fossil fuel will slowly reduce from 97.3% in 2010 tural gas consumption will increase from approximately to 81.0% in 2050, when oil product consumption will be 1% in 2010 to 13.3% in 2050, reaching 179 Mtce, or 134.9 1.09 Gtce. Major changes will take place in the shares of billion m3 of natural gas. Natural gas, as the alternative different oil products. The ratio between gasoline and fuel for vehicles and ships, will be of strategic importance diesel consumption will change from 0.64 in 2010 to 0.44 MtCe 2010 2015 2020 2025 2030 2035 2040 2045 2050 Final energy consumption (MtCe) 306.3if urban467 air pollutions643.7 are 831.3to be alleviated.996.7 The1128 consump1224.1- in 2050.1288.1 The proportion1349.7 of diesel in the consumption of Oil consumption (MtCe) 298.02tion 449.08of aviation609.06 kerosene770.41 will increase903.77 significantly998.91 1057.37due oil products1078.39 will1093.88 experience big changes, thus resulting in CO2 emissions (right axis) (MtCO2) 643.1to the974.3 rapid development1335.7 1718.1 of air transport,2051.1 reaching2310.7 1482494.6 great 2609.5challenges2717.2 to the oil-refining industry. FIG 5.4A Figure 5‑4a. Change in transportation energy demand and energy mix in the reference scenario

1600 Final energy consumption (MtCe) 3000

Oil consumption (MtCe) 1400 CO2 emissions (right axis) (MtCO2) 2500

1200 2000 1000

800 1500

600 1000

400 CO2 emissions (MtCO2) 500 200 Final energyFinal andoil consumption(MtCe) 0 0 2010 2015 2020 2025 2030 2035 2040 2045 2050 Year

Figure 5‑4终b . 端F inal能源消energy费量 use of the transportation sector 2010 2050 Ref. Sc 2050 Ref. S 2010 1百万吨标煤 FIG 5.4B Bio Fuel 0.00 33.65 2.5% 0.0% 1600.0 CNG 1.27 146.98 10.9% 0.4% Coal Unspe 0.25 0.00 0.0% 0.1%

Crude Oil 2.26 14.09 1.0% 0.7% 1400.0航 Natural Gas Diesel 154.04 616.88 45.7% 50.3% 汽 1.8% LPG 油 11.0% Electricity 2.85 40.04 3.0% 0.9% 1200.0 电 LNG Ethanol 0.16 0.11 0.0% 0.1%

3 柴 Fuel Oil 18.38 40.87 3.0% 6.0% Jet Kerosene 1000.0 20.3% Gasoline 99.21 273.39 20.3% 32.4% 天 Heat Heat 0.56 2.61 0.2% 0.2% 3.0% Gasoline Jet Kerose 23.56 148.27 11.0% 7.7% 800.0 3.0% Fuel Oil LNG 1.42 24.52 1.8% 0.5% Ethanol LPG 0.58 0.38 0.0% 0.2% 600.0 Natural Ga 1.79 7.90 0.6% 0.6% Electricity Fuel consumptionFuel (MtCe) 45.7% Total 306.33 1349.68 400.0 Diesel Crude Oil 7.7% 2010 2050 Ref. Scenario Bio Fuel 0.0% 2.5% 200.0 32.4% Coal Unspecified 6.0% CNG 0.4% 10.9% 10.9% CNG 50.3% Coal Unspecified 0.1% 0.0% 2.5% 0.0 Bio Fuel Crude Oil 0.7% 1.0% 2010 2050 Ref. Scenario Diesel 50.3% 45.7% Electricity 0.9% 3.0% Ethanol 0.1% 0.0% Fuel Oil 6.0% 3.0% Gasoline 32.4% 20.3% Heat 0.2% 0.2% Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | Jet83 Kerosene 7.7% 11.0% LNG 0.5% 1.8% LPG 0.2% 0.0% Natural Gas 0.6% 0.6% The freight transportation sector remains a major source slight decline from the level in 2010. Natural gas is an im- of transportation energy consumption. Freight transpor- portant clean alternative vehicle fuel. Compared with the tation will pursue higher levels of efficiency and conve- base year, the shares of electric power, LPG and gasoline nience. The proportion of waterways and railway freight will not change much. transportation will shrink gradually, while road freight The energy consumption of urban passenger transporta- transportation will see its share increasing yearly. In ap- tion will peak in 2040. As the urbanization process acce- proximately 2030, road will overtake waterways and be- lerates, the population living in cities will increase yearly, come the most important mode of freight transportation, but the growth rate will significantly slow down after the and the transportation energy consumption intensity of urban populations reaches 980 million by 2030. Affec- road trucks is much higher than that of waterway ship- ted by urbanization, improvements in urban passenger ping. Therefore, the freight transportation is actually transportation and progress in technical efficiency, ur- developing towards higher energy intensity. Accordingly, ban passenger transportation energy consumption will the energy consumption of road freight transportation peak in 2040 at 310 Mtce. The main factors behind the will be 670 Mtce, accounting for more than 75% of freight peaking are the stability of the urban population size and transportation energy consumption and approximately the gradual saturation in urban mobility needs. Compa- 50% of final transportation energy consumption. Both red to the level in developed countries, China still has the energy consumption and its share will be very consi- some space to further improve the model structure of its derable. In terms of the different fuels used for freight urban passenger transportation structure, but the energy transportation, diesel will be the most important fuel, consumption of its urban passenger transportation is ex- accounting for 74% of freight transportation energy pected to peak before 2050. From the perspective of the consumption in 2010 and 62% in 2050. The main energy energy mix of urban passengers, gasoline is the main fuel alternative to diesel is natural gas. The vehicle models uses for urban passenger transportation energy consumption. will be mainly heavy trucks and light trucks. The organi- In 2050, gasoline is projected to account for 76% of urban zation and efficiency of freight transportation logistics passenger transportation energy consumption, mainly are poor, and the development level of third-party logis- because of its use as fuel for small private cars. The pe- tics is low. Before 2050, this will see some improvement, netration rate of electric vehicles will be approximately but there will be no fundamental change to the dominant 30% of private vehicles and taxis, but the proportion of role of road transportation in freight transportation. their energy consumption will be limited, approximately Intercity passenger transportation energy demand will 9% of the total energy consumption of urban passenger see a strong momentum for growth and a shift towards transport. Natural gas, ethanol and diesel will be used as high levels of efficiency and speed. The proportion of wa- fuel for taxis and buses, and the change will be moderate terway and railway passenger transportation will decline compared with that in the base year. year by year. Aviation's share in passenger transportation will increase to 20% by 2050, but its share of energy Rapid growth in the energy consumption of consumption in intercity passenger transportation will transportation imposes challenges for sustainable rise to 56%. Meanwhile, the share of road passenger trans- transportation development portation will remain stable and it will continue to be Rapid growth in demand creates huge pressure for ener- the most important mode of passenger transportation. gy safety. The energy consumption in the transportation Road transportation will undertake 53% of intercity pas- sector is mainly in the form of petroleum. In the Refe- senger transport in 2050 and its share in intercity passen- rence Scenario, oil product consumption will reach 1.09 ger transportation energy consumption will be 37.4%. The Gtce, and its share in the final traffic energy mix in 2050 passenger transportation turnover undertaken by the will rise to 81% (see Figure 5-5). If the proportion of oil railways will be reduced to 27% in 2050, and the energy consumption in the transportation sector in the whole of consumption will be 6.6%. Since waterways are generally society remains unchanged, then due to the limited space an inconvenient form of passenger transportation and for further increase in domestic oil production, the gap restricted by a wide range of conditions, their service between supply and demand can only be satisfied through level and energy consumption will be very limited. As imports. China's dependence rate on oil import will gra- for the energy mix in intercity passenger transportation, dually increase from 59.5% in 2014 to 88.0% in 2050.13 aviation kerosene and diesel are the main fuel categories. This is 20% higher than the record high oil import depen- Aviation kerosene will account for 55% of intercity pas- dence rate of 67% in the history of the United States, and senger transportation energy consumption in 2050 due to greater popularity of civil aviation. Diesel is mainly used by intercity buses and will account for 31% of the intercity 13 It is assumed conservatively that oil product consumption in other sectors passenger transportation energy consumption in 2050, a remains unchanged based on 2010.

84 | CHINA Energy Efficiency Series 石油万吨

1980 1985 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 消费量 8757.4 9168.8 11485.6 12383.5 13353.7 14721.3 14956 16064.9 17436.2 19691.7 19817.8 21072.9 22495.9 22838.3 24786.8 27126.1 31699.9 32537.7 34875.9 36658.7 37302.9 38384.5 43245.2 45378.5 47650.5 87.574 91.688 114.856 123.835 133.537 147.213 149.56 160.649 174.362 196.917 198.178 210.729 224.959 228.383 247.868 271.261 316.999 325.377 348.759 366.587 373.029 383.845 432.452 453.785 476.505 进口量 82.7 90 755.6 1249.5 2124.7 3615.7 2903.3 3673.2 4536.9 6787 5738.7 6483.3 9748.49 9118.2 10269.3 13189.6 17291.3 17163.15 19453 21139.35 23015.45 25642.39 29437.22 31593.6 33088.81 出口量 1806.2 3630.4 3110.4 2930.7 2859.6 2506.5 2380.2 2454.5 2696 2815.2 2326.5 1643.5 2172.14 2046.7 2139.2 2540.8 2240.6 2888.08 2626.2 2664.27 2945.65 3916.64 4079 4117.038 3884.294 净进口 -1723.5 -3540.4 -2354.8 -1681.2 -734.9 1109.2 523.1 1218.7 1840.9 3971.8 3412.2 4839.8 7576.35 7071.5 8130.1 10648.8 15050.7 14275.07 16826.8 18475.08 20069.8 21725.75 25358.22 27476.56 29204.52 对外依存度 -19.68% -38.61% -20.50% -13.58% -5.50% 7.53% 3.50% 7.59% 10.56% 20.17% 17.22% 22.97% 33.68% 30.96% 32.80% 39.26% 47.48% 43.87% 48.25% 50.40% 53.80% 56.60% 58.64% 60.55% 61.29%

1980 1985 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 生产量 10594.6 12489.5 13830.6 14099.2 14209.7 14517.4 14608.2 15005 15733.4 16074.1 16100 16000 16300 16395.9 16700 16960 17587.3 18135.3 18476.6 18631.8 19044 18949 20301.4 20287.6 20747.8 105.946 124.895 138.306 140.992 142.097 145.174 146.082 150.05 157.334 160.741 161 160 163 163.959 167 169.6 175.873 181.353 184.766 186.318 190.44 189.49 203.014 202.876 207.478 13120.1 12751.1 13769.2 14878.3 17230.7 17185.7 19196.3 21704.2 21420.7 22690.9 25068 30397.4 29522.3 32677.2 34442.6 36168.1 36758.1 41580.6 43647.1 46068

2010 2015 2020 2025 2030 2035 2040 2045 2050 生产量 2.03 2 2 2 2 1.9 1.9 1.9 1.9 净进口 2.29452 4.516481 6.837916 9.179144 11.11426 12.59488 13.44314 13.74813 13.97291 对外依存度 53.06% 69.31% 77.37% 82.11% 84.75% 86.89% 87.62% 87.86% 88.03% 消费量、全社会石油万吨 43245.2 65164.81 88379.16 111791.4 131142.6 144948.8 153431.4 156481.3 158729.1 651.6481 883.7916 1117.914 1311.426 1449.488 1534.314 1564.813 1587.291 交通油品消费量 298.0237367 449.0824 609.0638 770.4093 903.7672 998.913 1057.371 1078.389 1093.879 Mtce 68.91% 68.91% 68.91% 68.91% 68.91% 68.91% 68.91% 68.91% 68.91% MTOE 208.6166157 314.358 426.345 539.287 632.637 699.239 740.159 754.872 765.715

1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050 对外依存度 -19.68% -38.61% -20.50% 7.59% 33.68% 43.87% 58.64% 0 0 0 0 0 0 0 69.31% 77.37% 82.11% 84.75% 86.89% 87.62% 87.86% 88.03%

生产量 105.946 124.895 138.306 150.05 163 181.353 203.014 200 200 200 200 190 190 190 190 消费量 87.574 91.688 114.856 160.649 224.959 325.377 432.452 651.648 883.792 1117.91 1311.43 1449.49 1534.31 1564.81 1587.29

Figure 5‑5. Historical trends and projections of future oil production and consumption

1800 Projection Oil consumption 1600

1400

1200

1000

800

600 Million tonnesMillion (Mt) Oil production 400

200

0 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050

will bring in high risks and uncertainties to China’s geo- riety of organic compounds. More than 50% of the PM2.5 political position. Along with the rise in the dependence contents are the products of various physical and chemi- rate on oil import, fluctuations in international energy cal processes in air and PM2.5 is a typical secondary pol- prices will hugely influence China's domestic economic lutant. The Paris Agreement adopted at the International activities. Oil products, as the main fuel in the transpor- Conference on Climate Change in 2015 is the latest treaty tation sector, are an important component of overall of the international community to jointly address climate production costs. Rises in oil prices will cause higher change. It reflects the decision and will of all countries costs of the transportation and increases in the costs of around the world to promote green and low-carbon de- private vehicle trips. These influences will be transmitted velopment, and to make efforts to control global average through supply chain and create a risk of inflation for the temperatures to within 2°C compared with the level be- whole of society. fore industrialization and to strive to control the temperature rise within 1.5°C. The transportation sector, as the Transportation-related emissions will exacerbate envi- important sector for carbon emissions, should also make ronmental and climate change problems. Today, China a contribution to global carbon emissions reduction. faces severe environmental problems. Each year, the Beijing-Tianjin-Hebei region, the Yangtze River Delta, The existing development trend in transportation makes and the Pearl River Delta are covered in heavy smog for improvements in living quality weak. During the past de- more than one hundred days, affecting a population of cade, urbanization in China has been developing at twice approximately 600 million. In some cities, the number of the world average rate. The problems caused by unplan- days with heavy smog even exceeds 200. One important ned urban sprawl are gradually noticeable. Irrational land factor behind the bad smog pollution is the pollutant use, huge infrastructural investment, increases in private

emissions from the use of motor vehicles. NOX emissions car ownership, bad traffic congestion during rush hours, mainly come from motor vehicles, power plants and and low utilization rates of urban roads and municipal industrial combustion. At least 74% of the near-surface resources are causing a decline in the quality of urban

NOx concentrations are from motor vehicles. Motor vehi- life. Urban residents spend long time commuting and cle emissions are close to the ground and lower than the suffering from various environmental problems in cities. emissions from other sources, thus making it the main Urban sprawl increases the share of trips by private vehi-

source of near-surface NOx concentrations. The PM2.5 cles. Private vehicles can improve access but have high content of motor vehicle emissions is also high, but the external costs in three aspects. The first external cost is sources of PM2.5 pollution are diversified and the mecha- related to various impacts during vehicle uses, including nism of its formation is complicated. In addition to di- air pollution, noise, water and soil pollution, and traffic rect emissions, PM2.5 pollution also stems from physical accidents; the second externality related to vehicle life and chemical processes occurring in the atmosphere. Its cycle when cars are not running on road, including the chemical composition is complicated and includes a va- pollution caused by vehicle production and disposal, land

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 85 occupation for parking, and congestion in parking zones. In the IEC Scenario, China will move towards an urba- The last externality is closely related to transportation nization model in which large, medium and small cities infrastructure, including damage to urban landscape, the develop in a harmonious manner. The dominant role of barrier isolation effects on community life and the sepa- energy intensive industries will be replaced by a combi- ration effect on ecological environment. nation of a service sector and high value-added industry. The internal space layout of cities, assisted by informa- In summary, in the Reference Scenario, if the transpor- tion and communication technologies, can effectively re- tation sector continues the existing development trends, duce trips and improve the efficiency of transportation energy consumption will double by 2050, presenting se- systems. In the IEC Scenario, the vision of constructing vere challenges to national oil security. At the same time, high-efficiency, clean, green, low-carbon, convenient it may trigger various environmental problems in urban and comfortable transportation systems will be realized; areas and climate change, impeding the country's pursuit transportation energy consumption, economic and social for sustainable development. Therefore, development of progress and the environment will be decoupled; and the the transportation sector must be reshaped to save ener- transportation sector will be on the track of sustainable gy and to change existing sustainable development modes development. and trends. Under the IEC Scenario, great efforts will be made to Changing the energy-use mode under the support low-carbon development of the transportation Intensified Energy Conservation Scenario can realize sector, to meet the country's transportation service de- multiple effects of energy conservation and energy mands, and to realize the decoupling of transportation diversification development from energy demand growth. China will In the Energy Conservation Intensification Scenario, by opt for a brand new industrialization pathway, adopt the reducing and adjusting transportation service demand, urbanization mode of coordinated development, opti- optimizing and changing the structure of transportation mize transportation organization and management with services, speeding up the switch to clean fuels and signifi- advanced technologies, and make efforts to improve the cantly improving the energy efficiency level of transpor- energy efficiency of transportation devices. In the IEC tation devices, final energy demand in the transportation Scenario, despite slow growth in transportation energy sector in 2050 will be reduced from 1.35 Gtce to 686 Mtce. consumption, the transportation sector will be able meet The diversification of transportation energy mix and the the national economic and social development's demands shift to clean processes will be significantly accelerated for transportation services. Compared with 2010, the and the energy demand and carbon emissions of the trans- transportation sector's final energy demand will peak portation sector will peak around 2035 (see Figure 5-6). around 2035 and decline thereafter. By 2050, the trans-

Figure 5‑6. Energy conservation potential and pathways in the IEC scenario 1400 1350 755 28 80 863 8% 108 686 60 10 756 5% 69 0 400 286 686 686 1200 1350 253 1000 • Harmonized urbanization 186 • Better664 0 0.989568 800 distribution of 47 • High speed industries 108 686 • and normal Compact cities 69 • railways as • Better logistics 600 Smart cities backbone • ICT Passenger • Public • Swap trailer transit as transportation Freight • Fuel Final Final energy consumption(MtCe) the base • EVs 400 306 • Natural gas economy vehicles and improveme vessels nt 200 • bio-fuel • Super trucks

0 2010 2050 - Reference Green Structure Bigger vechiles Fuel substitution Efficiency 2050-IEC develooment, optimization and better (8%) improvement harmonized (14%) management (4%) (5%) urbanization, smart cities (19%)

FIG 5.6

86 | CHINA Energy Efficiency Series Figure 5‑7. Final energy demand of the transportation sector under different scenarios Difference Final energy use 2010 - Base year 0 360 2050 - Reference 0 1350 1600 Reduction potential 686 664 2050 - IEC Scenario 0 686 1400 1350

1200

-49% 1600 1000 Chart Title 1400 800 Final energy use Difference 1200 686 1000 600 0 Final energyFinal use (MtCe) 800 Final energy use 600 400 360 686 Difference

400 1350 0 200 200 0 664 686 0 360 20100 - Base 2050 - Reduction 2050 - IEC 2010 - Baseyear2010 year - BaseReference2050 year - Reference 2050potential - ReferenceReduction Scenario potentialReduction potential2050 - IEC Scenario2050 - IEC Scenario

FIG 5.7 portation sector's energy demand will be only 686 Mtce; will be only 48.64 Mtce, 50.9% less than the level in 2010. the annual growth rate of the final energy demand for Aviation kerosene demand will maintain a growth rate of transportation during 2010-2050 will be 2.0%, just 0.42% 2.9% during the 2010-2050 period. of the annual GDP growth rate in the same period. Com- Under the IEC Scenario, the government will focus on pared with the Reference Scenario, the final energy de- model innovation and technical progress for early carbon mand for transportation in 2050 under the IEC Scenario emissions peaking and realize the decoupling between will be around half (see Figure 5-7), realizing the decou- transportation development and carbon emissions. In the pling of transportation development and energy demand IEC Scenario, in the future fossil fuel consumption of the increase. transportation sector will see slower growth. By 2050, the Under the IEC Scenario, the transport sector will pro- petroleum demand in the transportation sector will be vide convenient and quick transportation services with only 230 Mt, increasing by just 14% from the level in 2010, high energy efficiency, clean and diversified modes of and just 31% of the petroleum demand in the Reference transportation, while its consumption of fossil fuel will Scenario at that time (see Figure 5-8b and Figure 5-9), not see major increases. China will vigorously develop and it will peak around 2035 at approximately 390 Mt alternative fuels and continuously improve the fuel eco- (550 Mtce). By 2035, the final energy demand of transpor- nomy of vehicles. Future transportation energy demand tation will peak at 720 Mtce. Carbon emissions will reach will see slow growth rates, and the energy mix will be si- 1.43 Gt in 2035 but only 1.23 Gt in 2050, thus realizing gnificantly improved. Figure 5-8a shows the fuel mixes of the decoupling between transportation development and the transportation sector under the two scenarios. Under carbon emissions. the IEC Scenario, biofuel, natural gas and electric power Under the IEC Scenario, the transportation sector will will become the fast growing fuel types in future traffic see constant energy efficiency improvement; its pollu- energy consumption and electric will become the second tant emissions will be significantly reduced; and urban major fuel type, and natural gas the third one. During environment and transportation service quality will see the modeling period, the annual growth rate of diesel remarkable improvement. Such energy efficient trans- oil demand will be only 0.6%. The demand for diesel in portation modes as railways and waterways will see their 2050 will be 187 Mtce, an increase of just 20% from the declining shares in the transportation services reversed. level in 2010. Along with significant improvements in the Along with intelligent transportation system develop- efficiency of conventional gasoline vehicles and the de- ment in urban passenger transportation, public tran- velopment of alternative fuels, gasoline demand in 2050 sit will experience constant improvement in its service

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 87 Figure 5‑8a. Fuel mix of China's transportation sector 100% 2% 3% 8% 90% 13%

80% 21%

50% 800 70%

700 Biofuel Electricity 60% 46% 28% Natural gas 600 Other 50% Diesel Diesel

500 1% Electricity Jet kerosene 40% Gasoline 400 Gasoline 3% Jet kerosene IEC (MtCe)IEC 300 Natural gas 30% 22% 32% Biofuel 20% 200 20%

100 7% 10%

Fuel mix Fuel of thetransportation sector underthe 100% 0 8% 11% 10% 2% 3% 2010 2015 2020 2025 2030 2035 2040 2045 2050 8% Biofuel Natural gasGasoline Jet kerosenDiesel Other Electricity 0% Year 2010 0.2 4 99 23.6 154 21.2 2.9 2010-Base year 2050-Reference 2050-IEC 90% 13%

80% 21% Figure 5‑8b. Final energy demandFIG 5.8 and fuel mix under the IEC Scenario 50% 800 70%

700 Biofuel Electricity 60% 46% 28% Natural gas 600 Other 50% Diesel Diesel

500 1% Electricity Jet kerosene 40% Gasoline 400 Gasoline 3% Jet kerosene IEC (MtCe)IEC 300 Natural gas 30% 22% 32% Biofuel 20% 200 20%

100 7% 10%

Fuel mix Fuel of thetransportation sector underthe 0 8% 11% 10% 2010 2015 2020 2025 2030 2035 2040 2045 2050 Biofuel Natural gasGasoline Jet kerosenDiesel Other Electricity 0% Year 2010 0.2 4 99 23.6 154 21.2 2.9 2010-Base year 2050-Reference 2050-IEC

quality and a constant increase in its share in the urban level will remarkably higher (see Figure 5-10).FIG Compared 5.8 transportation services. At the same time, along with with 2010, the energy consumption per 10,000 km will be technical advances, the energy efficiency of different 0.09 tce by 2050, approximately 40% lower; the energy means of transportation such as the railways, roads, wa- intensity of the transportation sector in terms of its GDP terways, and civil aviation will be remarkably improved, contribution will be reduced by more than 60%. and the transportation sector's overall energy efficiency

Figure 5‑9. Final energy demand and carbon emissions in the transportation sector under the IEC scenario FIG 5.9

1448.1900 1392.9 1314.9 1230.6 Final energy

consumption 2400 800 peaks at 749

700

CO2 peaks 1.5 Gt 1900 in 2035 600

500 1400 CO2 CO2 emissions (MtCO2) 400 Oil consumption Oil and final andfinal Oil energy consumption(MtCe) peaks in 2030 at 900 603 MtCe 300

200 400 2010 2015 2020 2025 2030 2035 2040 2045 2050 Year Final energy consumption (MtCe) Oil consumption (MtCe) CO2 emissions (right axis) (MtCO2)

88 | CHINA Energy Efficiency Series

Figure Error! No text of specified style in document.-1. The available quantity and consumption of steel scrap in China in 2000-2030 and relevant predictions Data source: World Steel Association Report on the Energy Efficiency Potential in the Utilization of Steel Scrap (2012). Figure 5‑10. OverallFigure energy 5-3 efficiency evolution of the transportation sector under the IEC Scenario

Figure 5-10 5.3 Identifi cation of HIOs provement under the Reference Scenario. This can lead in the Transportation to an energy saving of 45.94 Mtce per year(see Figure 5-11). Sector in China The most cost-effective energy-saving opportunities lie in improvements to engine efficiency, aerodynamic impro- The energy efficiency improvement potential lies in both vements, and low rolling resistance tire technology. For transportation mode changes and efficiency improve- the specific cost and energy conservation capacity of each ments to vehicles. The following is an analysis on the high technology, see Figure 5‑12. While the price of diesel is impact opportunities for energy-efficient technologies kept at the level of RMB 7.76/L, except for hybrid power and structural optimization in the transportation sector and vehicle weight reductions, all other energy-efficiency under the IEC Scenario. This is followed by discussions improvement technologies are cost-effective. To achieve on the main barriers and some recommendations on how the objective of improving the fuel economy of trucks by to overcome them. 45% (assuming the operation life of trucks is at seven years on average), about RMB 390 billion (at constant prices in 5.3.1 Technical HIOs 2010) of investments is needed to update truck-driving software, tire monitoring, the electrification of auxiliary HIO 1: Improve the fuel economy of trucks functions and to improve engine efficiency, aerodynamic To improve the fuel economy of trucks, tighter standards performance and the use of other technologies. for their fuel economy should be formulated. The key There exist some barriers to improvements to truck fuel effective technologies in reducing fuel consumption per economy. First, the fuel economy standards for trucks in hundred kilometers by trucks include equipping trucks China are not strict enough, and the enforcement rates with an aerodynamic structure, use of low rolling re- of the standards are low. In the future, China needs to sistance tires, tire pressure monitoring, improving the tighten the standards and improve the compliance rate thermal efficiency of engine, pressure recovery and elec- of the standards. At present, overloading and empty trips trification accessory appliances such as pumps and air- of trucks in China is an extremely serious problem; they conditioning. To improve the fuel efficiency of on-road dramatically increase the actual fuel consumption levels trucks, the problem of frequent severe overloading of of truck. The administration agencies for transportation trucks shall be addressed and policies shall support the should find a way to effectively eliminate the overloading market shift to bigger trucks for freight transportation. of trucks and improve the safety of trucks during on-road Through a package of energy efficiency improvement running. The emissions of a truck are many times those plans and policies for truck energy efficiency improve- of an ordinary light vehicle. To address the problem of ment, it is projected that by 2050, the fuel efficiency of air pollution, more restrictions shall be enacted on truck China’s truck fleet can be improved by 45%, increasing by emissions in the future. This will also indirectly lead to 20 percentage points higher than the 25% efficiency -im fuel economy improvement of trucks. Another barrier

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 89 2010 2015 2020 2025 2030 2035 2040 2045 2050 ICE Scenario 306.3 462.3 630.6 808.5 963 1085.9 1174.7 1233.9 1290.8 Truck efficiency 0 4.8 13.2 22.8 32.7 42.1 49.3 54.2 58.9 Ref. Scenario 306.3 467.1 643.8 831.3 995.7 1128 1224 1288.1 1349.7

Figure 5‑11. Energy-saving potential from inmproving truck fuel economy under the IEC Scenario compared to the Reference Scenario FIG 5.11

1600

1400 1349.7 1288.1 1224 58.9 1200 1128 54.2 49.3 995.7 1000 42.1 831.3 32.7 800 643.8 22.8 600 467.1 13.2 400 Energy consumption(MtCe) 306.3 4.8

200 0

0 2010 2015 2020 2025 2030 2035 2040 2045 2050 Year

Truck efficiency improvement Ref. Scenario

Figure 5‑12. Cost curve of truck fuel economy improvements

Source:Figure Cost-benefit 5-12 Analysis of the Reinventing Fire China Project

is that truck manufacturing enterprises attach little im- HIO 2: Improvements to the fuel economy of light portance to energy conservation technologies, and their passenger vehicles technical research and development capabilities are low. Currently, China is implementing Phase IV of the Stan- These are all important factors affecting the upgrading of dard for Fuel Consumption Limits of Light Passenger Vehicles. truck fuel economy. The standard for the first three phases has played a very important role in promoting the fuel economy of light passenger vehicles in China. In the future, the mandatory

90 | CHINA Energy Efficiency Series

Source: ICCT, updated in September 2015

Figure 5-12 Figure 5-12

Figure 5-12 Figure 5‑13. Improvement in fuel economy in various countries and outlook

Data source: ICCT, updated in September 2015

Source: ICCT, updated in September 2015 national standardsSource: will ICCT, be updated continuously in September implemented 2015 as Through a package of technical improvements, including

an important Source: instrument ICCT, updated for vehicle in September energy 2015efficiency engine design optimization, improvements to vehicle drive level improvements, reductions of urban pollution, and systems, intelligent starting/stopping, energy recovery sys- promoting sustainable development in transportation. tems, aerodynamic performance improvements and fric- According to the predictions of the International Energy tional resistance reductions, the fuel efficiency of vehicles Agency (IEA), the fuel economies of light vehicles will can be improved to 3 L/100km. This includes the contribu- be significant improvement in all countries around the tion of battery electric vehicles and plug-in hybrid electric world in the future (for more details, see Figure 5‑13). vehicles. For the entire fleet, compared with the base year of 2010, the energy consumption per vehicle∙kilometer of 2010 2015 2020 2025 2030 Through2035 the 2040mass application2045 of such2050 new materials as car- taxis on the road can be reduced by 72%, and the energy Taxi 6.31 5.34 4.37 3.7 3.11 bon fiber,2.6 aluminum,2.17 high-strength1.96 1.75 steel and compound consumption per vehicle∙kilometer of private vehicles on Private veh 6.39 5.82 5.18 4.47 3.84 materials,3.31 light-duty2.86 vehicle2.48 will become2.12 lighter in weight. the road can be reduced by 66% (see Figure 5-14).

