China’s Energy Transition Pathways for

China’s Energy Transition Pathways for
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China’s
Energy
Transition
Pathways for
Low Carbon Development
Dr Tao Wang and Dr Jim Watson
Sussex Energy Group
SPRU, University of Sussex, UK
and Tyndall Centre for
Climate Change Research
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Acknowledgements
The scenarios presented in this research have
been developed through a considerable process
of dialogue with a range of organisations within
China and the UK. Two stakeholder workshops
have been held to aid this process. The first
took place in Beijing in September 2007 and
helped to identify appropriate parameters of the
scenarios such as the cumulative emissions
budgets, possible turning points for China’s
emissions and critical trends for key sectors
such as industry, power generation, housing and
transport. A second, smaller workshop was held
in London in May 2008 to test the scenario
methodology and an early draft of the scenario
storylines. We would like to thank all of those
who attended these workshops and gave us
their time and the benefit of their experience.
We are also grateful for all the feedbacks we
had from colleagues in various conferences
and workshops where we presented our
results “in working progress”. We’d also like
to acknowledge the support we have received
from our colleagues at Tyndall Centre
Manchester, particularly Alice Bows and Kevin
Anderson. Thanks also to Mari Martiskainen
for proof reading a final draft.
This research was funded by the UK research
councils through the Tyndall Centre for Climate
Change Research and the ESRC Sussex
Energy Group.
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China’s Energy Transition Pathways for Low Carbon Development
Contents
1.Executive summary . . . . . . . . . . . . . . . . . . . . 2
2.Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.China’s Energy Trajectory. . . . . . . . . . . . 11
4.Future carbon emissions budgets
and trajectories for China . . . . . . . . . . 20
5.Trajectories in detail: implications
for future energy pathway . . . . . . . . . . 28
6.Thinking beyond carbon . . . . . . . . . . . . 6 0
7.Towards low carbon growth . . . . . . . . . . 70
8.References . . . . . . . . . . . . . . . . . . . . . . . . . . 74
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1.Executive Summary
China’s continuous economic growth over the
last 30 years is a great achievement. This has
significantly improved the living standards of
more than 1 billion people. A major poverty
eradication effort has resulted in 400 million
people being lifted out of poverty between 1980
and 2000. GDP per capita has increased five
times since 1981 (World Bank 2004). Alongside
economic expansion, China has also
experienced a large increase in energy demand
despite a continuous decline in energy intensity
between 1980 and 2000. As the Chinese
economy moved into a new period of heavy
industrialisation and urbanisation in the early
2000s, energy demand rocketed with a
consequent increase in energy intensity
between 2003 and 2005.
the potential trajectories of carbon emissions
that China could follow to achieve a given
climate change target – and how China might
slow its emissions growth, and eventually enter
a period of declining emissions. The report
investigates in detail how these emission
trajectories could be achieved through changes
in China’s economy and society, and the
policies and technologies that shape China’s
energy system.
The target for China used in this report is a
cumulative emission budget for China over the
21st century, which is derived from a global
target of stabilising atmospheric concentration
of CO2 at 450 parts per million (ppm). According
to the Intergovernmental Panel on Climate
Change’s (IPCC) latest assessment, achieving
Due to this dramatic increase of energy
this target would mean that the world has a
demand, most of which is met by the use of
significant chance of avoiding some of the worst
coal, China became the world’s largest carbon
impacts of climate change. The report analyses
dioxide (CO2) emitter in 2006. It is now widely
four scenarios that are based on two different
accepted that a post-2012 international climate apportionment approaches for global emissions:
namely equal emissions per capita and equal
framework without the participation of China
emissions intensity of GDP. The total global
and the United States will be ineffective.
budget is 490 GtC (gigatonnes of carbon =
However, such a framework must incorporate
109 tonnes) over the 21st century. Within this,
the development needs of China and other
China is given a cumulative emission budget
developing countries. In addition to leading to
ranging between 70 GtC under the former
international calls for China to act to curb its
approach, and 111 GtC under the latter. When
emissions, China’s recent energy demand
combined with different medium term carbon
growth has also led to concerns about energy
emissions pathways, the implications of these
supply, local and regional environmental
budgets for China is a peak in emissions
pollution and social stability. This leads on to
between 2020 and 2030, followed by a decline.
a fundamental question: can China’s future
Our research shows that early action to slow
development path be decoupled from carbon
emissions growth and achieve a peak closer to
emissions growth? In other words, can China
develop within the tight global carbon emissions 2020 is desirable because more of the carbon
emissions budget is then available to smooth
constraints that climate science now says are
the subsequent emissions reduction pathway.
necessary?
The disadvantage of this is that China would
This report is the result of a three year research
need to implement far reaching changes to its
project funded by the Tyndall Centre for Climate
economy and energy system sooner rather
Change Research, which explores the answers
than later.
to this question. The project has investigated
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China’s Energy Transition Pathways for Low Carbon Development
The four scenarios analysed in this report are
distinctive from each other, but in general are
divided by their relative positions on two critical
issues: promoting innovation and the approach
to social inequality. This report is not intended
to be prescriptive about which of these budgets
– or the many alternative pathways – China
should follow. The scenarios analysed in the
report are designed to illustrate some of the
possibilities, and what the consequences of
these might be for investment, economic
structure and Chinese policy if they were
followed in practice. Therefore, the report does
not reach a firm conclusion on which scenario
is the most desirable.
This report highlights a number of key findings
from the scenario analysis which are intended to
inform policy making both within China, and in
international negotiations. These key findings
include:
1. Decoupling carbon emissions growth from
economic development is challenging but
achievable in China, and there is more than
one way to achieve it. The four scenarios
demonstrate different ways to square China’s
continuing development with a carbon
emissions constraint. They reflect different
priorities in governmental decision making,
infrastructure investments and social
preferences.
The scenario results show that the Chinese
2. The four scenarios show that it is vital to start
economy in 2050 will grow to between 8 and
slowing emissions growth and to reach a
13 times larger than today’s size. The economy
carbon emissions peak as early as possible.
in all scenarios will be dominated by service
The later the peak occurs, the more difficult
sector, as is the case in most of today’s
it will be for China to comply with the
industrialised countries. The structure of other
emission budget. Furthermore, later peaks
industries varies between the scenarios. The
are often associated with steeper subsequent
total primary energy demand for 2050 also
reductions in emissions which are likely to be
varies among scenarios, ranging from only 15%
much more challenging than shallower
higher than 2005 to twice the 2005 level. As a
trajectories. Even in our scenario S4 which
result, the energy intensity of Chinese economy
allocates nearly a quarter of the global
will be reduced by 76-87% between now to
budget of cumulative carbon emissions to
2050, while carbon intensity has to be cut
China, a late emissions peak and high
further to just 4-7% of the 2005 level. China’s
emissions trajectory between now and 2030
carbon emissions rise to between 24% and 72%
make it very difficult for China to remain
higher than 2005 by 2020. But emissions
within its budget. Our analysis clearly
subsequently decline to between 15% and 70%
demonstrates that 2040 is too late for
less than the 2005 level by 2050. Among all
China’s emissions to peak – and 2010 is
the sectors of the Chinese economy,
inconceivable. A peak in Chinese emissions
transportation will have the highest growth
between 2020 and 2030 is therefore the
within the scenarios. But energy consumption in
most plausible way in which China could
households and industry hold the key to a
make a full contribution to global action to
successful transition to low carbon development
stabilise the climate.
in the next few decades. The full report
describes in detail how this transition is
achieved within each scenario.
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3. The success and speed of economic and
industrial structural change towards a more
balanced service economy and high tech
industries is likely to be key to China’s low
carbon development. Such a trajectory fits
well with recent policy pronouncements of
Chinese leaders, who are keen that China
moves away from its recent energy intensive
development path. In our scenario S2, where
this change is successful and quick,
economic growth is much faster and more
sustainable and resilient to external shocks
than in the scenario S4. S4 explores a
pathway in which economic restructuring is
less successful and slower, although energy
demand and the emissions budget are
roughly the same in both scenarios.
increase some dimensions of energy security
such as the exposure of China to fossil fuel
price volatility. Stability of the energy system
with large contributions from renewables will
be a serious issue, but could be managed by
smarter grid technologies. The extensive
deployment of electric vehicles in some
scenarios could also help balance supply
and demand.
6. In three out of the four scenarios, carbon
capture and storage (CCS) plays a crucial
role in helping China to develop within a
carbon budget. CCS is not assumed to be
implemented on a large scale in China until
2030, and will have to be employed quickly
after that date if decarbonisation of the
power system is to be achieved in these
scenarios. By 2050, CCS will have to be
installed to 80-90% of fossil fuelled power
plants in scenarios S3 and S4. This means
that action is required now, on an
international basis, to assist China with the
demonstration of CCS technologies. Only
then will it be clear whether they will be
technically and economically suitable for
widespread commercial use.
4. Energy efficiency is another vital factor for all
four scenarios, although the challenges are
different across scenarios. Currently the
largest potential for energy efficiency
improvement lies in China’s industries. But
the fast growing energy use in the household
and transport sectors requires early action
on efficiency if the overall energy efficiency
targets in the scenarios are to be met. There
is still time to head off pervasive carbon lock7. Nuclear power can play a role in China’s low
in effects within these two sectors.
carbon future. It does not have the crucial
role that renewable energy technologies have
5. Renewable energy has huge potential to
within our scenarios. However, in the scenario
substitute fossil fuels in China, and to meet
with the most ambitious nuclear programme,
energy demand growth in the future. With
China will build nuclear power plants three
proper policy support to enable innovation,
times faster than France has ever done.
development and rapid diffusion, renewable
Within this scenario, the deployment of
energy could contribute more than 40% of
nuclear power reaches seven times the size
China’s total energy demand in 2050, and
of the current French nuclear power fleet in
more than 60% of power generation. By
2050. Yet even in this scenario, nuclear
then, the amount of power generated by wind
power only accounts for 30% of on-grid
and solar PV could be larger than China’s
power generation and 12% of total energy
coal-fired and total power generation
demand. Concerns about nuclear security
capacities today respectively. A large portfolio
and fuel supply may be significant in limiting
of renewable energy could significantly
further deployment beyond this.
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China’s Energy Transition Pathways for Low Carbon Development
8. Achievement of a transition to a low carbon
development pathway does not only depend
on technology choices. As in other countries,
social choices and the potential carbon lockin in life styles and behaviour patterns will
have significant impacts on future emissions.
For a country like China that is building a
large and influential new middle class,
encouraging a green lifestyle and low carbon
consumption behaviour could have strong
exemplary effect on the wider population
about the development pathways that are
seen as desirable. This is an essential
aspect of China’s future story that should
be addressed alongside measures for low
carbon investment, institutional change
and policy incentives.
While this scenario analysis focuses on China’s
potential future carbon emission trajectories,
the economic and social transition within these
scenarios has much wider implications than just
carbon. This report therefore discusses its wider
implications in the context of the availability
of energy and other resources, some of the
impacts on water and land resources, and the
implications for China’s energy security. It also
shows that some of these implications are
potentially serious if not thought through
carefully. For example, the level of biofuels in
China’s transport sector envisaged in the
scenarios could not be achieved using current
first generation technologies. Second or third
generation technologies would be required
which potentially have much lower land use
requirements and higher levels of sustainability.
strategies to realise them in practice. This will
have to build on the contemporary economic
policy debate in China that is trying to rebalance
the structure of Chinese economy. Through such
strategies, China to build on the widely
discussed “green opportunities” associated
with the current economic crisis. Low carbon
development is likely to mean more than the
deployment of low carbon technologies and
measures throughout China. It is also an
opportunity for China to build on recent success
stories in wind power and electric vehicles – and
build low carbon industries and new institutions
to foster low carbon innovation will be required
to achieve this. International collaboration in
technology and finance also have a crucial role
to play, and are important parts of the post2012 international framework. Within this
framework, developed countries must make
good on their repeated promises to assist
developing countries like China with such
technology and finance. Without such
assistance, there is a greater risk that China will
not move fast enough towards the low carbon
development pathway that is necessary.
Finally the report discusses the policy
implications in China of the kinds of low carbon
development pathways that are flow from this
scenario analysis. All of the scenarios are
ambitious and challenging, which would require
comprehensive climate change and energy
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China’s Energy Transition Pathways for Low Carbon Development
2.Introduction
China's economy is growing rapidly with nearly
10% GDP growth per year over the last two
decades. At the same time, economic
expansion is leading to large increases in energy
demand despite a continuous decline in energy
intensity between 1980 and 2000. Since 2000,
quick expansion of heavy industries such as iron
and steel has led to accelerating energy
demand growth and a trend of increasing energy
intensity between 2003 and 2005. Coal
continues to dominate China’s energy system
despite a slowly declining share, and is fuelling
the majority of power generation. China’s
generation capacity reached nearly 800 GW in
2008, of which three quarters was coal fired.
Imported oil is also increasing sharply to over
50% of total oil consumption – up from 29% in
2000 as domestic output has matured.
Demand for natural gas keeps growing, and
largely exceeds the supply capacity.
These trends lead to a number of pressing
challenges. Securing enough energy to sustain
economic growth is an important priority for the
Chinese government. Alongside this, more
attention is being given to addressing the
environmental effects of economic development
and energy consumption. These include severe
desertification, air and water pollution in China
and an increasing contribution to international
environmental problems like climate change.
China is now the world’s largest emitter of
carbon dioxide (CO2), the most important
greenhouse gas (GHG)1 , after a 50% increase
between 2000 and 2005. At the same time,
China is particularly vulnerable to the impacts of
climate change. Aware of the huge challenges
ahead, the Chinese government has
implemented various measures and targets to
reduce China’s reliance on fossil fuels,
particularly coal and to mitigate the impacts of
rapid economic growth. But effects of these
1
measures are yet to be seen, and they are at
best only starters of what are needed to address
China’s environmental concerns and the
implications for the international challenge of
tackling climate change.
Against this background, this report sets out the
results of a three year research project
conducted by the Tyndall Centre for Climate
Change Research. The project aim was to
assess alternative energy futures for China, and
to evaluate the scope for mitigating CO2
emissions while achieving development targets.
A key question for the research is whether China
can avoid the problem of ‘carbon lock-in’ that is
faced by most developed countries. This is
characterised by dependence on carbon
intensive energy systems, infrastructure and
social economic structures that are difficult to
change. The project has explored a range of
scenarios for China’s future energy trends and
carbon emissions to inform policy making in
both China and the UK.
The next section of the report (section 3)
provides some background on China’s energy
system, its recent development and the current
policy landscape. Sections 4 and 5 set out four
cumulative carbon emission scenarios for China
over the 21st century that achieve economic
development within the constraints of a global
emission budget. This budget is designed to
stabilise carbon dioxide concentrations at 450
parts per million (ppm). If achieved, there is a
significant probability that the most severe
impacts of climate change will be avoided. A key
assumption is that other countries pursue
equivalent actions that are also commensurate
with the same stabilisation target. These
sections also include a detailed analysis of the
different energy and social-economic
implications of these pathways for China’s future
development. Section 6 then moves on to
EIA (2008), available at http://www.eia.doe.gov/pub/international/iealf/tableh1co2.xls
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analyses some of the possible consequences of
the scenarios for energy resource use and
energy security. Finally, Section 7 provides some
pointers for policy makers which stem from the
scenario analysis.
This report is not intended to be prescriptive
about the pathway that China should follow over
the coming decades. Instead, it explores a
variety of alternative development futures that
China could choose, each of which is
constrained by an overall cumulative emissions
budget. By doing so, the report is designed to
provide policy relevant insights into the kinds of
changes in the Chinese economy and energy
system that might be required if development is
to continue within a carbon emissions
constraint.
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China’s Energy Transition Pathways for Low Carbon Development
3.China’s Energy Trajectory
China’s Energy and
Environmental Challenges
Mtoe
the most efficient way. Most of the incremental
energy demand is met by increased production
China’s rapid industrial growth over the past
of domestic coal, with severe environment and
twenty five years has led to a rapid increase in
health impacts in each step along the chain
energy demand. The International Energy Agency from extraction to consumption. The large
(IEA) estimates that China and India alone are
expansion of coal use is partly due to the
expecting to contribute 51% of the incremental pursuit of energy self-sufficiency as China has
world primary energy demand in the period to
abundant coal reserves. It is also because coal
2030, despite a global economic slowdown in
is the cheapest energy source for China when
2008 (IEA 2008a). With an over 55% increase the enormous external costs are not accounted
in primary energy demand between 2000 and
for. Figure 1 indicates the close trend between
2005, China now accounts for more than 16%
domestic energy production and total energy
of global primary energy demand and will
demand in China since 1980. The fast growth
overtake the US as the world largest energy
of coal consumption is believed to be one of the
consumer soon after 2010 (IEA 2007a). China's main reasons for China missing the
enormous energy demand partly stems from a
environmental targets in its 10th Five-Year Plan
rising standard of living of the world’s largest
between 2000 and 2005. There has been a
population, rapid growth in the world third
remarkable unswing in sulphur dioxide (SO2)
largest economy, deepening industrialisation and emissions, over 90% of which is from coal
urbanisation over the last ten years, and an
combustion. Energy-wise, China’s declining
increasing influence on the world trade system. energy intensity over the last two decades was
Yet, China’s energy demand is not increasing in
Figure 1: Growth in China's primary Energy Production
and Consumption
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The environmental impacts of China’s economic
growth can also be felt beyond the border of
China. Alleged as the world largest emitter of
CO2 since 2006 (EIA 2008), China’s carbon
emissions increased by over 50% between
2000 and 2005. It is not surprising that there is
renewed call for China to take more
responsibility for mitigation in the post-2012
international climate agreement which is
currently being negotiated. Although China is
now the global top emitter of CO2, it has only
accounted for 7% of cumulative emissions
between 1850 and 2000, far behind US and EU
which is responsible for almost 30% of
cumulative emissions each (Pew Center 2008).
China’s CO2 emissions per capita was just over
4 tonnes in 2006, and is much less in
cumulative terms. Although it is still only one
fifth of the US and about half of the EU, it is
almost four times of India, another emerging
economy that is usually shares the pressure to
The development road China has taken and is
reduce CO2 emissions with China. Large
still taking is unsustainable and has induced
increases in energy demand has not only led to
severe environmental problems. Energy and
international pressure on China to act on
water shortages, water and air pollution,
environmental issues, it has also led to worries
cropland and biodiversity losses are all
about securing energy supplies and a hefty cost
escalating as economic growth continues.
due to volatile energy prices in the last two
Having fuelled the previous miracle economic
years. To conserve energy and reduce the
growth, China’s coal based and inefficient
exposure to energy security risks (and carbon
energy system has led to a number of
emissions growth), Beijing has already
challenges which have the potential to work
committed to a 20% cut in China’s energy
against China’s future economic growth. Sulphur
intensity in the 11th Five-Year Plan by 2010
dioxide caused by the coal combustion is now
(National People's Congress 2006).
resulting acid rain falling on more than 30% of
China's total land, ruining croplands and
What is less heard of than China’s ever rising
threatening food chains and water systems. 16 carbon emissions is that China itself is one of
Chinese cities are ranked among the most
the most vulnerable countries to the adverse
polluted 20, mostly due to the production and
consequences of climate change. This has been
use of coal. The World Bank estimates around
emphasised as a real concern to the Chinese
400,000 people in China die each year from air government in the first National Assessment
pollution-related illnesses, mainly lung and heart Report on Climate Change (MOST, CMA et al.
diseases (McGregor 2007).
