LBNL Assessment of China's11th 5YP

8/14/2019 LBNL Assessment of China's11th 5YP

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Assessment of ChinaAssessment of China

s Energys Energy --Saving and EmissionSaving and Emission --ReductionReductionAccomplishments and OpportunitiesAccomplishments and Opportunities

During the 11th Five Year PlanDuring the 11th Five Year Plan

Findings and Recommendations

Presentation forPresentation forChinaFAQsChinaFAQs : The Network for Climate and Energy Information Meeting: The Network for Climate and Energy Information Meeting

World Resources Institute, Washington , DCWorld Resources Institute, Washington , DCDecember 2, 2009December 2, 2009

Mark D. Levine and Lynn PriceMark D. Levine and Lynn PriceChina Energy GroupChina Energy Group

Energy Analysis DepartmentEnergy Analysis DepartmentEnvironmental Energy Technologies DivisionEnvironmental Energy Technologies Division

Lawrence Berkeley National LaboratoryLawrence Berkeley National Laboratory


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Introduction

Lawrence Berkeley National Laboratorys (LBNLs) China Energy Group teamed

with researchers from Tsinghua University and McKinsey & Company to: Review current progress to-date of energy efficiency policies and programsundertaken during the current Five Year Plan period (2006-2010)

Evaluate energy efficiency policies and programs based on international experience Provide recommendations on how energy efficiency policies and programs could be

improved during the current and next Five Year Plans

LBNL reviewed progress-to-date for the following policies or programs: Ten Key Projects Buildings Energy Efficiency Top-1000 Energy-Consuming Enterprises Structural Adjustment/Small Plant Closures Appliance Standards

Research conducted through document reviews, web searches, and interviews The full report will be available on the China Energy Group (http://china.lbl.gov/)

once the review process has been completed


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3 Source: National Bureau of Statistics, China Statistical Abstract , various years.

Context:Historical Trends in Energy Intensity in China

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

1980 1985 1990 1995 2000 2005

k g c o a l e q u i v a

l e n t

/ 1 0 , 0 0 0 ( 2 0 0 0 ) R M B Average Annual Decline of

5% per year

Average Annual Increase of 2% per year


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Context:

China Adopted an Energy Intensity Reduction TargetDuring the 11 th Five-Year Plan

November 2005: Premier Wen Jiabao at the Plenary of the Communist Party:Energy use per unit of GDP must be reduced by 20% from 2006 to 2010

March 2006: Statement reiterated by the National Peoples Congress Chinas 11th Five Year Plan (2006-2010): outlined goal of reducing energy

consumption per unit of GDP by 20% between 2006 and 2010


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0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

1980 1985 1990 1995 2000 2005

k g c o a

l e q u

i v a

l e n t / 1

0 , 0

0 0 ( 2 0 0 0 ) R M

Source: National Bureau of Statistics, China Statistical Abstract , various years.

1980-2002:Average Annual Decline of

5% per year

Context:Recent Trends in Energy Intensity in China

2002-2005:Average Annual Increase of

2% per year

2005-2006:1.79% decrease

2006-2007:4.04% decrease

2007-2008:4.59% decrease


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Frozen Baseline Developmentand Energy Savings Assessment

Indicator Unit 2005 2006 2007 2008Frozen 2005 Energy IntensityGDPFrozen Baseline Energy

Kgce/RMBBillion 2005 RMBMtce

0.122618,3222,247

0.122620,4492,508

0.122622,9822,818

0.122625,8483,170

Annual Energy Difference Mtce 0 45 162 320Cumulative Energy Difference Mtce 0 45 207 527

Energy use values are reported by NBS (NBS, 2007; NBS 2008). Energy intensity reduction values are from NDRC(NDRC, 2009a; NDRC, 2009b). GDP values were then derived using these two values. This method was chosenbecause the energy values and energy intensity reduction values were the most clearly reported values; GDP valueshave undergone a series of revisions and may continue to be revised.