FIG 5.14 Figure 5‑14. Fuel economy improvement of the private vehicles and taxi fleets under the IEC Scenario

Taxi Private vehicles 6

1 Average vehicle fuel efficiency (kg/100 km)

0 2010 2015 2020 2025 2030 2035 2040 2045 2050 Year

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 91 2014$ fuel economic benefits average of % Incremental costs RMB weight reduction 减重 WT 2.50% 280 1740.6 aerodyn. & friction reduct. 空气动力学 AERO 2.60% 133 826.8 variable valve technologies 可变气门技术 VVT 3.70% 279 1734.4 auto transmission 自动挡 AT6 2.60% 510 3170.5 cont. variable trans 无极变速 CVT 4.30% 266 1653.6 gasoline direct injection 汽油直喷技术 GDI 3.10% 324 2014.2 turbocharging & downsizing 涡轮增压 TRBDS 5.30% 814 5060.3 conersion to diesel 柴油 Diesel 35.70% 3974 24704.8 hybrid 混合动力 HEV 58.10% 4982 30971.1 plug in hybrid 插电式混合动力 PHEV 14723 91527.0

6.2166 人民币兑美元平均汇率2014

2014$ fuel economic benefits average of % RMB weight reduction 空气动力学 AERO 2.60% 826.8 aerodyn. & friction reduct. 无极变速 CVT 4.30% 1653.6 auto transmission 可变气门技术 VVT 3.70% 1734.4 gasoline direct injection 减重 WT 2.50% 1740.6 variable valve technologies 汽油直喷技术 GDI 3.10% 2014.2 aerodyn. & fricont. variabauto transmissio weight gasoline direct inauto tranturbocharging & downsizing cont. variable trans 自动挡 AT6 2.60% 3170.5 0 826.8 turbocharging & downsizing 涡轮增压 TRBDS 5.30% 5060.3 2.60 826.8 conersion to diesel 柴油 Diesel 35.70% 24704.8 2.60 hybrid 混合动力 HEV 58.10% 30971.1 2.60 1653.6 plug in hybrid 插电式混合动力 PHEV 91527.0 6.90 1653.6 Figure 5‑15. Cost curve for the fuel economy improvement of light duty vehicles 6.90 6.90 1734.4

10.60 1734.4 10.60 6,000 10.60 1740.6 13.10 1740.6

& downsizing &

Turbocharging 13.10 5,000

13.10 2014.2

16.20 2014.2

16.20 4,000

16.20 3170.5

trans variable Cont. 18.80 3170.5 3,000 18.80 Variable valve Variable 18.80 5060.3 2,000 24.10 5060.3 Gasoline direct injection direct Gasoline Aerodyn. & friction reduction friction & Aerodyn. Auto transmission Auto cost cost of technology Weight reduction Weight

RMB RMB per % of improvement 1,000

成本 0 节能量 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 1.3 0 2.60 826.8 % of efficiency improvement 4.8 0 6.90 1653.6 8.8 0 10.60 1734.4 Source of Data: Richard A. S., et al., 2015 11.9 0 13.10 1740.6 FIG 5.15 14.7 0 16.20 2014.2 17.5 0 18.80 3170.5 Apart from the technologies for improving the vehicle fuel in the future, EVs can reduce emissions by approximately 21.5 0 24.10 5060.3 economy of light passenger vehicles, switching from fossil 20% during their whole life-cycle (towards 2020, the share fuel to various cleaner fuels can also bring about some ef- of clean energy for the grid will be increased, but the ficiency improvements to light duty vehicles by 2050. For coal-fired power generation will contribute the majority more detailed technologies and costs, see Figure 5‑15. of grid power in China (Zhang et al 2013). The fuel economy of traditional ICE-based vehicles will continuously HIO 3: Development and wide application of battery improve). In our analysis, private vehicle ownership in electric and plug-in hybrid electric vehicles China in 2050 will be 440 million, taxi ownership 3.5 mil- Electric vehicles (EV), as a promising solution for low- lion, and privately owned buses 5 million. Almost all of carbon transportation development, have now been rapi- these vehicles can be electric ones, including BEVs and dly developed in all countries around the world in recent PHEVs. More than 70% of urban buses will be EVs and years. China became the largest EV market in the world play an important role in urban air pollution reduction. in 2015. The main driving forces behind this change in Through the substitution of EVs, by 2050, the Chinese China are policy support and subsidies. Worldwide, the transportation sector can achieve an energy saving of total number of EVs in use has exceeded 1 million. EVs 49.22 Mtce (see Figure 5-16). mainly include battery electric vehicles (BEV) and plug- Compared with traditional ICE-based vehicles, EVs in hybrid electric vehicles (PHEV), as well as hydrogen are more expensive and this remains true even if fuel fuel battery vehicles (HEV). BEVs are mainly driven by consumption costs and maintenance costs are included. electric motors. The engine system of PHEVs consists of Australia’s RACQ conducted a detailed market survey both an internal combustion engine and an electric mo- and analysis of the selling price of different types of vehi- tor, so it runs on both oil and electricity. The main fuel cles, covering more than ninety vehicle models. Below is of HEVs is hydrogen. The process of vehicle hydrogena- a comparison of the annualized average cost of convention is much faster than the electricity charging process, tional ICE-based vehicless, PHEVs and BEVs; the annua- basically equivalent to the refueling speed of traditional lized cost includes the annual depreciation of vehicles, vehicles based on internal combustion engines (ICE). operating and maintenance costs, and fuel costs. It can EVs are associated with high energy-saving potential. be observed that currently, the annual operating costs of Compared with traditional ICE-based vehicles, they can electric vehicles are nearly 30% higher than traditional be 35% more energy efficient. With renewable energy ICE vehicles (see Figure 5-17). contributing an increasingly high share of grid electricity

92 | CHINA Energy Efficiency Series 2010 2015 2020 2025 2030 2035 2040 2045 2050 ICE Scenario 306.3 466.1 640.1 819.5 976.2 1098 1186.4 1244.7 1300.5 Energy conserva 0 0.9 3.7 11.9 20.6 30.1 37.6 43.3 49.2 Ref. Scenario 306.3 467 643.8 831.4 996.8 1128.1 1224 1288 1349.7

Figure 5‑16. Energy saving potential from replacing ICE-based vehicles with EVs in the IEC Scenario in comparison with the Reference Scenario

1600

1400 1349.7 1288 1224 49.2 1200 1128.1 43.3 37.6 996.8 1000 30.1 831.4 20.6 800 643.8 11.9 600 467 3.7

Energy consumption(MtCe) 400 306.3 0.9

200 0

0 2010 2015 2020 2025 2030 2035 2040 2045 2050 Year

Energy conservation of EVs Ref. Scenario

FIG 5.16 Figure 5‑17. Comparison of Priceannual comparisoncosts among ICE amongs, PHEVs ICEs,and BEV PHEVs,s EVs 16,000 $14,191 14,000 $13,152

12,000 $11,157

10,000

US$ 8,000

6,000

4,000

2,000

0 ICEs PHEVs BEVs

Source of data: RACQ Vehicle Running Costs 2014 Note: Annual cost includes purchase cost, operating and maintenance cost, fuel cost, etc. and the average value of the prices of different types of vehicles

There are some barriers to the wide application of elec- HIO 4: Improve the electrification of the railways tric vehicles. The first barrier is some technology pro- Currently the locomotives used in the Chinese railway sys- blems in electric vehicle technology; particularly the tem are mainly the internal combustion locomotives and battery technology is not mature yet. The second barrier electric locomotives. Steam locomotives have already been is lack of infrastructural support and construction. The replaced. Internal combustion locomotives and electric lo- Chinese government has issued a Development Guidance comotives respectively accounted for 56% and 43% of the for the Construction of Charging Infrastructure of Electric Chinese locomotive stock in 2010. The efficiency level of Vehicles (2015-2020), but in reality, there still exist pro- electric locomotives is about three times that of internal blems in such aspects as high electricity prices, low capa- combustion locomotives. The electrification level of the city in the manufacturing of chargers, and difficulties in railway system should be significantly improved to achieve connections to the electricity grid. higher efficiency level of the railway system and to promote switch to clean and modern fuel forms in railways.

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 93 In 2050, railways will contribute 40% of the passenger 5.3.2 Structural HIOs transportation turnover and 24% of the freight turnover respectively, making railways the backbone and main HIO 1: Increase the share of public transit mode for long-distance transportation in China. The The efficiency of urban public transportation systems is electrification and efficiency levels of the railway system much higher than that of driving private cars. The en- have a significant influence on the energy mix of the energy consumption of an urban trip by compact vehicle tire transportation sector. For passenger transportation, is three times higher than that by bus. By encouraging the proportion of electric locomotives will gradually in- urban residents switch from using private cars to using crease from less than 50% in 2010 to 100% in 2050. The pro- public transport in the form of urban rail transit systems, portion of electric freight locomotives will increase from BRTs, public service vehicles, the energy consumption less than 50% in 2010 to approximately 80% in 2050. The of urban passenger transportation can be effectively re- railway system will achieve electrification on the whole, duced. Compared to main cities in developed countries, thus realizing energy savings of 11.28 Mtce in 2050 (see the share of urban public transit in China has enormous Figure 5-18). room of improvement. Beijing is a leading city in the de- In terms of operating costs, the energy cost of electric velopment of public transit systems, but even in Beijing, locomotive traction is lower than that of internal com- public transit accounts for less than 50% of urban passen- bustion locomotive traction, which is mainly due to the ger transportation. Beijing still lags much behind Hong price levels of electricity and diesel in China, as well Kong, Singapore, and New York in public transport deve- as the higher efficiency of electric locomotives. Taking lopment, where the share of public transit in urban pas- other operating costs into consideration, including the senger transportation exceeds 70% (see Figure 5-19). depreciation of fixed assets and O&M costs, the total Measures to increase the popularity of urban public tran- operation cost of electric locomotives is also lower than sit mainly include accelerating the construction of urban that of internal combustion locomotives (Yu 2014). public transportation infrastructure, improving the ac- The barriers to railway electrification. In recent years, rai- cessibility of rail transit and public transportation, reali- lway electrification has been progressing steadily in China, zing zero-distance transfers between different modes of especially since the rapid development of high-speed rai- public transportation, adopting information technology lways; and the speed of electrification has been accelera- to make urban public transit more convenient and quic- ting. The service life of an internal combustion locomotive ker, increasing the costs of private vehicle uses through is approximately thirty years and when their service life such measures as collecting parking charges and conges- ends, they will be replaced with electric locomotives. tion charges. By 2050, all Chinese cities with a population

Figure 5‑18. Energy-saving potential of railway electrification in the IEC Scenario compared with the Reference Scenario

1600

1400 1349.7 1288

1224.1 11.3 1200 1128 8.9 6.8 996.8 4.9 1000 831.4 3.1 800 643.7 1.9 600 467.1 0.9 400 Energy consumption(MtCe) 306.3 0.4

200 0

0 2010 2015 2020 2025 2030 2035 2040 2045 2050 Year

Railway electrification Ref. Scenario

94 | CHINA Energy Efficiency Series Tokyo Bus 3% Tokyo Hongkong Bicyles 14% Other 1% Bus 3% Bicycles Walk 9% Private vehicles 12% Tokyo 14% Bus 25% Walk 23% Bus 3% Tokyo Private Hongkong Rail transit 48% Bicyles 14% Bicycles vehicles 14% Other 1% Private Bus 3% Walk 9% Private vehiclesRail transit 12% 14% Bus 25% Walk 48% 23% vehicles Private Rail transit 48% 12% vehicles 14% Rail transit Private 48% vehicles 12% Rail transit Figure 5‑19. Walk 23% 55% Seoul Share of trip modes in major cities in the world Rail transit Tokyo Tokyo Bus 28% Seoul Walk 23% 55% Tokyo Bus 28% Hongkong Bus 3% Bus Taxi 3%Tokyo 6% Hongkong Tokyo Hongkong Bus 3% Tokyo Taxi 6% Bicyles 14% Private vehicles Bicycles26% Seoul Other 1% Bicyles 14% Bicyles 14%Bus 3% Other 1%Private vehicles 26% Bicycles Walk 9% Seoul Other 1% London London Private vehicles 12% Bus 3% Bicycles Walk 9% Bus 3% Walk 9% Private vehicles 12% Private vehicles Other 12% 14%5% Other 5% 14% Bus 25% Rail Bicyclestransit 2%Bicycles 2% 14% Bus 25% Bus 28% Rail transit Bus 25% Rail transit 35% Bus 28% Bus 15% Walk 23% Walk 23% Walk Rail transit23% Private35% Private 12% 12% Bus 15% Rail transit Private Rail transit 48% Rail transit 48% Rail transit 48% vehicles 14% Rail transit vehicles 14% 35% vehicles 14% Private Private Hongkong Taxi 1% Rail transit Rail transit Rail transit 35% Private Taxi 1% vehicles Hongkong vehicles Bus 25% 48% 48% 48% vehicles 12% Bus 25% 12% Rail transit 55% 12% Taxi 6% Private vehicles 14% Walk 30% Rail transit 55% Walk 9% TaxiOther 6% 5% Rail transit Private Private vehicles 14% Other 1% Rail transit Rail transit Private Seoul Walk 23% 55% vehicles 26% Walk 30% vehicles 40% Seoul Seoul Walk Walk9% 23% Other 5% Walk 23% 55% 55% Bus 28% London Private Private Bus 28% Bus Other 28% 1% Taxi 6% Bicycles 2% vehicles 26% vehicles 40% Private vehicles 26% Seoul Taxi 6% Bus 15% Taxi 6% London New York Private vehicles London26% Taxi Seoul 1% Other 5% Private vehicles 26% Seoul Rail transit Bicycles 2% London Bus 28% Private vehicles 40% London Other 5% Bus 8% Rail transit 35% Other Bicycles 5% 2% Bus 15% Other 5% 12% Walk 30% Bicycles 2% Rail transit Bicycles 2% Bus 15% Bus 28% Rail transit Private Rail transit Rail transit 35% Rail transit 35% Bus 28% Rail transit 12% 12% Bus 15% 35% New12% York Bus 15% vehicles 16% Hongkong Taxi 1% Rail transit Taxi 1% FIG 5.19 Rail transit New York Bus 25% Private vehicles 40% 35% Other 5% Bus 8% Taxi 1% Hongkong35% Bus 8% Taxi 1% Rail transit 55% Hongkong Taxi 6% Walk 30% Bus 25% Private vehicles 16% Walk 4% Private vehicles 14% Bus 25% Rail transit 12% Walk 4% Private Rail transit 55% Walk 30% Taxi 6% Rail transit vehicles 16% Walk 9% Rail transit Other 5%55% Taxi 6% Rail transit 67% 67% FIG 5.19 PrivatePrivate vehicles 14% Other Private 5% Other 1% Private vehicles 14% vehicles 26% New York Walk 30% Walk 9% Other 5% vehicles 40% Walk 30% Walk 9% Other Bus5% 8% Private Private London Other 1% Private Private vehicles 16% vehicles 26% Walk 4%Private vehicles 40% Other 1% vehicles 26% Bicycles 2% Walk 4% vehicles 40% Bus 15% London Rail transit New York of more Railthan transit five million67% shall create an urban transport67% Today the total length of high-speed railways in China Taxi 1% London Bicycles Other 2% 5% Private vehicles 40% Bicycles 2% Other 5% BusBus 8%system dominated15% by rail transit and BRT systems. Cities has reached 16,000 km, representing more than 60% of New York Walk 30% Bus 15% Taxi with a population1% of more than 1 million will mainly fo- the global mileage of high-speed railways. China plans to Rail transit 12% Private New York Taxi 1% Private vehiclesvehicles 16% 40% Other 5% Bus 8% cus on public transit, whileFIG small 5.19 cities will focus on indi- build another 45,000 km of high-speed railways, bringing Private vehicles 40% Walk 30% Other 5% Bus 8% New York vidual transportation. By 2050, metro trips will account its totalPrivate railway mileage to 200,000 km. The high-speed Bus 8% Walk 30% Rail transit 12% Private vehicles 16% Private vehicles 16% Rail transit 12% for 20% of urban passenger transportation. At that time, railway networks will connectFIG all 5.19 provincial capitals and Walk 4% vehicles 16% New York FIG 5.19 Walk 4% Rail transit the share of travel by public transit systems will reach other large and medium-sized cities with a population Bus 8% Rail transit 67% New York 67% 64%. This transformation in urban transportation can of more than 500,000. At that time, the 1-4 hour traffic Other 5% Bus 8% Private vehicles 16% Walk 4% Walk 4% Private vehicles 16% create 14.85 Mtce of energy savings. RailWalk transit 4% circle will be realized for adjacent large and medium- Rail transit 67% 67% Walk 4% Rail transit sized cities. An intercity passenger transportation system OtherThe barriers to5% increasing the share of urban public tran- Rail transit 67% 67% with high-speed railways and railways as the framework Other 5% sit mainly include poor urban planning, the constant will come into being, enabling railway to play a key role expansion of megacities, the function specialization of in long-distance passenger and freight transportation. different city areas as residential areas and office areas, and the huge traffic in rush hours and long commuting Currently, the main barrier to enlarging the share of rai- distances, which make public transit an unfavorable op- lway trips is insufficient capacity of high-speed railways tion for passenger transportation. Also the construction and ordinary railways. In the future, the connections of public transit systems needs huge investment and the between high-speed railway stations and cities will be the upfront investment is high. Improvements to comfort le- most important factor affecting the popularity of high- vels also need funding and may increase energy consump- speed railways. Therefore, attention should be paid to tion. Finally there is also the consumer behavior barrier improving the connections between high-speed railway to which can also affects the share of public transit in stations and urban public transit facilities. urban transportation. HIO 3: Vehicle sharing HIO 2: Increase the share of railways Vehicle sharing has been spreading around the world at The energy consumption of high-speed railways per an amazing speed in recent years. Not only each vehicle passenger∙km is only 1/5-1/3 that of aviation. For trips is shared and used by different people at different times, shorter than 1,000 km, high-speed railway is both chea- but also several passengers can take the same vehicle du- per and faster than aviation. Meanwhile, with passenger ring a trip to one or more destinations. Vehicle sharing transportation shifting from ordinary railways to high- not only means faster and more convenient trips, but also speed railways, more railway transportation capacity can higher energy efficiency. Digital platforms can enable be made available for freight transportation. This can not more passengers to share vehicles and reduce future pri- only replace long-distance road transportation, but also vate car ownership. Vehicle sharing, as the business model improve the energy efficiency of freight transport. of a transportation service, combined with self-driving vehicles, electric vehicles and other new technologies, is dramatically changing the landscape of passenger trans-

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 95 portation. Since vehicle sharing can reduce vehicle depre- railways and railways, boost the transformation and up- ciation, repair and maintenance costs for vehicle owners grading of ordinary railways, makes available more ordi- and users, it can also reduce transportation costs. nary railway transportation capacity for the long distance freight transport, help improve operating efficiencies There are a few barriers to the dissemination of vehicle of railway transport. Declines in the share of railway in sharing. One major barrier to the uptake of vehicle- freight transport shall be reversed by 2022, and thereafter sharing is the traditional perception that considers car the share of railway in freight transport shall be increased ownership a symbol of high social status and financial to one quarter by 2050. The major cities will be connected success. Some gaps in the regulatory system, such as re- by a network of high-speed railways, which will become levant laws and regulations, insurance, information, are the main mode of intercity passenger transport. also important barriers. 5.4.3 Recommendation 3: Regularly and timely release and update fuel 5.4 Policy economy standards Recommendations It is necessary for China to set and issue footprint-based fuel economy standards for vehicles and update the stan- 5.4.1 Recommendation 1: boosting dards regularly, tighten the fuel economy standards for the reform and upgrade of trucks, reinforce supervision and inspection, and reduce transportation sector governance the difference between nominal fuel efficiency levels and The government needs to end the phenomenon of mul- actual operating fuel efficiency levels. Through offering tiple-authorities in charge of transportation sector gover- preferential vehicle sales tax, the government can encou- nance in China, centralize the transportation administra- rage households to buy and use small and more energy tion into one government agency, make administration efficient cars. Through imposing heavy taxes, the govern- innovations, promote new business modes such as vehicle ment can discourage the ownership and use of high-emis- sharing, and attach importance to improve the connec- sion and luxury vehicles. tions between different transportation modes. It is also important to liberalize fuel-oil pricing and allow market 5.4.4 Recommendation 4: expedite supply and demand to play a bigger role in market price the construction, investment and shaping, include environmental impacts in the market financing of public transportation prices, and guide consumers to opt for clean and effi- infrastructure cient transportation mode. China also needs to eliminate In urban planning, transit-oriented development (TOD) the institutional, standard and administrative barriers should be taken as a priority. Residential blocks shall be to connecting different transportation modes, imple- built near the main public transportation corridor (metro ment container standardization, and attach importance + BRT), thus creating urban designing with public trans- to the seamless connection in infrastructure design and portation as the main backbone. More emphasis shall be construction. The country needs to build a multimodal given to the construction of infrastructure for non-mo- transport system that can exert the advantages of rai- torized transport; more investment shall channeled to lways and waterways in long-distance transportation and building pedestrian lanes and bicycle lanes; congestion the flexibility of road transport in short-distance trans- charging and parking charging in urban central zones portation; and it is also key to increase the proportion in should be reformed and increased, making it more expen- logistics transport. sive to use private vehicles in downtown areas; the share of private vehicle transport should be reduced. Govern- 5.4.2 Recommendation 2: Speed up of ments at all levels shall continuously increase funding for market-oriented reform of railway the construction of urban public transit infrastructure, transport especially the construction of rail-transit facilities, attach It is important to take the following measures: breaking importance to the construction of zero-distance transfer the monopoly of the railways, accelerating market-orien- stations, improve the comfort level, speed, and reliability ted railway reform, implementing floating pricing, al- of public transportation. Public parking areas will be es- lowing private capital access, eradicating institutional tablished in some transition stations to facilitate trans- barriers to better connections between the railways and fers between private vehicles and public transportation. other modes of transportation. These measures can make it easier to mobilize private funding for the construction and operation of railways and high-speed railways, speed up the construction of a national network of high-speed

96 | CHINA Energy Efficiency Series 4.5 Recommendation 5: continue research and development and to promote advanced transport technologies China should intensify the research and development of EVs, achieve technical breakthroughs in battery life and mileage, service life, reliability, grid energy storage, etc., improve the utilization of the subsidy fund for EVs, avoid local protectionism, and attach equal concern and importance to PHEVs and traditional ICEs. The government can pilot the use of EVs as taxi and buses with preferential policies. The pilot results should be analyzed timely and used as inputs for further policy making. The government should speed up the planning and building of charging stations, achieve matching and coordinated development between grid load management and the electricity demand for EV charging, and uses EVs as an important solution for electricity storage and integrating more electricity from renewable sources.