2007) and China’s National Climate Change
also reversed for the first time in 2004 and
2005, and so was the declining share of coal in
China’s energy mix. To meet this soaring energy
demand, China’s power sector has undergone
an unprecedented expansion, whose generation
capacity increased two and half fold from 319
GW in 2000 to 793 GW in 2008. Although
most of the increase is through coal fired power
plants, the rate of increase is as fast for hydro
power, and much faster for nuclear and wind
power. Oil demand increased sharply in both
industry and transport sectors, much of which
has to be met through imported oil as domestic
production matures. Imported oil accounts for
52% of total oil consumption in 2008, a huge
leap from only 29% in 2000. Consumption of
the cleanest fossil fuel, natural gas, tripled from
24.5 billion cubic meters (bcm) in 2000 to 72
bcm in 2008 (Ren 2009), and will continue to
rise as the construction of pipelines progresses.
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China’s Energy Transition Pathways for Low Carbon Development
Programme (NDRC 2007a). With only one third
of the world’s average land availability per capita
and 27% of the world’s average water resources
per capita, the availability of cropland and water
resources will be pressing concerns for China's
sustainable agricultural development. This will
cause up to a 40% reduction in cereal
production if proper adaptation is not taken
(Xiong, Conway et al. 2009). The total area of
China’s western glaciers will shrink by over 27%,
threatening long term water supply to several of
the most populated river basins in the world.
The current imbalance of water distribution will
be exacerbated. Droughts, floods, typhoons and
other extreme weather events will cause
tremendous economic losses and harm China's
fragile environmental system.
primarily driven by concerns about local and
regional environmental pollution and energy
security. But co-benefits of these policies are in
line with China’s principle “to address the
climate change within the framework of
sustainable development” (NDRC 2007a). This
is an important way to increase the participation
of developing countries to a post-2012
international climate agreement.
Rocketing Demand
The primary energy consumption in China has
grown almost four fold since 1980 to nearly
2500 million tonnes of coal equivalent (Mtce),
most of which is driven by a huge expansion of
industry, particularly the quick growth of heavy
industry since 2000. As China embarked on its
latest phase of heavy industrialisation and faster
For the reasons above, it is unsurprising that the urbanisation, energy demand rocketed in the
early 2000s. As people’s living standards have
Chinese government are taking climate change
risen with economic growth, China’s energy
more seriously than seen before, with an
demand is set to keep growing in the next
obvious attitude change seen in the latest
international conferences of the United Nations decade or two. Contributions to growth from the
household and transport sectors will be
Framework Convention on Climate Change
significant despite a large potential for energy
(UNFCCC) in Bali and Poznan. At the top
leadership level, combating climate change and efficiency improvement. Industry accounts for a
large proportion of China’s energy demand:
adapting to its adverse impacts was
incorporated into Chinese President Hu Jingtao’s around 70% of end-use energy consumption in
2002 (Dai, Zhu et al. 2004; LBNL 2004).
report delivered in October 2007 at the 17th
However the mix of energy consumed by
National Congress of the Communist Party of
industry has changed dramatically with the
China and Premier Wen Jiabao heads the
proportion of coal falling from 45.4% in 1985 to
National Climate Change Response Leading
22.0% in 2002, while electricity has risen from
Group that includes 29 top ministerial officials
from all 28 ministerial agencies. In line with the 25.8 to 43.6% at the same time. Due to its
crucial contribution to China’s energy demand,
top level demand, various measures and
the Chinese government started the “1000
policies have been taken in China to address
enterprises programme” as a key step to
the energy and climate issue from both supply
and demand side, and to pave the way towards improve energy efficiency in the vast industrial
sector. These 1000 industries are all huge
sustainable development in the coming
companies which account for nearly half of total
decades. It would be imprudent to believe that
industrial energy consumption and a third of
China is now fully devoted to tackling climate
national total (NDRC 2007b). This programme
change as most of these policy changes are
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manufacturer and is expected to take the first
place in both in around 2015. But this is only
part of the picture. Both aviation and shipping
are growing at much faster speed. Passengerand freight- distance by air has increased by
Structural change in energy consumption is also
more than 50 times in 25 years since 1980,
seen in the household sector where coal’s share
and 10 times for freight-distance in shipping.
of residential energy consumption dropped from
China has started to address energy
over 90% to 30% in by 2002. In the same
consumption in the transport sector and its
period, there was an almost a 20 and 25 fold
consequent pollution, particularly from the
increase in residential consumption of electricity
booming road transport sector. The Chinese
and natural gas. In most areas, quick
government has an ambitious plan to narrow
penetration of household electric appliances is
the gap with leading nations, like those of the
the driver behind the increased consumption of
EU, in fuel economy and emission standards for
electricity, such as TVs, washing machines,
its growing passenger vehicle fleet. This is
refrigerators and air conditioners (Zhang 2004).
supported by recently revised consumption taxes
Electricity consumption of a large number of airin favour of energy efficient small engines and
conditioners in the rich east coast cities has
alternative fuel vehicles such as hybrid or allbeen accused of causing power shortages in
electric cars. China’s fuel economy standards
summers. To the north, old and inefficient coal
for vehicles are catching up with those of Japan
fired district heating systems charge consumers
and the EU. They are already more ambitious
at a fixed rate with no individual control,
than those of US and Australia. In July 2007
discouraging any energy saving efforts. They are
China implemented State III (similar to Euro III)
responsible for the poor air quality in northern
vehicle emission standards and is scheduled to
China in winter. However, the average residential
move to State IV (similar to Euro IV) in July
energy consumption in China is still well below
2010. Beijing has already implemented State IV
the level of developed countries and huge
in July 2008.
growth is expected with growing income. China
Coal-dominated Supply
has put in place stringent energy efficiency
China has the third largest coal reserve after US
requirements in the latest building code and
and Russia, but has been the world’s largest
established energy efficiency labelling for
producer and consumer of coal since 1990s
electric appliances. However, their
(Andrews-Speed 2004). Despite a significant
implementation is still open to question.
shut-down in late 1990s, the proliferation of
Energy consumption in transportation has
small township and village coal mines in China
increased 4.5 times in 25 years since 1980.
still accounted for more than 50% of China’s
Most of growth has been driven by a seven fold
annual production of coal in 2000 (Gao, Qu et
increase in energy consumed by road vehicles
al. 2004). This dropped to less than 40% in
(IEA 2008b). This has been markedly
2007 after further efforts to integrate and
represented by a 37% annual growth in private
upgrade capacity of the coal industry. China
vehicle sales between 2000 and 2006. China is
produced 2.7 billion tonnes of coal in 2008
now the second largest automobile market after
compared with around 1 billion tonnes in 2000.
US and the third largest automobile
Coal will maintain a dominant position in
aims to reduce 100 Mtce from baseline annual
energy demand by 2010 through energy
efficiency improvement. This is equivalent to
260 million tonnes (Mt) of CO2.
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China’s Energy Transition Pathways for Low Carbon Development
demand will be met through imports by
extending pipelines to Central Asia and liquefied
natural gas (LNG) terminals in the east coast.
China has small reserves of oil and gas - roughly
1/15 of world average per capita. With only
1.3% of world proved oil reserves (BP 2008),
China is now the world’s fifth largest oil
producer and second largest oil consumer. It is
no surprise that IEA estimates China’s oil import
dependency rise to over 80% by 2030 as the
gap keeps growing between demand and
domestic production (IEA 2007a). Demand for
natural gas is the smallest in fossil fuels, yet
has the fastest growth. It is estimated that
demand for natural gas will jump to 200 bcm in
2020, nearly a nine fold increase from 2000.
Most of China’s natural gas reserves are located
in remote areas, making them difficult to
access. This requires large investment in
delivery infrastructure like the 3900 km-long
East-West pipeline. Half of the natural gas
Over 80% of China’s power generation is fossil
fuelled, almost entirely from coal, as indicated
by Figure 2. The power sector accounts for
almost half of China’s coal consumption. Many
power plants are small and old that are among
the dirtiest in the world. To upgrade the fleet,
China plans to close down 50 GW of inefficient
and small generation capacity between 2006
and 2010 whilst restricting new additions to
large state of art supercritical and ultrasupercritical units. In 2008, 17 GW of inefficient
capacity has been closed down. The overall
efficiency of coal fired power plants has
improved from 370g of coal per kWh of
electricity (g coal/KWh) in 2005 (Zhang and
Zhao 2006) to 349g coal/KWh in 2008,
exceeding the 11th Five-Year target of 355g
coal/KWh by 2010 2 years early.
GW
China’s energy supply for the near future,
although it is likely to be more and more costly
to use in the future.
Figure 2: China’s power generation mix
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Wind power is currently enjoying the fastest
growth in all power generation technologies,
almost doubling the installed capacity every year
since 2004. As a result, it has grown from 0.76
GW in 2004 to 13.24 GW in 2008, on track to
beat the government’s 30 GW by 2020 wind
power target by 200% (The Climate Group
2008). China now has the world’s fourth largest
wind power capacity after US, Spain and
Germany. Some believe China could reach 100120 GW by 2020 and up to 270 GW in 2030
(Li, Gao et al. 2008). Figure 3 shows the recent
take off of China’s wind power. Although solar
China installed the first nuclear power plant in
photovoltaic (PV) is still rare in China, the
1993 but no new capacity was installed until
Chinese solar manufacturing industry is second
2002. As China has revised its nuclear power
only to Japan with more than 400 solar
strategy much quicker development of nuclear
companies including the world’s 4th largest PV
power is expected. The capacity increased from
producer, Suntech. This makes it possible to
2.1 GW in 2001 to 10.8 GW in 2008, with 11
upscale quickly in China when the cost of solar
GW under construction and a further 15 GW
PV declines further. On the other hand, solar
approved (WNA 2009). The Chinese government
water heaters are now installed in 10% of
made plans in 2006 to have 40 GW of nuclear
Chinese households, accounting for nearly twopower by 2020 but is now considering raising
thirds of total global capacity and three quarters
this to 60 GW
of the annual addition of solar water heaters
(REN21 2008).
GW
But China also has the world largest hydro
power generation capacity, twice the size of the
second largest in Canada. It is symbolised by
the 22.5 GW Three Gorges Dam, of which 18.2
GW have already been brought to commercial
operation since October 2008. Apart from large
hydro, China also had over 60% of the world’s
small hydro power generation capacity in 2006
(REN21 2008). The Chinese government plans
to further increase hydro power generation
capacity from 172 GW to 300 GW by 2020,
mostly from large hydro.
Figure 3: China’s wind power growth 2004 – 2008
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China’s Energy Transition Pathways for Low Carbon Development
Policy Responses
The overall goal of Chinese energy policy is to
achieve a sufficient energy supply to enable
sustained economic growth. One of the
strongest energy policy drivers in the last few
years has been the government’s attempt to
gradually liberalise the energy sector to remove
the inefficiencies of central planning and secure
energy supply for the future. Diversification of
energy supply, energy efficiency improvement
and energy-environmental concerns are also
rising up the government’s agenda. Energy
policy in China has evolved a lot in the last two
decades, but many experts point out that it is
still lagging behind the development of energy
system itself, in many cases only passively
responding to the change rather than proactively
shaping the future (Gao, Qu et al. 2004; Sinton,
Stern et al. 2005).
People's Congress 2006). The government is
taking a lead in promoting energy efficient
products through large scale government
purchasing. The Ministry of Finance (MOF) and
the NDRC issued government procurement
regulations for energy efficient products in
December 2004, requiring local and national
governments to purchase energy efficient
products for replacement (CESP 2005). Given
the vast size of inefficient industry and potential
growth in household and transportation,
progress made in energy efficiency will have a
large effect on China’s energy future.
What is also important in abating China’s fast
growing energy demand as well as carbon
emissions is to rebalance the structure of
economy and industry. This means shifting away
from the expansion of energy and resource
intensive industries, and away from too much
reliance on export-led growth. By increasing
China achieved an unprecedented continuous
domestic demand’s contribution to economic
energy intensity reduction between 1980 and
growth and developing more high tech and high
2000. While its GDP grew more than four fold,
energy demand only doubled at the same time. value-added industries to enable a higher
position in the global production value chain for
The Chinese government has set up the same
the Chinese industries, the economic growth in
target for itself for the next 20 years, declared
the future will also be more resilient to external
as a national development goal in the 16th
National Congress of Chinese Communist Party shocks and more sustainable in itself. As Lardy
(CCP) in 2004: to quadruple the economy with (2007) has pointed out, China’s recent growth
has been driven by a large, growing trade
only a doubling of energy demand between
surplus and rising investment in energy-intensive
2000 and 2020. China is also putting more
sectors such as coal, steel, cement and
effort into liberalising the pricing mechanism of
energy and reforming the energy market. These chemicals. This partially led to China’s
efforts, however, have only been implemented in disproportionate growth in energy demand and
emissions in the early 2000s.
some sectors. The lack of a more
comprehensive systematic reform of pricing is
Despite becoming a major global trade power,
causing serious price distortion in some cases.
60% of China’s exports in 2006 were from
As the Chinese Premier Wen Jiabao urged China
to build a resource-saving, environmentallyfriendly, thrifty society2, energy efficiency is now
announced as the first priority of China's energy
policy in the 11th Five-Year plan (National
multinational ventures in China3. These ventures
account for the majority of high-tech and high
value-added exports from China (see Figure 4).
Overall, China’s exports are still dominated by
low technology products or the low value part of
2
Speech in his Government Work Report delivered in March 2006 at the annual legislative session of the National People's Congress
3
26th August 2007, Mr.Bo Xilai, Minister of Commerce of China, speech on the ASEAN Economic Ministers meeting.
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Figure 4: Chinese high-tech exports by ownership of
firms Source: OECD (2008)
medium-high technology products. Imports are
mainly high value added medium and high
technology products (Sachwald 2007), which is
almost the opposite to most of the technologybased economies like the UK, US, or Korea.
This acutely reflects the relatively low position of
the Chinese economy in the globalised market
and production value chain. There has been a
clear recognition within the Chinese government
that without structural change of the economy,
neither its short-term 20% energy intensity
reduction target nor the medium-term target of
quadrupling economy with double energy
demand by 2020 could be achieved (AndrewsSpeed 2009). Having been clearly emphasised
this message in the 11th Five-Year plan, it has
been reinforced by the Chinese government’s
recent economic stimulus package responding
to the global economic slowdown. Whilst the
Chinese government is trying to rebalance the
18
pattern of growth so that services, higher value
added industries and domestic consumption act
as more important drivers in the future
economy, the impact of these policies is yet
to be seen.
There are also marked changes in China’s
energy strategy. It is notable that the famous
phrase, “mainly based on coal”, despite its
existence in the 11th Five Year-Plan, is quietly
removed from the proposed China’s future
energy strategy in the 2007 China’s Energy
White Book (State Council 2007). At the same
time, the Renewable Energy Development and
Utilization Promotion Law (Renewables Law),
which came into effect in 2006, saw the
government’s ambitious renewable energy
development plan for 2020 outdated in less
than 2 years due to the renewables boom. The
Chinese government aims to raise renewable
energy’s share in China’s primary energy
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China’s Energy Transition Pathways for Low Carbon Development
demand to from 8% in 2006 to 15% in 2020.
This is reinforced by targets for 300 GW of
hydro power, 30 GW of wind power and
biomass, 40 GW of nuclear power and a modest
target for solar energy (NDRC 2007c). ). Many
of these targets seem likely to be overtaken by
rapid progress with implementation. Other
Chinese energy policy priorities include
diversifying the current energy mix, reducing
dependency on fossil fuels, particularly those
that are imported, mitigating environmental
pollution, and safety issues in energy production
and consumption. But all these ambitions will
remain as ambitions unless institutional
changes continue, market reform continues to
progress, and regulatory revisions are pursued.
The seriously short-staffed energy and
environment administrations in the Chinese
government will need more resources and a
coherent vision that is shared with powerful
economic departments.
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4.Future carbon emissions budgets
and trajectories for China
Scenarios are now widely used to investigate
potential future developments but they are
neither predictions nor forecasts (IPCC 2000).
Scenarios are often used for the assessment of
future developments that are either inherently
unpredictable or highly uncertain. This usually
means that a coherent set of scenarios is
developed to explore the key dimensions of
these uncertainties. Within this, each scenario
describes and analyses just one possible future.
A large number of scenarios have been
developed in recent years that are designed to
explore future emissions in greenhouse gases,
their potential impacts and abatement
strategies. One of the most notable scenario
exercises that focus on climate change is the
Intergovernmental Panel on Climate Change
(IPCC) Special Report on Emission Scenarios
(SRES) published in 2000 (IPCC 2000). This
includes four different narrative storylines that
represent different demographic, social,
economic, and technological driving forces. Their
environmental impacts are further developed to
examine the range of outcomes for greenhouse
gas emissions (IPCC 2000). 40 SRES scenarios
have been categorized in four large scenario
families (known as A1, A2, B1 and B2). Many
of the climate change and energy scenarios
developed ever since then are more or less
based on this scenario families.
There are a number of appraches to scenario
building. The ‘forecasting approach’ where
scenario exercises start with the present and
use simulation techniques, modelling or other
forms of projection to develop a set of potential
future trajectories or ‘storylines’, and the
‘backcasting approach’ where scenarios start
from a desirable future state using backcasting
techniques to develop their storylines. This is
used to understand the range of developments
and changes could occur to achieve the desired
future state.
20
There is also a distinction between ‘top-down
approach’ which starts with an overview of the
system and overarching principles, and then
move to specific details and ‘bottom-up
approach’ which aggregate specific details at
the micro level to build up the picture of overall
trends. The choice of a top-down or bottom-up
approach depends on the requirements of a
particular scenario set.
A number of scenario exercises have explored
potential long-term trends in energy and CO2
emissions in China and the UK. Three of these
which are particularly relevant to this report are
summarised below.
The first is the scenario analysis of China's
energy demand to 2020 by the Chinese Energy
Research Institute (ERI) in collaboration with the
Lawrence Berkeley National Laboratory (LBNL) in
the US using the LEAP 2000 model (hereafter
ERI 2020). The scenarios differ mainly in the
extent to which sustainable development
policies are implemented, the energy market is
liberalised and China adapts to WTO
membership and globalisation (Dai, Zhu et al.
2004). This scenario analysis only evaluated
some relatively modest possibilities for change,
and it soon proved to be outdated after China’s
energy demand surged from 2003.
The second is a set of long term emission
scenarios to 2050 developed by ERI using an
Integrated Policy Assessment model for China
(IPAC) (hereafter ERI 2050). Directly focusing on
carbon emissions, the scenarios did not
incorporate any international emissions or
climate targets. The superior Policy and
Technology (P&T) scenario leads to a 40%
reduction in CO2 emissions compared with the
Business as Usual (BAU) scenario. Although the
emissions reduction falls short of people’s
expectations today, it provides an indication of
China’s large emission reduction potential.
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China’s Energy Transition Pathways for Low Carbon Development
The third set of scenarios were developed in the
Tyndall Centre’s projects Decarbonising the UK
(Anderson, Mander et al. 2008) and the
subsequent Living Within a Carbon Budget
(Bows, Mander et al. 2006). A cumulative
emissions approach is adopted in the latter to
give a cumulative CO2 emissions budget for the
UK. The scenarios are consistent with stabilising
the global atmospheric CO2 concentration at
450ppm, with different assumptions for energy
supply, energy demand, efficiency improvement
and sectoral changes. One of the most
important features is the two distinguished
approaches to reduce carbon emissions, either
by reducing energy intensity of the economy, or
by reducing carbon intensity of energy supplies.
Choosing a global budget
As CO2 stays in the atmosphere for more than
100 years, emissions from many decades ago
will have a similar impact on the climate as
today’s emissions. Therefore it is reasonable to
investigate the possibility of limiting cumulative
emissions of CO2 over time rather than simply
analysing specific percentage cuts in emissions
by specific dates (Anderson, Bows et al. 2008).
As noted earlier, this approach has already been
used by the Tyndall Centre in its most recent
scenarios for the UK (Bows, Mander et al.
2006).
