The Way to Low-Carbon Economy
for Circum-Bohai-Sea Region
PALADINPan Zhaoan,[email protected] Yan, [email protected] Ni, [email protected] University
SK
Necessity
World
Chi
na
Situation
Problems
Comparative
Analysis
Eva
luat
ion
Solution
Enterpris
eGovernment
Citi
zen
SK’s Way
Str
ateg
y
Challenges
R&D
Center
1
2
3
4 Provide general solution
for low-carbon economy in Circum-Bohai-Sea region
Specify the actions for SK on renewable energy in Circum-Bohai-Sea region
Goal
Co
nten
ts
◆ Avoid High Cost in the Future Without any action, the loss of climate changing 〓 5% ~20%of GDP 〓 loss of the First World War,
the Second World War and the Great Depression. In 2040, losses caused by severe weather will reach 3 trillion dollars per year, accounting for 3% of the
current global GDP.
◆ Avoid Carbon Lock Definition: with a huge economy , a
country’s technologies and systems based on fossil fuel have great inertia.
If emission peak delays 10 years, the maximum annual emissions rate would expand its 1-fold, from current 2.5% to 5%.
◆ Energy Security Reducing dependence on oil is the goal
of the countries all over the world. More balance energy structure, much
safer energy security.
2000 2001 2002 2003 2004 2005 2006 20070
10
20
30
40
50
60
70
80
The Proportion of EnergyConsumption in China
Coal ShareOil ShareNatural Gas Share Hydroelectric, Nuclear Power and Wind Power Share
Unit:
%
The Necessity for Low-Carbon Economy in the World1.1
The Necessity in China1.2
China relies heavily on coal and oil, whose consumption accounts for 90% of all energy consumption.
◆ Emission Reduction Commitment
China USA EU Russia India Japan Brazil Germany Canada UK0.00
1,000.00
2,000.00
3,000.00
4,000.00
5,000.00
6,000.00
7,000.00
8,000.00
0
5
10
15
20
25Carbon Emissions
Emissions(Million tons) per emission(ton)
Unit:
Unit:
World
China
USA
Korea
Japan
0 1 2 3 4 5 6 7 8
Energy Consumption 2006 2005 2004
Unit: 10 thousand dollars GDP
2009.12.18, Jiabao Wen, Copenhagen,” Carbon dioxide emissions per unit of GDP of China in 2020 will reduce 40% -45% than in 2005”.
The Necessity for Low-Carbon Economy in China1.2
◆ Economic Restructuring China’s energy consumption per GDP is double of
the world average level ; Much higher than USA, Korea, Germany, UK and
Japan .
◆ Pressure of Emission ReductionChina is the country with the largest carbon emissions.
The Energy Distribution of SK in Three Regions1.3
SK international trade (Beijing) Co., Ltd.SK (China) Investment Co., Ltd.SK (Beijing) Highway Technology Co., Ltd.
SK Energy oil (Tianjin) Co., Ltd.
Offshore Oil Chemical Co., Ltd. DalianBeijing Valley Fuel Chemical Co., Ltd. DalianSK Energy Co., Ltd. DandongSK Energy Co., Ltd. ShenyangSK Energy Development Co., Ltd. Shenyang
SK High Oil Co., Ltd. ShandongSK Energy Co., Ltd. ZiboSK Asphalt Co., Ltd. RizhaoSK&Jinchao Plastic Industry (Yantai) Co., Ltd.SK Heruida oil fire Yantai Co., Ltd.YantaiSK Jinchao Plastic Industry (Yantai) Co., Ltd.SK Energy (Qingdao)Co., Ltd. SK Emerging Energy (Qingdao) Co., Ltd.
SK Zhenhua Asphalt Co., Ltd.ShanxiShanxi Huineng Coal Industry Co., Ltd.
SK Energy International Trading (Shanghai) Co., Ltd.SK Takahashi Solvent Co., Ltd. Shanghai
SK Shenxin Packaging Co., Ltd. ZhejiangSK Jin Hua Baoying Asphalt Co., Ltd.Taizhou Zhongran-SK City Gas Development Co., Ltd.SK Baoying Asphalt Storage Co., Ltd. Ningbo
19
60
Energy enterprise resource is concentrated in the Circum-Bohai-Sea.
2005 2006 20070
10000
20000
30000
40000
50000
60000
70000
GDP&GDP Growth Rate
Yangtze River Delta Pearl River Delta Circum-Bohai-Sea
5
10
15
20
GDP in Circum-Bohai-Sea is the compared with the other two ( Reasons :
It includes Beijing and Shandong which is in the third position nationwide in GDP )
Pearl River Delta has the largest growth rate, followed with Yangtze River Delta, Circum-Bohai-Sea the
Analysis
The average car ownership is highest in Pearl River Delta with the highest growth rate.