References

Huanjun Yu, 2014, A Study on the Operating Costs of Railway Electric Locomotive Traction, master's degree thesis Xiliang Zhang, Xu Zhang, Xunmin Ou, China New-energy Automobile Industry Development Status and Pros- pect. Environmental Protection, 2013 (41), 10: 24-28.

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 97 hapter 6c Energy Efficiency Policy and High Impact Opportunities in the Power Sector in China

Qingbing PEI Quan BAI

98 | CHINA Energy Efficiency Series 6.1 Review of Achievements first in the world (for variations in the installed capacity and Policies Regarding of the power sector in China since 2000, see Figure 6‑1). Energy-Efficiency The rapid increase in installed capacity in China not only exceeds the country’s own historical level, but is also is Improvements to Power surprising compared with that of developed countries. Generation in China Average annual newly installed capacity during 2005- 2015 in China was 99.1 GW. This means that every week The power industry is an important foundation for na- 1.5 power plants with a capacity of 1 GW were added, or tional economic development and plays a very important every year an installed capacity equivalent to that of Bri- role in both it and social progress. Then power industry tain (for a comparison with other countries, see Figure is important not only for national economy security, but 6-2). Such a growth rate has rarely been seen in the world. also for people’s daily lives and social stability. Since the reform and opening up, along with the rapid develop- Power consumption obviously improved ment of China’s economy, China’s power industry has In the wake of the rapid development of the economy, consistently been in a phase of high-speed development society and the power industry, both power generation dominated by coal-fired power generation. and per capita power consumption are increasing rapidly in China. From 2005 to 2015, China’s power generation 6.1.1 Achievements in Energy increased from 2.49 trillion kWh to 5.81 trillion kWh at Efficiency Improvements in Power an annual growth rate of 8.83%, and per capita power Generation consumption increased from 1907 kWh in 2005 to 4227 Scale of power generation rapidly expanded kWh in 2015 at an annual growth rate of 8.28% (see Table 6‑1). This reflects the improvements in economic develop- The scale of the power industry is expanding. In 1949, ins- ment and people’s living standards in China. talled power generation capacity in China was only 1.84 GW and annual power output only 4.3 billion kWh (ex- Compared with developed countries, however, per ca- cluding Taiwan, Hong Kong, and Macao), ranking China pita power consumption in China remains very low. The 21st and 25th in the world respectively. In 1987 installed per capita installed power-generation capacity in deve- power generation capacity exceeded 100 GW, and China loped countries is above 1.5 kWh and per capita power became one of the few countries with an installed capa- consumption mostly above 5000 kWh. Per capita power city exceeding this figure. Since 2000, as the growth rate consumption in the USA and South Korea even reaches of China’s economy has accelerated, China’s power indus- approximately 10,000 kWh (see Figure 4‑3). China there- try has also taken to the development speedway. In 2015, fore still has a long way to go in industrializing and mo- installed capacity reached 1508 GW, ranking the country dernizing.

Figure 6-1 Figure 6‑1. Installed power generation capacity in China since 2000 发电装机(亿千瓦）发电装机万千瓦） 1949 0.0185 ( Installed Capacity (GW) Installed Capacity (GW) 1978 0.571 2000 31932 2000 319 1600 1508 1990 1.3789 2001 33849 2001 338 1370 1995 2.17 2002 35657 2002 357 1400 1258

2000 3.1932 2003 39141 2003 391 1200 1147 2004 4.4239 2004 44239 2004 442 1063 2005 5.1718 2005 51718 2005 517 966 1000 874 2006 6.237 2006 62370 2006 624 793 800 718 2007 7.1822 2007 71822 735.2378 2007 718 624 2008 7.9273 2008 79273 2008 793 600 517 442 2009 8.741 2009 87410 2009 874 391 338 357 Installed capacity (GW) 319 2010 9.6641 2010 96641 2010 966 400 2011 10.6253 2011 106253 2011 1063 200 2012 11.4676 2012 114676 2012 1147 2013 12.5768 2013 125768 2013 1258 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2014 13.7018 2014 137018 2014 1370 Year 2015 15.0828 2015 150828 2015 1508 99.11 Data source: China Electric Power Yearbook 2001-2016 来源：中国统计摘要2014

Figure 6-2

Installed Capacity (GW) Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 99 2010 data 1600 1508

1400 Installed Capacity (GW)

USA 1041 1200 Russia 224 1041 1000 Japan 287 France 124 800 Per capita electricity consumption (kWh) Canada 137 12000 Germany 157 600 10547 10428 10000 U.K. 93 Installed capacity (GW) 400 287 106 7836 Italy 224 8000 7022 7382 137 157 Spain 109 200 124 93 106 109 85 99 6000 5409 5124 Korea 85 0 4227 China (2015） 1508 USA Russia Japan France Canada Germany U.K. Italy Spain Korea China China 4000 China annual average growth 99 (2015） annual average 2000 Per capitaPer power(kWh)use growth source: 国际统计年鉴（2014） 0

Figure 6-3 2013data Electricity Consumption per Capita (kWh) USA 10547 Japan 7836 UK 5409 49.0 Germany 7022 France 7382 47.0 Italy 5124 Coal ME 6 to 100 MW - Ref. Scenario Korea 10428 Coal ME 100 to 200 MW - Ref. Scenario 45.0 China(2015) 4227 Coal ME 200 to 300 MW - Ref. Scenario

Coal ME 300 to 600 MW - Ref. Scenario 43.0 source: IEA statistical data Coal ME 600 to 1000 MW- Ref. Scenario Coal ME 1000 MW or Above - Ref. Scenario Figure 6-7 41.0

plants (MtCe)plants Coal ME 6 to 100 MW -IEC Scenario Coal ME 100 to 200 MW- IEC Scenario 2010 2015 2020 2025 2030 2035 2040 2045 2050 39.0 Coal ME 200 to 300 MW- IEC Scenario Coal ME 6 to 100 MW - Ref. Scenario 35.8 35.8 35.9 35.9 36.0 36.0 36.1 36.1 36.2 Coal ME 300 to 600 MW-IEC Scenario Coal ME 100 to 200 MW - Ref. Scenario 37.5 37.6 37.8 37.9 38.0 38.1 38.2 38.3 38.4 37.0 Coal ME 200 to 300 MW - Ref. Scenario 38.5 38.5 38.6 38.7 38.7 38.8 38.9 38.9 39.0 Coal ME 600 to 1000 MW - IEC Scenario

Energy saving Energy saving frommore efficint condening power Coal ME 1000 MW - IEC Scenario Coal ME 300 to 600 MW - Ref. Scenario 40.1 40.2 40.3 40.4 40.5 40.5 40.6 40.7 40.8 35.0 Coal ME 600 to 1000 MW- Ref. Scenario 41.8 41.9 41.9 42.0 42.1 42.2 42.2 42.3 42.4 2010 2015 2020 2025 2030 2035 2040 2045 2050 Coal ME 1000 MW or Above - Ref. Scenario 44.8 44.9 45.0 45.1 45.1 45.2 45.3 45.4 45.5 Year Coal ME 6 to 100 MW -IEC Scenario 35.8 36.0 36.1 36.3 36.5 36.7 36.9 37.1 37.2 Coal ME 100 to 200 MW- IEC Scenario 37.5 37.8 38.1 38.3 38.6 38.8 39.1 39.4 39.6 Coal ME 200 to 300 MW- IEC Scenario 38.5 38.8 39.1 39.4 39.7 40.0 40.3 40.6 41.0 Coal ME 300 to 600 MW-IEC Scenario 40.1 40.4 40.6 40.9 41.2 41.5 41.8 42.1 42.4 Coal ME 600 to 1000 MW - IEC Scenario 41.8 42.1 42.5 42.9 43.2 43.6 43.9 44.3 44.7 Coal ME 1000 MW - IEC Scenario 44.8 45.1 45.4 45.7 46.0 46.3 46.6 47.0 47.3

62.0%

61.0% 60.8% 60.3% 60.0% 59.7% Figure 6-8 59.0% 59.1% 58.5% 2010 2015 2020 2025 2030 2035 2040 2045 2050 58.0% 57.9% 57.7% 57.8% NGCC- Ref. Scenario 56.8% 56.9% 57.1% 57.2% 57.4% 57.5% 57.7% 57.8% 58.0 57.4% 57.5% 57.0% 57.1% 57.2% NGCC- IEC Scenario 56.8% 56.9% 57.9% 58.5% 59.1% 59.7% 60.3% 60.8% 61.5 56.8% 56.9%

NGCC efficiency efficiency NGCC level 56.0%

55.0%

54.0% 2010 2015 2020 2025 2030 2035 2040 2045Year NGCC- Ref. Scenario NGCC- IEC Scenario

Efficiency level of different coal-fired generating units in China - 2010 400 Figure 6-9 350 2010 300 Coal ME 6 to 100 MW 343.39201 250 Coal ME 100 to 200 MW 327.38412 200 Coal ME 200 to 300 MW 319.63589 150 Coal ME 300 to 600 MW 306.71325 100 Coal ME 600 to 1000 MW 294.0895 50 Coal ME 1000 MW or above 274.45288 0 Coal ME 6 to Coal ME 100 to Coal ME 200 to Coal ME 300 to Coal ME 600 to Coal ME 1000 Figure 6-10 use Coal for powergeneration (g/kWh) 100 MW 200 MW 300 MW 600 MW 1000 MW MW or above 待补充 Different generating units

Figure 6-11 待补充

Figure 6-12 Energy Denmand (MtCe) 2010 2015 2020 2025 2030 2035 2040 2045 2050 1,800 Electricity 434 608 764 934 1,099 1,210 1,296 1,336 1,318 1,600 Heat 88 115 150 192 230 259 286 295 284 286 295 284 1,400 259 Total 522 723 914 1,125 1,329 1,469 1,583 1,631 1,602 1,200 230

1,000 192

800 150 115 1,336 1,318 600 1,210 1,296 1,099

Energy Denmand(MtCe) 88 934 400 764 608 200 434

- 2010 2015 2020 2025 2030 2035 2040 2045 2050 Year Heat Electricity

6,000 Figure 6-13 Geothermal 5,000 2010 2015 2020 2025 2030 2035 2040 2045 2050 1,202 Biomass PG

Coal Fired PG 658 886 1,511 1,715 1,904 2,041 2,101 2,029 1,940 914 4,000 671 Solar PG Diesel 9 10 13 15 17 19 19 18 17 462 908 Wind PG NG PG 47 95 120 152 184 220 250 287 327 679 802 303 540 Hydro 216 286 333 372 398 420 444 474 501 3,000 Nuclear 163 420 Nuclear 11 39 53 94 130 168 220 271 350 311 Hydro 96 Wind PG 30 108 206 311 420 540 679 802 908 2,000 206 NG PG

Solar PG 0 38 96 163 303 462 671 914 1,202 Installed capacity (GW) 38 Diesel Biomass PG 4 8 12 14 19 29 42 54 59 108 1,000 Geothermal 0 0 0 0 0 0 0 0 1 30 0 Coal Fired PG Total 976 1,471 2,344 2,838 3,376 3,900 4,427 4,850 5,306 - 2010 2015 2020 2025 2030 2035 2040 2045 2050 Year

Figure 6-14

2050 - Ref. 2010 Scenario 2050 - IEC Scenario 3000 Wind Power Generation 30 908 1600 Solar Power Generation 0 1202 2500 2500 Wind Power Solar Power 2000 2010 30 0 2050 1500 Reference 1000 Scenario 908 1202 2050 IEC Installed capacity (GW) 500 Scenario 1600 2500

0 2010 2050 - Ref. Scenario 2050 - IEC Scenario

Wind Power Generation Solar Power Generation

Figure 6-15 2,000

1,800 1,833 2010 2015 2020 2025 2030 2035 2040 2045 2050 1,780 1,574 1,737 Ref. Scenario 1,020 1,101 1,349 1,574 1,780 1,833 1,737 1,500 1,052 1,600 1,613 1,549 IEC Scenario 1,020 1,084 1,306 1,488 1,613 1,549 1,229 773 711 1,500 1,349 1,488 17 43 85 167 283 508 727 341 1,400 1,306 (MtCe) 1,101 1,200 1,229 1,020 1,084 1,052 1,000 1,020

800 773

Fossil useFossil for powergeneration in China 711 600 2010 2015 2020 2025 2030 2035 2040 2045 2050 Year Ref. Scenario IEC Scenario

Figure 6-16

100%

16 4% Figure 6-1 发电装机(亿千瓦）发电装机万千瓦） 1949 0.0185 ( Installed Capacity (GW) Installed Capacity (GW) 1978 0.571 2000 31932 2000 319 1600 1508 1990 1.3789 2001 33849 2001 338 1370 1995 2.17 2002 35657 2002 357 1400 1258

来源：中国统计摘要2014

Figure 6-2 Figure 6-1 Figure 6‑2. Installed capacity in China (in 2015) and some developed countries (in 2010) 发电装机(亿千瓦）发电装机万千瓦） Installed Capacity (GW) 1949 0.0185 ( Installed Capacity (GW) Installed Capacity (GW) 1978 0.571 2000 31932 2000 319 2010 data 1600 1508 1600 1508 1990 1.3789 2001 33849 2001 338 13701400 1995 2.17 2002 35657 2002 357 1400 Installed Capacity (GW) 1258

USA 1041 2000 3.1932 2003 39141 2003 391 1147 1200 1200 1041 2004 4.4239 2004 44239 2004 442 Russia 224 1063 966 1000 2005 5.1718 2005 51718 2005 517 Japan 287 1000 874 2006 6.237 2006 62370 2006 624 France 124 793 800 Per capita electricity consumption (kWh) 800 718 2007 7.1822 2007 71822 735.2378 2007 718 Canada 137 624 12000 2008 7.9273 2008 79273 2008 793 Germany 600 517 157 600 10547 10428 442 10000 2009 8.741 2009 87410 2009 874 U.K. 391 93 Installed capacity (GW) 338 357 400 Installed capacity (GW) 400 319 287 2010 9.6641 2010 96641 2010 966 106 7836 Italy 224 8000 7022 7382 137 157 2011 10.6253 2011 106253 2011 1063 Spain 200 109 200 124 93 106 109 85 99 6000 5409 5124 2012 11.4676 2012 114676 2012 1147 Korea 85 0 0 4227 2013 12.5768 2013 125768 2013 1258 China (2015） 1508 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 USA Russia Japan France Canada Germany U.K. Italy Spain Korea China China 4000 2014 13.7018 2014 137018 2014 1370 China annual average growth 99 ） annual Year (2015 2015 15.0828 2015 150828 2015 1508 99.11 average 2000 Per capitaPer power(kWh)use Data source: International Statistics Yearbook 2014. growth source: 国际统计年鉴（2014） 0 来源：中国统计摘要2014 Table 6‑1. Power generation and per capita power consumption in China Figure 6-2 Figure 6-3 2013data 2005 2010 2011 2012 2013 2014 2015 Electricity Consumption per Capita (kWh) Installed Capacity (GW) Power generation (100 GWh) 24,940 41,934 47,001 49,763 54,203 56,384 58,106 USA 10547 2010 data 1600 Japan 1508 7836 Per capita power consumption (kWh) 1,907 3,127 3,488 3,675 3,983 4,122 4,227 UK 5409 49.0 1400 Data source: China Energy Yearbook Installed Capacity (GW) Germany 7022

France 7382 USA 1041 1200 47.0 Italy 5124 Coal ME 6 to 100 MW - Ref. Scenario Russia 224 1041 Figure 6‑3. Per capita power consumption in China (in 2015) and some developed countries (in 2013) 1000 Korea 10428 Coal ME 100 to 200 MW - Ref. Scenario Japan 287 45.0 China(2015) 4227 Coal ME 200 to 300 MW - Ref. Scenario France 124 800 Per capita electricity consumption (kWh) Coal ME 300 to 600 MW - Ref. Scenario Canada 137 43.0 source: IEA statistical data 12000 Coal ME 600 to 1000 MW- Ref. Scenario Germany 157 600 10547 10428 Coal ME 1000 MW or Above - Ref. Scenario 10000 41.0 U.K. 93 Installed capacity (GW) Figure 6-7 400 287 (MtCe)plants Coal ME 6 to 100 MW -IEC Scenario 106 7836 Italy 224 8000 7382 Coal ME 100 to 200 MW- IEC Scenario 157 7022 109 200 124 137 2010 2015 2020 2025 2030 2035 2040 2045 2050 39.0 Spain 93 106 109 85 99 Coal ME 200 to 300 MW- IEC Scenario Coal ME 6 to 100 MW - Ref. Scenario 35.8 35.8 35.9 35.9 36.0 36.06000 36.1 36.15409 36.2 5124 Korea 85 Coal ME 300 to 600 MW-IEC Scenario 0 Coal ME 100 to 200 MW - Ref. Scenario 37.5 37.6 37.8 37.9 38.0 38.1 38.2 38.3 38.4 4227 37.0 China (2015） 1508 USA Russia Japan France Canada GermanyCoal ME 200U.K. to 300 MWItaly - Ref. ScenarioSpain Korea China 38.5China 38.5 38.6 38.7 38.7 38.84000 38.9 38.9 39.0 Coal ME 600 to 1000 MW - IEC Scenario

China annual average growth 99 (2015） annual Energy saving frommore efficint condening power Coal ME 1000 MW - IEC Scenario Coal ME 300 to 600 MW - Ref. Scenario 40.1 40.2 40.3 40.4 40.5 40.5 40.6 40.7 40.8 35.0 average 2000 Coal ME 600 to 1000 MW- Ref. Scenario 41.8 41.9 41.9 42.0 42.1 capitaPer power(kWh)use 42.2 42.2 42.3 42.4 2010 2015 2020 2025 2030 2035 2040 2045 2050 growth source: 国际统计年鉴（2014） Coal ME 1000 MW or Above - Ref. Scenario 44.8 44.9 45.0 45.1 45.1 45.2 0 45.3 45.4 45.5 Year Coal ME 6 to 100 MW -IEC Scenario 35.8 36.0 36.1 36.3 36.5 36.7 36.9 37.1 37.2 Coal ME 100 to 200 MW- IEC Scenario 37.5 37.8 38.1 38.3 38.6 38.8 39.1 39.4 39.6 Figure 6-3 Coal ME 200 to 300 MW- IEC Scenario 38.5 38.8 39.1 39.4 39.7 40.0 40.3 40.6 41.0 Data source: IEA, Key World Energy Statistics 2014 2013data Coal ME 300 to 600 MW-IEC Scenario 40.1 40.4 40.6 40.9 41.2 41.5 41.8 42.1 42.4 Electricity Consumption per Capita (kWh) Coal ME 600 to 1000 MW - IEC Scenario 41.8 42.1 42.5 42.9 43.2 43.6 43.9 44.3 44.7 USA 10547 Coal ME 1000 MW - IEC Scenario 44.8 45.1 45.4 45.7 A power46.0 generation46.3 structure46.6 dominated47.0 by coal 47.3 20.08 GW, accounting for 1.5%, of wind power 96.57 GW, accounting for 7.0%, and of grid-connected solar power Japan 7836 The installed capacity structure in China has been domi- 24.86 GW, accounting for 1.8% (see Table 6‑2). Although62.0% UK 5409 49.0 nated by thermal power all along, that is, on coal-fired the share of thermal power declined from 75.7% in 2005 Germany 7022 power. In 2014, the installed capacity of thermal power 61.0% 60.8% France 7382 to 67.4% in 2014, it still has the dominant position, with 60.3% 47.0 in China was 920 GW, accounting for 67.4%, of hydro- 60.0% Italy 5124 coal-fired plants accounting for more than 95%. 59.7% Figure 6-8 power 300 GW, accounting for 22.2%, of nuclearCoal MEpower 6 to 100 MW - Ref. Scenario 59.1% Korea 10428 Coal ME 100 to 200 MW - Ref. Scenario 59.0% 45.0 58.5% China(2015) 4227 2010 2015 2020 2025 2030 2035 2040 2045 Coal ME 2002050 to 300 MW - Ref. Scenario 58.0% 57.9% 57.8% 57.5% 57.7% NGCC- Ref. Scenario 56.8% 56.9% 57.1% 57.2% 57.4% 57.5% 57.7% 57.8% Coal ME 300 58.0to 600 MW - Ref. Scenario 57.2% 57.4% 43.0 57.0% 56.9% 57.1% source: IEA statistical data NGCC- IEC Scenario 56.8% 56.9% 57.9% 58.5% 59.1% 59.7% 60.3% 60.8% Coal ME 600 61.5to 1000 MW- Ref. Scenario 56.8% Coal ME 1000 MW or Above - Ref. Scenario efficiency NGCC level 56.0% Figure 6-7 41.0 plants (MtCe)plants | Coal ME 6 to 100 MW -IEC Scenario 100 CHINA Energy Efficiency Series 55.0% Coal ME 100 to 200 MW- IEC Scenario 2010 2015 2020 2025 2030 2035 2040 2045 2050 39.0 Coal ME 200 to 300 MW- IEC Scenario 54.0% Coal ME 6 to 100 MW - Ref. Scenario 35.8 35.8 35.9 35.9 36.0 36.0 36.1 36.1 36.2 2010 2015 2020 2025 2030 2035 2040 2045Year Coal ME 300 to 600 MW-IEC Scenario Coal ME 100 to 200 MW - Ref. Scenario 37.5 37.6 37.8 37.9 38.0 38.1 38.2 38.3 38.4 37.0 NGCC- Ref. Scenario NGCC- IEC Scenario Coal ME 200 to 300 MW - Ref. Scenario 38.5 38.5 38.6 38.7 38.7 38.8 38.9 38.9 39.0 Coal ME 600 to 1000 MW - IEC Scenario

Energy saving Energy saving frommore efficint condening power Efficiency level of different coalCoal-fired ME 1000generating MW - IEC Scenario units in China - 2010 Coal ME 300 to 600 MW - Ref. Scenario 40.1 40.2 40.3 40.4 40.5 40.5 40.6 40.7 40.8 35.0 400 Coal ME 600 to 1000 MW- Ref. Scenario 41.8 41.9 41.9 42.0 42.1 42.2 42.2 42.3 42.4 2010 2015 2020 2025 2030 2035 2040 2045 2050 Figure 6-9 350 Coal ME 1000 MW or Above - Ref. Scenario 44.8 44.9 45.0 45.1 45.1 45.2 45.3 45.4 45.5 Year Coal ME 6 to 100 MW -IEC Scenario 35.8 36.0 36.1 36.3 36.5 36.7 36.9 37.1 37.2 2010 300 Coal ME 100 to 200 MW- IEC Scenario 37.5 37.8 38.1 38.3 38.6 38.8 39.1 39.4 39.6Coal ME 6 to 100 MW 343.39201 250 Coal ME 100 to 200 MW 327.38412 Coal ME 200 to 300 MW- IEC Scenario 38.5 38.8 39.1 39.4 39.7 40.0 40.3 40.6 41.0 200 Coal ME 200 to 300 MW 319.63589 Coal ME 300 to 600 MW-IEC Scenario 40.1 40.4 40.6 40.9 41.2 41.5 41.8 42.1 42.4 150 Coal ME 300 to 600 MW 306.71325 Coal ME 600 to 1000 MW - IEC Scenario 41.8 42.1 42.5 42.9 43.2 43.6 43.9 44.3 44.7 100 Coal ME 600 to 1000 MW 294.0895 Coal ME 1000 MW - IEC Scenario 44.8 45.1 45.4 45.7 46.0 46.3 46.6 47.0 47.3 50 Coal ME 1000 MW or above 274.45288 0 Coal ME 6 to Coal ME 100 to Coal ME 200 to Coal ME 300 to Coal ME 600 to Coal ME 1000

62.0% use Coal for powergeneration (g/kWh) Figure 6-10 100 MW 200 MW 300 MW 600 MW 1000 MW MW or above 待补充 Different generating units 61.0% 60.8% 60.3% 60.0% 59.7% Figure 6-8 59.0% 59.1% 58.5% 2010 2015 2020 2025 2030 2035 2040 2045 2050 58.0% 57.9% 57.7% 57.8% NGCC- Ref. Scenario 56.8% 56.9% 57.1% 57.2% 57.4% 57.5% 57.7% 57.8% 58.0 57.4% 57.5% 57.0% 57.1% 57.2% NGCC- IEC Scenario 56.8% 56.9% 57.9% 58.5% 59.1% 59.7% 60.3% 60.8% 61.5 56.8% 56.9%

NGCC efficiency efficiency NGCC level 56.0%

55.0%

54.0% 2010 2015 2020 2025 2030 2035 2040 2045Year NGCC- Ref. Scenario NGCC- IEC Scenario

Efficiency level of different coal-fired generating units in China - 2010 Figure 6-11 400 待补充 Figure 6-9 350 2010 300 Coal ME 6 to 100 MW 343.39201 250 Coal ME 100 to 200 MW 327.38412 200 Coal ME 200 to 300 MW 319.63589 150 Coal ME 300 to 600 MW 306.71325 100 Coal ME 600 to 1000 MW 294.0895 50 Coal ME 1000 MW or above 274.45288 0 Coal ME 6 to Coal ME 100 to Coal ME 200 to Coal ME 300 to Coal ME 600 to Coal ME 1000 Figure 6-10 use Coal for powergeneration (g/kWh) 100 MW 200 MW 300 MW 600 MW 1000 MW MW or above 待补充 Different generating units

1,000 192

800 150 Figure 6-11 115 1,336 1,318 600 1,210 1,296 待补充 1,099

Energy Denmand(MtCe) 88 934 400 764 608 200 434

- 2010 2015 2020 2025 2030 2035 2040 2045 2050 Year Heat Electricity

6,000 Figure 6-13 Geothermal 5,000 2010 2015 2020 2025 2030 2035 2040 2045 2050 1,202 Biomass PG

Figure 6-12 Solar PG 0 38 96 163 303 462 671 914 1,202 Installed capacity (GW) 38 Diesel Energy Denmand (MtCe) Biomass PG 4 8 12 14 19 29 42 54 59 108 1,800 1,000 2010 2015 2020 2025 2030 2035 2040 2045 2050Geothermal 0 0 0 0 0 0 0 0 1 30 0 Coal Fired PG Electricity 434 608 764 934 1,099 1,210 1,296 1,336 1,318 Total 1,600 976 1,471 2,344 2,838 3,376 3,900 4,427 4,850 5,306 Heat 88 115 150 192 230 259 286 295 284 - 286 295 284 1,400 2010 2015 2020 2025 2030 2035 2040 2045 2050 259 Year Total 522 723 914 1,125 1,329 1,469 1,583 1,631 1,602 1,200 230

