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The Chinese Coal Value Chain & Climate Change
Kevin Jianjun Tu, Senior Associate Carnegie Endowment for Interna<onal Peace
1779 MassachuseDs Avenue Northwest
Washington, DC 20036
October 27th, 2011
Presenta4on Outline
• Background of China’s Energy Sector • Chinese Coal Value Chain & Challenges • Coal Project at Carnegie Endowment
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China as a Hybrid Economy
• In 2010, China passed Japan as the 2nd largest economy. • Per capita GDP of China < half of world average & 10% of US. • PaDern of wealthy government vs. rela<ve poor people will last.
Per Capita GDP (thousand $) GDP (trillion $)
Source: World Bank, IEA and own calcula<on. Note: GDP by market exchange rates.
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Driver Underlying Global Energy Trend
Source: BP World Sta<s<cal Review 2011.
• China & US are leading energy consumers.
• Energy mix of US is similar to the world average.
• China consumes too much coal, too liDle oil, gas, nuclear and renewables.
• Convergence of primary energy mix is a key global energy driving force.
70%
30% 23%
4.0%
24% 27%
0.7% 5.2% 8.4%
0.5% 1.3% 1.7%
18% 34% 37%
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Source: IEA Interna<onal Energy Outlook 2010.
Share of Global Energy Supply: China vs. US
68% 64%
63%
5.1% 1.0%
1.5%
1.9%
0.1%
1.0%
23%
14%
17%
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Annual Growth % (1990-‐2008)
Annual Growth % (2008-‐2030)
Targe4ng Chinese Coal is Key to Climate Solu4ons
• In 2006, China passed US as the leading carbon emiDer. • In 2009, emissions from Chinese coal comprised 20 % of global
carbon emissions, an amount greater than total US emissions.
MtCO2
Source: NBS, IEA, US EPA, ERI and own es<ma<on.
Nuclear: AMermath of Fukushima Daiichi
Nuclear Capacity Target in China by 2020 (GW)
Source: Carnegie Policy Outlook on the Chinese Nuclear Industry (in Chinese). August 2011.
Ø Will China’s nuclear expansion be scaled back?
Ø More pressure on coal in terms of carbon abatement?
Coal Resources Ø China’s Total Coal Resources: 1,021 Gt, ranking 2nd in the world ader Russia.
Ø Proven Coal Reserves: Gt % US 237 25.6 China 182 19.6 Russia 157 16.9 World 928 100.0 Source: MLR, CNCA and BP (2010).
Source: Tu (2011).
Ø Characteris<cs of coal resource distribu<on determines paDern of coal transport in China.
Coal Produc4on in China
Source: Tu (2011). Industrial Organiza<on of the Chinese Coal Industry. & CNCA.
Coal Output (Gt)
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Share of Output
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Source: Tu (2011).
Coal Transport PaRern Exports
Coal Imports
Domes4c Marine
Transport
Coal Imports
Transport Deters CCS Deployment in China
Source: Jaccard & Tu (2011).
Ø CCS can allow China to con<nue relying on coal to fuel economic development while retarding spiking carbon emissions.
Ø GreenGen & Shenhua CTL CCS are two examples of CCS demonstra<on in China.
Ø Carbon capture, u<liza<on & storage is the recent trend in China.
Ø Energy penalty of CCS poses significant challenges for coal transport infrastructure in China.
Coal Consump4on by Sector in China
Source: NBS and CNCA.
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Coal Use (Gt)
Installed Power Capacity in China by 2030
Source: Tu (2011).
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CTL in China
Source: Shenhua.
Ø Energy security was used as an excuse for coal-‐to-‐liquids, coal-‐to-‐chemicals development.
Ø Should CTL be posi<oned as a backup tech. instead of a energy security strategy?
Source: China Customs.
Chinese Coal Imports by Country in 2010 !!"#
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Coal Exports Peaked in 2003
China encouraged coal exports
Source: NBS and China Customs.
Chinese Coal Imports/Exports Ø Global coal trade is about one third of China’s domes<c coal consump<on level.
Ø China became a net coal importer in 2009.
Ø Chinese coal imports = carbon tax on global coal trade.
Ø Economic and environmental implica<ons of US coal exports to China.
MRV Challenge – Coal Sta4s4cal Distor4on
Source: Tu (2011) & CNCA.
Coal Output (Gt) Discrepancy (%) Monthly Coal Output(Mt)
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Safety Challenge
Source: Tu (2011).
Laobaidong 682 (1960)
Sunjiawang 214 (2005)
Death Toll (thousands)
Coal Project at Carnegie Endowment
Ø Medium-‐ to Long-‐term Energy & Climate Solu<ons -‐ Phase I: Coal Value Chain and Climate Change.
Ø Focus: coal industry environmental issues, efficiency & safety.
Thank You !