Following on from this, our project analyses
China's cumulative emissions of CO2 over the
21st century. We chose a cumulative emissions
Our carbon emission scenarios for China use
budget for China that is commensurate with a
backcasting combined with a chosen cumulative target for the stabilisation of CO2 concentrations
emissions budget. This is similar to the method in the IPPC Fourth Assessment Report (AR4)
used for Living within a Carbon Budget. The
Working Group 1 report (IPCC 2007a). This
following section will first discuss how the
states that global cumulative emissions for this
cumulative emissions budget has been
century should be no more than 490 GtC
developed for China for the 21st Century, and
(gigatonnes of carbon = 109 tonnes) in order to
show how a range of possible emissions
stabilise the CO2 concentration at 450 ppm.
pathways were developed from now to 2100.
Given the assumptions for other greenhouse
These certainly do not describe all possibilities – gases in the IPCC report, this is roughly
but are designed to help explore some key
equivalent to a concentration for all greenhouse
dimensions that have been identified in two
gases of around 550 ppm CO2 equivalent (CO2e)
stakeholder workshop discussions that were
(IPCC 2007b). According to the report, this is
held in Beijing and London. Each pathway has
likely to result in a global average temperature
an associated storyline that describes changes
rise in the range 1.9-4.4°C above pre-industrial
in the economy, technology, governance and
levels, with a mean of 2.9°C (IPCC 2007a). This
society. These changes affect the energy
stabilisation level is almost the upper level that
consumption and carbon emissions of different
is recommended in the Stern review (Stern
sectors such as households, transport, power
2006) between 450-550 ppm CO2e, higher
generation and industry. It is important to note
than the latest figure of 500 ppm CO2e he
that we have adhered to the principle of making suggested in June 20084. However, more recent
no judgement of the most desirable or likely
analysis by our Tyndall Centre colleagues
scenario in generating these storylines. However, suggests that these stabilisation levels require
there are clear policy implications of these
much more effort from the developed countries
scenarios (see Section 7 of this report) which
than is currently being contemplated. On a
tend to favour some scenarios over others.
4
See http://www.guardian.co.uk/environment/2008/jun/26/climatechange.scienceofclimatechange?gusrc=rss&feed=environment
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report, delays in action by the world’s
economies mean that the allowable carbon
budget is being used up, leaving progressively
less emissions for future years. A practical
problem with using lower global budgets is that
There are other options that we could have used
they make it more difficult to develop a
with different concentration targets as the 2007
plausible global emissions pathway. Within this,
IPCC projection has a high chance of pushing
pathways for individual countries including China
global temperatures above 2°C. One could argue
can be very challenging and difficult to analyse.
temperature increases above this level are
For example, the rates of decrease in emissions
much more likely to lead to more serious,
would either have to be very high (with
irreversible impacts (European Commission
emissions beginning to fall very soon) – or
2007). To have a much higher probability of
alternatively, China would need to be allocated a
confining temperature increases within 2°C, a
larger share of global cumulative emissions.
smaller global cumulative emissions budget
would be necessary. For example, Meinshausen For these reasons, we have chosen a larger
predicted the world could emit around 400 GtC global emissions budget. This is not to say that
in this century with about 50% probability of an we agree to accept a higher risk of temperature
average temperature rise of over 2°C. This would rise, but to illustrate the challenging task we
face. With a higher chance of causing severe
require stabilising GHG concentration in the
impacts, it should be recognised that adaptation
atmosphere at 450 ppm CO2e in 2100
to these impacts will also be much more
(Meinshausen 2007). In an earlier prediction,
important than under scenarios where global
Meinshausen suggested even lower cumulative
emissions are more constrained. As this paper
emissions of 387 GtC over this century, which
would lead to a less than 30% probability of 2°C will go on to show, the possible pathways for
China’s emissions under this larger global
rise. In this second case, the concentration of
greenhouse gases would have to peak at around budget are still challenging enough.
Furthermore, this reinforces the calls by many
475 ppm CO2e before declining to and
scientists and indeed the Chinese government
stabilising at 400 ppm CO2e (Meinshausen
that adaptation to serious climate change
2005). There are also other suggestions like
should receive much more attention.
that by Jim Hansen, senior climate scientist of
NASA, who argues for stabilising at 350 ppm
Which apportionment method?
CO2 or less in the long term is necessary “to
Although the latest IPCC report recognises the
avert disastrous pressures on fellow species and importance of focusing on cumulative emissions
large sea level rise” in his famous letter to
(IPCC 2007a), there is no consensus on how to
President Obama5.
apportion these emissions among countries.
global basis, this effort needs to go well beyond
the emissions reductions of 2.5–3% per year
that is suggested by the Stern Review and Defra
(Anderson, Bows et al. 2008).
This illustrates one of the difficulties of
developing carbon emissions scenarios: the
science of climate change, and the urgency and
extent of action required to meet stabilisation
goals are continuously evolving. During the time
taken to conduct the research that led to this
5
22
This is one of the most controversial and
debated issues in the climate change
negotiations, particularly with respect to a
possible ‘post 2012’ international regime
(Böhringer and Welsch 2006). There has been
significant discussions in the climate change
His letter “Tell Barack Obama the Truth – The Whole Truth” is available at
http://www.columbia.edu/~jeh1/mailings/20081229_Obama_revised.pdf
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China’s Energy Transition Pathways for Low Carbon Development
literature of different approaches to this
question (Rose and Stevens 1993; Grubb
1995; Ridgley 1996; Rose, Stevens et al.
1998; Gupta and Bhandari 1999; Metz 2000;
Leimbach 2003). Two of them are briefly
discussed here, the equalisation of emissions
per capita and the equalisation of emissions
per unit of GDP.
The equal emissions per capita approach has
been developed following the concept of
equality using a Contraction and Convergence
(C&C) mechanism developed by the Global
Commons Institute. The basic principle is to
entitle the same level of carbon emissions to
each person in the world. Under this approach,
emissions in many developing countries would
be allowed to rise from current levels whilst all
developed countries would need to reduce
emissions. Some have pointed out that this
approach is not as equitable as it seems since
it fails to address different personal needs that
are associated with existing natural and cultural
living conditions (Leimbach 2003).
The second approach focuses more on global
economic growth and efficiency. It aims to
equalise carbon emissions per unit of GDP
generated in different countries. This
emphasises on equal carbon productivity and
would therefore provide a strong motivation for
countries to try to decouple economic growth
and carbon emissions. However, it provides
developed countries with some advantages as
they usually have higher energy efficiency level
hence a better starting point. For some, this is
"equivalent to penalising the developing for their
later progress" (Rose 1992). Gupta and
Bhandari (1999) proposed an approach that
tries to combine the per capita and carbon
intensity approaches.
We decide to use these two apportionment
approaches to generate the boundary for
China’s cumulative emission budget in the 21st
century in our scenarios. It is worth noting that
we do not expect actual emissions to conform
to these budgets. We have simply used them as
a way to generate a distinctive range of
cumulative budgets for China in the 21st
century, which will have significantly different
implications. The global shares of cumulative
emissions for some major emitters in the 21st
century under the two apportionment
approaches are shown in Figure 5.
Figure 5: Shares of cumulative emission under two
approaches
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•Contraction and convergence (C&C) based on
equal carbon emission per capita is used to
generate budgets for two of our four
scenarios. Under this approach, global
emissions per capita will converge by 2050
and then contract at the same rate to the
stabilisation level. Population change in
different countries will not affect their global
share after 2050.
•Contraction and convergence (C&C) based on
equal carbon emissions intensity of GDP
Purchasing Power Parity (PPP) is used for the
other two scenarios. Similar to the first one,
this approach converges to same level of
carbon emissions per unit of GDP PPP,
referring to the same carbon productivity
across the globe. Then emissions will reduce
at the same rate globally to the stabilisation
emission level. Similarly, changes in GDP
growth after 2050 will have no impact on
each nation's share.
Cumulative emissions budgets for China
It is clear that the two critical factors that will
determine China's cumulative emissions budget
within this analysis are the relative growth rates
of population and GDP.
Within all scenarios, the population growth of
China in the four scenarios follows the median
population projections from the United Nations
(UN 2005). It states that China's population will
slowly increase at around 0.4% p.a. from 1.3
billion in 2003 to 1.44 billion in 2030 before
declining. China's population will be overtaken
by India around 2035, whose population
increases twice as fast as China between 2000
and 2050. In 2050, China's population will be
around 1.4 billion while India hits 1.5 billion,
with a total 9 billion world population. Using
these figures and the global cumulative
24
emissions budget discussed above would give
China a budget of 70 GtC over the 21st
Century.
The GDP data used in this research is based on
a purchasing power parity (PPP) approach. This
equalises the carbon productivity of each
country, taking into account differences of price.
The national data of GDP PPP is taken from the
World Development Indicators 2006 (World
Bank 2006). Predictions of economic growth
are based on estimates in the IEA’s World
Energy Outlook 2006 for 2003-2030 (IEA
2006a), and from the IEA's Energy Technology
Perspectives 2006 for 2030-2050 (IEA 2006b).
Note that GDP growth is only fixed while
allocating China's cumulative emission budget.
The actual rates of GDP growth will then
become a variable in each scenario to
elaborating the different pathways of emissions
over time. This approach allows a cumulative
emissions budget of 111 GtC for China in the
21st Century.
From budgets to trajectories
Whilst these two methods have provided two
distinct carbon budgets for China, the scenario
development process still includes significant
room for manoeuvre. We did not expect China’s
annual carbon emission to follow exactly the
C&C approach. The pathway taken by China’s
annual emissions over time is fully flexible in our
scenario as long as the cumulative emissions
budget is not exceeded and the annual
emissions in 2100 are the same as the annual
emissions at stabilisation. In other words, the
two chosen apportionment approaches do not
constrain China's actual emission pathways over
time. This leaves scope for our scenarios to
reflect different assumptions about economic
development, energy use and emissions.
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Annual Emission (tC)
China’s Energy Transition Pathways for Low Carbon Development
Figure 6: Carbon emissions in China since 1990
and projections by IEA and ERI
The next step is to outline four carbon emission
pathways over time that are consistent to these
two budgets. Following discussions at our
second stakeholder workshop in London, we
used medium-term emissions pathways that
have already been developed by Chinese and
international organisations as the first step
towards decarbonisation in China. Our analysis
will then see whether these pathways are
compatible with the carbon budgets for the
entire century that were outlined above. The two
medium-term pathways we have chosen are the
International Energy Agency’s alternative
scenario in the World Energy Outlook (WEO)
2007: China and India Insights (IEA 2007a) and
scenario B of ERI 2020 (Dai, Zhu et al. 2004).
6
The latter pathway was regarded at that time as
the most likely scenario and incorporates an
official Chinese government target of
quadrupling economy size between 2000 and
2020, whilst energy demand just doubles. Each
of these two pathways can be combined with
both of our cumulative budgets to yield a total
of four scenarios. The two medium-term
pathways are illustrated in Figure 6 along with
China’s historical emissions from the dataset of
the Carbon Dioxide Information Analysis Center
(CDIAC) between 1990 and 2004. Inevitably the
observation data is not entirely up to date as we
used the 2004 data6 as the last year of
observation. China’s carbon emissions have
continued to rise in the last few years.
CDIAC now has updated data of China’s Fossil-Fuel CO2 Emissions for 2005,
but it is too late for us to incorporate the update in the scenarios.
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Figure 7: Carbon emissions in China: Historic data,
projections and Tyndall scenarios
It therefore should be borne in mind that the
actual challenge could be even greater than that
revealed by the scenario analysis because more
of the emissions budget has already been used
since 2004.
decades. We have therefore used this pathway
to illustrate the impact of relatively incremental
changes on China's economy and energy system
until 2020.
The original basis for our second medium term
pathway, ERI's scenario B, was described as
The IEA's alternative scenario (IEA 2007a) for
China takes into account the energy and climate "a detailed interpretation of the sustainable
economic and energy development for the 10th
related policies that have been considered by
Five-Year Plan and the following 10 years"
the Chinese government. This scenario
(Dai, Zhu et al. 2004, page VII). However, when
"illustrates how far policies currently under
it was produced in 2004, the ERI scenarios did
discussion could take us and assesses their
not anticipate the sudden surge of China's
costs" (IEA 2006a, page 49). However, the
energy demand and carbon emissions,
pathway described by this alternative scenario
particularly after 2003. This has occurred as a
does not show any dramatic change in China's
result of rapid growth in industrial sectors and
carbon emissions growth during the next two
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China’s Energy Transition Pathways for Low Carbon Development
a structural shift within industrial sub-sectors
towards heavy industries such as steel and
cement (Lin, Zhou et al. 2008). As a result,
the 2010 estimate for carbon emissions in this
scenario was already exceeded in 2004.
However, despite that, we use their emissions
estimate for 2020 to derive a medium-term
pathway that employs a rapid and significant
change in China's industrial and economic
structure, and the consequent carbon
emissions. This is a feature that participants in
our first stakeholder workshop in Beijing were
particularly keen to explore. It assumes a brake
in the expansion of heavy industry and reduces
overall energy intensity quickly. Derived from the
medium-term target of quadrupling economy
with doubling of energy demand between 2000
and 2020, this medium term pathway is also in
line with the Chinese government's short-term
target of reducing energy intensity by
20% by 2010.
A second point is that each scenario includes
a peak in emissions followed by a declining
trajectory to remain within its carbon budget.
This decline is designed so that the pathway is
consistent with the scenario’s cumulative
emission budget and reach the stabilising
annual carbon emission level in 2100, and the
rate of decline for each is determined by how
much of the budget has been used before the
peak.
Finally, the peaking years are between 2020
and 2030 in order to balance practicability and
flexibility. A peak earlier is thought to be
unfeasible while a later peak would make it too
difficult to remain within the cumulative
emission budgets. Even this choice of emissions
peak necessitated some adjustment to our
carbon budgets. In the case of the mediumterm pathway described by the IEA with an
emissions peak in 2020, it was not possible to
follow this pathway while staying within the 70
GtC cumulative budget for the whole century
For China’s annual carbon emission pathways,
the trajectory of China’s carbon emissions starts due to the large emissions accumulated before
the peak. We therefore increased the budget in
from CDIAC data for the period 1990-2004,
this scenario to 90 GtC just to ensure the
then the two medium term pathways are
followed until 2020 at which point each divides scenario could still be feasible. The stabilisation
into a further two pathways – giving us our four level at the end of the century remains
unchanged. The additional emissions budget
scenarios. All four pathways are
under this scenario could imply a possibility of
shown in Figure 7.
delayed international climate agreement, or
Before describing each individual scenario
delayed action to curb China’s carbon emissions
pathway in more detail, it is worth commenting
due to a more incremental approach.
on some of the choices that have been made
here. First, the medium-term pathways have
only been followed to 2020. This maximises the
chance that the scenarios will remain within
their carbon budgets and also leave room to
apply different features to each scenario.
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5.Trajectories in detail: implications
for future energy pathways
Crucial to each scenario’s carbon emissions
pathway is the story that implicitly lies behind
the changes in emissions. This will aid our
detailed elaboration of the pathways, and
illustrate how annual emissions from different
sectors of China’s economy will fit within the
overall trajectory of each scenario. Table 1
summarises the key features of each story –
including the year in which carbon emissions
peak, the innovativeness and openness of the
future Chinese economy, and the social
preference between efficiency and equity. A
narrative storyline is provided for each scenario
which depicts the key trends in the scenario.
i.e. to what extent income disparity is addressed
as a more serious issue than income growth.
The first distinction lies in the nature of
innovation that shapes the future Chinese
economy. We use these features to explore the
possible implications of Chinese government’s
current efforts to rebalance the sources of
China’s economic growth (Wen 2008). This is a
particularly evident change in the 11th Five-Year
plan for national economic and social
development since 2006, which has a strong
focus on promoting science and technology
innovation to boost future economic growth.
Scenarios 1 and 2 describe futures in which
Among various differences that differentiate the rebalancing has been more successful and more
rapid – whilst in scenarios 3 and 4 this process
four scenarios, one of the most important
has been slower and less successful. The first
distinctions is the speed and extend to which
two scenarios are characterised by more radical
the current Chinese economy is transforming
change, and a more pronounced shift away
into a much more innovative and knowledge
from heavy and conventional industries towards
based economy that has strong and dynamic
more value-added manufacturing and the
high value-added industries and services.
Another key distinction is the societal preference provision of a service based economy.
between social equity and economic efficiency,
Cumulative
budget
Medium-term
pathway
Year of
emissions peak
Scenario 1 (S1)
Scenario 2 (S2)
Scenario 3 (S3)
Scenario 4 (S4)
70 GtC
111 GtC
90 GtC
111 GtC
ERI 2020
ERI 2020
IEA
IEA
2020
2030
2020
2030
Population
growth rate
Same in all scenarios following the UN 2004 prediction
Nature of
innovation
highly innovative,
tendency for radical
technical change
strong science and
technology advance;
but slower diffusion
significant technical
change – cumulative,
incremental process
incremental
innovation, mainly in
legacy industries
Equity and
Efficiency
attitude
strong preference for
social welfare and
equity
globalised market and
economic efficiency
driven
inward investment
and against
communal disparity
focus on market and
growth, individual
success
Table 1: General characteristics of the Tyndall
Centre scenarios
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Trillion $US (2000)
China’s Energy Transition Pathways for Low Carbon Development
Figure 8: Growth of total Gross Value-added of
Chinese economy in each scenario
A major difference between scenario 1 and 2,
and between scenario 3 and 4, is the attitude
to disparity within the future society. With a
communal attitude supporting equal rights and
opportunity within the community, scenario 1
and 3 are societies with stronger preference for
public welfare and inward investment, and with
less income disparity than scenario 2 and 4. As
China’s economy rapidly grows over the last two
decades, income disparity and the equity issues
are becoming ever more acute. The most
commonly used inequality indicator, the Gini
index, has risen quickly in China since the
economic reform. China has an index of 46.90,
positioned at 93 out of the 126 countries
surveyed (UNDP 2008). Despite the criticism of
the general accuracy of the Gini index’s, at its
very least this figure gives a hint of China’s
deteriorating income disparity over the last two
decades. Together with environmental issues,
income disparity is believed to be a main source
of increasing social unrest and an imminent
instability threat. So it will stay high on the
Chinese government’s agenda. It has been
particularly pointed out in the Chinese President
Hu Jintao’s keynote report at the 17th National
Congress of the Communist Party of China in
2007 as well as in the 11th Five-Year Plan.
These differences described above have shaped
the four scenarios to make them very distinctive
from each other, and hence no scenario is
intended to be claimed as ‘the best’.
Nevertheless, the four scenarios are in general
divided by the two critical issues that challenge
China’s future development path, innovation and
income disparity. Each of the scenarios
represents a particular combination of potential
responses that China might implement to
address these two issues. It is not up to the
authors, nor is our intention to suggest the best
development path, but to help inform the
potential economic, energy, environmental and
social implications of each choice, particularly
those of global importance to the global
challenge of combating climate change.
Cross-scenario results
Economic Growth
With different carbon emission and economic
growth trajectories, these four scenarios lead to
different GDP growth of Chinese economy. The
annual GDP growth rates between 2005 and
2050 on average vary between 4.8% in S4 and
5.9% in S2. Over 45 years time, this leads to a
rather large difference in GDP size, as shown in
Figure 8. The economy in S2 will be more than
13 times large as that of 2005, while in S4 it
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Figure 9: Economic structure of current major
OECD countries
will be just 8.24 times larger. The size of the
economy is measured by the total Gross Valueadded (GVA) from agriculture, industry and
service sectors combined, which thereafter is
used as a proxy for GDP. The Chinese economy
will increase from $1.89 trillion (constant 2000
US$) in 2005, to $15.54 trillion in S4 and
$24.86 trillion in S2 respectively. S1 has similar
GVA size as S4 while S3 ranks in the middle.