1,000 192

Figure 6-14 800 150 115 1,296 1,336 1,318 600 2050 - Ref. 1,210 1,099

Energy Denmand(MtCe) 88 2010 Scenario 9342050 - IEC Scenario 3000 400 764 Wind Power Generation 30 608 908 1600 Solar Power Generation 200 434 0 1202 2500 2500 Wind Power Solar Power - 2000 2010 30 0 2010 2015 2020 2025 2030 2035 2040 2045 2050 Year 2050 Heat Electricity 1500 Reference 1000 Scenario 908 1202 2050 IEC Installed capacity (GW) 6,000 500 Scenario 1600 2500 Figure 6-13 Geothermal 0 5,000 2010 2050 - Ref. Scenario 2050 - IEC Scenario 2010 2015 2020 2025 2030 2035 2040 2045 2050 1,202 Biomass PG

Coal Fired PG 658 886 1,511 1,715 1,904 2,041 2,101 2,029 1,940 914 4,000 671 Solar PG Wind Power Generation Solar Power Generation Diesel 9 10 13 15 17 19 19 18 17 462 908 Wind PG NG PG 47 95 120 152 184 220 250 287 327 679 802 303 540 Hydro 216 286 333 372 398 420 444 474 501 3,000 Nuclear 163 420 Nuclear 11 39 53 94 130 168 220 271 350 311 Hydro 96 Wind PG 30 108 206 311 420 540 679 802 908 2,000 206 NG PG

Solar PG 0 38 96 163 303 462 671 914 1,202 Installed capacity (GW) 38 Diesel Biomass PG 4 8 12 14 19 29 42 54 59 108 Figure 6-15 1,000 2,000 Geothermal 0 0 0 0 0 0 0 0 1 30 0 Coal Fired PG 1,833 Total 976 1,471 2,344 2,838 3,376 3,900 4,427 4,850 5,306 1,800 1,780 2010 2015 2020 2025 2030 2035 2040 2045 2050 1,737 - 1,574 Ref. Scenario 1,020 1,101 1,349 1,574 1,780 1,833 1,737 1,500 1,052 1,600 1,613 2010 2015 2020 2025 2030 2035 2040 2045 2050 1,549 IEC Scenario 1,020 1,084 1,306 1,488 1,613 1,549 1,229 773 711 1,488 1,500 Year 1,349 17 43 85 167 283 508 727 341 1,400 1,306 (MtCe) 1,101 1,200 1,229 1,020 1,084 1,052 Figure 6-14 1,000 1,020

2050 - Ref. 800 773 2010 Scenario 2050 - IEC Scenario 3000 useFossil for powergeneration in China 711 600 Wind Power Generation 30 908 1600 2010 2015 2020 2025 2030 2035 2040 2045 2050 2500 Solar Power Generation 0 1202 2500 Year Wind Power SolarRef. Power Scenario IEC Scenario 2000 2010 30 0 2050 1500 Reference 1000 Scenario 908 1202 2050 IEC Installed capacity (GW) 500 Scenario 1600 2500 Figure 6-16

0 100% 2010 2050 - Ref. Scenario 2050 - IEC Scenario 16 4% Wind Power Generation Solar Power Generation

Figure 6-15 2,000

800 773

Fossil useFossil for powergeneration in China 711 600 2010 2015 2020 2025 2030 2035 2040 2045 2050 Year Ref. Scenario IEC Scenario

Figure 6-16

100%

16 4% Table 6‑2. Installed capacity of power generation from various sources in China and share changes since 2005

Installed capacity 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 (10,000kW) Total installed capacity 51,675 62,342 71,745 79,284 87,433 96,699 106,305 114,617 12,5768 13,7018 Thermal power 39,138 48,405 55,607 60,286 65,108 70,967 76,834 81,968 87,009 92,363 Hydropower 11,739 12,857 14,823 17,260 19,629 21,606 23,298 24,947 28,044 30,486 Nuclear power 685 885 885 885 908 1,082 1,257 1,257 1,466 2,008 Wind power 106 187 420 839 1,760 2,958 4,623 6,083 7,652 9,657 Solar energy 7 8 10 14 28 86 293 341 1,589 2,486 Others 20 8 19 Share (%) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Thermal power 75.7 77.6 77.5 76.0 74.5 73.4 72.3 71.5 69.2 67.4 Hydropower 22.7 20.6 20.7 21.8 22.5 22.3 21.9 21.8 22.3 22.2 Nuclear power 1.3 1.4 1.2 1.1 1.0 1.1 1.2 1.1 1.2 1.5 Wind power 0.2 0.3 0.6 1.1 2.0 3.1 4.3 5.3 6.1 7.0 Solar energy 0.0 0.0 0.0 0.0 0.0 0.1 0.3 0.3 1.3 1.8 Others 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Source: China Electric Power Yearbook 2006-2015

From the perspective of the output structure, the share Eliminate backward small and medium-sized power of thermal power declined from 82.0% in 2005 to 75.4% plants in 2014; the share of hydropower generation capacity in- A great quantity of old, backward, low-efficiency power creased from 15.9% in 2005 to 18.9% in 2014; the share of plants have existed for a longer time. During 2006-2014, nuclear power generation capacity fluctuated at around the Chinese government intensified its efforts to elimi- 2%; the share of wind power generation capacity in- nate backward capacity in the power sector, issuing a mis- creased from 0% in 2005 to 2.9% in 2014; and the contribu- sion statement for the elimination of 50 GW backward tion of solar energy appears to have been progressive (see small power plants. After five years of effort, 76.83 GW Table 6‑3). The share of clean energy therefore increased in small units had been closed down, an achievement rate gradually. of 153%. The12th FYP for Energy Conservation and Emissions The efficiency of the power sector continuously Reduction issued by the State Council called for the eli- improved mination of another 20 GW capacity in backward small power plants during 2011-2015, mainly conventional coal- The energy utilization efficiency of the Chinese power fired units with capacities of under 100 MW, conventio- sector has been constantly improved in recent years. The nal small thermal power units with capacities of under 50 gross coal consumption rate of power sets over 6000 kW MW, oil-fired plants mainly for power generation with declined from 370 gce/kWh in 2005 to 319 gce/kWh in capacities of under 50 MW, and conventional coal-fired 2014, the net coal consumption rate fell from 343 gce/ power units connected to the grid with capacities of un- kWh to 300 gce/kWh, the service power rate declined der 200 MW and with their design life having expired. from 5.87% to 4.83%, the line loss rate fell from 7.21% in During 2011-2014, China eliminated a total of 22,768 GW 2005 to 6.64% in 2014, the energy loss by power plants and of inefficient thermal power units, fulfilling the prede- transmission declined progressively and energy efficiency termined task of eliminating inefficient power units one steadily improved (see Table 6‑4). year earlier than planned (see Table 6‑5).

6.1.2 Review of Main Policies in Increase energy-efficiency access threshold for new Promoting Energy Efficiency in power plants Power Generation Generation efficiency varies greatly according to the size For a long time, the Chinese government has formulated of the power plant. At present, the generation efficiency a series of policies to promote gradual improvements in of large supercritical generation units is approximately the efficiency of the power sector. 43%, while the efficiency of ultra-supercritical power ge-

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 101 Table 6‑3. Total power generation and mix changes in China

Generation capacity 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 (100 million kWh) Gross power generation capacity 24932 28433 32607 34445 36810 42275 47298 49838 53721 56045 Thermal power 20437 23696 27207 28030 30117 34166 39003 39255 42216 42274 Hydropower 3964 4167 4714 5655 5717 6867 6681 8556 8921 10601 Nuclear power 531 543 629 629 701 747 872 982 1115 1332 Wind power 27 57 131 276 494 741 1004 1383 1598 Solar energy 36 84 235 Others 5 3 5 Share (%) 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Thermal power 82.0 83.3 83.4 81.4 81.8 80.8 82.5 78.8 78.6 75.4 Hydropower 15.9 14.7 14.5 16.4 15.5 16.2 14.1 17.2 16.6 18.9 Nuclear power 2.1 1.9 1.9 1.8 1.9 1.8 1.8 2.0 2.1 2.4 Wind power 0.0 0.1 0.2 0.4 0.8 1.2 1.6 2.0 2.6 2.9 Solar energy 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.2 0.4 Others 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Source: China Electric Power Yearbook 2006-2015

Table 6‑4. Efficiency of China’s power sector since 2005

Item 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Power supply coal consumption (gce/kWh) 370 367 356 345 340 333 329 325 321 319 Power generation coal consumption of thermal power plant 343 342 332 322 320 312 308 305 302 300 (gce/kWh) Station service power consumption rate (%) 5.87 5.93 5.83 5.90 5.76 5.43 5.39 5.10 5.05 4.83 Line loss rate (%) 7.21 7.04 6.97 6.79 6.72 6.53 6.52 6.74 6.69 6.64 Note: Power plant at 6000 kW and above nationwide Source: China Electric Power Yearbook 2006-2015.

Table 6‑5. Elimination of outdated capacity in China's power sector during 2011-2014

2011 2012 2013 2014 Total Elimination scale (10,000kW) 800 544 447 485.8 2276.8 neration technology can even reach figures above 45%. In and defining the technologies to be encouraged and de- addition to expanding the size of newly built plants, it is veloped, restricted, or compulsorily eliminated in detail. also important to improve efficiency by improving steam Technologies to be encouraged include: (1) supercritical temperature and steam pressure. Take 600 MW units as and ultra-supercritical units with a capacity of 600 MW an example: when steam temperature and pressure are and above; (2) centralized CHP and CCHP units with improved from subcritical to ultra-supercritical, thermal a capacity of 300 MW and above; (3) large air-cooling efficiency can increase from 41% to 45%, and the gross coal power generation units with a capacity of 600 MW and use rate can be reduced by 20 gce/kWh. above in water-deficient areas; (4) combined-cycle power From 2011, the National Development and Reform plants; (5) clean-coal power generation such as circulating Commission formulated and updated the Catalogue for fluidized beds, pressurized fluidized beds and integrated Guidance of Industrial Structural Adjustment annually, classification combined cycle power generation with a ca- classifying the sectors in the national economy into en- pacity of 300 MW and above; and (6) power generation couraging class, restricting class and elimination class,

102 | CHINA Energy Efficiency Series using fluidized bed boilers and coal gangue or inferior 6000 kW and above was 3183.62 PJ. The scale of installed coal with a capacity of 200 MW and above. capacity was 283.26 MW, accounting for 30.84% of thermal power, an increase of 11.25% from the level in 2013.15 Technologies to be restricted include: (1) conventional Cogeneration units in China mainly undertake the task coal-fired thermal power units with a capacity of300 of supplying urban factory steam and centralized heat MW and above; and (2) power generation units with a net supply. In 2014, urban steam centralized heat supply capa- coal consumption rate of 300 gce/kWh or higher, and air- city in China was 84,664 tons/hour, of which 70,372 tons/ cooling power generation units with a net coal consump- hour is from there thermal power plants, accounting for tion rate exceeding 305 gce/kWh. 83.12% of the total; the gross urban steam centralized heat Technologies to be eliminated include: (1) conventional supply was 556.14 PJ, of which 485.84 PJ was by thermal coal-fired condensing steam thermal power units connec- power plants, accounting for 87.36% of the total. In the ted to the grid with a capacity below 100 MW upon same year, the urban hot water centralized heat supply maturity of service life; (2) conventional small thermal capacity in China was 447,068 MW, of which 205,043 MW power generation units with a capacity below 50 MW; is from thermal power plants, accounting for 45.86% of and (3) oil-fired plants mainly for power generation with the total. The gross urban hot water centralized heat sup- a capacity under 50 MW. ply was 2765.46 PJ, of which 1151.90 PJ was from thermal power plants, accounting for 41.65%.16 The Chinese government is pressing enterprises hard to implement the Catalogue for Guidance of Industrial Structu- Implement energy-saving technical transformations ral Adjustment as industrial policies. The coal-fired powergeneration units that have been newly constructed in The Chinese government began to provide subsidies for recent years are basically large-size, high-parameter, high- energy-saving technical transformation projects to en- efficiency supercritical units, and the share of small-size, terprises from 2006. The subsidy given to enterprises is low-parameter and low-efficiency units has been progres- determined according to the energy savings made by the sively reduced. project. In 2006, the incentive standard was 200 RMB/ tce in the eastern regions and 250 RMB/tce in the central Generalize CHP plant and implement cogeneration and western regions. The threshold for obtaining such a transformation subsidy from central government is 10,000 tce. The government requires that the energy savings declared by the Cogeneration can reduce cold-end loss and is one of the enterprise must have been directly produced by the en- most effective means whereby thermal power units can terprise through technical transformations and that this improve energy efficiency. In China’s 11th and 12th FYPs can be checked and ratified. In 2011, the central govern- for Energy Conservation, cogeneration has been listed as ment increased the incentive standard to 240 RMB/tce a key project. In 2011, the National Development and Re- for the eastern regions and 300 RMB/tce for the central form Commission revised the Provisions on Development of and western regions. The incentive threshold for indivi- Cogeneration (combined heat and power generation). This dual projects was lowered to 5000 tce. From 2006 to 2013, policy calls for the following measures: (1) active support a number of power plants implemented energy-saving for the development of gas and steam combined-cycle co- technical transformations and benefited from this policy, generation; (2) that heat-supply boilers with a unit capa- which was abolished by the Ministry of Finance in 2013. city of 20 tons/hour and above and annual utilization of heat load greater than 4,000 hours, having demonstrated By means of the comprehensive interaction of the above obvious economic benefits technologically and economi- policies, the energy efficiency of the power sector has cally, should be transformed into cogeneration; and (3) been markedly improved. In 2015, the average gross coal that within the heat-supply range of the constructed co- consumption rate of coal-fired power generation in generation centralized heating and planned cogeneration China was about 315 gce/kWh, close to the international centralized heat-supply project, no coal-fired self-pro- advanced standard. vided power plant or permanent coal-fired boiler room should be constructed. Moreover, local environmental protection and technical supervision departments will not approve any more expansions of small boilers.14 Cogeneration (combined heat and power generation) has been rapidly developed in China in recent years. In 2014, the annual heat supply of a CHP unit with a capacity of

15 Data Source: Summary of Power Industry Statistics (2014). 14 http://www.nea.gov.cn/2011-11/22/c_131262611.htm 16 Data Source: China Urban-Rural Construction Statistical Yearbook 2014.

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 103 6.2 Prospects of Energy intensifying efforts to generalize advanced technologies Consumption in the and alter power structures. More specifically: • Power generation enterprises and electric grid enter- Power Generation Sector prises should attach importance to the management of (two scenarios, by 2050) energy efficiency. Currently mature and feasible high energy-efficient technologies and best practices will The research group adopts scenario analysis when stu- be generalized and applied maximally in the near and dying the energy efficiency HIOs in the power sector, medium terms. establishing two scenarios according to the different • In the medium and long terms, measures will be taken prospects of technological and policy development in the to control carbon dioxide emissions in the power future, namely the reference scenario and the intensified sector. The power generation costs of fossil fuels will energy-saving scenario. By way of comparing the diffe- gradually be increased through carbon taxes, carbon rence between the two scenarios, guidance will be provi- emissions trading, etc. ded for determining HIOs. • In medium and long terms, the more rapid decline in 6.2.1 Methodology the cost of renewable energy sources will accelerate the replacement of coal-fired power, and coal-fired power The methodology used for the power sector is mainly di- plants will gradually be phased out after the expiration vided into two parts: scenario design and model design. of their service lives. Scenario design is directed at qualifying the two different • The reform of the power system will be smoothly development prospects; model design is used to describe carried out. The marketization of grid power genera- the modeling tools deployed by the research group and tion will be successful in medium and long terms. New the creation of model framework. technologies such as demand-side response, large grid Scenario design long-distance power transmission, etc. will be applied on large scale. After thorough discussion, the research group decided that the reference and the intensified energy-saving sce- Selection of modeling tools and design of model narios for the power sector should be determined as fol- framework lows: (1) Introduction of LEAP model (1) Reference Scenario In the research described in this chapter, the research The Reference Scenario covers the prospect of future group adopts a LEAP model as the main quantitative development obtained mainly by continuing the exis- analysis tool. LEAP is the abbreviation for ‘long-range en- ting policies before 2010 and appropriately taking into ergy alternatives planning’ system. The LEAP model is an account the continuation of the trends of technical ad- energy-environment model developed by the Stockholm vancement in the power sector. Specifically: Environment Institute (SEI) Boston/Dallas Branch. This • The technologically mature and most feasible cases of model is itself a ‘bottom-up’ simulation model that can be best practice in 2010 will be generalized and applied to used for calculating energy consumption demand, loss of some extent. The Energy efficiency will be improved, energy processing and conversion, and the pollutant and but the speed of improvement may be very slow; greenhouse gas emissions caused by this. Since 1995es, • Progress with of greenhouse gas emission-reduction more than 190 countries and thousands of organizations mechanisms such as carbon taxes and carbon emissions have gradually adopted the LEAP model to conduct na- trading will be very slow; tional/regional energy strategic research and greenhouse gas emission evaluations. • Coal-fired power is characterized by better economy, stronger competitiveness and greater development Through decades of development, the software functions inertia. It will be difficult to replace fossil energy of the LEAP model have constantly been perfected, and comprehensively with renewables in the medium and the interface has become increasingly friendly (see Figure long terms. 6-4), establishing a good reputation with users from all around the world. (2) Intensified Energy-saving Scenario Compared with other energy-planning models, one The Intensified Energy-saving Scenario is mainly a sce- outstanding advantage of the LEAP model is its compara- nario in which the energy efficiency of China’s power tively transparent data and the fact that the model’s requi- sector will be further improved and the proportion of rements regarding input data are relatively flexible. Users renewable energy sources will be markedly increased by may select the form and quantity of input data according

104 | CHINA Energy Efficiency Series

carbon emissions trading, etc.

 In medium and long terms, the more rapid decline in the cost of renewable energy sources will accelerate the replacement of coal-fired power, and coal-fired power plants will gradually be phased out after the expiration of their service lives.

 The reform of the power system will be smoothly carried out. The marketization of grid power generation will be successful in medium and long terms. New technologies such as demand-side response, large grid long-distance power transmission, etc. will be applied on large scale.

Selection of modeling tools and design of model framework

(1) Introduction of LEAP model

In the research described in this chapter, the research group adopts a LEAP model as the main quantitative analysis tool. LEAP is the abbreviation for ‘long-range energy alternatives planning’ system. The LEAP model is an energy-environment model developed by the Stockholm Environment Institute (SEI) Boston/Dallas Branch. This model is itself a ‘bottom-up’ simulation model that can be used for calculating energy consumption demand, loss of energy processing and conversion, and the pollutant and greenhouse gas emissions caused by this. Since 1995es, more than 190 countries and thousands of organizations have gradually adopted the LEAP model to conduct national/regionalFigure 6‑4. Senergychematic strategic diagram research of the andLEAP greenhouse Model gas emission evaluations.

Figure 6-4. Schematic Diagram of LEAP Model to the characteristics of the research topic and data availa- ted in the present analysis. This part of energy consump- Through decades of development, the software functions of the LEAP model have constantly been perfected, and bility, unlike other models with rigid forms of data input tion will be treated as included in the power sector. the interfaceand higher has requirements become increasing regardingly thefriendly perfection (see levelFigure of 6-4), establishing a good reputation with users from all The power module of the LEAP model designed by the aroundthe the data, world. which cannot be computed if some data is lacking, research group is divided into transmission loss, elec- such as price or cost data. The LEAP model, as a flexible tricity-only supply, CHP and heat supply, of which the Comparedmodel with with other low initialenergy data-planning requirements, model s can, one meet outstanding the advantage of the LEAP model is its comparatively electricity-only generation part is divided into coal-fired different needs of different users and without heavy data transparent data and the fact that the model’s requirements regardinggeneration, input gas-fired data are generation, relatively flexible. oil-fired User generation,s may input and high expertise requirements on the users. select the form and quantity of input data according to the characteristicsnuclear power, of the wind research power, topic hydropower, and data solar availability, energy (2) LEAP model framework for the power sector power generation, biomass power generation and geo- 123thermal power generation. In addition, the coal-fired In the energy model established by the research group, electricity-only power units are also divided into six ca- the industry, building and transportation sectors will all tegories: units of 1,000 MW and above, of 600-1,000 MW, predict terminal energy consumption demand in the fu- of 300-600 MW, of 200-300 MW, of 100-200 MW, and of ture, of which electricity and heat demand, etc. is trans- 60-100 MW according to size (as shown in Figure 6‑6). mitted to the power sector for analysis and measurement. The primary energy consumption of the power sector, 6.2.2 Key Assumptions the non-power processing and conversion sector, and The main assumptions of the model input include transmis- the terminal energy consumption sector are totaled up sion loss, the power generation efficiency of various genera- to provide a figure for the gross national primary energy tion units, the priority of various modes of generation, power consumption (as shown in Table 6‑5). generation costs, capacity in base year, and other parameters. The power sector studied in this chapter not only includes electricity generation, but also heat supply and the Energy efficiency of power plants transmission and distribution of both it and electricity. (1) Energy efficiency of power plants The research group believes that, although the energy consumption of a part of the power and heating power The research group abides by the objective law that the production department in the energy balance sheet is in- larger the capacity of the unit, the higher its efficiency cluded in the terminal department, this has been adjus- will be when the energy efficiency of the current and

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 105 Figure 6‑5. Positioning of the the power sector model in the entire energy model Figure Figure6-4. Schematic 6-4. Schematic Diagram Diagram of LEAP of LEAPModel Model

Processing and conversion Primary一次能源需求 energy 电电电Processing电电电 and conversion Primary一次能源需求 energy Electric电 power电电电 sector 电电电电电电 Electric power sector Termin终端能源需求al energy 电电电电 Termin终端能源需求al energy Power 发电generation Coal煤炭 Power 发电generation Coal煤炭

供热 Petroleum石油 Heat supplyHeat 供热 supply Petroleum石油工业 Industry Industry工业输电天然气 Electric transmissionElectric transmission输电 Natural gasNatural天然气 gas

Nuclear核能 powerNuclear核能 power Building建筑 Building建筑 Non-非电部门electricNon power-非电部门electric power Hydropower水能 Hydropower 水能 Coke炼焦-burningCoke 炼焦-burning

Wind风能 powerWind 风能 power Oil 炼油refiningOil 炼油refining Transportation交通 Transportation 交通 Solar太阳能 energySolar太阳能 energy Biomass生物质燃料 fuelBiomass生物质燃料 fuel

Biomass生物质能 energyBiomass生物质能 energy …… ……

…… ……

Figure 6‑6. Structure of the LEAP Model for power sector Figure Figure6-5. Positioning 6-5. Positioning of the of Power the Power Sector Sector Model Model in the in Entire the Entire Energy Energy Model Model

Coal-fired power Coal-fired power Coal-fired power +IGCC Coal-fired power Coal-fired power +IGCC Coal-fired power Coal-fired power + CCS Coal-fired power + CCS Coal-fired power + IGCC +CCS Coal-fired power + IGCC +CCS NGCC Gas-fired power NGCC + CCS Gas-fired power

Oil-fired power Oil-fired power Oil-fired power Oil-fired power

Nuclear power Nuclear power Nuclear power Nuclear power Hydropower Hydropower Hydropower Hydropower Pumped storage Pumped storage Onshore wind farm Wind power Onshore wind farm Wind power Offshore wind power Offshore wind power Solar power Photovoltaic

Solar power PhotovoltaicUrban refuse

Biomass power UrbanFirewood refuse power generation Straw power generation Biomass power Firewood power generation Straw power generation Geothermal power Geothermal power generation

Geothermal power Geothermal power generation

Figure 6-6. LEAP Model Structure in the Power Sector Figure 6-6. LEAP Model Structure in the Power Sector

106 | CHINA Energy Efficiency Series future power plants is taken into account. Table 6-6 coal consumption rate of this type will be reduced to 270 shows the status of the power supply energy efficiency gce /kWh (equivalent to improving power generation ef- of the thermal power generation unit at different capa- ficiency by 45.5%) by 2050. In the intensified energy-sa- city classes in some large power generation enterprises ving scenario, through a series of systematic transforma- in China in 2012. It can be observed that the difference tions, by 2050 coal-fired power generation efficiency will between the 600 MW class and the 1000 MW class in coal be further improved by 47.3%, a net coal consumption consumption is 22 gce/kWh, that between the 300 MW rate of 260 gce/kWh, demonstrating that the intensity class and the 600 MW class is approximately 12 gce/kWh, level is quite large (see Figure 6-7). that between the 350 MW class and the 300 MW class is Gas turbines and natural gas and steam combined cycles 8 gce/kWh, and that between the 200 MW class and the (NGCC) are the main modes of natural gas power gene- 600 MW class is approximately 30 gce/kWh. ration in the developed countries at present. The produc- The research group assumes that energy efficiency will tion principle is to make use of natural gas through its still be progressively improved after the various classes direct combustion in gas turbines and to enable gas tur- of thermal power generation units constantly implement bines to drive generators to generate electricity. At this the transformation of energy conservation . The research moment, it is a single-cycle form of power generation. If group assumes that energy efficiency is very slow to- im the high-temperature tail gas produced by the gas turbine prove in the reference scenario, accelerating in the in- is put through a waste-heat boiler after generating high tensified energy-saving scenario. At present, countries temperatures and high pressure steam, it will cause the around the world are working hard to surmount the ul- steam turbine to drive the generator to generate electrici- tra-supercritical coal-fired power generation technology ty. At this moment, it is a combined-cycle form of power at a steam temperature of 700°C. Once this technology generation. Research indicates that the power supply ef- has been surmounted, the main steam parameter will have ficiency of advanced and mature gas turbines operating been improved to 35MPa/700°C/720°C. Power generation independently will be approximately 40%. The net effi- efficiency will be further improved by approximately 50%, ciency of combined-cycle power generation may be more and the net coal consumption rate will be reduced to be- than 58%, the highest level in today's practical power low 260gce/kWh. If high-efficiency coal-fired power gene- generation technology. The initial inlet temperature of ration technology is forcefully promoted, it will be pos- the latest gas turbine may reach more than 1600°C. The sible to realize this ultra-high energy-efficiency objective. power generation efficiency of combined-cycle technology has exceeded 61%. In model research, the research In model research, the research group assumes that the group assumes that China will use the gas-steam combi- coal consumption of 1,000,000kW-class coal-fired genera- ned cycle as the main type in the future. In the reference tion units in 2010 was 274 gce/kWh, equivalent to 44.8% scenario, the power generation efficiency of natural gas of power generation efficiency. In the reference scenario, will be improved from 56.8% in 2010 to 58% in 2050. In assuming that efficiency has already reached a quite high the intensified energy-saving scenario, efficiency will be level and it is difficult to continue improving it, the net further improved to 61.5% (see Figure 6-8).

