2016 State Utility Commissioners Clean Energy Policy and Technology Leadership Mission to China

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2016 State Utility Commissioners Clean Energy Policy and Technology Leadership Mission to China 2016 STATE UTILITY COMMISSIONERS CLEAN ENERGY POLICY AND TECHNOLOGY LEADERSHIP MISSION TO CHINA SPONSORED BY OFFICE OF CLEAN COAL & CARBON MANAGEMENT US-CHINA CLEAN ENERGY RESEARCH CENTER US DEPARTMENT OF ENERGY BEIJING, HAIYANG, SHANGHAI, AND ORDOS TRIP REPORT ROBERT W. GEE, PRESIDENT SHERI S. GIVENS, SENIOR VICE PRESIDENT .... Gee Strategies 11111 Group,LLc WASHINGTON | AUSTIN WITH SPECIAL APPRECIATION TO: COMMISSIONER TRAVIS KAVULLA, MONTANA COMMISSIONER DAVID ZIEGNER, INDIANA COMMISSIONER LIBBY JACOBS, IOWA COMMISSIONER SANDY JONES, NEW MEXICO COMMISSIONER SHERINA MAYE EDWARDS, ILLINIOIS JOE GIOVE, US DEPARTMENT OF ENERGY a1J1 6e e Strategies Group,LLc 11111 December 1, 2016 Dr. Robert C. Marlay US Director US-China Clean Energy Research Center Office of International Affairs US Department of Energy Mr. David Mohler Deputy Assistant Secretary for Clean Coal and Carbon Management Office of Fossil Energy US Department of Energy Dear Dr. Marlay and Mr. Mohler: We are forwarding you the 2016 Trip Report for the State Utility Commissioners Clean Energy Policy and Technology Leadership Mission to China As the attached report outlines, each goal we set out to accomplish at the outset of the mission was achieved, and we believe that the lessons learned by the participating state utility commissioners will yield dividends to the US Government and Department of Energy. We extend my deep gratitude for your support for this mission. Sincerely, Robert W. Gee President Gee Strategies Group LLC Sheri S. Givens Sheri S. Givens Senior Vice President Gee Strategies Group LLC Attachment TABLE OF CONTENTS Background 1 Delegation Meetings 2 Beijing 3 Haiyang 33 Shanghai 38 Ordos 44 Major Mission Accomplishments 56 Recommendations 58 Appendices A. Itinerary 60 B. Delegation Attendees 65 C. Commissioners’ Comments & Observations 67 D. About the Authors 69 BACKGROUND From August 31 through September 10, 2016, Gee Strategies Group LLC organized and arranged, on behalf of the Office of Clean Coal & Carbon Management and the US-China Clean Energy Research Center of the US Department of Energy (DOE), a delegation of five state utility commissioners and two DOE staff members to engage in bilateral discussions with Chinese officials and power companies in four cities across China. The mission’s central purposes were: (1) to advance the delegation’s knowledge of cutting-edge energy technology being developed in China; (2) to share how the US federal government and US states regulate the energy and utilities industry, and learn how China regulates its energy and utilities industry; and (3) to identify opportunities for potential collaboration on technology research and development, paving the way for commercial activity. The delegation visited the following cities and regions: Beijing, Haiyang, Shanghai, and Ordos, Inner Mongolia. The mission enabled the delegation to engage in discussions and participate in field visits that encompassed the following areas: • Clean coal/carbon capture utilization and storage, and ultra-supercritical coal applications; • Advanced nuclear energy technology; • Electric vehicle battery storage and charging stations; • Carbon emission trading pilot programs; and • Issues pertaining to renewable energy integration and dispatch. ORDOS• CHINA /NOIA 1 .,.. Gee Strategies r.111 Group, u.c Delegation Meetings The delegation met with central and provincial government entities, US business firms active in the energy sector in China, non-profit US clean energy and environmental organizations, research and development entities, carbon exchanges, and in-country western financial analysts. During meetings in Beijing, Haiyang, Shanghai and Ordos, the delegation learned about the most recent developments in China’s power sector and the advances that China is making in relation to clean energy. The delegation participated in meetings with prominent advisors to the People’s Republic of China’s (PRC’s) central government, sharing their perspectives on the US energy regulatory landscape related to: (1) the federal-state relationship for energy policy and regulation, including an overview of the National Association of Regulatory Utility Commissioners (NARUC) and major policy trends (e.g., regional and state carbon markets, renewable energy integration, and the impact of shale gas production on the electricity resource mix); (2) US federal agency hierarchy and jurisdiction, including those pertaining to the Federal Energy Regulatory Commission (FERC), North American Electric Reliability Corporation (NERC), US Department of Energy (DOE), and US Environmental Protection Agency (EPA); and (3) ongoing challenges impacting US coal