Economic Structure
One of the main reasons behind the different
size of the Chinese economy in each scenario is
the variance in the composition of each
economy. The economy in the future is driven by
the progress of science and technology
advances as well as the social preferences. In
common with many of the major developed
countries, (see figure 9) services and commerce
will eventually become the largest economic
sector, accounting for between 60% and 80% of
GDP in our scenarios. But there is also major
difference in the structure of industries. The
whole industry is divided into four subcategories: heavy industry, conventional industry,
high technology and valued added (HTV)
30
industry and the energy industry that mainly
involves electricity generation. The heavy
industry includes iron and steel, petrochemicals,
non-ferrous metals and minerals etc., while the
conventional industry includes manufacturing
industries that are not energy intensive nor high
value-added.
The composition of the Chinese economy in
each scenario is illustrated in Figure 10. Service
and HTV industry are the sectors that would
enjoy the largest growth from now to 2050, but
the growth varies across scenarios. S1 and S3
have the largest share of the economy
contributed by the service and commerce
sector: about 75% and 78% respectively.
Industry overall accounts for 20% in these two
scenarios and between 3 and 5% is from
agriculture. S2 and S4 will see a larger share
from industries, but with different compositions.
With significant progress in science and
technology innovation and an innovative society,
HTV industry will account for 75% of all industry
in S2 in 2050, while in S4 it is more equally
shared by heavy, conventional and HTV
industries. Services will account for 65% to 70%
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China’s Energy Transition Pathways for Low Carbon Development
S1
100%
Agriculture
80%
Service
60%
Ener Ind
40%
HTV Ind
20%
Conv Ind
0%
Heavy Ind
2005
2010
2020
2030
2040
2050
S2
100%
Agriculture
80%
Service
60%
Ener Ind
40%
HTV Ind
20%
Conv Ind
0%
Heavy Ind
2005
2010
2020
2030
2040
2050
S3
100%
Agriculture
80%
Service
60%
Ener Ind
40%
HTV Ind
20%
Conv Ind
0%
Heavy Ind
2005
2010
2020
2030
2040
2050
S4
100%
Agriculture
80%
Service
60%
Ener Ind
40%
HTV Ind
20%
Conv Ind
0%
Heavy Ind
2005
2010
2020
2030
2040
2050
Figure 10: Different economic structure of each
economy
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of the economy in these two scenarios and 3%
for agriculture. However, with the lowest service
share (<65%) and largest industry share (33%),
S4 is different to the other 3 scenarios and all
today’s major developed economies. This
reflects some consideration that given relative
size of China, it is possible that China will be
unable to largely rely on outsourcing of
manufacturing to other less developed countries
in the future - at least not as much as the
current OECD countries have outsourced to
China. There will be also much less population
in developing countries to support these
industries after today’s emerging economies
turn into developed economies. Therefore a
large share of heavy and conventional industries
will remain in China within scenario 4 to support
domestic needs.
Energy Demand
Mtoe
Similarly, there is also wide variance in total
primary energy consumption (TPEC) within the
four scenarios, as shown in Figure 11. S1 has
the least energy consumption in 2050 among
the four, at 1886 million tonnes of oil equivalent
Figure 11: Total primary energy consumption of each
scenario from now to 2050
32
(Mtoe) compared with 1638 Mtoe in 2005. S4
will consume 3232 Mtoe. However, these levels
of energy consumption do not stem from linear
growth in any scenario, with growth, decline and
stabilisation at different stages. Due to different
roles that research and development,
demonstration and diffusion (R&DDD) of low
carbon technologies has in reshaping the
general economy and energy system in each
scenario, the picture is slightly different when it
comes to final energy demand. S2 instead
overtakes S4 and ends up with a higher final
energy demand in 2050 due to less energy
transformation and transition losses. The final
energy demand in S3 also becomes closer to
that of S1 for the same reason.
Energy Structure
Apart from the variety in demand levels, the fuel
sources of TPEC are also very different in each
scenario and over time. Figure 12 shows the
energy mix evolution in each scenario. Starting
from the same point in 2005, differences can
already be seen between S1&S2 and S3&S4
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China’s Energy Transition Pathways for Low Carbon Development
Figure 12: comparison of primary energy demand
of scenarios in 2020 and 2050
following the two different medium-term
pathways. In S3 and S4, renewables managed
to provide 15% of total primary energy
consumption in 2020, as planned by the
Chinese government, while S1 and S2 will
increase the share to 20% due to a stronger
promotion and development of renewable
energy. 2050 will see renewable energy playing
a much bigger role in China’s energy system,
but will also see a more diverse energy
structure. Coal will reduce from more than 60%
in 2005 to around 30%, while oil and gas
continue their steady growth in the energy mix.
Nuclear has the most diverse picture, nearly
negligible in S2 and more than 12% in S3. This
reflects a choice between advanced renewables
such as wind and solar PV and nuclear for low
carbon energy supply. But the scenarios show
that it is difficult for nuclear to play a major role
in the Chinese energy system, even with a huge
expansion that dwarfs the experience of French
nuclear power. The details will be elaborated
more in the specific results of each scenario
later in this section. Even though each scenario
leads to a similar level of renewables in the
energy mix, there is still large variance in
technology choice within the renewable options,
as well as in the way they are deployed (e.g. in
centralised facilities and/or small scale microgeneration).
Power Generation
The power generation sector has been the
fastest developing sector in China since 2000.
Although largely dominated by coal, with power
generation capacity more than doubling in just
8 years, there is a great deal of room within the
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GW
GW
GW
GW
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Figure 13: Power structure of each scenario over time
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China’s Energy Transition Pathways for Low Carbon Development
scenarios for renewable sources of electricity to
grow. The evolution of power generation capacity
in each scenario reflects the variable electricity
demand for economic growth, but also indicates
our judgements about technology choice within
the storyline of each scenario. The details are
shown in Figure 13. As discussed above, S2 will
have significant progress in both wind and solar
PV, which are of comparable size to coal fired
power generation by 2050. Wind power will
increase at about 10% p.a. or 16 GW every year
between 2010 and 2050, and 16% p.a. for
Solar PV during the same period. This figure is
15% higher than the high range development
target in the China Wind Power Report 2008 (Li,
Gao et al. 2008) but we believe it is consistent
with the innovative storyline of S2. S3 sees
significant developments in nuclear power
capacity to become the second largest source
of electricity. The 400 GW nuclear power
generation capacity deployed by 2050 within S3
contributes up to 30% of the grid electricity. S1
has the smallest power generation capacity
among the four, with only about 600 GW from
coal and 400 GW each from wind, solar PV and
hydro. As we mentioned in earlier sections,
China’s coal fired power capacity already
reached 600 GW in the end of 2008, therefore
transitioning to S1 would require significant
plant retirements to offset new capacity
additions. S4 instead has the largest coal fired
power capacity, over 1200 GW in 2030 and
then a decline to 1086 GW by 2050. Apart
from that, S4 also includes a large portfolio of
renewable electricity generation technologies
due to its large electricity demand. Among the
four scenarios, it has the largest generation
capacity in coal, bio/waste and wind, and the
second largest generation capacity in hydro, gas
and nuclear. Unsurprisingly a large amount of
coal and gas powered generation has to be
7
equipped with carbon capture and storage
(CCS) so that the carbon emissions could be
abated to comply with the emissions budget.
This is almost as critical for S3 due to its
smaller budget but S4 faces the more
challenging task to bring about a much quicker
and larger deployment in its massive power
system.
Transport
The differences among the four scenarios are
less prominent in the transport sector, as
China’s transport in general is still well behind
the level of developed economies. Even for the
widely-known story of China’s fast growing
private car ownership, the national average is
only 17 cars per 1000 people (IEA 2007a) in
2005 compared with over 700 in the United
States and 400 to 550 in European countries
(IEA 2007b) in 2004. Within China, there is a
big variance between rich coastal cities and the
inland less developed provinces. Both domestic
and international aviation have experienced
some dramatic increases over the last few
decades. However they are still lagging behind
the booming demand for mobility that has been
increasing with income over the same time,
particularly because of the laggard
infrastructure. With similar size of territory or
less, China had 186 major airports7 in 2007,
compared with 415 in the United States, and
457 in the European Union (CIA 2008). It also
has much less extensive railway infrastructure,
at 75438 km in 2007?only one third of that in
the European Union or United States
(CIA 2008).
Therefore, there is unsurprisingly significant
growth in almost all modes of transportation in
the four scenarios, although the exact pattern
varies depending on the preferences of each
scenario. Variations reflect preferences between
public and private transport, between railways
We only counted the airport with paved runways longer than 2438 m so to avoid counting
in private and military airports, but this cannot be guaranteed.
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12%
14:48
8%
Page 36
7%
6%
2%
13%
52%
Dom Av i
Int Av i
Dom Ship
Int Ship
Railway
Priv Road
2050 S1
12%
and private cars, etc. The 2050 fuel
consumption from transportation in each
scenario is shown in Figure 14. This results from
combined drivers of mobility growth, technology
advance, and transportation preference. The
unique feature of each scenario is still obvious.
S1 has high percentage of public road transport
and S3 has more from railways. Although both
reflect a strong preference for public transport,
public road transport works better in S1 in
which most people are living in a large number
Publ Road
2050 S2
11%
12%
18%
13%
7%
19%
3%
6%
3%
21%
29%
19%
27%
Dom Av i
Int Av i
Dom Ship
Int Ship
Railway
Priv Road
Publ Road
Dom Av i
Int Av i
Dom Ship
Int Ship
2050 S3
10%
12%
14%
Railway
2050 S4
Priv Road
Publ Road
11%
11%
12%
6%
6%
4%
4%
42%
30%
15%
23%
Dom Av i
Int Av i
Dom Ship
Int Ship
Railway
Priv Road
Publ Road
Figure 14: Energy demand of transportation
in each scenario
36
Dom Av i
Int Av i
Dom Ship
Int Ship
Railway
Priv Road
Publ Road
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China’s Energy Transition Pathways for Low Carbon Development
of small cities and countryside areas while
railways are better for the majority population
in S3 that lives in a few large cities and a
number of medium cities. The population
distribution and density patterns are discussed
in more detail in later in this section. S2 has a
similar transportation system to S1, only having
a bit more private road transport. But note that
this is the scenario with the highest economic
growth and highest mobility, so the public
transport system including railways will be much
larger than that in S1. S4 has the largest share
of private road transport and a relatively weak
public transport system, and as a result the
transport system accounts for nearly 60% of
S4’s total carbon emissions in 2050.
share of coal to less than 7% by 2030 and
totally phases it out by 2050. The change of
household energy use is shown in Figure 15.
The development of micro renewables is much
more complicated than is shown here.
Traditional biomass is declining all the time at
different rates in the four scenarios. At the
same time, other renewable energy sources
including solar water heaters, small scale offgrid combined heat and power (CHP), advanced
biomass and biogas use, more advanced solar
PV panels and roof-top wind turbines are all
developing quickly in each scenario at various
rates and with various priorities. As a result, the
micro renewable energy use will increase in the
first two decades from now to 2030, although
Household
its share has fallen from 65% to 30-50% during
Household energy use included large amounts
the same time. Between 2030 and 2050, the
of micro renewables in 2005. However these
micro renewable energy use declines gradually
are not the “modern renewables” such as solar along with overall household energy demand in
and wind. The majority is solid biomass like fuel all scenarios as a result of the following factors.
wood. Coal still persists as an important fuel
First the household energy demand will start to
source in household energy use despite its use plateau and decline with successful demand
having been banned in many cities in China.
side management (DSM) and continuous energy
Grid electricity has increased exponentially over efficiency improvements in household energy
the last two decades with an ever rising
use. Second is the continuing decline of the
electrical appliance ownership in China. The
use of solid biomass, coal and oil in
rising number of air conditioners in coastal
households, which becomes negligible by 2050.
areas was partly responsible for the electricity
The third is the wide deployment of advanced
shortages in 2004 and in subsequent summers. micro renewable technologies. Energy used in
District heating is another important form of
the household is more and more generated
household energy.
within the house or local community, which in
The four scenarios include quite different levels turn increases efficiency and reduces losses.
For example in S1, the electricity generated
of household energy demand, but the general
from micro renewables in 2050 will account
trend is similar. There is a strong growth in grid
electricity in all scenarios, as well as a moderate for 37% of total electricity use in the household,
and micro renewables will contribute 45% of the
increase in the share of gas together with a
total energy use in the household.
quick decline of coal use, which reduces the
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2005 Household Energy Dem and
400
Mtoe
300
200
100
0
S1
Grid Elec
Coal
S2
Oil
Gas
S3
Micro renew
Hydrogen
S4
Sold Heat
2030 Household Energy Dem and
1000
Mtoe
800
600
400
200
0
S1
Grid Elec
Coal
S2
Oil
Gas
S3
Micro renew
Hydrogen
S4
Sold Heat
2050 Household Energy Dem and
800
Mtoe
600
400
200
0
S1
Grid Elec
Coal
S2
Oil
Gas
S3
Micro renew
Figure 15: Fuel sources of household energy demand
38
Hydrogen
S4
Sold Heat
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China’s Energy Transition Pathways for Low Carbon Development
Industry
In S1 and S2, science and technology
Industry is the largest sectoral energy consumer innovation will significantly boost the
in China, therefore its structural change has very development of HTV industry. As its GVA
significant implications for China’s future energy increases over time as discussed in an earlier
consumption and consequent carbon emissions. section, the energy demand of HTV industry will
also increase fast. It will increase from about 60
This is particularly the case now that heavy
Mtoe to 120 Mtoe in S1 by 2030, and to 180
industries account for nearly 60% of total
Mtoe in S2. On the contrary, the figure is less
industrial energy demand, while industry as a
than 100 Mtoe in S3 and S4. By 2050, the
whole accounts for more than two thirds of
China’s total energy demand (NDRC 2007b). In HTV in S2 will increase to account for nearly
half of the total industrial energy demand while
common with their GVA, the energy demand of
various industries are significantly different. This it generates more than 75% of total industrial
distribution of demand is strongly related to the GVA. It also accounts for one third of the
structural change of industry, which is illustrated industrial energy demand in S1, but only less
in Figure 16. In 2005, the majority of energy is than 20% in S3 and S4. Instead, heavy industry
is still dominant in the industrial energy demand
consumed by heavy industry, followed by the
in these two scenarios, S4 in particular. 60% of
energy industry and conventional industry.
2030 Industry Energy Dem and
2005 Industry Energy Dem and
60%
60%
40%
40%
20%
20%
0%
0%
S1
Heav Ind
S2
Conv Ind
S3
HTV Ind
S1
S4
Ener Ind
Heav Ind
S2
Conv Ind
S3
HTV Ind
S4
Ener Ind
2050 Industry Energy Dem and
60%
40%
20%
0%
S1
Heav Ind
S2
Conv Ind
S3
HTV Ind
S4
Ener Ind
Figure 16: Change of industrial energy demand over time
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each member of society has been preferred to
economic efficiency and income growth.
Therefore to some extent the low GVA size and
energy consumption in S1 is a choice rather
than result (See Box 1). China's carbon
However, these trends occur against a
emissions will peak in 2020 and then reduce to
background in which the share of energy
comply with the annual emissions budget in
demand consumed by industry is declining in all
2100. Nevertheless, GDP of S1 in 2050 will be
scenarios as energy consumption in household
8.7 times as large as that in 2005. Carbon
and transportation grows much faster. By 2050,
emissions will peak in 2020 at 1724 MtC
the household and transportation sectors will
(megatonnes of carbon = 106 tonnes), about
both account for 30-35% of total final energy
24% higher than the 2005 level, then quickly
consumption, similar to the share of industry.
decline to only 30% of the 2005 level by 2050,
This is a similar energy consumption structure to
at 435 MtC. Energy intensity of the Chinese
current OECD countries. The fact that all four
economy will be reduced to 50% lower than the
scenarios lead to similar energy structures by
2005 level by 2020, and is further reduced to
2050 illustrates the significant future
13% of the 2005 level in 2050. Carbon
importance of controlling energy demand growth
intensity of GDP will be reduced even more to
in the household and transportation sectors.
only 4% of the 2005 level due to
This can be done by avoiding energy lock-in
decarbonisation. The economy is highly
effects due to low housing quality and efficiency
innovative because of a strong promotion and
standards, poor public transport plans and high
pursuit of science and technology. With a quick
carbon footprint lifestyle. Without starting to
and radical economic structural change, the
address these issues now, they will become
service sector becomes dominant, accounting
stubborn obstacles to reductions in energy
for 60% of the overall economy by 2020,
demand in the future, and severely jeopardise
compared with 42% in 2005, and it further
efforts to remain within the cumulative
increases to 75% in 2050. This is similar to the
emissions budgets used in our scenarios.
share of services in today’s UK economy (Office
Scenario Specific results
for National Statistics 2007). But agriculture will
Scenario 1: 70 GtC 2020
still account for nearly 5% in 2050 compared
Highly innovative, domestic driven and service
with 1% in the UK due to higher contribution
dominance economy; strong preference on
from rural development. Overall, the society is
social equity
quite stable and harmonised with reduced social
and economic disparities and comprehensive
This scenario has the smallest cumulative
social welfare coverage.
emissions budget for China based on an equal
per capita approach. In common with the
approach used to allocate the cumulative
carbon emissions, the society in this scenario
also gives more priority to social equity and
welfare among the people. Addressing
disparities and ensure equal opportunity in
public services like healthcare and education to
industrial energy demand in 2030 and 50% in
2050 in S4 stems from heavy industry. As a
result, the energy industry also becomes a
larger energy consumer in S3 and S4.
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China’s Energy Transition Pathways for Low Carbon Development
Box 1 Demand Side Management
and Behaviour Change
A strong feature in the scenario 1 is the low
energy demand in general compared with the
other 3 scenarios. As discussed above that
the relatively small economic size and low
energy demand in this scenario stems from a
choice to place more emphasis on social
equity and public welfare. The relatively low
energy demand reflects a social preference for
a greener and more sustainable lifestyle and
higher environmental awareness, but is also a
result of successful demand side management
(DSM) of energy consumption, particularly in
households and transport. With similar
technological advances, this made a
distinctive difference between S1 and S2 in
the growth of household and transport energy
consumption for same level of economic
growth. For example, between 2020 and
2030 the income elasticity of household
energy demand, measured by the
responsiveness of energy demand growth to
the change in the income of the people, is a
quarter lower in S1 than in S2. This is
particularly important for S1 to realise an early
peak and quick reduction in emissions after
2020. In transport, the overall mobility growth
in S1 is also smaller during the same period,
with just half of the growth of S2 in aviation
and 40% in private road transport. But note
that this is overall mobility growth which has
taken into account the higher economic
growth in S2. Similar differences could also
be found between S3 and S4, but of less
prominence.
8
There is large potential to reduce energy
consumption in both residential and nonresidential buildings (Hinnells 2008a; Hinnells
2008b), as well as to provide energy more
efficiently with lower carbon intensity. Many
technologies that can enable this are already
known, and some related to behaviour
changes. But more understanding is needed
of these technology innovations and their
performances over time, which can only be
learnt through small scale implementation
that is supported by an appropriate regulatory
framework and economic incentives before
they can diffuse on a much larger scale
(Watson, Sauter et al. 2006; Woodman
and Baker 2008).
The Chinese government has started realising
the importance of DSM and raising
environmental awareness in people. Media,
NGO and governmental led environmental and
climate change campaigns have made some
progress. A recent survey revealed that people
in China showed a strong correlation between
knowing about climate change and
participation in environmental activities to
protect the environment (Europe's World
2008). The Chinese government also
published the ‘Booklet of Public Energy
Conservation and Pollutant Discharge
Reduction’ in 2007 to encourage and guide
the general public to conserve energy in
their daily life. But this is just a beginning for
changing the lifestyle and consumption
behaviour in China in a way that is compatible
with low carbon development. It is important
to start addressing it now to avoid social
carbon lock-in8.