Table 6‑6. Efficiency levels of the thermal power generation units at different capacity classes in some large power enterprises in China in 2012

Standard coal Gross installed Capacity level Number of sets consumption of power capacity (10 MW) supply (gce/kWh) All units 1295 42411 318 Grade of 900-1000MW 31 3132 290 Grade of 600MW 265 16400 312 Grade of 350MW 68 2387 318 Grade of 300MW 447 13920 326 Grade of 200MW 155 3183 341 Grade of 120-165MW 116 1655 347 Grade of 100MW 21 213 350 Below the grade of 100MW 148 361 367 Gas turbine 44 1161 229

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 107 Figure 6-1 发电装机(亿千瓦）发电装机万千瓦） 1949 0.0185 ( Installed Capacity (GW) Installed Capacity (GW) 1978 0.571 2000 31932 2000 319 1600 1508 1990 1.3789 2001 33849 2001 338 1370 1995 2.17 2002 35657 2002 357 1400 1258

来源：中国统计摘要2014

Figure 6-2

Figure 6-1 Installed Capacity (GW) 发电装机(亿千瓦）发电装机万千瓦） 1600 1508 1949 2010 data 0.0185 ( Installed Capacity (GW) Installed Capacity (GW) 1978 0.571 2000 31932 2000 319 1600 1508 1990 1.3789 2001 33849 2001 338 1400 1370 1995 2.17 2002 35657 2002 357 1400 Installed Capacity (GW) 1258

2000 3.1932 2003 39141 2003 391 USA 1041 1200 1147 2004 4.4239 2004 44239 1200 2004 442 1063 2005 5.1718 2005 51718 1041 2005 517 966 Russia 224 1000 874 2006 6.237 2006 62370 1000 2006 624 793 Japan 287 800 718 2007 7.1822 2007 71822 735.2378 2007 718 624 2008 124 7.9273 2008 79273 2008 793 600 517 France 442 2009 8.741 2009 87410 800 2009 874 391 Per capita electricity consumption (kWh) 338 357 Canada 137 Installed capacity (GW) 400 319 2010 9.6641 2010 96641 2010 966 12000 Germany 2011 157 10.6253 2011 106253 600 2011 1063 200 10547 10428 2012 11.4676 2012 114676 2012 1147 0 10000 U.K. 2013 93 12.5768 2013 125768 Installed capacity (GW) 2013 1258 400 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2014 13.7018 2014 137018 2014 2871370 7836 Italy 106 Year 2015 15.0828 2015 150828 2242015 1508 99.11 8000 7022 7382 137 157 Spain 109 200 124 93 106 109 85 99 来源：中国统计摘要2014 6000 5409 5124 Korea 85 0 4227 Figure 6-2 China (2015） 1508 USA Russia Japan France Canada Germany U.K. Italy Spain Korea China China 4000 China annual average growth 99 (2015） annual Installed Capacity (GW) average 2000 1600 capitaPer power(kWh)use 2010 data 1508 growth source: 国际统计年鉴（2014） 0 1400 Installed Capacity (GW)

USA 1041 1200 Russia 224 1041 1000 Figure 6-3 Japan 287 France 124 800 Per capita electricity consumption (kWh) Canada2013data 137 12000 GermanyElectricity Consumption per Capita (kWh)157 600 10547 10428 10000 U.K. 93 Installed capacity (GW) USA 10547 400 287 106 7836 Italy 224 8000 7022 7382 137 157 Japan Spain 7836 109 200 124 93 106 109 85 99 6000 5409 5124 Korea 85 UK 5409 0 49.0 4227 China (2015） 1508 Germany 7022 USA Russia Japan France Canada Germany U.K. Italy Spain Korea China China 4000 China annual average growth 99 (2015） annual average 2000

France 7382 capitaPer power(kWh)use 47.0 source: 国际统计年鉴（2014） growth Italy 5124 0 Coal ME 6 to 100 MW - Ref. Scenario Korea 10428 Coal ME 100 to 200 MW - Ref. Scenario 45.0 China(2015) Figure 6-3 4227 Coal ME 200 to 300 MW - Ref. Scenario 2013data Electricity Consumption per Capita (kWh) Figure 6‑7. Power generation efficiency of coal-fired units under the Reference Scenario and theCoal IE MEC 300 to 600 MW - Ref. Scenario USA 10547 43.0 source: IEA statistical data Scenario Coal ME 600 to 1000 MW- Ref. Scenario Japan 7836 UK 5409 49.0 Coal ME 1000 MW or Above - Ref. Scenario Figure 6-7 Germany 7022 41.0 France 7382 (MtCe)plants Coal ME 6 to 100 MW -IEC Scenario 47.0 Italy 5124 Coal ME 6 to 100 MW - Ref. ScenarioCoal ME 100 to 200 MW- IEC Scenario Korea 2010 2015 202010428 2025 2030 2035 2040 2045 2050 39.0 Coal ME 100 to 200 MW - Ref. Scenario 45.0 Coal ME 200 to 300 MW- IEC Scenario China(2015) 4227 Coal ME 200 to 300 MW - Ref. Scenario Coal ME 6 to 100 MW - Ref. Scenario 35.8 35.8 35.9 35.9 36.0 36.0 36.1 36.1 36.2 Coal ME 300 to 600 MW - Ref.Coal Scenario ME 300 to 600 MW-IEC Scenario Coal ME 100 to 200 MW - Ref. Scenario 37.5 37.6 37.8 37.9 38.0 38.1 38.2 38.3 38.4 43.0 source: IEA statistical data 37.0 Coal ME 600 to 1000 MW- Ref. Scenario Coal ME 600 to 1000 MW - IEC Scenario Coal ME 200 to 300 MW - Ref. Scenario 38.5 38.5 38.6 38.7 38.7 38.8 38.9 38.9 39.0 Coal ME 1000 MW or Above - Ref. Scenario Figure 6-7 41.0 Energy saving Energy saving frommore efficint condening power Coal ME 300 to 600 MW - Ref. Scenario 40.1 40.2 40.3 40.4 40.5 40.5 40.6 40.7 40.8 (MtCe)plants Coal ME 6 to 100 MW -IEC ScenarioCoal ME 1000 MW - IEC Scenario 35.0 Coal ME 100 to 200 MW- IEC Scenario 2010 2015 2020 2025 2030 2035 2040 2045 2050 39.0 Coal ME 600 to 1000 MW- Ref. Scenario 41.8 41.9 41.9 42.0 42.1 42.2 42.2 42.3 42.4 2010 2015 2020 2025 2030 2035 2040 2045 Coal2050 ME 200 to 300 MW- IEC Scenario Coal ME 6 to 100 MW - Ref. Scenario 35.8 35.8 35.9 35.9 36.0 36.0 36.1 36.1 36.2 Coal ME 300 to 600 MW-IEC Scenario Coal ME 1000 MW or Above - Ref. Scenario Coal ME 100 to 20044.8 MW - Ref. Scenario 44.9 45.037.5 45.1 37.645.1 37.8 45.237.9 38.0 45.3 38.1 45.438.2 45.538.3 38.4 37.0 Year Coal ME 6 to 100 MW -IEC Scenario Coal ME 200 to 30035.8 MW - Ref. Scenario 36.0 36.138.5 36.3 38.536.5 38.6 36.738.7 38.7 36.9 38.8 37.138.9 37.238.9 39.0 Coal ME 600 to 1000 MW - IEC Scenario Coal ME 300 to 600 MW - Ref. Scenario 40.1 40.2 40.3 40.4 40.5 40.5 40.6 40.7 40.8 Energy saving frommore efficint condening power Coal ME 1000 MW - IEC Scenario Coal ME 100 to 200 MW- IEC Scenario 37.5 37.8 38.1 38.3 38.6 38.8 39.1 39.4 39.6 35.0 Coal ME 600 to 1000 MW- Ref. Scenario 41.8 41.9 41.9 42.0 42.1 42.2 42.2 42.3 42.4 2010 2015 2020 2025 2030 2035 2040 2045 2050 Coal ME 200 to 300 MW- IEC Scenario Coal ME 1000 MW38.5 or Above - Ref. Scenario38.8 39.144.8 39.4 44.939.7 45.0 40.045.1 45.1 40.3 45.2 40.645.3 41.045.4 45.5 Year Coal ME 6 to 100 MW -IEC Scenario 35.8 36.0 36.1 36.3 36.5 36.7 36.9 37.1 37.2 Coal ME 300 to 600 MW-IEC Scenario Coal ME 100 to 20040.1 MW- IEC Scenario 40.4 40.637.5 40.9 37.841.2 38.1 41.538.3 38.6 41.8 38.8 42.139.1 42.439.4 39.6 Coal ME 600 to 1000 MW - IEC Scenario Coal ME 200 to 30041.8 MW- IEC Scenario 42.1 42.538.5 42.9 38.843.2 39.1 43.639.4 39.7 43.9 40.0 44.340.3 44.40.67 41.0 Coal ME 1000 MW - IEC Scenario Coal ME 300 to 60044.8 MW-IEC Scenario 45.1 45.440.1 45.7 40.446.0 40.6 46.340.9 41.2 46.6 41.5 47.041.8 47.342.1 42.4 Figure 6‑8. Efficiency levels of the gas-fired power generation units under the Reference Scenario and the Coal ME 600 to 1000 MW - IEC Scenario 41.8 42.1 42.5 42.9 43.2 43.6 43.9 44.3 44.7 IEC Scenario Coal ME 1000 MW - IEC Scenario 44.8 45.1 45.4 45.7 46.0 46.3 46.6 47.0 47.3 62.0% 62.0%

61.0%61.0% 60.8% 60.8% 60.3% 60.0% 59.7% 60.3% Figure 6-8 60.0% 59.0% 59.1% 59.7% Figure 6-8 58.5% 2010 2015 2020 2025 2030 2035 2040 2045 2050 59.0%58.0% 57.9% 59.1% 57.8% NGCC- Ref. Scenario 56.8% 56.9% 57.1% 57.2% 57.4% 57.5% 57.7% 57.8% 58.0 57.5% 57.7% 57.2% 58.5%57.4% 57.0% 56.9% 57.1% NGCC- IEC Scenario2010 2015 202056.8% 202556.9% 2030 57.9% 203558.5% 59.1%2040 59.7% 204560.3% 60.8%2050 61.5 58.0% 56.8% NGCC efficiency efficiency NGCC level 57.9% 57.8% 56.0% 57.5% 57.7% NGCC- Ref. Scenario 56.8% 56.9% 57.1% 57.2% 57.4% 57.5% 57.7% 57.8% 58.0 57.2% 57.4% 57.0%55.0% 57.1% NGCC- IEC Scenario 56.8% 56.9% 57.9% 58.5% 59.1% 59.7% 60.3% 60.8% 61.5 56.8% 56.9%

NGCC efficiency efficiency NGCC level 54.0% 56.0% 2010 2015 2020 2025 2030 2035 2040 2045Year NGCC- Ref. Scenario NGCC- IEC Scenario 55.0% Efficiency level of different coal-fired generating units in China - 2010 400 Figure 6-9 350 54.0% 2010 300 2010 2015 2020 2025 2030 2035 2040 2045Year Coal ME 6 to 100 MW 343.39201 250 NGCC- Ref. Scenario NGCC- IEC Scenario Coal ME 100 to 200 MW 327.38412 200 Coal ME 200 to 300 MW 319.63589 150 Efficiency level of different coal-fired generating units in China - 2010 Coal ME 300 to 600 MW 306.71325 100 Coal ME 600 to 1000 MW 294.0895 400 50 (2) Energy efficiency of power transmission system From the perspective of the various factors affecting grid Coal ME 1000 MW or above 274.45288 0 Figure 6-9 350 Coal ME 6 to Coal ME 100 to Coal ME 200 to Coal ME 300 to Coal ME 600 to Coal ME 1000 Theoretically, there are many factors affecting energy line loss in China in the future, this not only includes Coal use Coal for powergeneration (g/kWh) Figure 6-10 2010 300 100 MW 200 MW 300 MW 600 MW 1000 MW MW or above loss from the electric grid, such as the materials of which increasing energy consumption, but also declining ener- 待补充 Different generating units the grid cables are made, the coverage of the grid, the gy consumption. Resources for coal-fired power, hydro- Coal ME 6 to 100 MW 343.39201 250 regulatory capacity of grid transmission and distribution, power, wind power and photovoltaic power generation Coal ME 100 to 200 MW 327.38412 200 the power load density, the characteristics of the power are abundant in the western regions in China, while the Coal ME 200 to 300 MW 319.63589 150 distribution, the power transmission distance, the grid electricity load is mainly concentrated in the eastern management level, etc. After years of efforts, grid loss has regions. Because of the regional difference between re- Coal ME 300 to 600 MW 306.71325 100 declined consistently in China. The proportion of line Coal ME 600 to 1000 MW 294.0895 sources for power generation and load, China will cer- 50 loss in transmission capacity declined from 7.2% in 2005 tainly improve its long-distance power transmission ca- Coal ME 1000 MW or above 274.45288 0 to 6.6% in 2014. pability in the future. This will increase the line-loss level Coal ME 6 to Coal ME 100 to Coal ME 200 to Coal ME 300 to Coal ME 600 to Coal ME 1000 Figure 6-10 use Coal for powergeneration (g/kWh) 100 MW 200 MW 300 MW 600 MW 1000 MW MW or above 待补充 Different generating units

108 | CHINA Energy Efficiency Series Figure 6-11 待补充

Figure 6-12 Figure 6-11 Energy Denmand (MtCe) 1,800 待补充 2010 2015 2020 2025 2030 2035 2040 2045 2050 Electricity 434 608 764 934 1,099 1,210 1,296 1,336 1,318 1,600 Heat 88 115 150 192 230 259 286 295 284 286 295 284 1,400 259 Total 522 723 914 1,125 1,329 1,469 1,583 1,631 1,602 1,200 230

1,000 192

800 150 115 1,336 1,318 600 1,210 1,296 1,099

Energy Denmand(MtCe) 88 934 400 764 608 200 434

- 2010 2015 2020 2025 2030 2035 2040 2045 2050 Year Heat Electricity

6,000 Figure 6-13 Geothermal 5,000 2010 2015 2020 2025 2030 2035 2040 2045 2050 1,202 Biomass PG

Coal Fired PG 658 886 1,511 1,715 1,904 2,041 2,101 2,029 1,940 914 4,000 671 Solar PG Diesel 9 10 13 15 17 19 19 18 17 462 908 Wind PG NG PG 47 95 120 152 184 220 250 287 327 679 802 303 540 Hydro 216 286 333 372 398 420 444 474 501 3,000 Nuclear 163 420 Nuclear 11 39 53 94 130 168 220 271 350 311 Hydro 96 Figure 6-12 Wind PG 30 108 206 311 420 540 679 802 908 2,000 206 NG PG

Solar PG 0 38 96 163 303 462 671 914 1,202 Installed capacity (GW) Energy Denmand (MtCe) 38 Diesel Biomass PG 4 8 12 14 19 29 42 54 59 108 1,000 1,800 Geothermal 2010 2015 2020 0 2025 0 2030 0 2035 0 0 2040 0 2045 0 2050 0 1 30 0 Coal Fired PG Electricity Total 434 608 764 976 934 1,471 1,099 2,344 1,210 2,838 3,376 1,296 3,900 1,336 4,427 1,318 4,850 5,306 - 1,600 Heat 88 115 150 192 230 259 286 295 284 2010 2015 2020 2025 2030 2035 2040 2045 2050 286 295 284 1,400 Year 259 Total 522 723 914 1,125 1,329 1,469 1,583 1,631 1,602 1,200 230 Figure 6-14 1,000 192 2050 - Ref. 2010 Scenario 2050 - IEC Scenario 3000 800 150 Wind Power Generation 30 908 1600

2500 115 1,336 1,318 Solar Power Generation 0 1202 2500 600 1,210 1,296 1,099 Wind Power Solar Power 2000 Energy Denmand(MtCe) 88 934 2010 30 0 400 764 2050 1500 608 Reference 434 1000 200 Scenario 908 1202 2050 IEC Installed capacity (GW) 500 - Scenario 1600 2500 2010 2015 2020 2025 2030 2035 2040 2045 2050 Year 0 2010 2050 - Ref. Scenario 2050 - IEC Scenario Heat Electricity

Wind Power Generation Solar Power Generation

6,000 Figure 6-13 Geothermal 5,000 Figure 6-15 2010 2015 2020 2025 2030 2035 2040 2045 2050 2,000 1,202 Biomass PG 914 Coal Fired PG 658 886 1,511 1,715 1,904 2,041 2,101 2,029 1,940 1,800 1,833 2010 2015 2020 2025 2030 2035 2040 2045 2050 1,780 671 Solar PG 4,000 1,574 1,737 Diesel Ref. Scenario 9 10 1,020 13 15 1,101 17 1,349 1,574 19 1,780 19 1,833 18 1,737 1,500 17 1,052 1,600 1,613 462 1,549 908 Wind PG IEC Scenario 1,020 1,084 1,306 1,488 1,613 1,549 1,229 773 711 802 1,500 NG PG 47 95 120 152 184 220 250 287 327 1,349 1,488 679 17 43 85 167 283 508 727 341 1,400 303 540 3,000 1,306 Nuclear Hydro 216 286 333 372 398 420 444 474 501 (MtCe) 1,101 420 1,200 163 1,229 Nuclear 11 39 53 94 130 168 220 271 350 1,020 311 Hydro 1,084 1,052 1,000 1,020 96 Wind PG 30 108 206 311 420 540 679 802 908 2,000 206 NG PG

Solar PG 0 38 96 163 303 462 671 914 1,202 Installed capacity (GW) 800 773 Fossil useFossil for powergeneration in China 108 38 Diesel 711 Biomass PG 4 8 12 14 19 29 42 54 59 600 1,000 201030 0 2015 2020 2025 2030 2035 2040 2045 2050Coal Fired PG Geothermal 0 0 0 0 0 0 0 0 1 Year Total 976 1,471 2,344 2,838 3,376 3,900 4,427 4,850 5,306 Ref. Scenario IEC Scenario - 2010 2015 2020 2025 2030 2035 2040 2045 2050 Year

Figure 6-16

100%

Figure 6-14 16 4%

0 2010 2050 - Ref. Scenario 2050 - IEC Scenario

Wind Power Generation Solar Power Generation

Figure 6-15 2,000

800 773

Fossil useFossil for powergeneration in China 711 600 2010 2015 2020 2025 2030 2035 2040 2045 2050 Year Ref. Scenario IEC Scenario

Figure 6-16

100%

来源：中国统计摘要2014

Figure 6-2

Installed Capacity (GW) 2010 data 1600 1508

1400 Installed Capacity (GW)

Coal ME 300 to 600 MW - Ref. Scenario 43.0 source: IEA statistical data Coal ME 600 to 1000 MW- Ref. Scenario Coal ME 1000 MW or Above - Ref. Scenario Figure 6-7 41.0

62.0%

NGCC efficiency efficiency NGCC level 56.0%

55.0%

54.0% Figure 6‑9. Efficiency levels of coal-fired power plants at different classes in 2010 2010 2015 2020 2025 2030 2035 2040 2045Year NGCC- Ref. Scenario NGCC- IEC Scenario

of the electricity grid in China, which in the future will red the design, manufacture, construction, debugging not be comparable to developed countries with higher and operational technology of supercritical 600 MW- load densities such as Japan, South Korea, etc. Meanwhile, class thermal power generation units, as well as, basically, along with advances in grid-dispatching technology and those of 1,000 MW-class supercritical units. Large turbine the optimization of the materials used for grid lines, condenser air-cooling technology, especially direct air- especially the wide application of digitalized grid regu- cooling technology, will be developed rapidly. As tradi- lation technology and the popularization of new mate- tional and mature power generation technologies, invest- rials such as high-temperature superconductors, etc., the ment in and the construction of large coal-fired power energy efficiency of the electricity grid will be improved plants in different places will be conducted according to and line loss constantly reduced. By synthesizing the two national standard, though the difference in investment factors above, the research group believes that the trans- levels is not great. In this research, the initial investment mission loss to the electricity grid in medium and long in coal-fired power generation unit will be calculated at terms will be slowly reduced. In the reference scenario, 4,000 RMB/kW (see Figure 6-9). Figure 6-11 待补充 the line loss will be reduced from 6.3% in 2010 to 5.5% in 2050, and in the intensified energy-saving scenario, (2) Gas-fired units line loss in 2050 will continuously decline to 4.5%, being Natural gas as a clean and high-quality energy will play reduced by 1 percentage point more compared with the important role in optimizing China’s energy consump- reference scenario. tion structure, improving the atmospheric environment and controlling greenhouse gas emissions. Due to the role Economy of various power plants of market, natural gas-based gas turbine technologies During research, the research group collected and ana- have achieved rapid development over the past twenty lyzed economic data for various power plants, inclu- years. Since the start of this century, China has achieved ding coal-fired power generation, gas power generation, better effects in markets for technology, in the localized hydropower, nuclear power, wind power, photovoltaic manufacture of gas-turbine equipment and in the deve- power generation, etc. lopment of domestic gas-turbine technology. Binding bids have accounted for eighteen power stations and 41 (1) Coal-fired units gas turbine generator sets. Especially in supporting the The cost of coal-fired plants can be divided into three ‘West-East natural gas transmission’ project, a group of elements: initial investment, operating and maintenance natural gas-combined cycle units have been construc- costs, and fuel costs, of which the initial investment is ted in load centers. The specific investment costs of gas related to construction capacity and installed capacity turbines and their combined cycle units are lower than Figure 6-12 and is generally represented by investment in unit ins- those of coal-fired steam-turbine power stations. In this Energy Denmand (MtCe) talled capacity (also called capacity cost). The operating research, it is assumed that the capacity cost of combi- 1,800 2010 2015 2020 2025and maintenance2030 costs2035 are related 2040 to human resources2045 ned-cycle2050 power plant in the base year is 3,000 RMB/kW. Electricity 434 608 764 934costs and 1,099 other factors, 1,210 while the 1,296 fuel cost is related 1,336 to 1,318 1,600 Heat 88 115 150 192 230 259 286 295 284 the price of the fuel used. At present, China has maste- 286 295 284 1,400 259 Total 522 723 914 1,125 1,329 1,469 1,583 1,631 1,602 1,200 230

1,000 192

800 150 115 1,336 1,318 600 1,210 1,296 Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 109 1,099 Energy Denmand(MtCe) 88 934 400 764 608 200 434

- 2010 2015 2020 2025 2030 2035 2040 2045 2050 Year Heat Electricity

6,000 Figure 6-13 Geothermal 5,000 2010 2015 2020 2025 2030 2035 2040 2045 2050 1,202 Biomass PG

Figure 6-14

0 2010 2050 - Ref. Scenario 2050 - IEC Scenario

Wind Power Generation Solar Power Generation

Figure 6-15 2,000

800 773

Fossil useFossil for powergeneration in China 711 600 2010 2015 2020 2025 2030 2035 2040 2045 2050 Year Ref. Scenario IEC Scenario

Figure 6-16

100%

16 4% (3) Hydropower put exceeded 50% of global production in 2012. Under the dual driving factors of continuous technical progress Hydropower investment is closely related to the geogra- and fierce industrial competition, in the past ten years phical and geological conditions, immigration conditions, the price of solar battery packs has been rapidly reduced etc. of the factory site. Investment in unit installed capa- from 46 RMB/W to 4.6 RMB/W, and the cost per kWh of city varies greatly. Along with increases in investments power to approximately 1 RMB/kWh. The cost of photo- in migration compensation in the future, a certain level voltaic power generation, on the other hand, approaches of increase may appear in the unit’s initial investment. In that of conventional power generation. this research the hydropower capacity cost in the base year will be calculated at 10,000 RMB/kW. It is estimated that the price of solar battery packs will be further reduced in the future, from the present 8,500 (4) Nuclear power RMB/kW to 7,000 RMB/kW by 2030. The conversion ef- Nuclear power is a clean, safe, economical energy source ficiency of monocrystalline silicon and polysilicon com- and one of the zero-carbon alternative energy sources for ponents will be improved from the present 17% and 16% scale generalization in the near and medium terms. In the respectively to 25% and 24% in 2030. past twenty years, the international focus has been on the construction of the third generation of pressurized (7) Biomass power generation water reactor power plants. China has basically laid the The biomass power generation industry has developed foundations and set the conditions for scale development rapidly in China in recent years and has become the in the independent design, manufacturing, construction, most mature and largest field in modern biomass ener- operation and site resources reserves of pressurized water gy utilization technology. The cost composition of bio- reactor power plants, as well as the safety and economy mass power generation is similar to the cost of coal-fired of the supply and operation of nuclear fuels. From the power generation in being divided into three parts: ini- perspective of the construction costs of both established tial investment, equipment operation and maintenance and in-construction nuclear power stations, the cost level costs, and fuel costs. of the initial investment in nuclear power in China has At present, the initial investment cost of biomass power been reduced from 2,068 US$/kW in Daya Bay to 1,385 generation is 8,600 - 11,000 RMB/kW. The cost of most US$/kW in the Qinshan Phase-II project. This research projects falls within a range of between 9,000 -10,000 assumes that the capacity cost of nuclear power construc- RMB/kW. Since the investment cost has no direct relation in the base year is 10,000 RMB/kW. tion to regional distribution, in this research, the initial (5) Wind power investment of biomass power generation projects in the base year is calculated at 9,500 RMB/kW. In recent years, the development of wind power technology has mainly been concentrated in the expansion in From the perspective of time scale, due to the progress the scale of the monomer unit. Reducing costs is one of made in power generation technology, initial investment the important tasks for the development of wind power in various modes of power generation will vary over time. technology. Along with the increasing maturity of wind Therefore, the price relationship between the unit initial power manufacturing and development technologies and investments of various forms of power generation will the scale development of wind power, wind power costs also vary over time, further affecting the decision-making have been constantly reduced in the past twenty years. In of power investment enterprises. The research group as- the development of onshore wind power, the cost of wind sumes the future changes in initial investments in unit power units accounts for approximately 65% - 84%; the installed capacity in various modes of power generation operating and maintenance costs of wind power (inclu- that are shown in Figure 6-10. It is estimated that, due ding service, spare parts, insurance, management, other to scale effects and technical progress in renewable en- expenses, etc.) account for approximately 25%. ergy sources, capacity costs will be greatly reduced in the next twenty years. At the same time, since the room for The average investment in the installed capacity of ons- technical progress in fossil energy power generation is hore wind power units in China is approximately 9,000 small and the scale benefits almost saturated, declines in RMB/kW. It is estimated that the average investment future capacity costs will be limited. New changes such in the unit installed capacity of onshore wind power in as these will be favorable to the large-scale development China in 2030 and 2050 will be greatly reduced. of renewable energy sources such as wind power, solar power, etc. (6) Solar power generation Since 2011, China has been the largest manufacturer of solar energy cells and components in the world, and out-

110 | CHINA Energy Efficiency Series 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050 Ocean power 73000 62400 53800 46800 41100 36400 32600 29400 26800 24700 23000 21600 20500 19700 19400 19300 19200 Concentrated solar power 64100 55800 49000 43200 38500 34400 31100 28200 25800 23800 22200 20800 19600 18700 17900 17300 17300 17200 17200 Geothermal 43000 41500 40200 39000 37800 36800 35900 35100 34300 33800 33400 33100 32800 32500 32300 32200 32100 32000 32000 Off-shore wind 37600 36300 35000 33900 32800 31900 31000 30300 29600 28900 28400 27900 27700 27400 27300 27100 27000 27000 26900 Utility PV 36500 33300 30600 28300 26200 24400 22800 21500 20300 19300 18400 17900 17500 17200 16900 16700 16500 16400 16300 Biomass 27000 26200 25500 24900 24300 23700 23400 23200 23000 22800 22600 22500 22400 22200 22200 22100 22000 22000 22000 On-shore wind 21800 21400 21000 20700 20400 20100 19900 19600 19500 19400 19300 19200 19100 19100 19000 19000 18900 18900 18900 Distributed PV 22900 21000 19300 17800 16500 15300 14400 13500 12800 12100 11600 11300 11000 10800 10600 10500 10400 10300 10300 Hydro 17300 17300 17300 17300 17300 17300 17300 17300 17300 17300 17300 17300 17300 17300 17300 17300 17300 17300 17300 Coal 10400 10400 10400 10400 10400 10400 10400 10400 10400 10400 10400 10400 10400 10400 10400 10400 10400 10400 10400 Gas Combined Cycle 9000 9000 9000 9000 9000 9000 9000 9000 9000 9000 9000 9000 9000 9000 9000 9000 9000 9000 9000 Figure 6‑10. Initial investment costs of different power generation technologies

80,000

70,000

60,000

50,000

40,000

30,000

20,000

Initial investmentInitial (2010 RMB/kW) 10,000

0 2014 2016 2018 2020 2022 2024 2026 2028 2030 2032 2034 2036 2038 2040 2042 2044 2046 2048 2050 Year Ocean power Concentrated solar power Geothermal Off-shore wind Utility PV Biomass On-shore wind Distributed PV Hydro Coal Gas Combined Cycle

Fuel costs of various power plants firewood used for power generation will be considerably increased with the rise in human resources. The research group also assumes that prices for the fuel used for future power generation will be as shown in Fi- 6.2.3 Analysis of Calculation Results gure 6‑11. In this context it is estimated that, as the requirement for the world to respond to climate increases Given the above assumption, the research group estima- in intensity, the future price of oil and natural gas in ted the development of the future power sector by ma- China will be gradually increased. As the main source of king use of the LEAP model. The results are as follows: energy of China, theFigure price 5-13 of coal will see stable growth.