The average car ownership in Circum-Bohai-Sea is the with a soft growth rate compared with the other districts.
Analysis
Average Civilian Car Ownership
1
3
5
7
0
2
4
6
8
Unit: every hundred
persons
Comparative Analysis for The Three Regions2.1
largest
last. lowest
Low-Carbon Standard Evaluation System2.2
Province F1 Rank F2 Rank F3 Rank Score Rank
Beijing 1.78 3 1.50 4 3.48 1 1.94 1
Shanghai 0.61 5 3.65 1 0.11 5 1.77 2
Tianjian 0.39 6 2.55 2 0.90 2 1.36 3
Guangdong 2.70 1 -1.91 10 -0.34 6 0.33 4
Zhejiang 1.82 2 -1.4 7 -1.42 11 -0.02 5
Jiangsu 1.29 4 -1.71 9 -1.37 10 -0.37 6
Inner Mongolia -2.50 10 1.71 3 -0.53 7 -0.46 7
Liaoning -1.22 8 -0.87 6 -0.72 8 -1.00 8
Hebei -1.38 9 -1.51 8 0.89 3 -1.07 9
Shandong 0.07 7 -2.58 11 -1.18 9 -1.22 10
Shanxi -3.56 11 0.59 5 0.18 4 -1.26 11
First level indicators Second level indicators
Low-carbonproduction
Carbon production levelEnergy consumption for unit GDP
Energy consumption for unit industry addedIndustrial waste water emission
Industrial exhaust emissionLow-carbon
consumptionCarbon emission per capita
Energy consumption per capitaElectricity consumption per capita
Low-carbonresource
Forest coverageAverage CDM project emission
Low-carbonpolicy
The yearly total investment resource for industrial pollution control
Government subsidy ratio for industrial pollution control
Set up an evaluation system for low-carbon economic development level
Aim at comparing the low-carbon development level of three economic regions in China
Analyze the strengths, find out the potentials and problems as well as provide solid data base for next section’s analysis.
District F1 Rank F2 Rank F3 RankComposite
ScoreRank
Yangtze River Delta 1.24 2 0.18 2 -0.9 3 0.46 1
Pearl River Delta 2.7 1 -1.91 3 -0.3 2 0.33 2
Circum-Bohai-Sea -0.92 3 0.2 1 0.4 1 -0.25 3
F2: Low-Carbon Consumption and Resource Index
Circum-Bohai-Sea is in the first place;
However , the population size in Circum-Bohai-Sea is twice times of that in Yangtze River Delta , three time of that in Pearl River Delta;
Thus , overall industrial emissions and energy consumption are much higher than the other two districts.
F3 : Low-Carbon Policy Index
The average reductions of CDM projects is a little bit higher in Pearl River Delta.
Industrial pollution subside from the government in Circum-Bohai-Sea is 8%, which is much higher than the other two areas.
Combining the two factors,
Circum-Bohai-Sea is NO.1 .
Circum-Bohai-Sea is in the last place;
Energy consumption of unit GDP and unit industry value added in Circum-Bohai-Sea is the highest;
Carbon production in Circum-Bohai-Sea is the lowest.
F1: Low-Carbon Production
Index
Low-Carbon Standard Evaluation System2.2
Public AwarenessWeak public awareness Lack of market power
The share from the companies in Circum-Bohai-Sea is the lowest
Companies
Carbon ProductivityCarbon production level is lowEconomic growth pattern needs to be changed
Government Government’s low-carbon plan needs to be improved
Problems for Low-Carbon Economy in Circum-Bohai-Sea2.3
Indicators
★ ★★ ★★★
Energy Consumption per GDP
★ ★★ ★★★
★ ★★ ★★★
Average CO2 Emission ★ ★★ ★★★
★ ★★ ★★★
★ ★★★ ★★
Carbon Production
Industrial Energy Consumption
Average Energy Consumption
The Share of the Companies’ Investment Sources of Current Industrial Pollution Control
Circum-Bohai-Sea
Yangtze River Delta
Pearl River Delta
Power Valley, Solar City National Renewable Energy Industrial Base National Model City on Applied Solar Utilization WWF China’s Low-Carbon City Development Project’s Pilot City
Binhai
City Case
Green Low-Carbon Capital Six “Golden Sunshine”
Projects
The Guidance for Speeding up the Development and Utilization of Solar Energy
Promote the Industrial Development in Beijing
Environmental Friendly to Live
China’s First Experimental Park on Recycling Economy
“Low-Carbon Life Starts from me” TIANJIN Set Up the First Emissions Exchange Market in China
The First Low-Carbon House in China
Solar City
National High Technology Biology Industrial Base
New Energy Industrial Base in State Torch Program
National Renewable Energy Model City on Construction
Applications
Beijing
Baoding
Dez
hou
11
Government Actions for Low-Carbon Economy3.1
Policy
Start low-carbon economic development strategy as soon as possible , which includes the 12th Five-Year Plan
Improve energy statistics system, and gradually introduce carbon emission statistics
Develop and improve the energy efficiency standards, and strengthen the implementation of energy efficiency standards
Economy
Credit support: increase the budget, promote “green credit " via banks