Carbon lock-in does not only apply to carbon intensive infrastructure and investment, but also applies lifestyles and activities with high
carbon intensity. If people believe success means having an energy intensive ‘American lifestyle’, it could become a key part of an overall
pattern of carbon lock-in that includes high carbon technologies and infrastructures, and associated institutions and policies.
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Energy and power generation
In this scenario, with reduced growth in industry
and agriculture, the overall energy demand
growth within the Chinese economy is slow, at
about 2% p.a. between 2010 and 2020, and
declines slightly in the next decade before
reaching a plateau after 2040. Energy will be
supplied from a wide range of sources, and
renewable energy will eventually overtake coal to
account for the largest share of energy
consumed by 2050. Renewables will account
for about 43% of TPEC, including 11% from
sustainable biofuel. Because of the pressure of
emissions reduction, the use of coal across the
economy will be gradually reduced and will be
increasingly burned with advanced technologies.
The share of coal in TPEC will reduce from more
than 60% to 30% during the same period, while
its share in total carbon emissions halved to
42% from 83% in 2005. In the power sector
renewable energy, largely hydro power and wind,
dominates nearly half of the electricity
generation in 2050. This extends to 55% when
off-grid generation is included. Wind will
overtake hydro power in 2050 to become the
largest renewable power source, accounting for
one fifth of total electricity generation from its
400 GW installed capacity. Hydro follows with
18% of generation and nearly 400 GW and
solar PV accounts for 10% of generation and
250 GW of capacity. Fossil fired power plants
still account for 36% of electricity, but two thirds
of them will be equipped with carbon capture
and storage (CCS). Nuclear will contribute 8%,
compared with 2% in 2005 and 4% in 2020.
Oil and gas will each contribute about 11% of
TPEC, and 35% and 23% of carbon emissions
respectively. Oil will still be important for
transport, but demand increases will be
moderated by efficiency gains and substitution
from biofuel and electricity use in transportation.
42
As a result, the share of oil in TPEC will drop
slightly in 2050 to 12% from 15% in 2005.
Overall energy demand growth will be much
lower than it has been in recent years due to
economic structural change, low carbon
technology diffusion, stringent efficiency
measures and significant demand side reduction
within an environmental friendly society.
In power generation, coal will remain as the
largest source of electricity until 2030-2040,
but energy efficiency will have improved
significantly, with replacement of small
inefficient plants with the most state of art
technologies. CCS technology will become
available and a favourable option after 2020,
depending on the price of coal. It will soon
become a compulsory measure for coal-fired
plants after that date to meet the need for
curbing emissions quickly. Older coal-fired
capacity that remains will be retrofitted with
CCS where feasible. Power generation from
natural gas is still small, and constrained by
resource availability from both domestic and
imported sources. Overall power generation will
grow to over 4 times in 2050 of the size in
2005, with 80% growth in the installed capacity
of fossil fuelled power plants. This is in the
same range as the IEA’s estimate of 3 times
growth in total electricity generation by 2030,
but significantly less than its estimate of 150%
growth in fossil fuelled power plants in 2030
(IEA 2007a). Given the small carbon budget,
CCS proves to be a critical technology to enable
the reduction in China’s carbon emission
without much disturbance to the overall
economic activity.
Among the renewable energy sources, a
significant proportion of the renewables are from
biomass, both CHP and onsite use like biogas,
and hydro electricity, benefiting from growth in
the agriculture sector. Wind power becomes
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China’s Energy Transition Pathways for Low Carbon Development
another significant energy source assisted by
technology advances and public support. PV has
increased dramatically, particularly in off-grid
and micro-generation power systems, but is still
a small proportion of overall supply. Solar
thermal for hot water and space heating prevails
in Chinese households. Large scale renewables
diffusion is accelerated by both financial
incentives and technical progress. Some
renewable technologies will become more
economic than coal as the emissions budget
tightens. Decentralisation also encompasses the
provision of heat with widespread use of CHP
powered by fossil and renewables for urban
areas; while demand in rural areas includes
significant amounts of biogas and solar thermal.
Decentralised energy systems will provide a
large share of household energy needs in 2050,
comparable to that delivered though the central
electricity grid.
promotion in innovation and technology transfer,
the GDP contribution of HTV industry increases
from 9% to 11% and moves up along the value
chain of production. The service sector is
dominant in China’s GDP yet it consists of large
numbers of dynamic small and medium
enterprises. A flourishing service sector offers
wide and in-depth coverage to people’s well
being. Energy service companies grow
particularly fast to offer both supply and demand
side management. Agriculture accounts for
nearly 5% of total GDP, the highest among the
four scenarios, which is partly because of the
development of high valued added agricultural
products.
Households and personal transport
Energy demand in households and personal
transport will increase with income and living
standards, but at a relatively low rate because
people in this scenario have a stronger
preference for environmentally friendly housing
Industry and services sectors
and public transport. Environmental education
In S1, China will pass the phase of heavy
industrialisation within the next few years, a vital and awareness will trigger behaviour and
development to allow a rapid transition from the consumption changes in early years and make
current carbon emission trajectory. By 2030, the people more inclined towards a green lifestyle.
People in S1 prefer to move out from crowded
growth of energy and resource intensive heavy
cities. A large proportion of the population is
industry, such as iron and steel, petroleum
living in small cities and the countryside. New
chemical and non-ferrous metals will be
buildings are obliged to meet high energy
reduced quickly, halving its share in the
efficiency standards and to maximise the
economy. Service and high technology and
integration of natural lighting and renewable
value-added (HTV) industries will embark on
energy sources for heating and power. Solar
much faster growth. Both heavy and
heating is the major heating system
conventional industry such as machinery and
supplemented by other sources including fossil
textiles will still persist at levels to supply
domestic needs. Overall, industry’s contribution fuels and biomass. Old houses and flats will be
upgraded and retrofitted to a similar level.
to GDP will gradually shrink from 45% in 2005
Private car ownership has increased moderately
to 20% by 2050. Continuous improvements in
energy efficiency and new materials technology but energy efficiency and alternative fuels are
supported by science and technology advances able to largely offset the increased emissions
make heavy industries much more efficient and from this. People use more public transport
sustainable than today. With strong support and particularly in cities and towns while in rural
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areas private transport is run on energy efficient
and low carbon fuels. One strong feature in S1
is a decarbonised road transport system with
advanced electric vehicles for both private and
public transport. Electric and alternative fuel
vehicles will become popular quickly and
contribute significantly to emission reductions by
2030. This, partly attributed to Chinese
government continuous support in R&DDD and
promotion of electric vehicles, enables the
Chinese auto industry to leapfrog its western
peers with the growth of Chinese private car
market (See Box 2). Similarly, demand for
international aviation and shipping only includes
modest growth in this scenario.
Figure 17: Electricity penetration in Transportation of S1
44
Nevertheless, households and transport will
become bigger energy consumers than industry
in S1, with about 30% each. The rest is made
up of 26% for industry and 10% for services.
Half of the gas is consumed in households for
cooking and heating, while half of the oil is
consumed by aviation and shipping. This is due
to fuel switching in industry and a boom in
electric vehicles for both railway and road
transport. In 2050, electricity will meet around
75%, 60% and 76% of respective energy
demand in railways, private and public road
transport, see Figure 17. This is in addition to
some 13%, 28% and 12% of energy demand
from biofuels in these sectors respectively.
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Box 2 China’s Automobile Industry
Leaps Forward in A Low Carbon
Economy?
The Chinese government views the automobile
industry as a potential early mover in
developing low carbon technologies that could
enable it to gain a world-leading position.
Without a heavy legacy of internal combustion
engine technology, the government and some
industrial analysts believe that the young
Chinese automobile industries will be able to
concentrate their efforts on alternatives such
as electric hybrid or fuel cell vehicles and
leapfrog into these new technologies quicker
than their western competitors. This new
technology movement also enables some
companies that have not previously been
automobile manufacturers to take advantage
of their own speciality. This possibility has
already become a reality for one Chinese firm:
BYD Auto that founded only in 2003.
It originates from a global leading battery
manufacturer, and has been selling the
world's first mass produced plug-in hybrid car
(the BYD F3DM) in China since December
2008.
The support from government is crucial for
the success of these alternative fuel
vehicles. The Chinese government lowered
consumption tax in early 2009 in favour to
energy efficient small engines and alternative
fuel vehicles such as hybrid or all-electric
cars, and aims to have 5% annual sales from
hybrid or alternative fuel vehicles by 2012
(State Council 2009). These industries are
also backed by measures such as R&D
support, subsidies for pilots in some cities
and public procurement. Universities and
research institutes are already heavily
involved in research projects on electric and
fuel cell cars and coaches which were used
in the Beijing Olympics.
industries and a rapid rate of low carbon
technology diffusion, the peak of emissions in
Strong innovation oriented, knowledge based
2030 is relatively low: about 35% higher than
high tech industry and service based economy;
focus more on economic efficiency than equity; the 2005 level at 1886 MtC. TPEC is 50%
higher in 2030 than in 2005. Further
engage with global market
decarbonisation of the Chinese economy will
This scenario has a similar development path to
see its carbon emissions reduced to 15% less
S1 until 2020, but its overall emissions budget
than the 2005 level in 2050, while TPEC almost
is nearly 50% larger than S1 following the
doubles. The energy intensity of the Chinese
apportionment approach of equal emissions
economy will also be reduced to 50% lower
intensity of GDP. This is an approach in favour of
than 2005 level in 2020 as in S1, and to about
economic efficiency and high GDP growth –
15% of the 2005 level in 2050. The carbon
leading to the highest economic growth among
intensity of GDP will be reduced even more to
the four scenarios (the economy of 2050 is 13
just 7% of the 2005 level due to
times larger than that of 2005) and the largest
decarbonisation.
final energy demand. This larger budget also
Since they are actively engaged in a globalised
allows the scenario to include continued
emissions growth for a further 10 years after the economy, industries in S2 are exposed to global
S1 peak to 2030. However, as the S2 economy competition but also exploit the global market
for a higher contribution to the overall economy.
includes an early transition away from heavy
Scenario 2: 111 GtC 2030
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By 2050, industries will account for 27% of the
GDP, with more than 20% from HTV, and
services will account for 70% of the GDP. This is
similar to the economic structure of Germany
today, will a slightly lower share for industry and
a higher share for agriculture. However, given
the large size of GDP (50% higher than S1), the
service economy is much larger than that of S1.
As a result, social welfare is improved but
income disparity is larger than in S1 as a result
of a focus on economic efficiency and growth.
The government is active in provision of
services, such as healthcare, education and
social support to complement the private actors
delivering these services. Social and communal
integration have made significant progress, but
are not as far-reaching as in S1.
Energy and Power mix
In this scenario, renewable energy, especially
wind and solar PV, will develop quickly as a
result of close international collaboration and
innovation combined with critical localisation
within the domestic market. However, with TPEC
70% higher than in S1, renewable energy
accounts almost the same share (32%) as in
S1 in 2050, but with much more diffusion of
advanced wind and solar energy. Significant
shares of TPEC also come from coal (23%), oil
(20%) and gas (15%), though the latter two
largely rely on imports. This reflects the less
constrained emission budget of S2 in
comparison with S1. With strong financial and
technological support in both transfer and
development, the costs of renewables fall to
become competitive with fossil fuels by 2020.
46
With fast growth in both wind and solar PV, the
power sector will see a quick decline in the use
of coal from 80% in 2005 to a mere 35% in
2050. On-grid power generation from renewable
sources will increase to 30% in 2020 and 56%
in 2050, or 61% with off-grid generation. In
2050, wind, solar PV and hydro will have
generation capacities of 697 GW, 818 GW and
399 GW respectively (Box 3). Wind will account
for nearly a quarter of grid electricity in 2050
and even more if off-grid wind is included. Solar
will also overtake hydro to contribute more than
15% of total generation, compared with 12%
from hydro. Large hydro power, which is
included as renewable in this scenario, yet
controversial in an international context,
develops less quickly than other renewable
options. But it remains as the largest non-fossil
energy source for power generation in China for
the next few decades. It takes until 2040 for
wind and solar PV to catch up and overtake
hydro. Nuclear only contributes 2-3% of total
power in 2050 with 40-50 GW capacity, as it is
outcompeted as an unfavoured option by the
development of renewable technologies. A
relatively large carbon emission budget also
reduce its acceptability as the benefit of carbon
saving does not overweigh its potential risks.
The power generation structure of S2 in 2050 is
shown in Figure 18.
Power generation from coal and natural gas
remain large, thanks to a larger emissions
budget and economic structural change. With
continuous investment in infrastructure, natural
gas imports via both middle Asia and LNG ports
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China’s Energy Transition Pathways for Low Carbon Development
are widely available. CCS will diffuse slower than
in S1 and only diffuse gradually over time. This
is because of less stringent pressure to cut
emissions beyond 2020 and a large share of
renewables in power generation. It is also due
to concerns about the cost and the impact on
the international competitiveness of Chinese
economy. Therefore only one third of the coal
and gas fired power plants that generate around
36% of total electricity in 2050 will be equipped
with CCS. Overall, electricity generation in 2050
will be more than 6.4 times larger than in
2005. Fossil fuelled electricity, including CHP
using coal and gas, will nearly triple between
2005 and 2050.
Box 3 China’s Renewable Revolution
China is the world largest renewable electricity
producer in the world (REN21 2008), with
more than two thirds of the renewable electric
power capacity of the EU-25 combined.
However the majority of renewable electricity,
47 out of 52 GW excluding large hydro in
2006 is from small hydro. Wind only accounts
for 2.6 GW compared with the 20.6 GW in
Germany, then world leader in wind power.
However, the situation of wind power is
changing very fast in China. Just 1 year after
the Chinese government released the target of
wind power development in 2006 (NDRC
2007b), the 2010 target of 5 GW was met in
2007 and by 2010 wind power capacity is
expected to reach more than 20 GW. Some
estimate that grid connected wind power could
reach 70-120 GW by 2020. Solar PV is still
too expensive to be implemented in large
scale in China, but the Chinese government
has carried out an ambitious rural
electrification program in which small or
household PV solar systems are used to
provide electricity access to people who would
Capacity in GW
Figure 18: Power generation capacity and
percentage of each source in 2050 (S2)
be too expensive to reach via the established
grid in near future. Between 2001 and 2003,
1 million people in 1000 remote townships
started using power that is largely brought to
them by PV or PV/wind hybrid systems (NREL
2004). The government is planning to bring
universal access to basic household electricity
to every household in China by 2015, by
electrifying the remaining 1-2% of households
using these systems.
Behind this growing renewable electricity
generation are booming wind and solar PV
industries in China. China already dominates
the world production and market of solar
thermal water heaters, with three quarters of
world’s new additions in 2006 and almost
80% of global production (REN21 2008). In
the fast growing wind power market,
indigenous wind manufacturers accounted for
more than 50% of annual capacity additions
for the first time in 2007, compared with only
29% in 2005 (Li, Gao et al. 2008). Among
them is Goldwind that has grown to be one of
the world’s top 10 wind manufacturers since
it was established in 1998. Overall the wind
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industry in China is expected to top the world
wind turbine manufacturing league by 2009
(The Climate Group 2008). Wind power is
strongly supported by the government through
wind concession programs and supportive
feed-in tariffs but that is not the case for solar
PV. The Chinese solar PV manufacturer
Suntech Power founded in 2002 had already
become the world third largest manufacturer
by 2008. Its products are mainly exported to
European and US markets where solar PV
enjoys more cost competitiveness with
conventional fossil fuels due to lucrative
government subsidies. Following a similar
strategy, many Chinese solar PV companies
developed quickly over the last few years. In
2003 China only possessed 1% of global solar
PV production, while in 2007 this figure has
jumped to over 18% (The Climate Group
Industry and services sectors
2008). Overall, China topped in global
renewable energy investment with Germany
in 2006 at $7 billion each and came second
after Germany in 2007 at $12 billion.
The Chinese leadership now regards green
industries, especially the new renewable
energy industries, as a key area in which
China could gain a global leading position
when compared to its position in other
industries. Due to this ambition and the
economic policies to counteract the effects
of the global recession in China, China’s
renewable energy industries are looking
promising. But to realise the very large
expansion of renewable energy depicted by
S2, there are more obstacles than just
technology and capital to be overcome.
in China’s current industrial structure. Industry
overall will account for 27% of GDP in 2050,
China’s industrial structure in this scenario will
be very different to now by 2020. Engaged with with over 75% of this coming from HTV
industries (see Figure 19). Industries, like
a globalised economy, industry will respond
biochemical, electronic, auto and high precision
actively to demand from both domestic and
machinery tools, will keep evolving with new
international markets, but in a more balanced
innovation and technologies, and act as engine
manner than China’s current export-led
of overall economic growth. Energy efficiency
economy. Combined with the promotion of
improvements and new materials use have
science and technological innovation, HTV
industries develop much quicker than the energy helped to reduce the environmental impacts of
intensive and conventional industries. This leads heavy and conventional industries. Services
account for 70% of the overall economy, a lower
Chinese industry to transit quickly from the
dominance of traditional and heavy industries to proportion than in S1 but much larger in size.
Apart from other services, energy management
highly innovative, high technology industries.
services prevail from primary energy providers to
Although its contribution to GDP just increases
end users, as required by regulations. The
from 9% in 2005 to 20% in 2050, the size of
HTV industry increases more than 30 times over government is a significant player in the energy
system, via both regulation and R&D support,
the 45 years. This compares to only 79% and
especially for long term investment in some
179% increase in heavy and conventional
industries, as they are already significantly large advanced technologies. Agriculture has a lower
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The population is concentrated in quite a few
metropolitan cities and large number of small
cities. With a highly developed service sector,
these metropolitan cities are dynamic centres of
economic and social activities. Population
density is medium and people live in moderately
sized but very efficient houses or flats. Overall
emissions from households and private transport
increase rapidly to 2030 before reaching a
plateau afterwards. Household energy
consumption and its associated carbon
Figure 19: Industrial GVA contributions of different
emissions increase largely due to higher income
industries in 2050 in S2
and living standards. This will be partially offset
by improved efficiency brought about by new,
share in the economy in S2, partly because the innovative technology applications diffused
through the application of stronger standards.
international market will play a larger role, but
Housing will be built to a much higher level of
also because a greater variety of foods than
domestic production can provide will be needed energy and material efficiency than today. Micro
generation and passive energy design will
in the diet of households with a larger
provide a significant share of household energy
disposable income than in S1.
consumption, yet the centralised supply system
Households and personal transport
will still be very important, particularly through
In both transport and heating, fossil fuels
remain important energy sources. Natural gas is grid electricity. In cities, comprehensive and
efficient public transport provides a primary
prioritised for household use, including off-grid
means of transport for commuters. Although
CHP at communal level. Nearly than three
private transport is still an important and widely
quarters of natural gas is used for household
available means of travelling outside of cities,
use in 2050, including cooking, electricity and
vehicle and fuel technologies have made it more
heating from CHP. But this figure has seen a
decline from an even higher level due to energy environmental friendly. After 2030, more radical
transport technologies and infrastructures such
efficiency gains and larger deployment of
as hydrogen fuel cells and advanced biofuels will
renewable technologies in the households.
Overall 16% of household energy use in 2050 is cut emissions substantially. Due to a higher
demand for mobility, international aviation and
met by natural gas, after grid electricity (39%)
shipping will also increase quickly, which are
and renewables (35%). Similarly, nearly half of
both mainly fuelled by oil. Environmental
total oil consumption is for railways and road
transport in 2050. When oil use in aviation and education and awareness-raising will lead
people to choose more green options. The
shipping are included, this figures increases to
over 80%. Oil plays a much larger role in railway impact of this is initially offset by consumption
and road transport than in S1, and fuels half of increases, but becomes significant after 2030.
the private vehicle use, 40% of railway and
public road transport use.