At the same time, resourcesFigure Error! such No text as straw,of specified methane style in and document. -2. LEAP Model Structure in the Power Sector Figure 6‑11. Fuel costFigure changes 6-10 of different power generation technologies

RMB/GJ

Figure 6-11

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 111 Figure 6-1 发电装机(亿千瓦）发电装机万千瓦） 1949 0.0185 ( Installed Capacity (GW) Installed Capacity (GW) 1978 0.571 2000 31932 2000 319 1600 1508 1990 1.3789 2001 33849 2001 338 1370 1995 2.17 2002 35657 2002 357 1400 1258

来源：中国统计摘要2014

Figure 6-2

Installed Capacity (GW) 2010 data 1600 1508

1400 Installed Capacity (GW)

Coal ME 300 to 600 MW - Ref. Scenario 43.0 source: IEA statistical data Coal ME 600 to 1000 MW- Ref. Scenario Coal ME 1000 MW or Above - Ref. Scenario Figure 6-7 41.0

62.0%

NGCC efficiency efficiency NGCC level 56.0%

55.0%

54.0% 2010 2015 2020 2025 2030 2035 2040 2045Year NGCC- Ref. Scenario NGCC- IEC Scenario

Figure 6-11 待补充

Figure 6-12 Figure 6‑12. Future terminal power demand and heat demand in China Energy Denmand (MtCe) 2010 2015 2020 2025 2030 2035 2040 2045 2050 1,800 Electricity 434 608 764 934 1,099 1,210 1,296 1,336 1,318 1,600 Heat 88 115 150 192 230 259 286 295 284 286 295 284 1,400 259 Total 522 723 914 1,125 1,329 1,469 1,583 1,631 1,602 1,200 230

1,000 192

800 150 115 1,336 1,318 600 1,210 1,296 1,099

Energy Denmand(MtCe) 88 934 400 764 608 200 434

- 2010 2015 2020 2025 2030 2035 2040 2045 2050 Year Heat Electricity

6,000 Power and heating power demand Difference between modes of power generation in the two scenarios Figure 6-13 Figures for power and heating power demand used by the research group are worked out with reference to EstimatingGeothermal changes in the scale and structure of instal- 5,000 2010 2015 2020 2025 2030 2035 2040 2045 2050 the situation in the terminal energy consumption sec- 1,202led power Biomass generation PG capacity in the future forms an im- tor, including industry, building, transportation, etc. in portant basis for formulating development plans for the Coal Fired PG 658 886 1,511 1,715 1,904 2,041 2,101 2,029 1,940 914 4,000 the reference scenario. In the reference scenario, 671 future power sectorSolar inPG the future. The total scale of national ins- Diesel 9 10 13 15 17 19 19 18 17 power demand and heating power demand 462 in China will 908talled powerWind generation PG capacity and the variation trend NG PG 47 95 120 152 184 220 250 287 327 679 802 both see great growth. By 2050, 303 power 540 demand will be in the power structure over time as obtained from the Hydro 216 286 333 372 398 420 444 474 501 3,000 Nuclear 3.0 times what it was in 1632010, and 420 heating power demand research group’s model analysis are shown in Figure 6‑13. Nuclear 11 39 53 94 130 168 220 271 350 3.2 times (as shown in Figure 311 6‑12). In the intensified en- Hydro 96 In the reference scenario, in order to meet the constant Wind PG 30 108 206 311 420 540 679 802 908 ergy-saving scenario, 206 future terminal power demand and NG PG 2,000 growth in power demand, the scale of the main power Solar PG 0 38 96 163 303 462 671 914 1,202 Installed capacity (GW) heating power demand will be greatly reduced compared 38 generationDiesel modes, including coal-fired power, gas power, Biomass PG 4 8 12 14 19 29 42 54 59 with that 108 in the reference scenario. 1,000 30 0 hydropower,Coal Fired nuclear PG power, wind power, photovoltaic Geothermal 0 0 0 0 0 0 0 0 1 It should be noted that, in order to better reflect the power generation, etc., will be markedly increased. Of Total 976 1,471 2,344 2,838 3,376 3,900 4,427 4,850 5,306 impact of improvements in the energy efficiency of the this, coal-fired power will be increased from 660 GW in - power sector on energy demand, the research group uni- 2010 to 2100 GW in 2040, wind power from 30 GW to formly2010 adopted2015 2020 terminal 2025 power 2030 demand 2035 and2040 terminal 2045 2050910 GW, and photovoltaic power generation from almost heating power demand in theYear reference scenario as the zero to 1200 GW. In respect of coal-fired power genera- basis for analyzing this impact, instead of the terminal tion units, the development of cogeneration units will power demand and heating power demand in the inten- not be so rapid. Comparatively speaking, in the inten- Figure 6-14 sified energy-saving scenario. The calculation may the- sified energy-saving scenario, the installed capacities of refore overestimate the energy saving potential of the wind power, photovoltaic power and nuclear power will 2050 - Ref. power sector to some extent. Therefore, when the entire be higher. By 2050, the installed capacity of wind power 2010 Scenario 2050 - IEC Scenario 3000 energy system is analyzed and the national amount of will be increased from 910 GW to 1600 GW, of photovol- energy savings calculated, energy savings in the power taic power generation from 1200 GW to 2500 GW, and of Wind Power Generation 30 908 1600

sector as measured in this chapter should not be added nuclear power from 350 GW to 400 GW (see Figure 6-14). Solar Power Generation 0 1202 2500 2500 directly to the figure for energy savings in industry or the Wind Power Solar Power 2000 building and transportation sectors. Energy Saving in the Power Sector in Two Scenarios 2010 30 0 In the two scenarios, great differences appear in the 2050 1500 consumption of fossil fuel. In the reference scenario, fossil-fuel consumption in the power sector will be in- Reference 1000 creased from 1.02 Gtce in 2010 to 1.78 Gtce in 2035; the- Scenario 908 1202 2050 IEC Installed capacity (GW) 500 Scenario 1600 2500

0 2010 2050 - Ref. Scenario 2050 - IEC Scenario

Wind Power Generation112 | CHINA EnSolarergy Power Effici Generationency Seri es

Figure 6-15 2,000

800 773

Fossil useFossil for powergeneration in China 711 600 2010 2015 2020 2025 2030 2035 2040 2045 2050 Year Ref. Scenario IEC Scenario

Figure 6-16

100%

16 4% Figure 6-1 Figure 6-1 发电装机(亿千瓦）发电装机(亿千瓦）发电装机万千瓦）发电装机万千瓦） 1949 1949 0.0185 0.0185( ( Installed Capacity (GW) Installed Capacity (GW) Installed Capacity (GW) Installed Capacity (GW) 1978 1978 0.571 2000 0.57131932 2000 319322000 319 2000 319 1600 1600 1508 1508 1990 1990 1.3789 2001 1.378933849 2001 338492001 338 2001 338 1370 1370 1995 1995 2.17 2002 2.1735657 2002 356572002 357 2002 357 1400 1400 1258 1258

2000 2000 3.1932 2003 3.193239141 2003 391412003 391 2003 391 1200 1200 1147 1147 2004 2004 4.4239 2004 4.423944239 2004 442392004 442 2004 442 1063 1063 2005 2005 5.1718 2005 5.171851718 2005 517182005 517 2005 517 966 966 1000 1000 874 874 2006 2006 6.237 2006 6.23762370 2006 623702006 624 2006 624 793 793 800 800 718 718 2007 2007 7.1822 2007 7.182271822 735.23782007 718222007735.2378 718 2007 718 624 624 2008 2008 7.9273 2008 7.927379273 2008 792732008 793 2008 793 600 600 517 517 442 442 2009 2009 8.741 2009 8.74187410 2009 874102009 874 2009 874 391 391 338 357 338 357 Installed capacity (GW) Installed capacity (GW) 319 319 2010 2010 9.6641 2010 9.664196641 2010 966412010 966 2010 966 400 400 2011 2011 10.6253 2011 10.6253106253 2011 1062532011 1063 2011 1063 200 200 2012 2012 11.4676 2012 11.4676114676 2012 1146762012 1147 2012 1147 2013 2013 12.5768 2013 12.5768125768 2013 1257682013 1258 2013 1258 0 0 2000 2001 2002 2003 20042000 2005 2001 2006 2002 2007 2003 2008 2004 2009 2005 2010 2006 2011 2007 2012 2008 2013 2009 2014 2010 2015 2011 2012 2013 2014 2015 2014 2014 13.7018 2014 13.7018137018 2014 1370182014 1370 2014 1370 Year Year 2015 2015 15.0828 2015 15.0828150828 2015 1508282015 1508 99.112015 1508 99.11

来源：中国统计摘要2014 来源：中国统计摘要2014

Figure 6-2 Figure 6-2

Installed Capacity (GW) Installed Capacity (GW) 2010 data 2010 data 1600 1600 1508 1508

1400 1400 Installed Capacity (GW) Installed Capacity (GW)

USA USA 1041 1041 1200 1200 1041 Russia Russia 224 224 1041 1000 1000 Japan Japan 287 287 France France 124 124 800 800 Per capita electricity consumptionPer capita (kWh) electricity consumption (kWh) Canada Canada 137 137 12000 12000

Germany Germany 157 157 600 600 10547 10547 10428 10428 10000 10000 Installed capacity (GW) U.K. U.K. 93 93 Installed capacity (GW) 400 287400 287 106 106 7836 7836 Italy Italy 224 224 8000 8000 7022 7382 7022 7382 137 157 137 157 Spain Spain 109 109 200 200 124 93124 106 109 8593 106 99109 85 99 6000 60005409 54095124 5124 Korea Korea 85 85 0 0 4227 4227 1508 China (2015） China (2015） 1508 USA Russia Japan FranceUSA CanadaRussia GermanyJapan U.K.France ItalyCanada GermanySpain KoreaU.K. ChinaItaly ChinaSpain Korea China China 4000 4000 China annual average growthChina annual average growth99 99 (2015） annual (2015） annual average average 2000 2000 Per capitaPer power(kWh)use Per capitaPer power(kWh)use growth growth source: 国际统计年鉴（2014）source: 国际统计年鉴（2014） 0 0

Figure 6-3 Figure 6-3 2013data 2013data Electricity Consumption per CapitaElectricity (kWh) Consumption per Capita (kWh) USA USA 10547 10547 Japan Japan 7836 7836 UK UK 5409 5409 49.0 49.0 Germany Germany 7022 7022 France France 7382 7382 47.0 47.0 Italy Italy 5124 5124 Coal ME 6 to 100 MW - Ref. Scenario Coal ME 6 to 100 MW - Ref. Scenario Korea Korea 10428 10428 Coal ME 100 to 200 MW - Ref. Scenario Coal ME 100 to 200 MW - Ref. Scenario 45.0 45.0 China(2015) China(2015) 4227 4227 Coal ME 200 to 300 MW - Ref. Scenario Coal ME 200 to 300 MW - Ref. Scenario

Coal ME 300 to 600 MW - Ref. Scenario Coal ME 300 to 600 MW - Ref. Scenario source: IEA statistical data 43.0 43.0 source: IEA statistical data Coal ME 600 to 1000 MW- Ref. Scenario Coal ME 600 to 1000 MW- Ref. Scenario Coal ME 1000 MW or Above - Ref. ScenarioCoal ME 1000 MW or Above - Ref. Scenario Figure 6-7 Figure 6-7 41.0 41.0 plants (MtCe)plants plants (MtCe)plants Coal ME 6 to 100 MW -IEC Scenario Coal ME 6 to 100 MW -IEC Scenario Coal ME 100 to 200 MW- IEC Scenario Coal ME 100 to 200 MW- IEC Scenario 2010 2015 20102020 2025 20152030 2020 20352025 20402030 20352045 20402050 2045 2050 39.0 39.0 Coal ME 200 to 300 MW- IEC Scenario Coal ME 200 to 300 MW- IEC Scenario Coal ME 6 to 100 MW - Ref. ScenarioCoal ME 6 to 100 MW - Ref. 35.8Scenario 35.8 35.835.9 35.9 35.836.0 35.9 36.0 35.9 36.136.0 36.036.1 36.136.2 36.1 36.2 Coal ME 300 to 600 MW-IEC Scenario Coal ME 300 to 600 MW-IEC Scenario Coal ME 100 to 200 MW - Ref.Coal Scenario ME 100 to 200 MW - Ref.37.5 Scenario 37.6 37.537.8 37.9 37.638.0 37.8 38.1 37.9 38.238.0 38.138.3 38.238.4 38.3 38.4 37.0 37.0 Coal ME 200 to 300 MW - Ref.Coal Scenario ME 200 to 300 MW - Ref.38.5 Scenario 38.5 38.538.6 38.7 38.538.7 38.6 38.8 38.7 38.938.7 38.838.9 38.939.0 38.9 39.0 Coal ME 600 to 1000 MW - IEC Scenario Coal ME 600 to 1000 MW - IEC Scenario Energy saving Energy saving frommore efficint condening power Energy saving Energy saving frommore efficint condening power Coal ME 1000 MW - IEC Scenario Coal ME 1000 MW - IEC Scenario Coal ME 300 to 600 MW - Ref.Coal Scenario ME 300 to 600 MW - Ref.40.1 Scenario 40.2 40.140.3 40.4 40.240.5 40.3 40.5 40.4 40.640.5 40.540.7 40.640.8 40.7 40.8 35.0 35.0 Coal ME 600 to 1000 MW- Ref.Coal Scenario ME 600 to 1000 MW- Ref.41.8 Scenario 41.9 41.841.9 42.0 41.942.1 41.9 42.2 42.0 42.242.1 42.242.3 42.242.4 42.3 42.4 2010 2015 2020 20252010 20302015 20352020 20402025 20452030 20502035 2040 2045 2050 Coal ME 1000 MW or Above - CoalRef. ScenarioME 1000 MW or Above44.8 - Ref. Scenario 44.9 44.845.0 45.1 44.945.1 45.0 45.2 45.1 45.345.1 45.245.4 45.345.5 45.4 45.5 Year Year Coal ME 6 to 100 MW -IEC ScenarioCoal ME 6 to 100 MW -IEC Scenario35.8 36.0 35.836.1 36.3 36.036.5 36.1 36.7 36.3 36.936.5 36.737.1 36.937.2 37.1 37.2 Coal ME 100 to 200 MW- IEC ScenarioCoal ME 100 to 200 MW- IEC37.5 Scenario 37.8 37.538.1 38.3 37.838.6 38.1 38.8 38.3 39.138.6 38.839.4 39.139.6 39.4 39.6 Coal ME 200 to 300 MW- IEC ScenarioCoal ME 200 to 300 MW- IEC38.5 Scenario 38.8 38.539.1 39.4 38.839.7 39.1 40.0 39.4 40.339.7 40.040.6 40.341.0 40.6 41.0 Coal ME 300 to 600 MW-IEC ScenarioCoal ME 300 to 600 MW-IEC40.1 Scenario 40.4 40.140.6 40.9 40.441.2 40.6 41.5 40.9 41.841.2 41.542.1 41.842.4 42.1 42.4 Coal ME 600 to 1000 MW - IECCoal Scenario ME 600 to 1000 MW - IEC41.8 Scenario 42.1 41.842.5 42.9 42.143.2 42.5 43.6 42.9 43.943.2 43.644.3 43.944.7 44.3 44.7 Coal ME 1000 MW - IEC ScenarioCoal ME 1000 MW - IEC Scenario44.8 45.1 44.845.4 45.7 45.146.0 45.4 46.3 45.7 46.646.0 46.347.0 46.647.3 47.0 47.3

62.0% 62.0%

61.0% 61.0% 60.8% 60.8% 60.3% 60.3%

60.0% 60.0% 59.7% 59.7% Figure 6-8 Figure 6-8 59.0% 59.0% 59.1% 59.1% 58.5% 58.5% 2010 2015 20102020 20252015 2030 20202035 2025 20402030 20452035 20402050 2045 2050 58.0% 58.0% 57.9% 57.9% 57.8% 57.8% 57.5% 57.7% 57.5% 57.7% NGCC- Ref. Scenario NGCC- Ref. Scenario 56.8% 56.9% 56.8%57.1% 57.2%56.9% 57.4% 57.1%57.5% 57.2% 57.7%57.4% 57.8%57.5% 57.7%58.0 57.8% 58.0 57.4% 57.2% 57.4% 57.0% 57.0% 57.1% 57.2% 57.1% NGCC- IEC Scenario NGCC- IEC Scenario 56.8% 56.9% 56.8%57.9% 58.5%56.9% 59.1% 57.9%59.7% 58.5% 60.3%59.1% 60.8%59.7% 60.3%61.5 60.8% 61.5 56.8% 56.9% 56.8% 56.9% NGCC efficiency efficiency NGCC level NGCC efficiency efficiency NGCC level 56.0% 56.0%

55.0% 55.0%

54.0% 54.0% 2010 2015 20202010 20252015 20302020 20352025 20402030 2045Year2035 2040 2045Year NGCC- Ref. Scenario NGCCNGCC- IEC- ScenarioRef. Scenario NGCC- IEC Scenario

Efficiency level of different coalEfficiency-fired generatinglevel of different units in coal China-fired - 2010 generating units in China - 2010 400 400 Figure 6-9 Figure 6-9 350 350 2010 2010 300 300 Coal ME 6 to 100 MW Coal ME 6 to 100 MW343.39201 343.39201 250 250 Coal ME 100 to 200 MW Coal ME 100 to 200 MW327.38412 327.38412 200 200 Coal ME 200 to 300 MW Coal ME 200 to 300 MW319.63589 319.63589 150 150 Coal ME 300 to 600 MW Coal ME 300 to 600 MW306.71325 306.71325 100 100 Coal ME 600 to 1000 MW Coal ME 600 to 1000 MW294.0895 294.0895 50 50 Coal ME 1000 MW or above Coal ME 1000 MW or above274.45288 274.45288 0 0 Coal ME 6 to Coal ME 100 to CoalCoal ME ME 200 6 to to CoalCoal ME ME 300 100 to to CoalCoal ME ME 600 200 to to Coal ME 3001000 to Coal ME 600 to Coal ME 1000 Coal use Coal for powergeneration (g/kWh) Figure 6-10 Figure 6-10 use Coal for powergeneration (g/kWh) 100 MW 200 MW 300100 MW MW 600200 MW MW 1000300 MW MW600 or MWabove 1000 MW MW or above 待补充待补充 Different generating units Different generating units

Figure 6-11 Figure 6-11 待补充待补充

Figure 6-12 Figure 6-12 Energy Denmand (MtCe) Energy Denmand (MtCe) 2010 2015 20102020 2025 20152030 2020 2035 2025 20402030 20352045 20402050 2045 2050 1,800 1,800 Electricity Electricity 434 608 434 764 934 608 1,099 764 1,210 934 1,296 1,099 1,2101,336 1,296 1,318 1,336 1,318 1,600 1,600 Heat Heat 88 115 88 150 192 115 230 150 259 192 286 230 259 295 286284 295 284 286 295 284 286 295 284

1,400 1,400 259 259 Total Total 522 723 522 914 1,125 723 1,329 914 1,469 1,125 1,583 1,329 1,4691,631 1,583 1,602 1,631 1,602 1,200 1,200 230 230

1,000 1,000 192 192

800 800 150 150 115 115 1,336 1,318 1,336 1,318 600 600 1,210 1,296 1,210 1,296 1,099 1,099 Energy Denmand(MtCe) Energy Denmand(MtCe) 88 88 934 934 400 400 764 764 608 608 200 434 200 434

- - 2010 2015 2020 20102025 20152030 20202035 20252040 20302045 20352050 Year2040 2045 2050 Year Heat Electricity Heat Electricity

Figure 6‑13. Installed power-generation capacity under the Reference Scenario in China

6,000 6,000 Figure 6-13 Figure 6-13 Geothermal Geothermal 5,000 5,000 2010 2015 20102020 2025 20152030 2020 20352025 20402030 20352045 20402050 2045 2050 1,202 Biomass PG 1,202 Biomass PG

Coal Fired PG Coal Fired PG 658 886 658 1,511 1,715 886 1,904 1,511 2,041 1,715 2,101 1,904 2,0412,029 2,1011,940 2,029 1,940 914 914 4,000 4,000 671 Solar PG 671 Solar PG Diesel Diesel 9 10 9 13 15 10 17 13 19 15 19 17 1918 1917 18 17 462 908 Wind462 PG 908 Wind PG NG PG NG PG 47 95 47 120 152 95 184 120 220 152 250 184 220287 250327 287 327 679 802 679 802 303 540 303 540 Hydro Hydro 216 286 216 333 372 286 398 333 420 372 444 398 420474 444501 474 3,000 501 3,000 Nuclear Nuclear 163 420 163 420 Nuclear Nuclear 11 39 11 53 94 39 130 53 168 94 220 130 168271 220350 271 350 311 311 Hydro Hydro 96 96 Wind PG Wind PG 30 108 30 206 311 108 420 206 540 311 679 420 540802 679908 802 2,000 908 206 2,000 206 NG PG NG PG Installed capacity (GW) Solar PG Solar PG 0 38 0 96 163 38 303 96 462 163 671 303 462914 1,202 671 914 Installed capacity (GW) 1,202 38 38 Diesel Diesel Biomass PG Biomass PG 4 8 4 12 14 8 19 12 29 14 42 19 2954 4259 54 59 108 108 1,000 1,000 Geothermal Geothermal 0 0 0 0 0 0 0 0 0 0 0 0 0 01 0 1 30 0 30 0 Coal Fired PG Coal Fired PG Total Total 976 1,471 976 2,344 2,838 1,471 3,376 2,344 3,900 2,838 4,427 3,376 3,9004,850 4,4275,306 4,850 5,306 - - 2010 2015 2020 2025 20302010 20352015 20402020 20452025 20502030 2035 2040 2045 2050 Year Year

Figure 6-14 Figure 6-14 Figure 6‑14. Installed capacity of wind power and solar PV in China under the Reference Scenario and the IEC Scenario 2050 - Ref. 2050 - Ref. 2010 Scenario 20502010 - IECScenario Scenario 2050 - IEC Scenario 3000 3000 Wind Power Generation Wind Power Generation 30 908 160030 908 1600

Solar Power Generation Solar Power Generation 0 1202 25000 1202 2500 2500 2500 Wind Power Solar PowerWind Power Solar Power 2000 2000 2010 30 20100 30 0 2050 2050 1500 1500 Reference Reference 1000 1000 Scenario 908Scenario1202 908 1202 2050 IEC 2050 IEC Installed capacity (GW) Installed capacity (GW) 500 500 Scenario 1600Scenario2500 1600 2500

0 0 2010 2050 - Ref.2010 Scenario 20502050 -- IECRef. Scenario Scenario 2050 - IEC Scenario

Wind Power Generation WindSolar Power Power Generation Generation Solar Power Generation

reafter, it will be reduced to 1.05 Gtce, the peak value and the structural adjustment of the power generation appearing around 2035. In the intensified energy-saving and heating power sectors in the future. scenario, the peak value of fossil-fuel consumption in the It is worth mentioning that, in the intensified energy-sa- power sector will appear around 2030, approximately five ving scenario, fossil energy is mainly consumed by way of years ahead compared with the reference scenario. The combined heat and power generation and heat supply. The peak value will be 1.61 Gtce, reduced by 180 Mtce com- Figure 6-15 2,000 2,000 fossil-fuel energy consumed by combined heat and power Figure 6-15 pared with that in the reference scenario. By 2050, fossil generation as a share of total fossil energy consumption energy consumption in the intensified energy-saving sce- 1,833 1,833 1,800 1,800 is up 1,780 to 70.0%; fossil fuel use in the1,780 reference scenario 2010 2015 20102020 2025 20152030 2020 20352025 20402030 20352045 20402050 nario2045 will be lower2050 than that in the reference scenario 1,737 1,737 1,574 by 2050 will be only 1,574 30.7% used for combined heat and Ref. Scenario Ref. Scenario 1,020 1,101 1,020 1,349 1,574 1,101 1,780 1,349 1,833 1,574 1,737 1,780 1,8331,500 1,7371,052 by 1,500 341 Mtce. 1,600 This 1,052 reflects the comprehensive 1,600 effects in 1,613 1,613 power generation and 51.7% used for electricity-only 1,549 ge-

1,549 IEC Scenario IEC Scenario 1,020 1,084 1,020 1,306 1,488 1,084 1,613 1,306 1,549 1,488 1,229 1,613 1,549 773 1,229 711 improving 773 the efficiency 711 of energy technology in China 1,500 1,500 1,349 1,488 neration 1,349 (see Figure 6-16). 1,488 Fossil-fuel energy-based coge- 17 43 85 17 167 43 283 85 508 167 283727 508341 727 1,400 341 1,400 1,306 1,306 (MtCe) (MtCe) 1,101 1,101 1,200 1,200 1,229 1,229 1,020 1,020 1,084 1,084 1,052 1,052 1,000 1,020 1,000 1,020

800 800 773 773 Fossil useFossil for powergeneration in China Fossil useFossil for powergeneration in China Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Pote ntial711 s | 113 711 600 600 2010 2015 2020 20252010 20302015 20352020 20402025 20452030 20502035 2040 2045 2050 Year Year Ref. Scenario IEC ScenarioRef. Scenario IEC Scenario

Figure 6-16 Figure 6-16

100% 100%

16 4% 16 4% Figure 6-1 发电装机(亿千瓦）发电装机万千瓦） 1949 0.0185 ( Installed Capacity (GW) Installed Capacity (GW) 1978 0.571 2000 31932 2000 319 1600 1508 1990 1.3789 2001 33849 2001 338 1370 1995 2.17 2002 35657 2002 357 1400 1258

来源：中国统计摘要2014

Figure 6-2

Installed Capacity (GW) 2010 data 1600 1508

1400 Installed Capacity (GW)

Coal ME 300 to 600 MW - Ref. Scenario 43.0 source: IEA statistical data Coal ME 600 to 1000 MW- Ref. Scenario Coal ME 1000 MW or Above - Ref. Scenario Figure 6-7 41.0

62.0%

NGCC efficiency efficiency NGCC level 56.0%

55.0%

54.0% 2010 2015 2020 2025 2030 2035 2040 2045Year NGCC- Ref. Scenario NGCC- IEC Scenario

Figure 6-11 待补充

1,000 192

800 150 115 1,336 1,318 600 1,210 1,296 1,099

Energy Denmand(MtCe) 88 934 400 764 608 200 434

- 2010 2015 2020 2025 2030 2035 2040 2045 2050 Year Heat Electricity

6,000 Figure 6-13 Geothermal 5,000 2010 2015 2020 2025 2030 2035 2040 2045 2050 1,202 Biomass PG

Figure 6-14

0 2010 2050 - Ref. Scenario 2050 - IEC Scenario

Wind Power Generation Solar Power Generation

Figure 6‑15. Fossil fuel consumption in China under the Reference Scenario and the IEC Scenario

Figure 6-15 2,000

800 773

Fossil useFossil for powergeneration in China 711 600 2010 2015 2020 2025 2030 2035 2040 2045 2050 Year Ref. Scenario IEC Scenario

Figure 6‑16. Different mixes of fossil fuel consumption under the Reference Scenario and the IEC Scenario

100% Figure 6-16 90% 16.4%

80% 100% 13.6% 51.7% 70% 16 4%

60% 84.1% 50%

40% 17.6% 70.0% 30%

Fossil fuel Fossil utilisation structure 20% 5.9% 30.7% 10% 10.1% 0% 2010 2050 - Ref. Scenario 2050 - IEC Scenario Condensing Power Generation Heat Generation Combined Heat & Power

neration will be difficult to replace by renewable energy gradually expanded. Compared with reference scenario, source power generation. This explains why gross fossil- by 2050, the improvement in grid energy efficiency in in- fuel demand will still be maintained and will not decline tensified energy-saving scenario will bring in the energy to some extent after 2045 (see Figure 6-15). saving amount of 15 Mtce (as shown in Figure 6‑17).