Indicator Unit 2005 2006 2007 2008EnergyGDPEnergy Intensity

MtceBillion 2005 RMBKgce/RMB

2,24718,3220.1226

2,46320,4490.1204

2,65622,9820.1156

2,85025,8480.1103

Energy Intensity Reduction % per year -1.79% -4.04% -4.59%


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11th FYP Energy-Saving Targets and Savings to Date,2006-2008, Based on Frozen 2005 Efficiency Baseline

11th FYP

Target

Savings to Date

2006-2008Policy/Program Primary Energy (Mtce)Ten Key Projects 268 102Buildings Energy Efficiency 112 41Top-1000 Program 130 124Small Plant Closures 118 91Appliance Standards 79 37Other savings including provincial programs 1146 185

Total Primary Energy Savings 1709 527

Note: Individual program savings do not add up to the TotalPrimary Energy Savings value because of overlap between theTen Key Projects and the Buildings Energy Efficiency and Top-1000 Programs. See report for details regarding how the totalprimary energy savings was calculated.

0

100

200

300

400

500

600

Primary Energy Savings 2006-2008

M t c e

Ten Key Projects

Buildings Energy Efficiency

Overla p Te n Key Projects & Top-1000

Top-1000 Program

Small Pla nt Clos ures

Appli ance Standards

Other Savings Including Provincial-

Level Programs


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Caveats and Difficulties

Analysis constrained by: Lack of publicly-available systematic reporting and monitoring of these

programs Information often reported in units that are not clearly defined (e.g. whether

electricity is accounted for at the site, 0.1229 kgce/kWh, or source, 0.404kgce/kWh, value)

Programmatic targets are not clearly delineated as to whether they representannual or cumulative savings goals through 2010

Conflicting and difficult to interpret information is provided throughinterviews, reports, and websites

Overall 20% energy/GDP target is a relative target (ratio of energy to

economic output), while most of the targets for the individual programs areabsolute targets (e.g. savings of 100 Mtce by 2010 for the Top-1000 program),making it difficult to relate the individual programs to the overall energyintensity goal


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Findings:Overall 20% Energy Intensity Goal

China has made substantialprogress toward achievingthe 20% energy intensityreduction goal

Success in meeting the 20%intensity target through 2007is due to increases in energyefficiency or conservation

Increases have beensufficient to overcome the

lack of success in achievingstructural change

Heavy Industry

y = 0.0234x6

- 0.8904x5

+ 13.043x4

- 93.459x3

+ 345.58x2

- 616.18x + 383.55

y = -0.0166x 6 + 0.6509x 5 - 10.011x 4 + 76.112x 3 - 293.63x 2 + 501.14x - 256.66

-250

-200

-150

-100

-50

0

50

100

150

200

250

E n e r g y M t c e

Energy Use 29.63 -22.42 -35.97 -11.33 16.94 9.16 30.27 123.76 168.90 111.61 106.57 107.04

Activity 30.05 -3.24 -17.91 4 4.70 66.44 51.48 70.91 152.58 166.96 162.69 178.64 230.94

Structure -21.33 -41.40 -44.43 5.98 24.74 11 .68 2 8.76 100.33 111.74 88.17 7 5.91 120.28

Efficiency 20.91 22.22 26.36 -62.02 -7 4.24 -54.00 -69.40 -129.15 -109.80 -139.25 -147.98 -244.18

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007


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Findings:Energy-Saving Programs

Energy-efficiency programs that appear to be on track to meet or in some

cases even exceed their energy-saving targets Ten Key Projects Top-1000 Program Small Plant Closure Program

Enforcement of new building energy standards Appliance standards and labeling program

Some programs are not on track to meet the stated goals Building retrofits Structural adjustment


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Findings:Energy-Saving Programs - Ten Key Projects