Explore various financing channels: financial allocation , policy bank loans & VC Tax incentives Product subsidies Reform the energy pricing mechanism Explore the "Carbon trading" in the field of
financial innovation Implement the contract of energy
management, international CDM transaction and other
new financing means
R & D
Strengthen international cooperation in low-carbon technology innovation
Set up special funds to support energy technological R & D and innovation
Promote R & D cooperation between Schools and firms
Personnel training Scientific research Project development Information technology
National energy R & D institutions
Government Actions
CitizenShape sustainable consumption patterns
Reuse
Re-calculate
Recycle
Re-evaluate
Reduce
Rescue
Select energy-saving appliances Less use of air conditioners Turn off lights
Purchase new energy vehicles Select the green low-carbon construction Select green food
Buy less disposable products Buy more second-hand or refurbished items Use reusable shopping bags
Do waste sorting and recycling Use readily biodegradable lunch box Use more bio-energy
Establish special conservation areas to save species Refuse fur products Against deforestation and protect the forest
Calculate the direct economic costs Calculate the carbon emission Choose the products with lower price and less carbon emission
Citizen Operations for Low-Carbon Economy3.2
Enterprise Movements for Low-Carbon Economy3.3
Set up a new firm
Co-operation
R&DPurchase Deposits
Open Shanghai's first hydrogen service station for cell vehicles.
Establish two EPR in the UAE with Suez and Areva Group.
Built the megawatt solar photovoltaic power generation system with China in 2004 , whose total installed capacity ranking first in Asia with total investment of 7.5 million U.S. dollars.
Cooperate with Shell in the development and production of natural gas in Sichuan.
Shell China Exploration and Production Co., Ltd. was awarded a CBM project in Shanxi Province with 55% participating interest in 2007.
Invest nearly 180 million Yuan building a 60,000 t / year scale biodiesel demonstration plant.
Plan to spend 3.5 billion Australian dollar on the acquisition of Australian coal bed methane and liquefied natural gas company in 100% equity with Shell Energy Holdings Australia Ltd. Cooperation .
Plan to buy Australia's largest coal bed methane producer Arrow Energy Ltd with Petro China in 2010.
Invest in new energy field more than one billion U.S. dollars annually.
M&A
In December 2009, enter the clean energy field by the acquisition of XTO Gas Company with 41 billion U.S. dollars.
SK will increase its investment in China on renewable energy,Combined with other areas, SK will invest 1 billion Yuan in total.
“
”
SK's Current Decisions in Low-Carbon Industry4.1
1, improve the efficiency to break technological barriers; 2, provide more low-carbon energy3, find any way possible to cut the carbon emission and other polluted emission.
“
”
We mainly realize the technological revolution in three areas:
Solar Energy
Wind Energy
Biology Energy
Challenges for SK in Low-Carbon Industry4.2
2004 2005 2006
The area is new and has a great potential in Circum-Bohai-Sea region
The industry has not set up its competition bar The industrial scale is relatively low For SK, it needs to lead the technology ability
In China’s rural areas, the firewood and coal saving stoves reach 0.2 billion
Approximately 70% of rural households benefit
3,764 large and middle digesters 0.341 billion cube meters biogas
0.12 billion ton organic waste and waste water
80 billion cube meters biogas .
Supporting Policies China has invested 4.8
billion Yuan for the enterprise .
For the fuel ethanol companies, the government exempts 5% of the consumption tax.
Shortage The shortage of raw
resources limits the mass production of biomass energy
It does not set up a comprehensive biomass energy industrial system .
Solid Biomass Energy
Biology Energy
Analysis
Gas Biomass Energy
2.26 billion rural household biogas digesters
9.2% of the total rural households
The 8.7 billion cube meters per year for biogas production
Benefit 0.75 billion people Add 18 billion Yuan directly to
the farmers .
Liquid Biomass Energy1
Strong competition
SK lacks of technology power
Company Strength
First install in Shandong in 1985, later in Tianjin , own the biggest wind power manufacture in China .
Form the industrial arrangement with Beijing as the center and Dalian, Inner Mongolia as the production bases.
In 2006, set up Tianjin Gamesa Wind Power Company.
In Jan, 2007, set up a blade manufacture in Dongying.
In Tianjin ,set up a joint venture manufacture-Ruineng North Fans Manufacturer.