Energy savings resulting from the improved Energy savings resulting from the improved transmission efficiency of the electric grid efficiency of condensing power generation units Model analysis indicated that, in reference scenario and Model analysis indicates that, in both the reference sce- intensified energy-saving scenario, the energy saving nario and the intensified energy-saving scenario, as the amount of grid transmission and distribution line loss efficiency of pure condensing power generation units is resulted from the improvement in grid efficiency will be improved, the fossil-fuel consumption of the pure power

114 | CHINA Energy Efficiency Series Figure 6‑17. Energy saving from improved grid efficiency

2045 Energy saving2050 from grid efficiency improvementce 16 13 15 14

12 10 8 6 4 Energy saving Energy saving (MtCe) 2 0 2010 2015 2020 2025 2030 2035 2040 2045 2050 Year

2045 Energy saving2050 from grid efficiency improvementce sector will be reduced. The energy savings represented by 16 Energy savings resulting from the expanded scale of investments 13 in fossil-fuel 15 consumption (the investment CHP 14 in renewable energy sources is not included) will be gra- 12 Cogeneration, as a high-efficient and energy-conserving dually improved. Compared with the reference scenario, 10 70 mode of power generation and heating, will effectively by 2050, continuous improvements in the efficiency of improve the utilization rate of fossil fuels after large-scale thermal8 power generation units in the intensified energy- 4 generalization. After expanding the power generation 3 saving scenario6 will produce60 energy savings of 56 Mtce (as 4 and heating capacity of cogeneration units, the installed 11 shown Energy saving (MtCe) in Figure 6‑18). 2 2 scale and generation capacity of pure condensing power 13 4 50 0 generation units will be reduced. The demand for boiler 12 9 2010 2015 2020 2025 2030 2035 2040 2045heat supply2050 will also be reduced. Therefore, when the 1 40 Year energy saving amount resulting from the expansion of 10 34 Figure 6‑18. Energy saving from improved power generation efficiency of pure condensing units 30 34 1 27 31

Energy saving Energy saving (MtCe) 8 70 20 23 0 4 5 15 3 60 10 16 15 0 8 2 11 11 13 2 13 8 4 50 5 2 2 - - - 1 12 9 2010 2015 2020 1 2025 2030 2035 2040 2045 2050 40 Others 10 Coal ME 200 to 300 MW 34 30 Coal ME 300 to 600 MW 34 Coal ME 600 to 1000 MW 1 27 Coal ME 1000 MW or above 31 Total energy saving from condensing power plants

15 11 10 5 3 - - Energy saving Energy saving (MtCe) - | Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials Year -5 2010 2015 2020 2025 2030 2035115 2040 2045 2050 -4 -10 15 11 10 5 3 - - Energy saving Energy saving (MtCe) - Energy saving from more RE and nuclear installed capacity Year -5 2010 2015 2020 2025 2030 2035 2040 2045 2050 -4 -10 700 600

Energy500 saving from more RE and nuclear installed capacity

700 400

600 300

500 200 400 Energy saving (MtCe) 100 300

200 0 Energy saving Energy saving (MtCe) 2010 2015 2020 2025 2030 2035 2040 2045 2050 100

0 2010 2015 2020 2025 2030 2035 2040 2045 2050

1,200 1,052 15 1,200 56 1,020 32 248 1,052 15 56 1,020 1,000 32 248 1,000 High grid Efficiency High grid Efficiency EE improvement of Promoting CHP EE improvement of Promoting CHP 800 condensing 800 condensing power plants 711 power plants 711 - -

600 600 Substituting Substituting fossil-fuel based fossil-fuel based heat and power heat and power generation with Energy demand(MtCe) 400 generation with Energy demand(MtCe) 400 RE and nuclear RE and nuclear 200 200

- 2010 2050-Ref. Scenario Measure 1 Neasure 2 Measure 3 Measure 4 2050-IEC Scenario - 2010 2050-Ref. Scenario Measure 1 Neasure 2 Measure 3 Measure 4 2050-IEC Scenario 2045 Energy saving2050 from grid efficiency improvementce 16 13 15 14

12 10 8 6 4 Energy saving Energy saving (MtCe) 2 0 2010 2015 2020 2025 2030 2035 2040 2045 2050 Year

2045 Energy saving2050 from grid efficiency improvementce 70 16 13 15 4 14 3 60 12 2 11 13 4 50 10

12 9 8 1 40 6 10 4 34

30 Energy saving (MtCe) 34 1 27 2 31

Energy saving Energy saving (MtCe) 8 20 0 23 2010 2015 2020 0 2025 2030 2035 2040 2045 2050 5 15 10 Year 16 15 0 8 11 13 2 8 2 5 - - - 1 2 2010 2015 2020 2025 2030 2035 2040 2045 2050 Others Coal ME 200 to 300 MW Coal ME 300 to 600 MW Coal ME 600 to 1000 MW Coal ME 1000 MW or above Total energy saving from condensing power plants 70 Figure 6‑19. Energy saving from expended application 4 3 60 2 11 13 4 50

12 9 1 40 10 15 11 34 10 30 34 1 27 5 3 31 - -

Energy saving Energy saving (MtCe) 8 Energy saving Energy saving (MtCe) - 20 23 Year -5 2010 2015 2020 2025 2030 2035 2040 2045 2050 -4 0 -10 5 15 10 16 15 0 8 11 13 2 8 2 5 - Energy - - saving from 1 more RE and 2 nuclear installed capacity 2010 2015 2020 2025 2030 2035 2040 2045 2050 700 the installed capacityOthers of cogeneration units is measured, Energy savings resultingCoal ME 200 from to 300 improved MW installed 600overall consideration will be given to the increase in the capacity of renewable energy sources and nuclear Coal ME 300 to 600 MW Coal ME 600 to 1000 MW 500fossil-fuel consumptionCoal ME 1000of cogeneration MW or above units, reductions power generationTotal energy saving from condensing power plants in fossil-fuel consumption resulting from the decline in 400 After the installed capacity of renewable energy and nu- the scale of pure condensing power generation units, and clear power has been improved, it will reduce the capa- 300reductions in fossil-fuel consumption resulting from the city of condensing power, thus reducing the consumption 200decrease in the heating scale of pure boilers. Energy saving Energy saving (MtCe) of fossil fuels accordingly. Model analysis indicates that, 100Model analysis indicates that the energy savings resulting by 2045, the energy savings resulting from the improved from0 the increased installed capacity of cogeneration installed capacity of renewable energy and nuclear power units (i.e.,2010 reduced2015 fossil 2020 fuel o) will2025 be increased2030 with2035 will be2040 increased 2045 to 6202050 Mtce. By about 2045, since the

improvement to the installed scale of cogeneration. By peak value of fossil fuel consumption in the reference sce- 2050, fossil energy consumption in the intensified ener- nario will come a little later and in the intensified energy gy-saving scenario may be reduced by 32 Mtce compared conservation will come earlier, the reduction in fossil fuel with the reference 15 scenario, equivalent to saving fossil consumption resulting 11 from the difference between the fuel amounting 10 to 32 Mtce. By about 2045, this alternative two (the ‘energy saving amount’ of the power sector defi- 1,200 effect will reach5 its peak value, and the energy savings ned in 3 this chapter) will rapidly decline to approximately 1,052 - 15 - Energy saving Energy saving (MtCe) 56 240 Mtce (as shown in Figure 6‑20). will reach 1,020 33 Mtce- (see Figure 6‑19). 32 248 Year 1,000 -5 2010 2015 2020 2025 2030 2035 2040 2045 2050 High grid Efficiency -4 -10 EE improvement of Promoting CHP

800 Figure 6‑20. Energy saving from highercondensing installed capacity of renewable energy sources and nuclear power generation power plants 711 - 600 Energy saving from more RE and nuclear installedSubstituting capacity fossil-fuel based heat and power 700 generation with

Energy demand(MtCe) 400 RE and nuclear 600

200 500

400 - 2010300 2050-Ref. Scenario Measure 1 Neasure 2 Measure 3 Measure 4 2050-IEC Scenario

200 Energy saving Energy saving (MtCe) 100

0 2010 2015 2020 2025 2030 2035 2040 2045 2050

1161,200 | CHINA Energy Efficiency Series

1,052 15 56 1,020 32 248 1,000 High grid Efficiency EE improvement of Promoting CHP

800 condensing power plants 711 -

600 Substituting fossil-fuel based heat and power generation with

Energy demand(MtCe) 400 RE and nuclear

200

- 2010 2050-Ref. Scenario Measure 1 Neasure 2 Measure 3 Measure 4 2050-IEC Scenario 2045 Energy saving2050 from grid efficiency improvementce 16 13 15 14

12 10 8 6 4 Energy saving Energy saving (MtCe) 2 0 2010 2015 2020 2025 2030 2035 2040 2045 2050 Year

70 4 3 60 2 11 13 4 50

12 9 1 40 10 34 30 34 1 27 31

Energy saving Energy saving (MtCe) 8 20 23 0 5 15 10 16 15 0 8 11 13 2 8 2 5 - - - 1 2 2010 2015 2020 2025 2030 2035 2040 2045 2050 Others Coal ME 200 to 300 MW Coal ME 300 to 600 MW Coal ME 600 to 1000 MW Waterfall chart of energyCoal ME 1000efficiency MW or above in the power solutions for newTotal situations, energy saving it willfrom becondensing important power to plants grasp sector the general trend of development in the Chinese power sector in the future and the change in the focus of work In summary, in the long term, the power sector in China on energy efficiency work. will see the dominant role of thermal power (especially coal-fired power generation) declines and a gradual shift toward renewable energy sources and nuclear energy by 6.3 Identification of HIOs 2050. This will be the general trend in the development of the Power Generation of the Chinese power sector. At the same time, there is still potential for China’s power sector to save energy and Sector in China reduce fossil fuel consumption. 15 The difference 11 between the reference scenario and the The analysis conducted 10 by the research group indicates intensified energy-saving scenario in the results in the that, compared with 5 the reference scenario, in the inten- 3 - - model are attributable to both technical and structural sified energy-saving Energy saving (MtCe) scenario, by 2050 the maximum ‘en- - factors. The major technologies with an impact on the ergy efficiency’ potential2010 (defined 2015 by the research2020 group 2025 2030 2035 2040 2045 2050 Year -5 power sector include cogeneration (e.g. transforming as the potential for reducing fossil fuel consumption) -4 will -10 pure condensing units into cogeneration units), energy come from replacing fossil-fuel power generation and conservation transformations of thermal power genera- heat supply with renewable energy sources and nuclear tion units, improving grid transmission, distribution effi- power. Energy savings will be 248 Mtce; for improving the ciency, etc. The structural factors include reducing fossil power generation efficiencyEnergy of thermalsaving from power more generation RE and nuclear installed capacity fuel consumption, mainly including improving the share units, by 2050, there will be an energy efficiency potential 700 of renewable energy, developing nuclear power, generali- of 56 Mtce, for advancing cogeneration 32 Mtce, and for 600 zing natural gas power generation, etc.

improving grid efficiency 15 Mtce (see Figure 6‑21). It is to be noted that,500 in a future age of power being dominated 6.3.1 Technical HIOs by renewables, the reduction of fossil fuel consumption 400 by improving energy efficiency will be relegated strategi- HIO 1: Transformation of pure condensing units to cally to a secondary300 position. realize cogeneration Therefore,200 from the long-term perspective, the main fea- The technology for transforming pure condensing tur- Energy saving Energy saving (MtCe) ture of the 100power sector in the future will be its transfor- bine units to realize cogeneration is mainly applied to mation from existing improvements to thermal power ef- 125-200MW pure condensing turbine units in the power ficiency to attempts0 to improve the share of zero-carbon sector. The technical principle is the holing-extraction of 2010 2015 2020 2025 2030 2035 2040 2045 2050 energy, such as renewable energy and nuclear power. For pure condensing turbine units to enable them to serve the Chinese decision-makers in the energy field seeking new dual functions of pure condensing power generation and

Figure 6‑21. Waterfall chart of energy efficiency improvement potential in the power sector

1,200

1,052 15 56 1,020 32 248 1,000 High grid Efficiency EE improvement of Promoting CHP

800 condensing power plants 711 -

600 Substituting fossil-fuel based heat and power generation with

Energy demand(MtCe) 400 RE and nuclear

200

- 2010 2050-Ref. Scenario Measure 1 Neasure 2 Measure 3 Measure 4 2050-IEC Scenario

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 117 heat supply. (1) No change will be made to the body of steam generator units. In addition, thermal power plants pure condensing turbines. Holing-extraction is conduc- are usually close to urban and densely inhabited districts, ted through two medium-low-pressure connecting pipes, and environmental protection standards will be much consolidating the same sides, and making use of the regu- higher, and so will unit investment as a result. This means lating valve and main governing valve to control the ex- that combined heat and power generation and pure traction parameters to enable the pure condensing power condensing thermal power generation units are usually generation unit to assume the functions of cogeneration disadvantageous in grid competition. (3) The generation and pure condensing power generation. (2) In dual-func- capacity of cogeneration units is affected by heating tion mode, the pure condensing mode maintains the ori- power demand. Cogeneration units are usually designed ginal operating mode without a change. For operation in according to the principle of ‘ordering power by heat’; the form of cogeneration, in order to maintain the safety when the heat load demand is instable, the generation performance unchanged, a heating capacity of 150t/h and capacity will also be affected. Therefore, the problem has above can be achieved, thus reaching the requirements of arisen that the economic benefits of heat power plants the basic indicators of cogeneration, namely the heat-to- are affected by the instability of the heating power load electric ratio: >50% and thermal efficiency: >45%. (3) The and electric load. If the growth in economic development parameters of heating, heat supply and extraction after slides and the rate of operation of enterprises becomes in- transformation comply with the requirements of the sufficient, new changes will have to take place to heating conventional heat supply. and power demand in industrial parks, and the difficulties in guaranteeing the economic benefits of cogenera- At present, the average energy consumption of 200 MW tion unit will increase. three-cylinder three-exhaust pure condensing turbine units is approximately 355gce/kWh, while that of centra- HIO 2: Comprehensive energy conservation lized boiler rooms is approximately 52kg/GJ. From the transformation technology of coal-fired power plants perspective of the technical and economic parameters of the existing investment project, investment in the The comprehensive energy conservation transformation transformation of the two sets of 200 MW three-cylin- technology of coal-fired power plants mainly consists of der three-exhaust pure condensing gas turbine units re- the comprehensive transformation of turbine units, the quired will be RMB 16 million, achieving energy savings in-depth recovery of residual heat from flue gas, conden- of 14,000 tce per year. The analysis of the China Catalo- ser vacuum keeping, and other technologies designed to gue for Generalization of Energy Efficiency and Low-carbon realize energy efficiencies in the operation of the power Technologies (2015) suggests that the generalization ratio of plant. cogeneration technologies realized through the transfor- (1) Comprehensive technology for improving the perfor- mation of pure condensing turbine units is less than 5% at mance of turbine units in thermal power plants. This present. It is estimated by 2020 the technical generaliza- technology is mainly applicable to gas turbine gene- tion ratio will be 10%. During the 13th Five-year Plan pe- rator units that have been commissioned with higher riod, the total investment required will be approximately energy consumption. By optimizing the body of the RMB 1.6 billion, and China will achieve energy savings of turbine and thermal system, analyzing equipment 4 Mtce per year. design and manufacturing, power plant design and auxiliary machine configuration, equipment instal- The main barriers to the transformation of generali- lation and overhaul, operation and maintenance, zing cogeneration include (1) the lagging behind of the and their mutual relations, turbine performance will construction of urban heat supply network infrastruc- be comprehensively improved. Key technologies for ture. In China, thermal power plants generally belong to transformation include turbine unit performance power generation companies, while heat supply networks diagnosis technology, technologies for improve are generally planned and constructed by local govern- turbine unit performance, technologies for impro- ment and heating power companies. The enthusiasm of ving heat-power systems and equipment, measures local government and local heating power companies and methods for improving equipment overhaul, and for heat supply network construction is not high, and best practice operational and maintenance measures such construction is not timely, possibly impeding the and methods. Through improvements, the unit development of cogeneration. (2) The heating power and heat consumption rate will be reduced by 80-150kJ/ power system is incomplete. Under the existing system, kWh (mainly for the 300-600 MW class unit). After heat power plants and thermal power plants will bid to improvement, the unit can reach a higher economic access the network on an equal basis. However, since the level in the long term and also reduce maintenance installed capacity of heat power plants is restricted by costs and pollution emissions per unit of generation thermal load, property, etc., unit capacity will be much capacity. smaller than the scale of the existing pure condensing

118 | CHINA Energy Efficiency Series (2) Technology of waste-heat in-depth recovery of the cleaning by closing down, and significantly reduce thermal power plant exhaust gas comprehensive the terminal temperature difference of the gas optimization system. This technology is applicable to turbine. The degree of vacuum in the condenser can coal-fired units with an actual exhaust gas tempera- be obviously improved and kept at an ideal vacuum ture greater than 120°C. The principle of this techno- value, and the average coal consumption of turbine logy is to install gas coolers at the tail flue between will be reduced by 2-4g/kWh. the air pre-heater of the power station boiler and the Based on an actual case from the existing project, it is electric precipitator, thus reducing the flue tem- estimated that by making use of the comprehensive tech- perature to approximately 90°C. The recovered gas nology for the performance of turbines in thermal power heat may heat the compensated water from 70°C to plants, by transforming five units with investments of approximately 110°C, thus pushing out low-pressure RMB 18 million, the energy saving potential is about heater steam extraction and increasing the action 54,000 tce per year. By transforming a 300 MW unit with of the turbine. While recovering residual heat from an investment of RMB 9.6 million for the in-depth reco- flue gas, the system will not affect the long-cycle very technology of residual heat for the flue comprehen- safe operation of the heat system. This can not only sive optimization system of the thermal power plant, it reduce the exhaust gas temperature and improve the can realize energy savings of 3900 tce per year. Through efficiency of the unit, but also improve the efficiency the transformation of two sets of 310 MW units with an of the electric precipitator and save water consump- investment of RMB 8 million in the condenser vacuum tion by the desulfurizing tower. The key technologies holding energy efficiency system technology of the ther- for this transformation are mainly the design of the mal power plant, energy savings of 6000 tce per year can gas cooler, a low-temperature corrosion study of the be achieved. flue gas cooler, anti-ash and anti-abrasion design of the gas cooler, heat system optimization design and Analysis of the China Catalogue for Generalization of Energy control, etc. After adopting flue gas in-depth cooling Efficiency and Low-carbon Technologies (2015) indicates that technology, coal consumption for power generation the generalization share of the comprehensive techno- will be reduced by 2-3g/kWh. Compared with tra- logy for improving the performance of the turbine unit ditional low-temperature economizer technologies, of thermal power plants is at present less than 10%. It is since the in-depth cooling effect increases energy estimated that by 2020 the technology generalization rate savings by more than 30%, dust emissions will be will be 30%. During the 13th Five-year Plan, the total in- reduced by more than 50%. vestment required will be approximately RMB 1 billion, (3) Vacuum holding energy efficiency system technology producing expected energy savings of 2.1 Mtce per year. of thermal power plant condensers. This technology The generalization rate of the residual heat in-depth re- is applicable to the generation units of water-cooled covery technology for the comprehensive optimization condenser systems in various specifications. Conden- system for the flue gas of thermal power plants isap- sers deal with the exhaust steam from turbines and proximately 10%. It is estimated that by 2020 the tech- the heat exchange of cooling water. The fouling nology generalization ratio will reach 50%. During the formed in the condenser cooling tube can not only 13th Five-year Plan, the total investment required will affect heat exchange efficiency and further reduce be approximately RMB 7.2 billion, with expected energy turbine efficiency, it also easily corrodes the conden- savings of 3.2 Mtce per year. The generalization rate of ser and wearing tube, reducing the vacuum, etc., and the vacuum holding energy efficiency system technology seriously affecting the economic and safe operation of the condenser of the thermal power plant will be less of the turbine. Turbine condenser vacuum holding than 3%, and it is estimated by 2020, the technology gene- energy efficiency systems clean using a rubber ball ralization share will reach 20%. During the same plan, the and can automatically and continually eliminate total investment required will be approximately RMB the fouling of the condenser and maintain a ball 3.2 billion, with expected energy savings of 1.7 Mtce per collection rate of more than 95% for long periods year. During the same plan as well, total investment in of time. After normal operation, the cleanliness the generalization of the three technologies in the ther- of the condenser will be improved and kept above mal power sector is expected to be RMB 11.4 billion, with 0.85 for long periods of time, thus improving unit energy savings of 7 Mtce per year. performance and reducing the energy consumption HIO 3: Newly built unit adopts large-capacity, high- of the turbine. The application of this technology parameter coal-fired generation unit. can maintain the ball collection rate above 95% for long periods of time, keep all the cooling tubes of Ultra-supercritical power generation technology uses the condenser clean for a long time, avoid manual large-capacity, high-parameter units, which will be distinctively advantageous in efficiency, reduce coal

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 119 consumption and reduce carbon emissions. In 2010, the for more than 4% of national generation capacity, average gross coal consumption rate in China was 333 of which the loss of the distribution transformer gce/kWh. The gross coal consumption rate of super- accounts for approximately 30% of the total loss. critical coal-fired power units with a capacity of 600 Therefore, reducing the energy loss consumption MW and above was less than 300 gce/kWh, potentially of transformers has increasingly become one of the reducing CO2 emissions by approximately 110 g/kWh. key points in the energy conservation of the power According to actually measured data, the power supply system. Controllable automatic capacity-regulating coal consumption of two sets of supercritical generation and voltage-regulating distribution transformer tech- units in Shanghai Waigaoqiao Plant No.3 may be 274.7 nology is applicable to 10kV distribution networks gce/kWh, and the SO2, NOx and dust discharged will be in the power sector. This technology makes use of much lower than the national environmental protection combined type capacity/voltage regulating switches standard. During power generation, emissions of NOx to change the connection of each tap in the coil of are even lower than for gas-burning thermal power units the transformer and the load switch state to provide in the same conditions (Table 6-7). such functions as automatic capacity regulation/voltage regulation, remote negative control, three-phase HIO 4: Implement grid energy conservation active imbalance adjustment etc., to achieve energy- transformation efficient transformer operation. Compared with the In linking power transmission and distribution, the gene- Type S11 transformer, the total loss of the operation ralization of such technologies as controllable automatic will be reduced by 48%; compared with the Type S9 capacity-regulating and voltage-regulating distribution transformer, it will be reduced by 53%. transformers, full optical fiber current / voltage trans- (2) Full optical fiber current / voltage transformer formers, fast eddy current drives and short circuit iden- technology. Current transformer and voltage trans- tification-based power grid operation control, overhead formers are one of the core pieces of equipment that ground wire insulation grounding method-based power form the basis of smart electric grids. Traditional line and energy efficiency technology, etc. will produce electromagnetic-type current transformers will marked energy efficiency potentials. not only consume a great quantity of nonferrous (1) The controllable automatic capacity-regulating materials such as copper, aluminum, etc., but also and voltage-regulating distribution transformer great quantities of energy during operation. Com- technology is one of the power industry’s leading pared with traditional mutual inductors, full optical pieces of equipment, consuming power energy while fiber current sensor technology will not consume a transmitting it. Although the efficiency of transfor- great quantity of nonferrous metals, nor pollute the mers reaches 96.0%-99.7% due to large consumption atmosphere, water, etc. This is an energy-saving, en- levels and a wide range of applications, there are vironment protecting, high-tech product and will be- considerable numbers of high-energy consumption come the alternative product to the traditional mu- transformers still in the operation in China’s electric tual inductor in the future. Full optical fiber current grid, the power energy consumed being astonishing. / voltage transformer technology will be used in large In electric grid loss, transformer loss accounts for smart transformer substations. The key technologies more than 60%. The loss of all transformers accounts include zero-phase position and modulated wave