generation. Delegation Site Visits The delegation made four site visits during the mission. The first was to the Haiyang Nuclear Power Station Unit No. 2, near Qingdao in Shandong province. The plant utilizes Westinghouse’s AP1000 technology, and the first two units of the plant are currently under construction. Shandong Nuclear Power Company, a subsidiary of the State Power Investment Corporation and one of China’s five largest power generation companies, owns the plant. In Shanghai, the delegation learned firsthand of China’s advances in highly efficient coal power generation technology at the Shanghai Waigaoqiao No. 3 power plant, an ultra-supercritical coal plant. Among other things, the visit enabled the delegation to assess whether China’s experiences with cutting-edge coal power generation technology could be viable in the US in the context of the EPA’s currently pending Clean Power Plan. This plant was developed by Forest Power and Energy Holdings In Ordos, the delegation visited two sites -- the Shenhua Direct Coal Liquefaction Plant Carbon Dioxide (CO2) Capture and Storage Project and the Guodian Bulian-Chahasu Coal-Electricity Integrated Project. 2 DELEGATION MEETINGS Beijing Beijing was the first city visited by the delegation. It is the capital of the People’s Republic of China (PRC) and one of the most populous cities in the world with over 18 million urban residents. It is considered the cultural, political, and educational center of China. The city’s history dates back over 3,000 years. The delegation spent three days conversing with various governmental entities and organizations in the city. The delegation participated in meetings with the following: (1) US Embassy Beijing; (2) international non-governmental organizations (NGOs), including The Paulson Institute, The Regulatory Assistance Project, and the Clean Air Task Force; (3) National Energy Administration, under the National Development and Reform Commission (NDRC); (4) the NDRC Department of Resource Conservation and Environmental Protection; (5) the Energy Research Institute of the NDRC; (6) Bloomberg New Energy Finance; (7) Independent Power Producers Forum – Beijing Chapter; (8) American Chamber of Commerce/US-China Clean Energy Cooperation Program; (9) China Energy Net Consulting (China 5e); and (9) State Grid Corporation of China (SGCC). US Embassy Beijing Background:1 By meeting with the US Embassy on the first day, it provided the delegation with an overview of China’s economy, energy sector, and central government planning processes. The US Embassy in Beijing serves as the bilateral mission between China and the US, housing more than 20 federal agencies. Diplomatic relations between China and the US date back to the 18th century, making China one of Asia’s countries with the longest diplomatic ties to the US. The Honorable Max Baucus is the current US Ambassador to the People’s Republic of China, appointed on February 21, 2014, having formerly served as the senior US Senator from Montana. The Ambassador personally welcomed the delegation and, with senior embassy staff and DOE Beijing officials, provided an overview on the status of the US-China economic relationship and China’s energy sector. Discussion:2 • Governance: In China, many policies with a climate co-benefit are being developed and implemented primarily due to air pollution, and promoting innovation in the economy, which is more important in the short term to the Chinese government. Provinces and 1 Throughout this report, “Background” is provided relating to the meetings and site visits made by the authors and delegation. Those representing the group, organization, or entity did not necessarily provide this information. Rather, the background information has been researched through currently available public sources. 2 “Discussion” in this report provides a high-level overview of the discussions and presentations provided to the delegation by the visited entity. These topics have not been researched by the authors nor do they constitute the views of the authors. 3 .,.. Gee Strategies r.111 Group, u.c cities all have their own political power bases, making it difficult to administer national priorities. Laws often exist in text only and are often not enforced or enforced arbitrarily. Instructions to provinces are interpreted locally, while the Chinese Communist Party (CCP) reviews provincial decisions according to party priorities, as opposed to central government priorities. A new leadership group will be installed in 2017, with much of the current politburo standing committee set to retire. How this will impact energy policy is not yet clear. For now, politics appears more important than economics. • Manufacturing: A national plan, “Made in China 2025,” was released by the PRC’s State Council in 2015 to promote manufacturing with still much left to do in this regard. •
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