Evaluation difficult due to lack of information regarding the activities and

savings undertaken for each of the projects Some of the savings from industrial sector projects, such as renovation of coal-

fired industrial boilers, waste heat and waste pressure utilization, and motorsystem energy efficiency, are most likely also counted in the savings attributedto the Top-1000 enterprises

Targets were not defined or tracked for the energy system optimization,government procurement, or energy conservation monitoring and evaluationsystem projects, making evaluation of these programs impossible

Appears that the Ten Key Projects are on track to meet or surpass the 11th FYPgoal of 250 Mtce primary energy savings


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Enforcing building codes in new buildings

Building retrofits and heating supply system reform

Energy management in government and large public buildings

Renewable energy in buildings

62 Mtce

16 Mtce

11 Mtce

11 Mtce

Findings:Energy-Saving Programs - Buildings

Breakdown of Building Sector Primary Energy-Saving Target in the 11th FYP (Mtce)

Source Cai, et al., 2009, Wu Y., 2009


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LBNL Estimated 2005-2008 Building Sector Primary Energy-Saving from the Programs

and Policies implemented in 11 FYP (Mtce)

0.27 20 14

1.9

4.82.6

6.536.36

62

0

10

20

30

40

50

6070

80

90

100

Total saving 2006-2008 2010 target

T a r g e t e d a n d A c h i v e d P r i m a r y E n e r g y S a v i n g

( M t c e

)

Enforcing Building Codes in NewBuildings

Large-Scale Public Buildings

Government Buildings

Heat Supply Reform (Mtce)

Exsiting Building Retrofit (Mtce)


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A comprehensive enforcement scheme for new buildings has been establishedand strictly followed in the large cities. New construction - rate of compliance

with new building standards improved Design phase - reported to be up to 98% by 2008 During enforcement - estimated at 81% in 2008

China has put into place a system that gives the proper incentives to the designinstitutes and builders which appears to be quite effective

Retrofits are estimated to meet target for total retrofitted area, but the energysavings target will be missed by a considerable margin.

For government office buildings and large-scale public buildings, energymanagement improvements are estimate to have saved 4.6 Mtce between 2005

and 2008 MOHURD has worked with the Ministry of Finance to offer incentive

mechanisms for building shell measures and heat metering

MOHURD has not adequately addressed major barriers such as changes in urbanheating prices and subsidies for urban heating retrofits, to promoteimplementation of building energy-efficiency programs


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Major barriers such as subsidized heating and heating prices based on square

meters of space rather than usage have not been adequately addressed There is widespread use of highly energy-intensive building materials, and little

consideration for life-cycle energy use

Developers lack incentives to include energy-efficient design and materials, ancity heating supply companies lack incentives to improve the efficiency or installcontrols on their systems

There is a lack of official reports and absence of standardized data-gatheringmethodologies make it difficult to determine building energy use and savings

Infrequent surveys on building characteristics and energy consumption patterns,as well as a lack of publicly available data, further hamper efforts to monitorprogress toward 11th FYP goals

The mechanism for allocating building sector energy targets is unclear and likelyled to a mismatch of energy-saving potential and actual energy savingachievements in the building sector


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Findings:Energy-Saving Programs - Top-1000 Program

Program on track to meet its cumulative final energy-saving target of 100 Mtce in

2010 Energy savings of 20 Mtce in 2006 Energy savings of 38 Mtce in 2007

Unit energy consumption (physical energy intensity) decreased for major products in

most sectors Largest improvements in non-ferrous metals Lagging in electrolytic aluminum processing

Many Top-1000 enterprises already had energy intensities better than the national

average and somein steel, coal mining, synthetic ammonia, and glasssurpassedinternational advanced levels


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Findings:Energy-Saving Programs - Top-1000 Program

Use of energy-saving agreements signed by high-level representatives fromgovernment and enterprises has been effective for stimulating action

Top-1000 enterprises invested over 50 billion RMB ($7.3B) in technologyinnovation and implemented over 8,000 energy-saving projects in 2007