Table 6‑7. Actually measured emission performance of the ultra supercritical generation unit at Shanghai Waigaoqiao Third Power Plant

Parameter Unit Amount Note Power generation GWh/half a year 5,728 Two units: #7, #8 capacity Coal consumption g/kWh 274.65

SO2 Kg/tce 0.47 National environment protection standard: 2 Kg/tce After overhaul of unit #7, 0.17 Kg/tce

NOx Kg/tce 0.37 National environment protection standard: 4.5 Kg/tce; Emission of unit #8, installed with SCR; Emission of fuel gas cogeneration is 1.2 Kg/tce. Dust Kg/tce 0.15 National environment protection standard: 0.5 Kg/tce (Source: January - June 2013 Report of Shanghai Waigaoqiao Third Power Plant, actually measured results)

120 | CHINA Energy Efficiency Series reset double closed-loop control (negative feedback) ground wires and the earth. Calculated according to technology, full optical fiber current transformer the existing design standard in China, among 110kV, error and suppression technology, common optical 220kV and 500kV power transmission systems, the path, differential signal demodulation technology, energy loss of overhead ground wires will be 3,700 etc. kWh/km per year, 14,400 kWh/km per year, and (3) Fast eddy current drive and short circuit identifica- 28,400 kWh/km per year respectively. By taking tion-based power grid operation control technology. the line scale of the south power grid, the power The high and low voltage transmission lines in China energy loss of overhead ground wires each year is usually have current limiting reactors and series approximately 1.67 billion kWh, equivalent to the compensation capacitors to prevent short circuits, consumption of 540,000 tce. Overhead ground wire reduce loss of line and improve voltage quality. As insulation grounding method-based power line and the electric grid has been constantly expanded in energy efficiency technology will change the earthing China in recent years, the short-circuit capacity of mode of ordinary ground wire and optical fiber com- the power system will be increased continually. The posite overhead ground wire from tower-to-tower application proportion of current limiting reactors grounding to insulation single point grounding, thus will be increased year by year. When a short-circuit cutting off the current path between grounding wire fault occurs on an electric grid system, current and earth and reducing the energy loss generated by limiting reactors can play the role of reducing the induced current. At the same time, through the ef- impact on electric grid equipment, but since the se- fective control of voltage, it will reduce the potential ries connection in electric grids will produce a great safety hazard. quantity of heat loss, this will lead to increases in From the perspective of the operating effects of the exis- line loss and cause the loss of power energy. A set of ting project, controllable automatic capacity-regulating current limiting reactors may consume several hun- and voltage-regulating distribution transformer techno- dred thousand to millions of kWh of power energy logy is introduced to conduct intelligent transformation. annually. Series capacitors can solve the problems An investment of RMB 14 million can realize energy of the poor quality of the terminal voltage of the savings of 1800 tce per year. Full optical fiber current/ power transmission line and excessive grid loss, but voltage transformer is used for the intelligent transfor- restrictions such as the higher cost of series compen- mation of high-voltage equipment, and an investment of sation capacitor technology, inconvenient mainte- RMB 2 million can realize energy savings of 1000 tce per nance, etc., make it difficult for series compensation year. Fast eddy current drives and short circuit identi- capacitor devices to be generalized and applied on fication-based power grid operation control technology a large scale. Fast eddy current drives and short are used, and an investment of RMB 3 million can realize circuit identification-based power grid operation energy savings of 3800 tce per year. For AC transmission control technologies are applicable to those places power efficiency technology based on overhead ground where long-distance transmission lines, transformers wires, an investment of RMB 22,000 can realize energy with high leakage impedance in the power sector, or savings of 150 tce each year. electric reactors and other energy-consuming equipment operate for long periods of time. By way of fast Analysis of the China Catalogue for Generalization of En- eddy current drive-type vacuum circuit breakers, in ergy Efficiency and Low-carbon Technologies(2015) indicates combination with power grid fault fast recognition that the share of generalization in controllable automatic technology, inputting compensating capacitors in capacity-regulating and voltage-regulating distribution long-distance transmission lines or current limiting transformer technology in 2006 was less than 1%; it is es- reactors in cases of electric grid failure, this will timated that by 2020 that the rate will be 5%. During the reduce the power energy loss of current limiting 13th FYP period, the total investment required will be ap- reactors and avoid the impact of large current and proximately RMB 5.2 billion, with expectations of energy high voltage surge current to series compensation savings of 670,000 tce per year. The generalization rate of capacitors during short circuits, this achieving the the full optical fiber current/voltage transformer is ap- highly efficient operation of the electric grid. proximately 1%, and it is estimated that by 2020 the generalization rate of the technology will be 50%. During the (4) Overhead ground wire insulation grounding method- 13th Five-year Plan period, the total investment required based power line and energy efficiency technology. will be approximately RMB 1.8 billion, with expectations Overhead ground wire provides security assurance of energy savings of 1 Mtce per year. The generalization in power transmission lines, but power transmission rate of the fast eddy current drive and short circuit iden- wires produce electromagnetic induction and form tification-based power grid operation control technology induced currents between ground wires and between will be less than 1% and will be 40% by 2020. During the

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 121 13th Five-year Plan period, the total investment required city of the electric grid to digest sources of renewable will be approximately RMB 500 million, with expecta- energy is relatively limited. At present, China’s electric tions of energy savings of 1.90 Mtce per year. The genera- grid has insufficient capability to digest renewable en- lization rate of overhead ground wire insulation groun- ergy sources, leading to problems of wind abandoning, ding method-based power line and energy efficiency water abandoning, light abandoning, etc. In minority technology will be approximately 1%, with expectations areas, wind abandoning and light abandoning have even that by 2020 the generalization rate of the technology reached levels of one-third. The insufficient absorption will be 30%. During the 13th Five-year Plan period, the capacity of the electric grid has already become the most total investment required will be RMB 250 million, with important bottleneck in the development of renewable expectations of energy savings of 810,000 tce per year. energy sources. During the 13th Five-year Plan period, the estimated investment required for improving power transmission and HIO 2: Scale development of nuclear power distribution efficiency will be more than RMB 7.7 billion, International experience has shown that nuclear power with energy savings of more than 4.38 Mtce per year. is one of the most important low-carbon energy sources, and it has assumed an important position in the power 6.3.2 Structural HIOs structure of developed countries. Through more than HIO 1: Speed up the development of renewable three decades of development, China has basically gras- energy ped the second generation of pressurized water reactor power generation technology. China’s energy develop- Renewable energy power generation will not emit any ment strategy sees the safe development of nuclear power carbon dioxide during power generation and is characte- as one of its important objectives in energy development. rized by ‘zero carbon power’. At the same time, renewable At present the generation capacity of nuclear power in energy sources do need manpower to prepare ‘fuel’. Once China only accounts for 2-3% of national generation capa- the power generation facility has been constructed, city. In order to realize the scale development of nuclear power can be used continuously free of charge and is cha- power, China has already begun to construct the second racterized as ‘near zero cost’ energy. In the context of res- generation and a half and the third generation of pressu- ponding to climate change, renewable energy sources are rized water reactor nuclear power stations. Today, China considered to be the alternative energy source with the has become the country with the most nuclear power greatest potential. In 2011, at the United Nations General plants under construction in the world. It is expected Assembly, the United Nations Secretary-General Ban Ki- that nuclear power will play a more important role in moon declared the goal of ‘Sustainable Energy for All’, Chinese energy structure in the future. i.e.: (1) by 2030, the whole world population should have a modern energy service; (2) the speed of improving energy Barriers faced by China in the development of nuclear efficiency should be doubled; (3) the share of renewable power include: (1) Investment in unit initial installed ca- energy in the energy used globally should be doubled. pacity will be very high. At present the unit installed cost of nuclear power is obviously higher than for coal-fired In China, the share of renewable energy in primary en- power. Especially in the case of third-generation pressu- ergy consumption has been made one of the compulsory rized water reactor technology, Chinese enterprises are objectives of Chinese economic and social development. still at the construction phase of demonstration pro- The latest objective is that the proportion of renewable jects, and the initial investment will be relatively higher. energy in the consumption of primary energy will be (2) Coastal factory sites are insufficient, and the merits increased from 12% in 2015 to 15% in 2020. In order to of onshore nuclear power initiation are still in dispute. accomplish this objective, the Chinese government has Concerning nuclear power safety, there are still different drawn up an ambitious renewable energy source deve- voices in China. Especially after the Fukushima Daiichi lopment plan and promoted realization of the objective nuclear disaster, there are still some debates on whether by such measures as government subsidies, implementing the construction of nuclear power stations should be ini- quotas for renewable energy, etc. tiated in the inland areas of China. The barriers faced by renewable energy source power generation in China include: (1) the greater cost of unit HIO 3: Develop natural gas power generation installed capacity. At present, the unit installed cost of Natural gas power generation units are characterized by renewable energy is higher than coal-fired power, and quick peak regulation responses and relatively low car- Chinese enterprises have not fully mastered some core bon dioxide emissions compared with coal-fired units. technologies. Therefore, power generation pricing has Natural gas power generation, which uses a low-carbon become the main barrier to whether large-scale genera- fossil fuel, not only helps carbon dioxide emission reduc- lization can be implemented in the future. (2) The capa- tion, but also undertakes the important task of peak re-

122 | CHINA Energy Efficiency Series gulation in power grids when renewable energy sources ting power pricing mechanisms, remove heat supply sub- develop on a larger scale in the future, when the installed sidies and adjust heat supply charging modes. power generation capacity of natural gas in China will enter a stage of rapid growth. 6.4.2 Recommendation 2: Encourage coal-fired plants to improve power The barriers faced to the development of natural gas generation efficiency power generation include: (1) the cost of unit installed capacity is relatively high. At present, Chinese enter- Encourage coal-fired power plants to establish enterprises have not fully mastered the design and manufac- prise energy management systems and formulate energy turing technology of the heavy-duty gas turbines used in conservation and energy efficiency improvement plans power generation. The unit installed cost of gas turbines on the basis of energy audits and awareness of own re- is higher than for traditional coal-fired power units. The sources. Encourage competent department for power higher price hinders the large-scale generalization of na- generation or power association to implement energy ef- tural gas power generation units. (2) The price of natural ficiency benchmarking for power generation enterprises gas is still high. Sources of natural gas are scarce in China, and create a culture of competition in which power enter- and the price of imported natural gas is also very high. prises go after ‘energy efficiency pacemakers’. Implement Higher initial investment and higher fuel costs make it total carbon emissions control and carbon emissions difficult for natural gas power generation and conven- trade in power generation enterprises through carbon tional coal-fired power generation to achieve economic emissions trade; encourage power generation enterprises competitiveness in the power market. (3) The market- to improve energy efficiency and obtain the economic oriented reform of power has not yet been completed. At benefits of carbon dioxide emissions reductions through present, the grid companies still determines the genera- trading. ting units for meeting the grid load based on the traditio- 6.4.3 Recommendation 3: Study of nal economic dispatch model. In this mode, natural gas new-generation high-performance power generation, mainly for peak regulation, is difficult and low-cost power generation to obtain a higher price for in accordance with the cost technology of the peak load. This income is obviously on the low side, and the economic benefit is very poor. Accelerate efforts regarding the research and development of new generations of power technology and make key breakthroughs in the core technology of large wind 6.4 Policy power units, heavy-duty gas turbine technology for Recommendations power generation, third-generation nuclear power technology, high-temperature gas cooled reactor technology, In order to promote further advance power technology etc. Encourage the piloting and demonstration of ad- with high opportunities to affect energy efficiency and vanced technology and strive to realize the localization play larger role in power generation, the research group of these core technologies in the design, manufacture and put forward the following suggestions: operation early, thus greatly reduce costs.

6.4.1 Recommendation 1: Encourage 6.4.4 Recommendation 4: Encourage the promotion of cogeneration the energy conservation according to circumstances transformation of the power grid and the digestion of renewable Encourage cities and industrial parks and zones with suf- energy ficient conditions to construct cogeneration units and encourage coal-fired units to implement the transfor- Encourage grid enterprises to accelerate the implemen- mation of cogeneration. Encourage local government to tation of energy conservation transformation and intel- develop cogeneration and formulate preferential policies ligent transformation, and improve the automation and in the areas of initial investment, operation and main- digitalization of the links between grid trading, transmis- tenance, infrastructure construction, etc. In areas where sion and distribution, scheduling, charging electric fee, cogeneration development plans have been formulated, etc. while reducing grid line loss. The development of local government should formulate regional heat-sup- the electric grid should take the digestion of renewable ply pipe network development plans appropriate to the energy sources as the important development objective, development scale of cogeneration units to enable uses enhance the construction of cross-regional transmission based on centralized heat supply to adopt it to the full. lines and improve the capability of the interconnection Further promote heat supply system reform, perfect hea- between regional grids. Improve the predictive ability of electric grids regarding renewable energy power genera-

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 123 tion and enhance the power generation capacity of peak regulation in the power grid to ensure that the share of renewable energy power generation in gross power generation be improved steadily.

6.4.5 Recommendation 5: Speed up the reform of the power system China has already drawn up a new roadmap for the reform of the power system. This calls for the spirit of the central government to be followed by accelerating the market-oriented reform of the power sector, breaking the monopoly in such links as power generation, scheduling, transmission and distribution, sales, etc. and speeding up marketization, accelerating the pace of adjustment in key fields such as power pricing, power supervision and management, pollutant emissions, greenhouse gas emissions, etc., to encourage China’s power sector to move in an high-efficiency, clean, low-carbon direction.

124 | CHINA Energy Efficiency Series hapter 7c Conclusions and Discussion Zhiyu TIAN

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 125 7.1 Conclusions Using the LEAP model and the C-CGE (China - Global Energy) model, in addition to various case studies across industry and the building, transportation and power sec- Energy efficiency and conservation efforts, either tors, it was concluded that China could achieve its INDC through improved energy efficiency or energy intensity targets by intensifying its energy conservation and low- technically, or through structural shifts from energy-in- carbon transformation efforts. Compare to the reference tensive activities to more service-oriented activities, both scenario, carbon emissions in 2030 could be 15% lower if contribute greatly to upgrading the quality of economic China is to achieve its emissions peak around 2030. Under growth, alleviating environmental pressures and impro- the intensified energy-saving scenario, on the other hand, ving energy security. The Chinese government has atta- carbon emissions in 2030 could be 27% lower compared ched great importance to energy efficiency and conser- to the reference scenario. Energy efficiency and conservation in past decades, setting mandatory reduction vation play a vital role in both scenarios in achieving the targets for the energy intensity of GDP in its economic climate pledge, contributing about three quarters of total and social development plans, broken down into provin- emissions reductions. cial, municipal, county and energy-intensive enterprises. Remarkable progress has been made in technical energy As the low-hanging fruit for energy efficiency has been efficiency, as well as improvements in nationwide energy gathered in recent years, the report provides detailed efficiency and competitiveness. By 2015, energy use per insights into the future options for energy efficiency. By unit of GDP declined by 18.4% compared to 2010, far ex- conducting comparative analyses and sensitivity analyses ceeding the set target of 16% for the 12th FYP. From 2010 to of the reference scenario and the intensified energy sa- 2015, energy efficiency and conservation allowed China ving scenario until 2050, HIOs for energy efficiency from to avoid the equivalent of 865 Mtce of energy use, equiva- both the technical and structural perspectives have been lent to a reduction of 1.82 billion tons of CO2 emissions. identified. In total, there are 26 HIOs in the industrial, Efforts in achieving energy efficiency and conservation in building, transportation and power sectors, of which China contributed greatly to sustainable transformation sixteen are technical and ten structural. Under the joint globally, accounting for more than half of the world’s en- effects of technical improvements and structural optimi- tire energy savings in the past thirty years. zation, these HIOs together can realize energy savings of over 2 Gtce in 2050. Energy efficiency is the most important mechanism through which countries can act to mitigate climate In the industrial sector, four technical and three struc- change in the short- to long-term, especially in countries tural HIOs are identified, which will result in energy sa- experiencing fast industrialization and urbanization like vings of over 1 billion tce in 2050. The selected technical China. Over the next few years, China will continue to HIOs included industrial waste heat recovery techno- draw up various energy-efficiency programs within its logy, advanced industrial combustion/calcination tech- economic and social development strategies in order nology, high-efficiency environment-friendly industrial to achieve the new target to reduce energy intensity by boilers, and raw material route-based process adjustment 15% from 2015 to 2020, as well as to cap primary energy and energy use optimization. The four technical HIOs consumption by around 5 Gtce by 2020. In 2015, China are estimated to save energy amounting to 580 Mtce in released its INDCs, in which it promised that its CO2 2050, of which nearly 200 Mtce will be saved by industrial emissions will reach peak value in around 2030 and that waste heat recovery technology. The structural HIOs in- it will strive to reach this peak value as early as possible, cluded ‘de-capacity’ and the transformation development that CO2 emissions per unit of GDP will decrease by 60% of energy-intensive industries, industrial ‘eco-link’ deve- to 65% against 2005, and that the share of non-fossil fuel lopment mode and a subversive industrial production energy in primary energy consumption will reach about technical revolution. In 2050, the three structural HIOs 20%. To act on energy efficiency and conservation, China are estimated to save energy amounting to about 500 is not only driven by its domestic need for sustainable Mtce, of which nearly 200 Mtce is saved by ‘de-capacity’. development in ensuring its economic prosperity, energy In the building sector, four technical HIOs and one security and environmental quality, but also by its sense structural HIO are identified, which will contribute en- of responsibility to engage fully in global governance and ergy savings of over 700 Mtce in 2050. Energy savings in promote common development for all human beings. In the building sector are mainly contributed by technical accordance with its pledge to cut greenhouse gas emis- HIOs, including promoting passive housing, populari- sions, China will also institute a revolution domestically zing high energy efficient equipment, carrying out deep- in energy production and consumption for 2030 and level energy conservation retrofits to existing buildings 2050, with improving energy efficiency being an impor- and using low-grade industrial waste heat for heating. tant pillar of the strategy. The first three HIOs contribute respectively energy sa-

126 | CHINA Energy Efficiency Series vings of 220 Mtce, 200 Mtce and 120 Mtce in 2050. The mentation of policies that target common actionable structural HIOs mainly involve promoting building in- approaches, including aligning government policies and dustrialization. Energy savings in 2050 will stand at30 business interests with the strategic goals of energy ef- Mtce. Moreover, building industrialization can save ma- ficiency and conservation; prioritizing structural adjust- terials, indirectly lowering energy consumption in the ment and irrational demand reduction as critical drivers industrial sector. to make the energy transformation happen in an affordable and efficient manner; promoting electrification In the transportation sector, four technical and three and reforming the electricity sector to support clean structural HIOs are identified, which will contribute and low-carbon supply options; and spurring technolo- energy savings of 650 Mtce. Technical HIOs include up- gical innovation and integrative design to minimize in- grading the fuel economy of trucks, improving the fuel vestments in smart and shared infrastructure. Besides, economy of light passenger vehicles, developing and po- specific attention should be paid to sectoral high impact pularizing battery electric and plug-in hybrid electric opportunities, including: vehicles, and increasing the electrification of the railways. In 2050, energy savings from the above HIOs respecti- In the industrial sector, widening the channels for enter- vely will be 45.94 Mtce, 12.39 Mtce, 49.22 Mtce and 11.28 prises to acquire information and application in cases of Mtce. Structural HIOs include improving the share ratio energy-saving technologies; improving standard systems of public transport, improving the share of railway use related to energy saving production processes, techno- and promoting vehicle sharing. In 2050, energy savings logies and equipment; removing system and mechanism from the above HIOs respectively will be 14.85 Mtce, 8.06 barriers across departments and industries; and esta- Mtce and 0.3 Mtce. blishing an institutional environment that is favorable to the optimization and upgrading of industrial structure In the power sector, four technical and three structural and to improving industrial competitiveness. In the buil- HIOs are identified, which will contribute energy savings ding sector, strengthening capacity building to promote of 340 Mtce in 2050. Technical HIOs include the trans- passive housing; improving the minimum requirements formation of pure condensing steam turbine units to for the energy efficiency standards of appliances; explo- realize cogeneration, comprehensive energy conservation ring deep-level energy conservation retrofits for existing transformation technology for coal-fired power plants, buildings; and reinforcing the planning of industrial the adoption of large-capacity and high-parameter coal- waste heat for heating in cities and towns. In the trans- fired generation units for newly built units, and the im- portation sector, boosting the transformation and upgra- plementation of power grid energy-saving technological ding of transportation sector management; quickening transformations. Structural HIOs include accelerating the pace of the reform of railway marketization; periodi- the development of renewable energy power generation, cally releasing and updating fuel economy standards in a promoting the scale development of nuclear power and timely fashion; expediting the construction, investment developing natural gas power generation. The biggest fos- and financing of public transport infrastructure; and sil fuel energy saving potential in the power sector un- continuing with R&D and the promotion of advanced der the intensified energy-saving scenario in 2050 comes technology. In the power sector, encouraging cogenera- from the replacement of fossil fuels with renewable en- tion promotion according to local circumstances; im- ergy and nuclear power for power generation and hea- proving power generation efficiency in coal-fired power ting, which can save energy by 248 Mtce. Improving the plants; exploring new-generation, high-performance and power generation efficiency of thermal power units can low-cost power generation technologies; boosting energy contribute energy savings of 56 Mtce, popularization of conservation transformation and renewable energy ab- cogeneration can contribute 32 Mtce in energy savings, sorption of power grids; and speeding up power system and improvements to power grid efficiency contributes reforms. 15 Mtce. The analyses in this report have shown that China could fulfill its pledge in its INDCs by achieving an earlier emis- 7.2 Discussion sions peak by around 2025. It can do this by seizing high impact opportunities for energy efficiencies in the indus-

Achieving energy and CO2 reductions under the inten- trial, building, transportation and power sectors. Howe- sified energy-saving scenario will require overcoming ver, this will not be achieved without a concerted set of a multitude of barriers to the full deployment of HIOs market actions and policy interventions, as well as deep that exist in the building, industry, transport and power reforms in almost every aspect of a developing country sectors. Overcoming these barriers will require the sus- such as China, which is still making the transition from tained and targeted support of China’s government, its a central-planned economy to a market-oriented eco- enterprises and its society at large, including the imple- nomy. This report has highlighted the energy efficiency

Enhancing Energy Efficiency in CHINA: Assessment of Sectoral Potentials | 127 and conservation opportunities from both technical and structural perspectives, but a high degree of uncertainty remains when it comes to fully tapping into the potentials available, such as rebound effects from restructuring patterns of consumption, lower-than-expected technical progress in renewable energy, a social backlash in nuclear power deployment, and vexed adjustments to interests caused by institutional reforms. This report has laid the foundation for analyzing high impact opportunities for energy efficiency in China. In terms of future areasof research, regional and sectoral analyses should be dee- pened, with a focus on cross-regional and cross-sectoral opportunities, in light of emerging technologies related to energy use, innovative commercial patterns and the institutional dividends from reforms to energy pricing, electricity dispatch and industrial governance. As China’s economy enters a new normal phase with a lower GDP growth rate, attention should also be paid to the potential contributions of energy efficiency and conservation to economic growth.

128 | CHINA Energy Efficiency Series AUTHORS AND EDITORS Dr. Quan Bai is the Executive Director and Research Professor at the Energy Efficiency Center of Energy Research Institute (ERI) of National Development and Reform Commission (NDRC), China. He is specialized in of energy economics, energy efficiency, climate change and energy technology policies and strategies.

Mr. Guanyun Fu is a researcher at the Energy Research Institute (ERI) of NDRC, China. His research mainly focuses on energy consumption in the Chinese industrial sector and energy efficiency policies assessment.

Ms. Jingru Liu is a senior researcher of Energy Research Institute (ERI) of National Development and Reform Commission (NDRC), China. She is specialized in policy Research of energy economics, energy efficiency and energy technology.

Dr. Qingbing Pei is a researcher at the Energy Research Institute (ERI) of National Development and Reform Commission (NDRC), China. He is specialized in energy efficiency analysis and energy conservation policy.

Mr. Zhiyu TIAN is the Deputy Director and a senior researcher at the Energy Efficiency Center of Energy Research Institute (ERI) of NDRC, China. His research focuses on the governance and policy issues related to energy efficiency and low-carbon development.

Ms. Yuyan Weng is a Ph.D. candidate at the Institute of Energy, Environment and Economy of Tsinghua University in China. Her research focuses on energy policy, low carbon economic transformation, and energy-economic modelling.

Mr. Huawen Xiong is the Deputy Director and a senior researcher at the Energy Efficiency Center of the Energy Research Institute (ERI) of NDRC, China. His key expertise includes energy efficiency strategies planning, especially policies, technical and economic evaluation for the industrial sector.

Dr. Wenjing Yi is a researcher at the Energy Research Institute (ERI) of National Development and Reform Commission (NDRC), China. She specialises in the policy research of energy efficiency and energy outlook of transportation sector.

Mr. Jianguo Zhang is a senior researcher at the Energy Research Institute (ERI) of National Development and Reform Commission (NDRC) in China. His main expertise area is energy efficiency policies, especially in building sector.

Prof. Zhang received his Ph.D. in Systems Engineering at Tsin- ghua University in 1997. Dr. Zhang is currently a professor of energy management and climate policy and director of Institute of En- ergy, Environment & Economy, Tsinghua University.

Dr. Sheng Zhou is an associate professor at Institute of energy environment and economy of Tsinghua University in China. His research focuses on energy model development and scenario analysis, climate change and carbon market.

Dr. Xianli Zhu is a Senior Economist at the Copenhagen Centre on Energy Efficiency, UNEP DTU Partnership. She specialises in policies and measures for energy efficiency and climate change mitigation in developing countries. Enhancing EnErgy E N ha

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Copenhagen Centre on energy effiCienCy ISBN: 978-87-93458-16-1 www.energyefficiencycentre.org

chINa ENErgy EffIcIENcy SErIES

978-87-93458-16-1