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Scenario 3: 90 GtC 2020
Global and domestic driven economy with
service basis; manufacturing and heavy industry
persist; people focuses on welfare and disparity
reduction;
This is an economy that is globalised, but with
significant focus on domestic investment and
development. The 90GtC cumulative emission
budget is at the median the four scenarios.
However with slow economic structural change,
it is a more challenging task to stay within this
budget than it is for the lower budget in S1. The
economic growth rate in this scenario is lower
than S2, because of this renewed local focus
and a continued reliance on conventional
manufacturing industries. Similar to S1,
government and society focus on welfare
coverage and providing equal opportunity of
development and access to resources. It is
stable and equal but less dynamic due less
innovation. Social welfare is given more priority
than economic expansion, resulting in a strong
social welfare system supported by both public
and private sectors. The economy grows to over
10 times as large as in 2005, with the most
contribution, 78% of GDP coming from the
service sector. Industry will account for only 19%
of the total economy in 2050, the lowest of the
four scenarios. The contribution from HTV
industries will not be much larger than the
conventional and heavy industries which mainly
persist to supply domestic needs. The economy
and industrial structure of S3 in 2050 is close
to that of the United States.
intensity will be reduced to only 16% of the
2005 level in 2050, with carbon intensity
reduced to only 4% of the 2005 level.
Innovations in this scenario tend to be
incremental rather than radical. Government is
not very efficient in providing welfare. Efforts to
promote adaptation to climate change are high
on the agenda and form an important part of
broader social services provided to communities.
Energy and Power mix
A unique feature of the energy and power mix in
this scenario is the relatively large role that
nuclear power plays. With less technology
advances and lower level of international
collaboration, renewable energy sources like
wind and solar will take more time to become
technologically and economically viable whereas
small hydro and biomass have limited capacities
to support China’s energy needs. TPEC will peak
in 2020 at about 90% higher than 2005 level
and gradually decline to about 75% higher, and
plateau afterwards. Coal remains as the most
important energy source, accounting for 31% of
TPEC in 2050, followed by renewables, oil and
nuclear. This scenario has a quite balanced mix
among the major energy sources, with the least
of them contributing more than 10%.
Nuclear becomes a favourable choice for
medium term emissions reductions from the
power sector – and fits with a continuation of a
centralised model of energy production and a
desire to reduce the dominance of coal. Within
the logic of this scenario, it also carries some
particular advantages over renewables in the
early decades by providing a constant base load
China's carbon emissions will peak at around
to the manufacturing industries (Box 4). The
2020 and will have to undertake a quick
reduction of 4-5% per annum to remain within a quickest nuclear power expansion in history so
challenging emissions budget. Carbon emissions far was seen in the 1980s during France’s
State-led programme of nuclear power. 45 GW
will be 70% higher than the 2005 level when
of nuclear power was installed between 1980
they peak in 2020, and then will fall to only
and 1989 - 9 GW alone in 19819. Due to the
40% of the 2005 level by 2050. Energy
9
50
World Nuclear Association, latest updated in April 2009.
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Total GW
China’s Energy Transition Pathways for Low Carbon Development
Figure 20: The nuclear power take-off in S3
extraordinary ambition of nuclear power
expansion in this scenario, China will have to
embark on a nuclear upscaling that is 2 to 3
times faster than the fastest rate that France
achieved in the 1980s. China will add nearly
100 GW of nuclear capacity in S3 between
2020 and 2030, and nearly 150 GW in each
subsequent decade to 2050. The total
generating capacity will reach 423 GW in 2050,
7 times as large as the current French fleet, as
shown in Figure 20. Even with this grand
investment in nuclear power, it will only account
for 26% of total electricity generation in 2050,
and about 12% of TPEC. Fossil fuels (mainly
coal) and renewable energy will contribute 37%
of power generation each. Cleaner coal
technology is therefore given a high priority to
enable the quick short term emissions
reductions around 2020, including ultrasupercritical and integrated gasification
combined cycle, or IGCC power plants. CCS is
urgent and mandatory from 2020 – and is rolled
out for older power plants when feasible after
that date. 30% of coal power plants will be
equipped with CCS in 2030.
This will increase to over 80% in 2050.
China signed a contract in March 2007 with
Westinghouse to introduce four units of AP1000
reactors which marks the start of a new round
of nuclear power expansion (see Box 4). But
this design, as well as another candidate, the
EPR from Areva in France, has not been
practically proved anywhere in the world.
Therefore it is associated with significant
economic and financial risks. This has already
been shown by the delays and cost over-runs
at the world’s first EPR project in Finland.
Oil remains important for transport in the short
and medium terms, but is replaced as the need
to reduce carbon emissions quickly becomes
apparent after 2020. Renewable energy
develops slowly. Small hydro and some biomass
are deployed in areas where these resources
are widely available – particularly in rural areas.
Wind and solar PV only have small shares by
2030 for technological and cost reasons. They
will take longer to upscale, accounting for 11
and 4% of power generation respectively in
2050, with 330 GW and 150 GW installed.
Some progress is made in micro-generation to
generate electricity and heat for households,
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Box 4 Nuclear Power Program in China
China’s nuclear power has been developing
slowly for almost 10 years since the first
nuclear power plants was built in 1993. It has
started picking up speed since 2003 after
severe power shortages in China in early 2000
together with a desire to reduce dependence
on coal.
As China revised its nuclear power strategy
much quicker development of nuclear power
is now expected. The capacity increased from
2.1 GW in 2001 to 10.8 GW in 2008, with
11 GW under construction and a further 15
GW approved. Currently in China there are
11 nuclear power reactors in commercial
operation, 7 under construction and 10 about
to start construction (WNA 2009). The
Chinese government made plan in 2006 to
have 40 GW of nuclear power by 2020 but it
is expected to be raised to at least 60 GW in
2020 and 120 to 160 GW in 2030.
China seeks to obtain and develop state of art
nuclear power technology by "Sino-foreign
cooperation, in order to master international
advanced technology on nuclear power and
develop a Chinese third-generation large PWR
(Pressurized Water Reactor)" (NDRC 2007d).
Based on this strategy, technology transfer
became a major factor in a 22 months long
bidding process for the 4-8 GW nuclear plants
52
in Sanmen and Yangjiang. The Westinghouse
AP1000 reactor eventually won with a promise
to transfer the technology over to Chinese
partners after the fist 4 units (WNA 2009).
In November 2007, a similar agreement was
reached with Areva for 2 EPR units in Taishan
with full technology transfer. At the same time,
the so called CPR-1000 or "improved Chinese
PWR" derived from Areva’s technology will be
widely used for domestic nuclear plants using
indigenous technology. China expects to gain
state of art “third generation” nuclear power
technology for further development through
these collaborations, but eyes on fast breeder
reactors in the long term (NDRC 2007d).
China aims to become self-sufficient in reactor
design and construction, as well as other
aspects of the fuel cycle.
However, half of China’s current uranium need
is met by import, from Kazakhstan, Russia,
Namibia and Australia. Although China’s
uranium reserve is theoretically sufficient for
its short term nuclear program, the ores are
low grade by international standards. China
has already started to acquire uranium
resources internationally. With the nuclear
expansion depicted in this scenario, China
will rely heavily on imported uranium to fuel
the nuclear power fleet which will have
important international implications (see
section 6 of this report for more analysis).
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China’s Energy Transition Pathways for Low Carbon Development
Energy efficiency improvements will contribute to
emission reductions but less so than in the first
two scenarios. Both old and new buildings are
required to comply with stringent energy
efficiency standards and there is significant use
Industry and services sectors
In this scenario, Chinese industry will respond to of natural lighting and renewable energy when
possible. Solar heating is important for hot
a combination of domestic and international
water and heating, but there are also important
markets – with some rebalancing in evidence.
Exports will plateau by 2015 and start declining contributions from gas and electricity. However,
due to low energy efficiency and slower
after losing cost competitiveness. But industry
development of renewable technologies, almost
will still be boosted by domestic demand from
ongoing economic growth. The industrial sector half of the energy in households is from grid
electricity. Micro- and decentralised energy
will include a fair share of high technology
generation is well supported but is constrained
industries, but conventional manufacturing
industry will remain equally important, unlike in by slow diffusion – and there is a general
preference for centralised solutions.
S1 and S2. Incremental energy efficiency and
material improvements reduce the overall
Private car ownership will experience a rapid
carbon and energy intensity of industry but
increase in the first decade of this scenario but
relatively slowly. The service sector has grown
more stringent economic and policy incentives
significantly from 42% in 2005, to dominate the manage to slow down this trend. People
economy with a contribution of around 78% of
increasingly use more public transport
total GDP. Government is an active service
particularly in cities, and private transport use
provider alongside the private sector. As a result, declines as a result. Advanced biofuel
the economy is in general not reliant on either
technology and electric cars will reduce oil
exports or industry. Agriculture only accounts for demand to some extent, but neither of them
2.7% of GDP in 2050, as it remains low value- has made a deep penetration in private
added and labour intensive in the economy.
transport, leaving half of it still fuelled by oil in
2050. Even less alternative fuels are used in
Households and personal transport
shipping and aviation. This leads to nearly 50%
Energy demand from households and the
of total emissions in 2050 coming from
transport system increases moderately in this
scenario compared with S2. This is partly due to transportation alone, mainly due to oil use.
Households only account for 15% due to their
a less affluent society and a large public
transport system, but is somehow offset by the reliance on decarbonised grid electricity.
large house size and more dispersed population Environmental education and awareness will
make people much more inclined to ‘green’
living in a number of closely linked mediumconsumption. Behaviour change becomes an
sized cities (like Suzhou, Changzhou, Yanghzou
important feature and source of carbon
and Wuxi along the Yangtze River delta).
emissions reduction after 2020.
Population density in these cities is lower
and people prefer to have more space with
fewer crowds.
but this is only supplementary to the dominant
centralised mode of provision. Cogeneration on
site for industry prevails to reduce energy loss
in transformation and transmission.
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Scenario 4: 111 GtC 2030
Strong conventional manufacturing industry in
globalised economy; susceptible to external
shocks; strong focus on growth; divided society.
The economy in this scenario is a strongly
globalised one with significant contribution from
heavy and conventional manufacturing
industries. GDP growth is therefore more
uncertain as it is susceptible to changes in
export market and faces severe constraints in
energy and resources availability due to the
huge demand of manufacturing industries. The
economy size in 2050 is the smallest among
the four scenarios, just over 8 times of the
2005 level while the TPEC is the highest of the
four scenarios. Even with the largest cumulative
emissions budget as S2, the late transition of
economic structure and major persistence of
manufacturing industries make it the most
challenging scenario, which requires halving its
emissions in 10 year after its emissions peak in
2030. The society is less innovative than S2
and the pursuit of economic growth leads to
large investment in deepening conventional and
heavy industrialisation in the near term. But with
continuous incremental innovations and
improvement the industry sector is more energy
and resource efficient than it is now. Both
industry and service sectors have a large share
of the economy while agriculture is less
developed because of the competition from
imports. Annual carbon emissions keep rising
after 2020, albeit a slower rate to 2030 due to
gradual structural changes. The peak emission
in 2030 will be more than 80% higher than
2005 level, and then it has to be slashed to
half in 10 years time, mainly through a massive
CCS roll out with stringent energy efficiency
improvement, and inevitably some decline in the
industry sector. By 2050, further emissions cut
will be needed to reach only 30% from the peak
in 2030, or 55% of the 2005 level.
54
Energy intensity in S4 is the highest of the four
scenarios due to its economy structure, about
24% of the 2005 level in 2050, and carbon
intensity is reduced to 7% of the 2005 level.
Industry accounts for 33% of total economy
even in 2050, a share higher than most OECD
countries today. Social welfare system is
established but not very comprehensive due to
weak support from private sectors. A rich and
powerful central government provides large
scale top-down social welfare care.
Technological and science innovations are
mainly promoted by government and large
industries at their initial stages, but the diffusion
and deployment are much slower. China will
have a strong industrialised economy and will
remain a major trade power in the
manufacturing economy. As economy grows,
pressure on poverty eradication is to some
extent alleviated but the income disparity
increases which in turn increases the concern of
instability in the society.
Energy and Power mix
Energy demand in this scenario is the largest
among the four in 2050. The TPEC has more
than doubled by 2030 from the 2005 level and
declines to just less than double of the 2005
level in 2050. Compared with S3, fossil fuels
make up a large share in the energy mix due to
better access to oil and natural gas from
international market. Nuclear and biomass are
reduced to smaller share. Renewables will take
a long time to mature and deploy, but will
steadily increase it share in the TPEC and keep
replacing traditional biomass with more
advanced renewable alternatives. Renewable
energy such as wind and solar PV will benefit
from international collaboration and joint
R&DDD, as well as the manufacturing power of
the economy. Hence they could roll out quickly
once they are commercialised and become
economic competitive.
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China’s Energy Transition Pathways for Low Carbon Development
Coal fired power plants remains significant in
the power sector, contributing more than 40% of
electricity generation in 2050. It will climb to its
peak generation capacity at 1200 GW in 2030
and then reduce to about 1100 GW in 2050. In
order to comply with emissions budget, CCS has
to be rolled out quickly in fossil fired power
plants, including natural gas, from almost none
in 2030 to 90% in 2050, as shown in Figure
21. Before 2030, efforts are focused on more
efficient technologies such as ultra-supercritical
boilers and IGCC. Assuming the technological
and economic uncertainty of CCS could be
solved by 2030, building new fossil fuelled
power plants as capture ready10 before then
would be necessary to make the later fast CCS
roll out possible.
Box 5 Carbon Capture and Storage
Carbon capture and Storage (CCS) is now
considered technically feasible at commercial
scale (Gibbins and Chalmers 2008) though
the world’s complete CCS demonstration was
only launched in September 2008 in north
Germany. The EU promised to have 12 CCS
flagship demonstration project by 2015 and it
also signed an EU-China NZEC agreement at
the EU-China Summit under the UK’s
presidency of the EU in September 2005 to
demonstrate advanced, near zero emissions
coal technology through CCS in China by
2020. As part of it, The UK-China NZEC
initiative is now in its first phase to explore
options for demonstration and building
capacity for CCS in China before the first
10
Adoption of CCS is initially low due to its cost
and efficiency penalty, but would increase
quickly as it becomes apparently critical to
achieve required emissions cuts. Widespread
implementation therefore follows from 2030
with an ambitious programme of new build and
retrofitting. Natural gas power plants will also be
prioritised in power sector after more natural
gas becomes available from both domestic
reserves and international markets not only for
its superior environmental and efficiency
performances, but also its special value in
balancing the intermittency of renewable power
generation. There will be 130-160 GW of
natural gas power plants in 2050, more than
ten times growth from now, but still subordinate
to coal.
demonstration plant in China by 2014. Within
the UK, a bidding competition is going on for
a government funded 300-400MW
demonstration project that is also due to
be open by 2014. Despite the government
funding withdrawn in January 2008 the US
flagship project Futuregen Alliance continued
move forward and is now expected to be
revived under the new Obama administration.
There is no scientific breakthrough needed for
the CCS, as it has already been used in
petroleum industry at smaller scale. There are
three main technologies, oxyfuel, which
involves burning fuel in almost pure oxygen
which is then relatively easier to separate CO2;
post-combustion, which has flue wet scrubbed
Capture ready is a design concept enabling fossil fuel plants to be retrofitted more economically with carbon dioxide capture and
storage (CCS) technologies. Capture-Ready should not be restricted to capture alone in the sense that a CCS project will need to be
integrated across capture, transport and storage … the concept of Capture Ready should ideally incorporate plant sitting to allow as
much as possible of the captured CO2 to be transported to the storage site in order to lower the total cost of the whole CCS process.
Source: CaptureReady.com
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with aqueous amine solutions from power
station chimneys and pre-combustion capture
that involves the removal of CO2 from the fuel
prior to combustion. The CCS project in
Germany used oxyfuel while it is likely that the
UK demonstration will use post-combustion
technology. While the technologies are yet to
prove themselves, there are also critical
aspects of CCS that need to be addressed,
such as reliability of geologic storage and
monitoring potential leakage, to facilitate large
scale deployment.
China is seen as a critical player and potential
leader in CCS deployment, due to its large
TWh
Similar to scenario 3, this scenario will see a
slower roll out of advanced low carbon energy
technologies due to a weaker innovative
capacity. Renewables other than hydro will
develop slower than in S2 due to inadequate
science and technology advances. More
advanced renewables like solar PV and fuel cell
will only be widely deployed after 2030 or even
Figure 21: The CCS penetration in fossil fuel
power generation in S4
56
capacity in coal fired power plants and strong
knowledge base in coal technology, and the
government’s ambition of leading clean coal
and low carbon technologies. However, the
inherent efficiency penalty means coal fire
power plant will need either economic
incentives or legal and regulatory requirements
or both to be motivated to adopt CCS. But
this will not be possible without a strong
commitment, both financial and technological,
to CCS from the developed country under
the post-2012 climate agreement that is
expected to be agreed in Copenhagen in
December 2009.
later. Eventual wind will grow to account for
17% of total generation and 575 GW of
generation capacity, followed by 10% from hydro
and 8% from the solar PV. The choice of nuclear
power will be supported by the electricity needs
in large industries and hence contribute to more
than 10% of total electricity generation in 2050.
It will reach nearly 200 GW of generating
capacity, much higher than both S1 and S2.
Decentralised power and heat generation will
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develop gradually but are constrained by cost
and lack of institutional support from a
centralised energy system. Solar water heaters
would be the main form of micro renewable
before 2015, with significant use of CHP
powered by both biomass and natural gas after
2015. Household PV will only become a
competitive choice after 2020 with strong
government support.
Industry and services sectors
Driven by the global market, Chinese economy
in S4 is equipped with strong manufacturing
capacity. The Chinese industry will maintain a
high proportion of heavy and conventional
manufacturing – with some shifts up the value
chain to more technology intensive industries.
As a result, heavy, conventional and HTV
industries are broadly taking the same share in
the industries’ overall 33% strong GDP
contribution. By 2050, heavy and conventional
industries will grow to between 4-5 times as
large as the size in 2005 while HTV industry will
increase more than 12 times. This is a much
smaller growth compared with more than 30
times in the S2. Despite being a major trade
and manufacturing power of the global
economy, lack of radical innovation and
technology breakthrough constrains the ability of
Chinese enterprises to become a world leader in
technologies innovations and new products,
hence prevents them from the most hefty profits
from trade. China will become further integrated
into the international patterns of production and
markets. Promotion of science and technology
innovation has made a significant contribution
to the emissions reduction but has failed to
reshape the industrial structure quickly. Energy
efficiency and supply chain changes also helped
to realise large, incremental emissions
reductions, particularly in the conventional and
heavy industries (Box 6). The service sector will
constitute 64% of the economy in 2050 from
42% in today, while agriculture makes up for
3%. Welfare is provided through state run
agencies to minimise the adverse impacts of
income disparity in society, but their
performances are held back by bureaucratic
administration and lack of incentive to improve
efficiency compared with their expensive and
dynamic private competitors in niche market,
which in return also fuels disparity and a
stronger pursuit within the general public for
economic growth.
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Box 6 1000 Enterprises Program
The Chinese government launched the 1000
enterprises program in April 2006 to improve
the most energy intensive industrial users as a
key effort to conservation energy consumption
and reduce energy intensity in the 11th FiveYear plan. The 1000 enterprises (998 in exact
number) cover 9 industrial sectors consisting
of, in the order of energy use, iron and steel,
power, chemicals, petroleum and
petrochemicals, coal, non-ferrous metal,
construction material, paper and textile. The
first 4 sectors account for 82% of the total
energy demand. Overall, the 1000 enterprises
represent almost half of total industrial energy
consumption and one third of China’s total
energy consumption. The target is to reduce
annual energy demand by 100 Mtce from the
baseline by 2010. If it was met, this program
would represent an annual reduction of 260
million tonnes (Mt) of CO2.