More than 95% of the enterprises established an energy management office Energy audits were conducted at nearly all the enterprises in the program, but

capabilities and audit quality varied widely Due to rapid implementation, program targets were established without detailed

assessments

Difficult to assess how much of the reported savings are directly attributable to theTop-1000 program and how much would have occurred in the absence of theprogram


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Findings:Energy-Saving Programs - Structural Adjustment

11th FYP calls for a more rational structure of industries, products, and industrialorganization and an increase in the ratio of service sector value-added to totalGDP of 3 percentage points

0

500

1,000

1,500

2,000

2,500

3,000

2000 2001 2002 2003 2004 2005 2006 2007

P r i m a r y

E n e r g y

U s e

( m t c e

)

Industry

Total

Source: NBS, various years.

Share of industrial sectorenergy use has grownfrom 69% of total energy

use in 2000 to 72% of total energy use in 2007

Share of GDP attributedto the secondary sectorof the economy increasedfrom 45.9% in 2000 to48.6% in 2007

Share of Industrial Sector Energy Use in Total Energy Use, 2000-2007


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Findings:Energy-Saving Programs - Small Plant Closures

Program aims to phase out obsolete production capacity in 13 energy-intensive

industrial subsectors, with goals set for 2010 To be on track, closures should be at 60% of the target by the end of 2008

When compared to the overall program goal, it appears that the program hassaved an estimated 76% of the total goal in the first three years, which is ahead of

schedule


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Industry Unit11 th FYPTargets

RealizedCapacityClosures

2006-2008*Share of Target

Cement Mt 250 140 56%Iron-making Mt 100 60.59 61%

Steel-making Mt 55 43.47 79%Electricity GW 50 38.26 77%Pulp & paper Mt 6.5 5.47 84%Alcohol Mt 1.6 0.945 59%Monosodium glutamate Mt 0.2 0.165 83%Electrolytic aluminium Mt 0.65 0.105 16%Citric acid Mt 0.08 0.072 90%Coking Mt 80 n/aFerroalloy Mt 4 n/aCalcium carbide Mt 2 n/aGlass M weight cases 30 n/a

Small Plants Closure and Phase-Out of Outdated Capacity Results To Date, 2006-2008

Source: State Council, 2007a; Feng Fei et al., n.d.; *NDRC, 2009a and 2009b.

Note: n/a = not available


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Difficulties remain at the local level, where government officials are reluctant to

give up tax revenues and jobs from local enterprises subject to closure Despite progress in closing small inefficient plants, overall structure of Chinas

industrial sector remains inefficient While the plant closures have had a positive effect, overall industry-wide factors

have had a much larger impact in the opposite direction Due to strong market demand and high prices of energy-intensive products,

manufacturers had more incentives to continue producing from smaller facilities Compared to the international market, major Chinese energy-consuming

industries are still less active in mergers and acquisitions, and still have not

realized efficiency gains from consolidated production Difficulties remain at the local level, where government officials are reluctant togive up tax revenues and jobs from local enterprises subject to closure


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Findings:

Energy-Saving Programs - Appliance Standards andEnergy-Efficiency Labels

China has a very active appliance standards and labeling programs, with minimum

energy performance standards (MEPS) for about 30 products During the 11th FYP, annual development of standards expanded from 3 to 6

products, including some new products

Some issues:

Bundling of MEPS, the reach standard, the energy label thresholds and thevoluntary endorsement label specification precludes the revision of any oneelement on a timeline separate from the revision of all four elements

Disconnects can develop between changing market conditions and existinglabel thresholds as a high percentage of models qualifies as efficient, thusdiluting the labels impact

Reach standards announced without corresponding energy labeling thresholdsor voluntary label efficiency specifications, so standard-setting process muststill be reopened at each point in time to revise the labeling thresholds

Lack of consolidation in the appliance manufacturing industry hampersenforcement of the standards and labeling programs


