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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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Findings:Energy-Saving Programs - Buildings
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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Findings:Energy-Saving Programs - Buildings
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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Findings:Energy-Saving Programs - Buildings
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
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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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Findings:Energy-Saving Programs - Small Plant Closures
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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Findings:Energy-Saving Programs - Small Plant Closures
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