International technological and financial aids
were provided to the enterprises from both
Household and personal transport
People in this scenario are constantly attracted
to a few supersize mega cities where economic
growth and living standard is very high. The
income disparity between urban and rural area
is therefore large and causes constant migration
flow from rural area to urban cities. This results
in a high population density and small living
area in those mega cities, which in return
reduces the energy consumption per capita.
Household consumption and transportation will
increase quickly in this scenario due to the
increase in household income and living
standards combined with slow diffusion of low
carbon alternatives. Offsetting effect from
efficiency improvements is limited too in the
58
United Nations and the EU, and agreements
were signed among central government, local
governments and the enterprises to stipulate
the individual goals of each province and
enterprise. The performance of energy saving
was monitored and supervised and will be
taken account in assessment of the
leaderships of both local governments and
enterprises. An initial review in 2007 showed
that the 1000 enterprise program is well
on track and could even achieve 50% more
saving than planned in 2010, which would
result in an annual CO2 emissions reduction
equivalent the total emissions of South Korea
(Price, Wang et al. 2008). Yet the Chinese
industrial system is very complex and the
fact that 20 Mtce energy saving was achieved
in 2006 just through a quick design and
implementation without fully implementing
the best practices reveals the huge potential
of energy efficiency improvement in China’s
industries.
early decades. However, the situation will
change later and after 2030, when stringent
energy efficiency improvements and energy
decarbonisation will help the emission from
household and transport sectors to decline after
2030, a major contribution to the ambitious
emission reduction required after 2030.
Household and transport sectors will become
the largest sources of emissions before 2040.
Construction codes for housing place significant
emphasis on energy and material efficiency
such as passive energy savings but less in
integrating renewable energy. As a result, micro
generation only manages to provide a small
share of household energy consumption and
almost half of the household energy demand is
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China’s Energy Transition Pathways for Low Carbon Development
met through grid electricity. In the rural area,
advanced biomass and biogas together with
micro generation provide significant energy
needs.
significant competition from alternative
fuel transport until 2030. More advanced
improvements such as hydrogen powered fuel
cells are not widely available in the market even
in 2050. International aviation and shipping
Public transport is well established in most
demand both increase very fast in response to a
cities, with very intensive use in those mega
high demand for mobility and trade in a
cities. But private transport is also highly relied
globalised economy. In combination, aviation
upon by regular commuters, especially between
and shipping will account for 40% of energy use
regions. There is less demand side reduction in
in transportation, same as private road. As a
private road transport compared with other
result, 57% of China’s total carbon emission in
scenarios. This is somehow related to the social
2050 will come from transportation alone, and
preference for ‘individual’ transport solutions to
oil, across its use in all sectors, will account for
‘public’ ones. Low carbon vehicle and fuel
60% of the total emission as it is difficult to be
technologies have made some significant
decarbonised. Environmental education and
progress globally but higher cost prevents them
awareness-raising have managed to encourage
from becoming a popular choice until after
some people to choose more green
2020. Biofuels and mixed fuel vehicles become
consumptions but it takes time to diffuse into
more important since then. But overall Oil-based
wider community.
transport remains important, and do not face
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6.Thinking beyond carbon
Whilst the main aim of this report is to explore
future energy pathways for China that comply
with a given carbon budget, it is important that
the analysis is not too one-dimensional. There
are two main reasons to think beyond carbon in
relation to our scenarios. First, other
greenhouse gases such as methane and nitrous
oxide are also responsible for anthropogenic
climate change. Second, China’s future energy
system will need to contribute a large number of
other policy and social goals as well as climate
change mitigation. Issues such as local air
pollution, access to energy services and energy
security are important drivers of energy policies
in China. It is increasingly recognised that
sustainable energy transitions can only be fully
assessed if these additional drivers are taken
into account alongside the imperative to tackle
climate change (e.g. Kowalski, Stagl et al.
2009).
The extent to which the scenarios in this report
will mitigate China’s emissions of other
greenhouse gases is beyond the scope of this
report. From a methodological point of view, this
is not problematic because the global carbon
budget that has been used to derive cumulative
emissions budgets for China is for carbon only.
Alongside this are assumptions about the
necessary trajectories of emissions of other
greenhouse gases. However, the practical
development and implementation of low carbon
development strategies for China will need to
include the abatement of these other
greenhouse gases.
scenarios for other dimensions of sustainability.
These include the demand for natural resources,
the implications for other forms of pollution (e.g.
for local air quality), the implications for poverty
alleviation and equity, and the extent to which
pursuing the pathways identified in the
scenarios would be compatible with energy
security. This project has not conducted a
comprehensive assessment of all of these
dimensions. This section focuses on two sets of
issues which have been chosen in consultation
with our expert interviewees.
The section first assesses the implications of the
scenarios for energy resources (both fossil and
non-fossil). It then discusses some of the
energy security challenges that are highlighted
by the scenarios. Within the analysis of these
two sets of issues, the section also considers
some of the additional dimensions of
sustainability when they are thought likely to be
particularly relevant and important.
Energy resources
Fossil fuel resources
Whilst the use of fossil fuels in modern energy
systems is a key cause of anthropogenic climate
change, the Tyndall Centre scenarios show that
radical low carbon development pathways do
not necessarily mean the end of fossil fuel use.
Like most other countries, China is heavily
reliant on fossil fuels for electricity generation,
industry and heating. As noted earlier in this
report, the use of coal is pervasive and
accounts for two thirds of China’s primary
energy needs.
Turning to the second rationale for a broader
In all of the scenarios described in this report,
assessment of the scenarios, it is desirable to
the demand for coal in 2050 is lower than the
devote some attention to the implications of the demand in 2005. Though in all cases, demand
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current estimates of fossil fuel reserves. It
clearly shows that demand for oil and gas will
exceed China’s own reserves by a large margin
unless there are significant new discoveries.
China is already a net oil importer, a position
that would not change within these scenarios.
Cumulative demand reaches well over 10% of
current global reserves in three of the scenarios.
One important implication of this continued
Natural gas demand in China has been relatively
fossil fuel demand – including significant growth
low due to the lack of availability of significant
in many cases – is the continued depletion of
reserves and – more recently – high
global reserves. In the case of oil, there is
international prices. Within the scenarios, gas
widespread concern that this will lead to high
demand expands to at least several times the
prices and that sufficient investment may not be
current level. Cumulative demand reaches up
made to ensure adequate global supplies (IEA
almost 10% of global reserves.
2008a). More fundamentally, there are
increasing claims that oil production will peak in For coal, the picture is rather different. China’s
vast coal reserves mean that in principle,
the near future, though such a diagnosis is far
cumulative demand could be met domestically.
from universal amongst oil analysts.
This is unlikely in practice due to economic
Table 2 illustrates how the scenarios would
factors (imported coal will be cheaper in some
contribute to global fossil fuel depletion, and
cases) and the need to burn low sulphur coal
compares cumulative demand within China to
that minimises acid rain pollution.
has continued to rise before declining. By
contrast, the demand for oil and natural gas in
2050 is much higher than in 2005. Economic
growth and the associated increases in energy
demand in these scenarios mean that the use
of these fossil fuels rises despite significant
substitution for oil in transport.
Coal Demand (2005-2050)
S1
S2
S3
S4
40,314
47,669
59,721
67,800
Coal Reserves
- China
80,070
- Global
592,649
Oil Demand (2005-2050)
15,100
24,040
19,987
25,504
Oil Reserves
- China
2,100
- Global
168,600
Gas Demand (2005-2050)
7,543
13,523
10,203
14,677
Gas Reserves
- China
1,692
- Global
159,624
Table 2: Cumulative demand for fossil fuels and fossil
fuel reserves (Mtoe)
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The impacts of this level of demand for fossil
fuels are hard to predict. Reserves figures such
as those quoted in the Table are not fixed – they
will evolve as a result of changes in prices and
technology. Accessing these reserves will also
be subject to political factors and constraints
and investment in the extractive industries. All of
these factors could significantly expand or
reduce reserves figures – and the proportion of
reserves that are economically recoverable.
However, given the level of demand for fossil
fuels in China within the scenarios, the
economic risks of price volatility and the
potential risks of disruptions to supply could be
high. Further discussion of these risks is
provided in the next sub-section.
A further implication of this continued use of
fossil fuels for China’s natural resources is
important to highlight here. To allow this high
level of consumption whilst remaining within the
overall carbon budget, the Tyndall scenarios
require a significant amount of carbon capture
and storage to be deployed – particularly on
coal fired power plants. This, in turn, means
that adequate CO2 storage capacity should be
available in depleted hydrocarbon fields or in
alternative geological formations such as saline
aquifers. Between 2005 and 2050, the
cumulative storage of CO2 within the scenarios
ranges from a minimum of 1277 MtC in S2 to a
maximum of 5753 MtC for S4.
A number of assessments of China’s CO2
storage capacity have been carried out. As with
many such estimates, they are subject to large
amounts of uncertainty. One recent estimate for
China gives an overall theoretical storage
capacity figure of 3088 gigatonnes of CO2 (840
GtC) (Li, Wei et al. 2009). 99% of this capacity
is in saline formations. Of course, the storage
capacity that can be practically and
economically used is likely to be much smaller
62
than this figure. Nevertheless, when compared
to the cumulative CO2 storage requirements of
the scenarios, there appears to be ample
capacity available. However, there are two
important caveats to this. First, there is a need
for more detailed assessments of China’s
storage capacity which consider the geography
of sources and sinks for CO2. The likely storage
sites are not necessarily close to locations
where coal-fired power plants will be located.
For example, the largest potential storage
reservoir is the Tarim Basin which is in the
remote north-western region of China. Second,
there is a need to get better estimates –
particularly of capacity in saline aquifers. Unlike
depleted hydrocarbon fields, many aquifers have
not been investigated in detail before. For both
these reasons, it is welcome that more detailed
assessments are now being carried out – for
example the assessment of northern China
within the NZEC (near zero emissions from coal)
project financed by the European Union.
Nuclear power and uranium resources
The Tyndall scenarios include different levels of
nuclear power deployment by 2050: ranging
from 45GW in S2 to 423GW in S3. Deployment
at the upper end of this range exceeds the
current level of global cumulative capacity,
which is around 360GW (Zittel and Schindler
2006). In 2005, this global nuclear capacity
consumed 67 kilotonnes (kt) of uranium. If the
efficiency of future Chinese reactors remains the
same as the current global average, the
demand for uranium within China will range
from 8-79kt per year. Of course, uranium
demand for China’s nuclear reactors in 2050
could be lower than these figures – for example
due to efficiency improvements and/or the
deployment of fast breeder reactors.
According to the OECD Nuclear Energy Agency,
global uranium resources that are ‘reasonably
assured’ amount to some 3300 kt (OECD
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China’s Energy Transition Pathways for Low Carbon Development
2006). In addition, there are thought to be up
to 11,000 kt of resources, but these are much
less certain – and are classified as inferred or
undiscovered. As will fossil fuel resources, the
actual size of these resources is a function of
economic and technology as well as geology.
Not all of the 3300kt of reasonably assured
resources are economic at current prices
(around $40/kg).
The cumulative demand for uranium between
2005 and 2050 from China’s reactors is
approximately 300-1300 kt. Again, this
assumes no improvement in the current global
average efficiency of uranium use or the
deployment of fast breeder reactors. However,
the upper end of this range represents a
significant proportion of ‘reasonably assured’
global reserves. Even if the rest of the world
also expands the use of nuclear power during
this period, this does not necessarily mean that
there will be a fundamental resource constraint.
Technologies for mining uranium could improve
significantly, exploration could identify new
reserves (currently in the ‘undiscovered’
category), and the use of uranium could
become much more efficient. However, there
could be significant impacts on uranium prices if
capacity scales up as outlined in the most
ambitious scenario.
Renewable energy resources
The deployment of renewable energy for
electricity production, transport fuels and
heating rises dramatically in the Tyndall Centre
scenarios. Renewable energy currently plays a
relatively small role in the Chinese energy
system. The mixes of technologies described
earlier in this report for each scenario are
illustrative, and are designed to give one set of
possible pathways for renewables deployment in
China. In these illustrations, a particular
emphasis has been placed on wind, solar,
hydro, biomass and biofuel technologies. It is
possible that other renewables could also make
a contribution to low carbon energy production
in China over the coming decades. For example,
China has a long coastline which opens up
potential for wave and tidal technologies.
Within many of the renewable technologies that
have been emphasised here, there are a range
of potential variants. For example, solar
electricity generation can be achieved by solar
photovoltaic panels or solar concentrators which
generate steam. A full discussion of all of these
variants and their resource implications is
beyond the scope of this report. Therefore this
section sets out some examples to provide
insights into some of the potential implications
of deploying these technologies on a large
scale.
China’s exploitable wind energy potential was
estimated recently at 700-1200GW (Li and Gao
2007). This overall range is lower than that from
some previous studies because it has taken into
account geographical and practical constraints
to deployment. The majority of this potential
(600-1000GW) is onshore, whilst an additional
100-200GW could be deployed in relatively
shallow water offshore. The geographical
distribution of this potential is not uniform. Wind
densities in coastal provinces and northern
provinces are significantly higher than in those
inland provinces further south.
Our scenarios include the development of a
large proportion of this potential for wind power
by 2050. Cumulative deployment by 2050
within these scenarios ranges from 397GW in
S1 to 738GW in S4. This represents large and
sustained rates of growth from China’s installed
capacity at the end of 2008 (around 13GW). It
also means that China could have up to eight
times more wind power installed in 2050 than
the world has now. It goes without saying that
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The use of biomass and biofuels within the
scenarios is extensive. Whilst biomass use is
historically very important in China – as it is in
many other developing countries – the
implications of the scenarios for biomass
resources and for land use are considerable.
The use of biofuels is already being widely
criticised because of its negative impacts on the
availability of land for food production, on food
prices, and the questionable nature of
emissions reductions from some biofuel
feedstocks (RFA 2008). Therefore, upgrading to
more sustainable and advanced forms of
biomass use is assumed in all four Tyndall
The contribution of solar photovoltaics (solar PV)
Centre scenarios.
to the scenarios is also very large. By 2050,
In power generation, the Tyndall Centre
deployment within the scenarios ranges from
scenarios include relatively large contributions
242GW in S3 to 818GW in S2. If this capacity
from power plants fuelled by biomass. This
were installed as small installations of several
kW in homes, offices and commercial buildings, contribution ranges from 62 to 152GW of
capacity. The biomass used in these plants
tens of millions of these installations would be
includes waste products and biogas as well as
required across China. However, it is possible
new biomass crops grown specifically for energy
that larger centralised arrays of solar PV
production. Nevertheless, these capacities are
capacity could form a large part of this total,
particularly if the promise of lower cost thin film much larger than any investments made to date
technology is realised. For example, Pacific Gas in biomass power generation, and the
implications for land use and wider sustainability
and Electric – a utility in California – has
recently agreed to buy power from two solar PV would need to be assessed carefully.
plants with a combined capacity of 800MW
The Tyndall Centre scenarios include significant
(Wald 2008). Several hundred of these plants
use of biofuels for transport by 2050. The
would still be required to reach the capacities
annual consumption in 2050 ranges from 158
included in the Tyndall Centre scenarios. The
Mtoe in scenario 4 to 285 Mtoe in scenario 2.
land use implications are not trivial either. The
By comparison, production so far is very small.
800MW of capacity for Pacific Gas and Electric
In 2007, China produced 1840 million litres of
will cover 12.5 square miles. Scaling up to
ethanol (1 Mtoe) and 114 million litres of
800GW (the largest capacity of solar PV within
biodiesel (0.08 Mtoe). Converting these and the
the Tyndall Centre scenarios) would require
scenario figures to litres and deriving their
12,500 square miles of land. Whilst there are
implications for land use is difficult because this
suitable desert areas in China that could be
depends on a range of factors. Biofuels differ
used in principle, implementation would clearly
significantly in their energy content and the
be very challenging.
productivity of land use (FAO 2008). Within the
the achievement of these installed capacities by
2050 will be challenging in several ways. The
implications for land use, electricity grid
operation and capital investment will be very
significant. However, it is also important to note
that the trajectory of wind power deployment
within our scenarios is in line with other
assessments. For example, the Global Wind
Energy Council’s most recent scenarios include
49-450GW of wind power deployment in China
by 2030 (GWEC 2008). The cumulative
deployment within the Tyndall Centre scenarios
is 151-367GW by 2030.
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China’s Energy Transition Pathways for Low Carbon Development
scope of this report, it is only possible to
produce illustrative figures. For example, if our
scenarios were met only from ethanol produced
by a first generation process (e.g. from
sugarcane), this would correspond to a range of
290-520 billion litres of biofuel. Assuming
current rates of productivity, land use would be
64-115 million hectares. This is similar to the
range of land areas required for all countries to
meet their 2020 biofuel targets (RFA 2008). It
also represents a large proportion of China’s
total cultivated land, which is 130 million
hectares in 2005 according to the official
statistical yearbook (NBS 2006).
In the light of this illustration, it is clear that the
contributions of biofuels included within the
Tyndall Centre scenarios could only be sustained
if there is significant use of second or even third
generation biofuel technologies. These
technologies could significantly reduce the
requirement to use cultivated land (many could
be grown on marginal or uncultivated land), use
non-food crops and wastes, and could
potentially yield more energy per hectare of land
use (IEA 2008c). However, such technologies
are not without potential drawbacks and could
lead to significant effects on soil fertility for
example (FAO 2008). Looking further ahead,
third generation technologies such as the use of
algae can potentially be produced in sea water –
and would therefore only require minimal land
use. However, for there is a long way to go
before second and third generation technologies
will be commercially available.
Hydro power is another renewable energy source
that is already extensively used within China.
China has 145GW of hydro capacity installed
(State Council 2008). There is a government
target for this to increase to 300GW by 2020.
All four of the Tyndall Centre scenarios foresee a
similar level of hydro power expansion – to
around 400GW by 2050. The contribution of
hydro power has deliberately been limited to this
level because this is the potential resource that
is commonly cited. Given the controversy
surrounding the Three Gorges project, it is likely
that exploiting all of this resource successfully
will not be a straightforward process. Negative
impacts on river systems, on local populations,
and on water resources could outweigh the
emissions reductions that this full exploitation
would achieve.
A final important issue is relevant to this
discussion of energy resources – both fossil and
non-fossil. Several of the new energy
technologies which are prominent within the
Tyndall Centre scenarios use raw materials
which could be subject to resource constraints
and/or price volatility – particularly if their use
expands on a global scale (Angerer,
Marscheider-Weidmann et al. 2009). These
impacts could affect commodity metals such as
copper and tin, and more specialist elements
such as gallium (used in thin film solar PV cells)
and platinum (used in fuel cells as catalysts).
This, in turn, could negatively affect the
economics of some low carbon technologies
and partially outweigh any benefits of scaling up
and mass production. However, the same
caveat applies to these raw materials as to
fossil fuel and uranium resources. Advances in
technology could expand the available global
reserves, reduce prices or lead to substitution of
these materials for others with better availability.
Energy security
Energy security has risen up the global political
agenda during the past few years. For Chinese
policy makers there are many reasons for this
including an increasing reliance on oil imports,
rapid increases in oil and gas prices (particularly
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in 2008), and power blackouts due to
insufficient investment in new power
transmission capacity. As in other countries, the
key threats to energy security have the potential
to affect prices and availability of energy
sources. For a developing country like China,
price security is particularly important because
many Chinese citizens still live on very low
incomes. Regulations to maintain low prices for
these citizens will be costly to the government if
commodity prices are high.