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Recommendations:Overall

Maintain existing policies and programs that are successful

Add explicit mechanisms to promote structural change

Continue to build the National Energy Conservation Center to facilitateinformation dissemination and training

Strengthen the capacity of provincial energy conservation centers Establish an independent institution similar to the U.S. Energy Information

Administration to systematically collect and analyze data focused on end-useenergy consumption


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Recommendations:20% Target

Continue with 20% Energy Intensity Target

Allocate target more scientifically, including a bottom-up analysis of energysaving potential

Add a target for Carbon Intensity


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Recommendations:Monitoring, Reporting, Verification

Create a consistent and transparent system for gathering and analyzing dataon energy intensity

Increase the level of public reporting regarding energy-saving policies andprograms

Standardize the metrics for targets and reporting

Establish systematic annual data reporting on greenhouse gas emissions


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Recommendations:Program Design

Improve the design phase for energy-saving projects

Clearly set program objectives, schedules, and targets Identify the target energy consumers

Specify the energy-efficiency measures and other mechanisms to be utilizedin the program

Develop an implementation strategy, including key milestones Develop funding mechanisms or incentives to support implementation

Disseminate information to program participants, and establishcommunication channels

Standardize the metrics for targets and reporting Establish a monitoring plan, including project indicators (metrics) and

monitoring procedures

Establish an evaluation plan


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Recommendations:Buildings Energy Efficiency

Revise the approach to existing building energy retrofits in cold climates, treatingbuilding envelope, control systems, and heat supply together

Expand the enforcement of building energy standards that have been effective inlarge urban areas to the rest of the nation improve building energy labels andprovide incentives for green building

Continue to place large emphasis on energy management of large-scale publicand governmental buildings

Enhance policy design and effectiveness through expanded surveys, monitoringand establishing meaningful baselines of building energy consumption/efficiency


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Recommendations:Industrial Energy Efficiency

Continue and expand the Top-1000 Program

Targets should be determined based on energy-saving potential of enterpriseor sector

Improve energy auditing capabilities

Benchmarking could be simplified to be used by more industries

Reporting and evaluation need to be strengthened

Dissemination of information on energy-saving opportunities andexperiences is needed


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Recommendations:Structural Optimization

Promote opportunities for structural change within industries

Address local concerns about small plant closures through furtherdevelopment of transition plans

Combine market mechanisms with administrative measures

Create additional mechanisms explicitly focused on structural change


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Recommendations:Appliance Standards and Energy-Efficiency Labels

Revise and strengthen energy performance standards for appliances

Undertake regular national surveys of energy end-use to assess programeffectiveness

Provide further support for enforcement of existing programs

Clarify the relationship between mandatory and voluntary efficiency labels

Increase participation in international networks for enforcement of appliance standards


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Acknowledgments

Funding provided by Energy Foundations Sustainable Energy Program (CSEP) Full report - Assessment of Chinas Energy-Saving and Emission-Reduction

Accomplishments and Opportunities During the 11th Five Year Plan- authored byMark D. Levine, Lynn Price, Nan Zhou, David Fridley, Nathaniel Aden, HongyouLu, Michael McNeil, Nina Zheng, Qin Yining of the China Energy Group, EnergyAnalysis Department, Environmental Energy Technologies Division, LawrenceBerkeley National Laboratory and Ping Yowargana, Azure International - Beijing

Review and collaboration with: Qi Ye and Hu Min of CSEP He Jiankun and Zhang Xiliang and their colleagues at Tsinghua University Martin Joerss, August Wu, Jian Sun, Haimeng Zhang, and Sabine Wu of McKinsey &

Company for their thoughtful discussions during preparation of this report

Acknowledgment and thank-you to: Interviewees who provided background information on Chinas various energy-

efficiency policies and programs Colleagues and visiting researchers in the China Energy Group at LBNL for their

thoughtful review and comments

Documents

LBNL Assessment of China's11th 5YP