International experience with fuel substitution -and applications for UB

Transcription

1 International experience with fuel substitution -and applications for UB Workshop April 10, 2008, Ulaanbaatar Robert J. van der Plas, World Bank consultant

2 Contents International Experience Constraints Best Practice Approaches Example Semi-Coked Coal Next steps for UB Rough cost estimates

3 International Experience fuel substitution Type of substitution More experience: cooking and transport fuels Less experience: heating fuels Heating fuel substitution Recently: China From raw coal to briquettes From coal& briquettes to electricity Decades ago: Japan, Korea, England and others Raw coal to briquettes, electrical heating, resettlement, gas distribution network Elements of strategy for briquettes (China) Initial supply by Govt, but poor performance Switch to fuel subsidy and private providers Change to improved stove Reduce consumption, better combustion quality, force people to use new fuel Prohibition of raw coal usage Experience with electricity (China) 140,000 households Electric storage heater, distribution network Yuan 38,000/hh ($5300) Subsidy covered 2/3 of heater costs, 100% of internal wiring, and 100% of distribtion network upgrade And also 2/3 of off-peak electricity costs (0.20 Yuan/kWh) or $18 million per year What about 600 MW additional generation capacity?

4 Substitution takes place naturally When: Household become richer Traditionally used fuels become expensive or scarce For external reasons (such as global warming, air pollution) Substitution to a higher quality fuel: Higher energy efficiency Higher level of comfort But normally also: Higher costs

5 Lack of Information Awareness of the options Where to obtain Constraints to fuel substitution uptake Non-Availability Cleaner fuels are not produced Cleaner stoves are not available Unaffordable (low income households) Cleaner fuels are likely to remain more expensive Inefficient stoves or HOB are already owned and used Cleaner/fuel efficient stoves need to be bought Difficult Market Penetration Coal, coal + sawdust briquettes 4-5 MNT/MJ LPG 20 MNT/MJ Kerosene 18 MNT/MJ Electricity 6-14 MNT/MJ

6 Best Practice Approaches Combination of (i) Regulation, Enforcement + Incentives (ii) Use of efficient end-use equipment (i) Regulation Standards Fuel: composition, energy value, pollutants Equipment: min efficiency, max fuel cons, max emissions Compliance Voluntary - Information campaign Compulsory - Enforcement Ban raw coal, phase-out leaded gasoline Allow only qualifying (certified) equipment (ii) Financial Incentives Taxation Polluter Tax Tax on dirty fuels, low (or none) on clean fuels to make clean fuels more affordable Tax on energy in-efficient equipment (car, stove, etc).

7 Cont d (ii) Financial Incentives Provide Subsidies for energy-efficient or clean equipment Buy-down higher investment costs on clean fuels to make clean fuels more affordable Subsidy Issues Need to be targeted Difficult to target the right population, free rider effect Exit strategy needed Very difficult in case of poor population Price controls Advantage: affordable price for substitution fuels Disadvantage: rations supply and can over-stimulate demand; difficult to enforce Without regulation, limited success.

8 SCC Briquettes Idea + Refine Idea design Compliance with Standards (fuel + appliance) Production issues Appliance issues Affordability issues Project Cycle Marketing strategy Pilot? Regulatory framework Potential support needed adoption testing Resulting heating costs Emission levels Acceptability Supply proven technology

9 Next Steps for UB Best Practice suggests combined approach: fuels + appliances Set appropriate standards for fuel and equipment for use in ger districts Create testing & certification capacity Assess performance & production of better fuels + stoves Determine potential impact Emissions + fuel consumption for fuel/stove combinations Estimate heating costs for end-users Estimate investment costs to assist start-up the production of fuels Develop mechanism to disseminate better fuels + stoves Develop mechanisms to verify compliance with standards Information campaign Use cleaner fuels Use better stoves Decide on enforcement, taxation, subsidization Allocate budget