Fossil fuel scarcity and external
disruptions
Fossil fuel dependency – particularly the
dependency on oil imports – is already an
important driver of policy. In China’s energy
White Paper of 2007, there are many
references to the inadequacy of its domestic
energy resources (State Council 2007). When
China first became a substantial oil importer
several years ago, a debate ensued about the
consequences for geopolitical security. Whilst
some analysts were concerned that China would
Energy security is commonly discussed as a
compete with established oil importers, others
geopolitical issue, particularly in countries like
foresaw a more co-operative future in which
China that are import dependent with respect to
China became more integrated into international
some fossil fuels (Yergin 2006). However, there
energy markets (Downs 2004). Although the
are also many other dimensions to energy
reality of Chinese policy falls between these two
security. As recent Chinese experience
extremes, China’s demand for energy has
demonstrates, threats to the security of energy
already had a major impact on the world oil
supplies can be domestic as well as
market – for example by contributing to the high
international (Watson and Scott 2008).
prices seen in 2008. In addition to stepping up
Therefore an assessment of the energy security
efforts to secure international supplies through
implications of the Tyndall Centre scenarios
China’s national oil companies and pursuing
needs to take the full range of potential threats.
policies such as a strategic petroleum reserve,
Furthermore, such an assessment needs to
the Chinese government has become
consider the overall resilience of the energy
progressively more ambitious in its
system to this range of threats (Stirling 2009).
push for greater energy efficiency
This brief assessment focuses on four main
(Andrews-Speed 2009).
categories of threat to energy security which
The implications of the Tyndall Centre scenarios
were initially developed to analyse strategies for
for fossil fuel demand in China have already
the UK (Watson and Scott 2008). The
been explored in this section. If current
categories are fossil fuel scarcity and external
estimates of fossil fuel reserves are correct, the
disruptions, lack of investment in infrastructure,
scenarios imply a substantial contribution to
technology or infrastructure failure, and
global resource depletion. China’s dependence
domestic activism and terrorism. These generic
on imports of oil is very likely to continue – and
categories are equally applicable to China,
to increase. Gas use within the scenarios is also
though the salience of particular energy security
likely to come from both domestic and foreign
threats will obviously differ between the two
sources. In principle, coal demand within the
countries.
scenarios could be met from Chinese sources.
But it is probable that significant imports will be
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China’s Energy Transition Pathways for Low Carbon Development
used for economic and technical reasons.
Across these three main fossil fuels, there will
therefore be continuing risks to availability and
prices – whether these are due to the physical
depletion of resources or ‘above ground’ factors
such as under investment or conflict.
The practical implication of these trends is that
geopolitical energy security risks are likely to
remain relevant in China for the foreseeable
future. Even if China is successful in developing
within the carbon budgets that guide the
scenarios, fossil fuel use will remain substantial.
This message is particularly important since the
scenarios incorporate large improvements in
energy efficiency. The most ambitious scenario
for energy efficiency (S1) includes a reduction in
China’s energy intensity by 50% between 2005
and 2020, with a further reduction to 13% of
current levels by 2050. This goes well beyond
the decoupling between energy demand and
economic growth that has characterised most of
the last 30 years of China’s development.
Given that energy efficiency alone is unlikely to
be a sufficient strategy to mitigate risks to
energy resource availability, many of the other
strategies that are currently being pursued will
remain important. These include policies such
as seeking a diversity of sources of fossil fuels
(both domestic and international), providing
incentives for a diversity of supply routes, and
the development of strategic storage capacity.
Lack of investment in infrastructure
Whilst energy security is often discussed as a
geopolitical issue, investments in energy
infrastructures within countries can have an
important impact. A lack of timely investment
in oil refinery capacity, electricity generation
and transmission assets or gas storage
facilities can all lead to supply disruptions or
energy price increases.
China’s rapid growth over the past few decades
has been accompanied by periodic shortages of
energy. In the mid-2000s, there were frequent
blackouts in some areas of China as investment
in power generation capacity failed to keep up
with demand (Xinhua News Agency 2004).
There have also been shortages of coal for
some power stations due to bad weather, and
problems caused by electricity transmission
capacity bottlenecks.
The Tyndall Centre scenarios have extensive
implications for investments in new energy
infrastructures. As noted elsewhere in the
report, the rates of deployment required to
realise the scenarios are unprecedented in
some cases. Whilst this report has not identified
the potential costs of this investment in any
detail, the availability of strong enough
economic incentives and sufficient resources are
essential if such deployment rates are to be
sustained. This applies to supply side
investments in electricity generation capacity
(both large and small scale), fuel processing
and transmission industries, infrastructure to
process biofuels or provide electricity for
transport, and CO2 pipelines for carbon capture
and storage. It also applies to energy end-use
infrastructure that has a particular role to play in
minimising the required growth of energy supply
infrastructure. For example, this would include
the rapid introduction of more efficient vehicles
and substantial rates of construction of new
buildings and retrofitting.
In power generation at least, China’s recent
history suggests that such rates are in fact
possible. Over the past few years, power plant
capacity in China has increased by almost
100GW a year. None of the scenarios include
capacity additions at a significantly higher rate
than this – in many cases the rates of increase
are lower. However, the key difference is that
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the scenarios include substantial contributions
from technologies other than coal and hydro to
energy system development.
This difference between recent and future
deployment trends raises a further important
issue for the electricity system. The Tyndall
Centre scenarios include substantial new
generating capacity which has intermittent
output such as wind and solar. Some scenarios
also include large contributions from other
inflexible plant such as nuclear power. As
previous Tyndall Centre research has illustrated,
scenarios that describe a low carbon electricity
system can have serious deficiencies when it
comes to matching supply and demand every
hour of the day, 365 days per year (Watson,
Strbac et al. 2004). There are several ways
around this. The traditional view is that more
flexible fossil fuel capacity will be required to
balance intermittency. This additional capacity
could mean more emissions and might be
difficult to fit within the overall carbon budget.
But developments in technology – especially in
the more innovative first two scenarios – could
mean that more creative solutions are available.
This could include smart grids, active demand
side management and storage capacity in
electric vehicles or for hydrogen.
Technology or infrastructure failure
Technology or infrastructure failures can occur
for a variety of reasons, and can have serious
impacts on energy security. Such failures can
arise for mainly technical reasons, or could be
due to external stresses such as extreme
weather. An example of the former is the series
of failures that affected advanced gas-fired
power plants in several OECD countries the
1990s. Within the latter category, extreme
weather events such as Hurricane Katrina have
affected offshore oil installations in the Gulf of
Mexico. Whether or not China develops within
68
the carbon budgets as set out in the Tyndall
Centre scenarios, climate science predicts that
such extreme weather events will become more
frequent – and that China will have to adapt to
its changing climate.
Failures are normal features of all large
infrastructure systems. In many cases, they are
not serious and do not substantially affect
operation due to built in redundancy – or spare
capacity in the system. In the case of energy,
this reinforces the need to pursue security
strategies that strengthen the resilience of
energy systems to such failures. Diversity is
often put forward as a key principle for such
strategies. At present, China’s energy system is
not particularly diverse with respect to energy
sources due to the dominance of coal. But
diversity can also be applied to the sources of
this coal, and the routes it takes from mines to
centres of demand.
The Tyndall Centre scenarios include a
substantial improvement in China’s energy and
electricity system diversity. This improvement is
potentially greater if a particularly diverse mix of
renewables were deployed. For example, China’s
primary energy mix in 2005 comprised coal
(65%), oil (16%) and renewables (16%). The
scenario with the highest energy demand growth
(S4) reaches a more diverse position by 2050 –
including coal (31%), renewables (27%), oil
(19%), gas (13%), biofuels (5%) and nuclear
(5%). There is one caveat to this positive
assessment. Diversity does not only mean
having many options, supply routes or
interconnections in an energy mix. It also
depends on the balance between these options
and how different they are from each other
(Stirling 2007). Some vulnerabilities may affect
more than one option or supply route if they are
sufficiently similar to each other. Therefore a full
analysis of diversity within future energy systems
needs to take such factors into account.
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China’s Energy Transition Pathways for Low Carbon Development
Another strategy for increased resilience to
deliberate disruptions and technical failures that
is sometimes put forward is energy system
decentralisation (Coaffee 2008). Some of the
Tyndall Centre scenarios (S1 for example)
include a greater emphasis on such local energy
production than others. Whilst the deployment
of more decentralised energy infrastructure can
increase redundancy and minimise the impact
of disruptions, the energy systems in such
scenarios would require greater levels of
innovation in new network management
technologies and/or greater scope for demand
side flexibility to balance supply and demand.
Domestic activism and terrorism
There are frequent reports of civil unrest within
China, for example in response to some factory
closures. The Chinese government is also
concerned about the potential for terrorist
attacks – both within the Chinese mainland and
in the wider East Asian region. A particular
concern for the government is that 70-80% of
China’s oil imports pass through the Malacca
Straits between Indonesia and Malaysia. This
makes such imports vulnerable to terrorist
attack and piracy as well as international
conflict (Lees 2007).
It is difficult to make any precise judgements
about the threat posed by such incidents to
energy security. Evidence that such threats have
had an impact in the past is scarce. Given the
continuing reliance on fossil fuels within the
Tyndall Centre scenarios, the potential for
terrorist disruption of energy supplies would
remain if these scenarios were followed.
Vulnerability to civil disruption would partly
depend on the nature of infrastructure
development within these scenarios.
Decentralisation of energy supply infrastructure
within China – so that there is resilience within
the power system, the distribution of coal and
the distribution of road transport fuel – would
make China’s energy systems less vulnerable to
such disruption. Diversification of international
supply routes, as the Chinese government is
seeking to do to reduce the amount of oil
imported via the Malacca Straits, could also
reduce this vulnerability.
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7.Towards low carbon growth
This report has shown how China could develop
within a range of cumulative carbon emissions
budgets. If any of these development pathways
were realised in practice, and other countries
took commensurate action in the period to
2050, there is a significant chance that the
most serious impacts of climate change would
be avoided. As noted earlier in the report, these
pathways are not intended to be prescriptive.
They are designed to illustrate just some of the
possible ways in which China could reconcile
the twin imperatives of development and climate
change mitigation.
this. The scenarios described in this report have
not been produced using a macro-economic
model. Whilst many such models are limited in
their ability to plausibly analyse radical changes
in energy systems and economies over many
decades, complementary economic analysis of
this kind could help to test our assumptions and
analysis.
These rates of growth are lower than the
average Chinese growth rates of the past two
decades. However, they remain high by
international standards. It has been argued that
China’s vast population in rural area means that
its growth needs to continue at 10% per year in
As discussed in section 6, the pathways
order to create enough jobs and to continue to
described in our four scenarios have wide
ranging implications for resource use and energy lift its citizens out of poverty. There are therefore
questions about the extent to which this lower
security. They also describe far reaching
rate of growth can also square climate change
changes in China’s industrial structure and its
energy infrastructure. The policy implications of mitigation with social stability and poverty
the scenarios are extensive. This final section of alleviation. However, it is plausible to assume
that 10% growth rates will not last forever. In all
the report will discuss both the overall
of our scenarios, China’s economic structure
implications for China’s policy approach to
has changed radically by 2050: and is similar to
climate change and energy – and some more
the current structure of leading OECD
specific implications for policies to support low
economies such as the USA and Germany. Such
carbon energy system development.
economies have much lower growth rates as
China’s climate change
their economies are mature.
and energy strategies
There is much discussion at present about the
The scenarios in this report clearly illustrate the
concept of low carbon growth, particularly in the benefits of early action to slow emissions
context of developing countries. Developing
growth, and to eventually move China onto a
countries such as China have repeatedly called downward emissions trajectory. Slowing growth
for climate change mitigation to be addressed
in emissions as soon as possible, followed by
within an overall framework of sustainable
reductions from 2020 (as in S1) appears to
development (State Council 2008). The Tyndall yield a more feasible future than a trajectory in
Centre scenarios provide one set of illustrations which emissions continue to grow rapidly and
of low carbon development for China. They
only begin to fall in 2030 (as in S4). The rates
demonstrate how economic growth can be
of decline required in the latter case are much
sustained at an average rate of 5-6% per year
higher and are therefore likely to be much more
over the period to 2050 whilst carbon emissions difficult to achieve. The lower carbon budget of
are constrained within cumulative budgets of
70 GtC used in this report is impractical if
70-111GtC. There is an important caveat to
emissions continue to grow at the relatively
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rapid rate until 2020. These insights follow
clearly from the cumulative emissions approach
that has been used. This is more informative
than an analysis that only discusses percentage
emissions reduction targets which are often long
term and well beyond current policy time
horizons. Of course, another way in which
China’s future emissions trajectory could be
made more plausible is to allocate a large
cumulative budget to China. Both scenarios S2
and S4 in particular benefit from this since the
larger budget buys time for a later transition to
a lower carbon development pathway.
government’s economic stimulus package of
RMB 4 trillion yuan (£400bn) includes
significant funding for environmental projects.
Well before 2050, China could become a global
leader in critical low carbon technologies as well
as a country in which they are widely deployed.
Within the scenarios, there is considerable
variation in the speed and direction of
innovation. For example, scenarios S1 and S2
include more radical and rapid technical change
which yields a quicker slowdown in emissions
growth. S4 follows a more incremental pathway
– though emissions have to fall very rapidly once
All four scenarios discussed in this report are
a turning point is reached in 2030. This is
extremely challenging and ambitious. They
achieved by a range of measures including a
describe extensive changes in technologies
particularly large scale deployment of carbon
across the Chinese economy – from power
capture and storage. The more radical scenarios
tend to emphasise more pervasive energy
generation to buildings and transport systems.
system innovation. Although such radical
They also include changes in lifestyles and
behaviours, and imply extensive changes in
changes in technical systems have occurred
policies, institutions and regulations. In addition, many times in the past (Freeman and Louca
2001), history shows that deliberate
they show that low carbon growth can mean
more than the deployment of a new set of
government action is rarely the main reason for
technologies to meet carbon mitigation goals.
such changes.
The Tyndall Centre scenarios have consciously
Whilst some of the technologies and measures
drawn on the contemporary Chinese policy
that are included in the scenarios are already
debate about the energy intensive model of
well established, many others are still in
growth that has been followed recently – and
development. Therefore, there is a key role for
the need for economic restructuring and
public and private actors to develop and deploy
innovation in higher value added industries to
these technologies. Incentives will be required
help correct imbalances in this model. To a
to support this process of research,
greater or lesser extent, the scenarios show how
development an demonstration and deployment
such a shift could be part of China’s low carbon
(R,D,D&D) – with tailored programmes to reflect
development story.
differences in technology status, types of
investors and market realities. New institutions
As many commentators have argued recently,
other benefits of this type of development could to foster low carbon innovation, experimentation
include the creation of new firms, industries and and deployment will also be important.
Proposals that focus on developing countries
jobs (Bowen, Fankhauser et al. 2009). Low
carbon growth could be one way for countries
such as low carbon innovation centres, put
forward by Carbon Trust (Carbon Trust 2008),
such as China to overcome the current
and Chatham House’s idea of low carbon zones
economic crisis. Indeed, the Chinese
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(Chatham House 2007) are both good
examples of such incentives and institutions.
Innovation is also a process with a strong
international dimension due to the significant
role of international firms and markets. In the
area of climate change, there is a particularly
important debate about the extent to which
developed counties should assist developing
countries with low carbon technologies as part
of a post-2012 deal (Ockwell, Watson et al.
2007). Developing countries such as China
rightly argue that promises in this area have
been made repeatedly at international
environmental summits since the early 1970s
(Economy 2005). However, there has been little
action to make good on such promises –
perhaps with the exception of investment
through the Clean Development Mechanism and
the new World Bank Climate Investment Funds.
For this reason, it is essential that the new post2012 framework includes further substantive
measures to improve international collaboration
between firms in developed and developing
countries. Although China is a middle income
developing country with significant capacity in
some low carbon technologies, substantial
financial and other assistance is required to
help Chinese firms upgrade their capabilities.
This is particularly the case in the more
traditional heavy industries in which Chinese
firms lag well behind the global leaders.
Critical issues for low carbon
development in China
The Tyndall Centre scenarios include a wide
range of low carbon technologies and other
measures in order to remain within the
constraints of cumulative emissions budgets. It
is not the intention to provide a detailed
discussion of all of these here. However, it is
possible to point to some of the most critical
technologies and measures that are
72
incorporated in the scenarios – and the extent
to which these require policy action in the short
to medium term to maximise the chance that
they could be implemented when required.
As with many analyses of climate change
mitigation, a key area in which more action is
required in China is energy efficiency. As stated
earlier in this report, China already has
ambitious targets for improving the efficiency of
its economy. Specific energy efficiency
measures have also been proposed or
implemented in buildings, industry and
transport. However, the history of success in this
area is mixed – with some notable successes
and some periods in which progress on
efficiency has been reversed (Andrews-Speed
2009). The Tyndall Centre scenarios build on
and extend the ambitions in current policy
targets. This is necessary to at least partly offset
demand growth due to increased mobility,
higher incomes and higher consumption as
China continues to develop. In the absence of
such sustained action to improve efficiency, the
scenarios would be even more ambitious in the
need for low carbon energy infrastructure and
social change. It will therefore be essential for
energy efficiency measures to be sustained and
intensified further across the economy.
The power generation sector in China continues
to grow rapidly in all scenarios. Within this,
there are some extensive developments of
renewable electricity generation and of carbon
capture and storage. Renewable energy
technologies are therefore a key area for
government policy action. Such action should
support a range of renewable options including
those that are currently most important (wind
and hydro) and potential new options (e.g. wave
and tidal). Our scenarios suggest that the
current strategy which focuses on the
deployment of renewables and policies to
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China’s Energy Transition Pathways for Low Carbon Development
Transport has been a particularly rapid source of
energy demand growth in China in recent years.
It is also an area in which there has been active
policy action to mitigate some of the
environmental side effects of this growth
With respect to CCS, Chinese power companies
(Gallagher 2006). Although a continuation of
have understandably been cautious. Integrated
this trend means that China’s oil consumption
CCS systems have not been deployed anywhere
will rise rapidly in the scenarios, the scenarios
in the world at full scale. CCS systems will
include fundamental changes over the coming
impose significant energy penalties at plants
decades. This includes significant efficiency
where they are installed. For a developing
improvements, modal shifts and switches to
country like China, such penalties mean that
biofuels and electric vehicles. There will be a
valuable power is not available to help meet
need to develop and evaluate new transport
demand which is growing rapidly. However, this
technology options for both public and private
does not mean that Chinese power companies
transport applications. As noted in the previous
should wait to demonstrate CCS on coal fired
section, the widespread use of biofuels in China
power plants. The EU-China NZEC (near zero
could only be realised if second or third
emissions from coal) feasibility study is a start.
generation technologies were successfully
Building on this, there are strong reasons to
developed and commercialised. Resource
make international financial assistance available
constraints mean that the use of first generation
for a full scale demonstration of CCS in China at
biofuels on a larges scale is likely to be
the same time as the demonstrations planned
impractical. With respect to electric vehicles and
in many OECD countries over the next few
the related possibility of hydrogen vehicles,
years. Without CCS as an option, it will prove
Chinese firms have started to make some early
much more difficult for China to develop within
headway. This report has already noted the case
a carbon budget. In contrast to CCS, nuclear
of the BYD plug-in hybrid electric vehicle, one of
power has a less prominent role – but is
the first such vehicles to be available
significant in one of our scenarios.
commercially in the world. Together with
The Tyndall Centre scenarios also include
development in other sectors such as low
significant power and heat generation at smaller carbon electricity or hydrogen generation and
scales. Off grid power generation and more
decentralised energy systems (e.g. solar hot
water panels and CHP systems) are particularly
important in some of the more innovative
scenarios. This leads on to the importance of
new smarter grid technologies, and information,
communication and control technologies to
better integrate supply and demand.
support the growth of renewable energy
industries should be continued and
strengthened if ambitious renewables
development is desired.
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