Representative is in Beijing ;Set up Tianjin Suzlon Energy Company.
Wind Energy Industry Ranking for Countries
ChinaUSA
Spain
German
yIndia
Italy
France
Engla
nd
Canad
a
Portuga
l0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Million Watt
Challenges for SK in Low-Carbon Industry4.2
Wind Energy distribution in ChinaWind Energy
Analysis2
60% to 70% of the solar battery industry in China is controlled by the above companies, which set the industry line bar extremely high and difficult for others to enter in.
For SK, it is urgent to set up a R&D center, which will help SK to take advantage of the convenient management.
Companies Strength Weakness Solar battery production level is
the second internationally. No specific R&D or sales department in
Circum-Bohai-Sea
Headquarter is in Baoding Inefficient management team
Representative is in Beijing, set up a solar company in Tianjin
It is a joint venture company with China Yiqing Group, which bring operation risk
Complete running arrangement in Circum-Bohai-Sea
No R&D center in Circum-Bohai-Sea
Challenges for SK in Low-Carbon Industry4.2
Company Names2007 2008 2009
Supply(MW)
Sales(MUS$)
Sales(MUS$)
Supply(MW)
Sales(MUS$)
Suntech Power Holding. Co., Ltd 64 1348.3 497.5 1923.5 704 1693.3Canadian Solar Inc 83.4 302.8 167.5 709.2 325.3 643.3
Solarfun Power Holdings. Co., Ltd 78.4 328.3 172.8 725.4 313.4 553.5Trim Solar Limited 67.96 301.8 201.01 831.9 399 845.1
JA Solar Holdings Co. Ltd 132.4 369.3 277 800 509 553.7Yingli Green Energy Holdings Co. Ltd 142.5 580 281.5 1107.1 525.3 1062.8
China Sunergy Co., Ltd 74 234.3 107.2 350.9 194 284.9
Competitors Analysis for SK in solar industry in Circum-Bohai-Sea region
Solar Industrial Analysis
3
Domestic Companies’ Supply and Sales
Supply (MW)
Renewable Energy
Current Development
Future Picture
Technology Requirement
Entering Threshold
Government Support
Money Resource
Solar ★★★ ★★ ★ ★ ★★ ★★
Wind ★★★ ★★ ★★ ★★ ★★ ★★
Biomass ★ ★★★ ★★★ ★★★ ★★★ ★
Weakness
International management style Large investment package Complete running arrangement in Circum-Bohai-Sea
No R&D center in Circum-Bohai-Sea
Unstable fund resources problem
Government Support: The Circum-Bohai-Sea region has make its low-carbon economy as its main development road in the future
Technology Innovation Investors’ enthusiasm for the low-
carbon economy
Single financial resource Depend on the business cycle Operation risk
S W
O T
Evaluation on Renewable Energy4.3
SWO
T Analysis for SK on Renew
able Energy
4.4
Wind
1.Fans Manufacture ★ Abandon the industry.
2.Wind Farm ★ Our suggestion for SK is
to cooperate with some local state-owned power groups to own a share in the business.
3.Additive Market ★ SK could use the
opportunity to share the Circum-Bohai-Sea market with its high technology level in battery field, sales net and local government policy.
★ SK could use its technology advantage to enter the field along with the well-prepared sales channels and sufficient capital.
★ Another method SK could use is to joint venture with the local companies.
Solar
Products for SK in Low-Carbon Industry4.5
★ Develop its Fuel ethanol : It is a blank field in Circum-Bohai-Sea region.
★ Explore biodiesel: Because the companies at home and abroad are entering the field consecutively, SK needs to seize opportunities.
Biomass
For
Maintain Core Competitiveness
Set up a R&D Center
It’s the national politics center, which helps to know and master the policy changes in time There are many universities and research centers in Beijing, which helps the process of the R&D Close to SK headquarter, easy to manage
Strength
Tianjin
Beijing
Shanghai
High living cost , lower the employee’s happiness High housing price, which increases the running cost Weakness
It’s a national new energy center Local governments provide preferential policies for the companies Intercity Highway makes Beijing and Tianjin as a whole Relative low housing price
Strength
Inefficient human resources Hard for SK headquarter to manage Weakness
SK has stable sales net in Yangtze River Area Competitive Human Resources
Strength
The Farthest from SK headquarter High living cost High housing price
Weakness
Advice: Choose Tianjin
R&D Center Decision for SK in China4.6
R&D Center in China
SK
Necessity
World
Chi
na
Situation
Problems
Comparative
Analysis
Eva
luat
ion
Solution
Enterpris
eGovernment
Citi
zen
SK’s Way
Str
ateg
y
Challenges
R&D
Center
1
2
3
4Summary
Thank You !