Dr Andrew J Minchener (Principal Associate)

Transcription

1 Is China s Massive Coal-Fired Capacity Growth Sustainable? Presentation to the Global Insight European Fuel Price Conference December 2006 Dr Andrew J Minchener (Principal Associate)

2 Acknowledgements IEA Clean Coal Centre: Coal in China study July 2004 IEA Clean Coal Centre: Coal Resources for Power Generation in China (in preparation) EC DG TREN: EU-China-Power Study (NNE5/2001/552) January 2005

3 Scope of Presentation Chinese government energy policies and issues Coal fired power plant considerations Non-power sector considerations Coal reserves and supplies International implications The way forward?

4 China and Sustainability Long-term Energy Security -providing affordable and reliable energy supply Local Environmental Impacts -limiting acid rain impact on agriculture and food security -limiting the impact on population health Global Environment Impacts -Climate Change concerns

5 Energy growth is rising rapidly Domestic demand for goods as well as exportled demand Industry, especially metals, building materials, and chemicals Residential and commercial buildings mainly electricity uses Transport all modes Electrification

6 China s responses to the need for demand side reductions Ambitious goal for greater efficiency: 20% reduction in energy/gdp by 2010 Targets for equipment, industrial processes Hopeful calls for structural shifts in the economy Renewed consideration of financial incentives New efficiency programmes, e.g. Top 1,000 Enterprises, government procurement, Energy Conservation Law update Standards and labels: motor vehicles, appliances, equipment, buildings R&D and technology transfer

7 China s responses to rising demand on the supply side Ever more coal to be produced, ever more rail installed to move it, and ever more power plants built to use it Extensive grid expansion and upgrading Development of coal-based alternatives (CBM, synfuels) Introduction of electricity alternatives (wind) Gradual price increases, liberalisation of energy markets

8 Growth Rate of Electric Power Installation (Source: PennWell, Global Power Review, March 2006) Capacity in GW Year

9 New coal-fired technology options Sub-critical PCC Huge existing capacity- 286 GW in 2003 Massive numbers of new orders 87GW in 2003, hundreds of boilers Supercritical PCC Policy to rapidly deploy the technology 26GW large boilers ordered in 2003, ~43 boilers Ordering pattern continued through CFBC Very significant niche market established IGCC Demonstration plant planned at Yantai Interest in poly-generation CCS of growing interest at government level

10 Future ordering patterns of supercritical plant? 30 New Orders to meet IEA/Interfax/McCoy/China Energy Forecast Thermal Capacity 2020 Prediction = 720GW GW No. 600MW Units

11 Typical (old) 200 MW plant

12 Wangqu 2x660 MW Power Plant

13 Huaneng Yuhuan Power Plant

14 China Power Generation Capacity: 2005 China 2005 Installed Power Gen Capacity - Actuals Estimate TOTAL = 500GW 15.0% 40 GW 1.4% 3.0% 0.2% 9.0% 1 GW 40 GW 0.2% 8.0% Coal Hydro Nuclear Oil Gas Wind 0.0% Small Hydro 71.4% 4 GW 0.8% Solar PV Biomass NOTE: Statistics for coal, hydro, nuclear, oil and gas, and total installed capacity estimate, courtesy of Merrill Lynch. Source:PowerGen Asia-2006

15 Future of China s Installed Power Generation Capacity 2010 National Plan China 2010 Installed Power Gen Capacity - China National Plan TOTAL = 743GW 17.4% 1.3% 2.0% 3.6% 0.7% 8.5% 5 GW 63 GW 50 GW 6.7% 0.1% 1.1% 67.1% 8 GW Coal Hydro Nuclear Oil Gas Wind Small Hydro Solar PV Biomass NOTE: Statistics for coal, hydro, nuclear, oil and gas, and total installed capacity estimate, courtesy of Merrill Lynch. Source:PowerGen Asia-2006

16 Future of China s installed power generation capacity 2020 National Plan China 2020 Installed Power Gen Capacity - China National Plan TOTAL = % 3.3% 1.2% 5.0% 2.5% 63.0% 152 GW 12.6% 30 GW 80 GW 40* GW 6.6% 0.1% 3.3% Coal Hydro Nuclear Oil Gas Wind Small Hydro Solar PV Biomass NOTE: Statistics for coal, hydro, nuclear, oil and gas, and total installed capacity estimate, courtesy of Merrill Lynch. Source:PowerGen IEA Clean Asia-2006 Coal Centre Global Insight European Fuel Price Conference December

17 Power Production Uncertainties Longer term optimisation vs. shorter term needs Centralised planning system again found wanting Power selling price not truly subject to market forces while coal purchase price is to a greater extent Demand side and supply side energy saving is very important but the need to maximise production limits the near term opportunities Investment needs are very significant and may best be met via further rationalisation of the power sector

18 Coal fired power plant environmental considerations New legislation applicable to new plant and existing plant Tighter dust emissions Very strict SO2 emissions Some NOx control in due course Carbon capture and storage issues only just starting to be considered

19 SO2 Emissions from Coal Fired Power Plants 12 million tonnes NOx 6.5 million tonnes PM 2.75 million tonnes Source: GreenGen Ltd 2004

20 Coal s problems: low efficiency and high emissions Two Control Zones of Acid Rain and SO2 in China Efficiency comparison

21 CO 2 Emissions in China Source: IEA, World Energy Outlook 2002

22 CO2 Emissions from Coal Fired Power Plant Source: IEA 2006

23 Non-Power Sector Overall a major user of coal BUT Fragmented Complex Financially unattractive -Industrial Boilers (400 Mt) -Coking (200 Mt) -Gasification/chemicals (80 Mt) -Kilns (100 Mt) Limited investment to date (domestically and internationally)

24 Can China fuel the power plants? Overall rising demand but sudden downturn in mid 1990s Rapid adjustments of production levels are problematical Potential problems to meet supply requirements when large amount of new capacity comes on line Longer term issues with coal properties and costs as mines go deeper Output (Mt) Trends in coal output (Mt) Year

25 Coal Production Issues Longer term optimisation vs. shorter term needs Forward planning for large scale investment in State key mines will be difficult Future role of TVE mines is unclear Transportation to end users will be an increasing problem Development of a true market situation remains problematical

26 Coal?

27 Projected coal flows in 2020 Source: IEEJ October 2003

28 China s impact on the international coal trade Year Coal exports (Mt) Coal imports (Mt) Total Coal Traded Internationally (Mt)

29 The future? Market potential for new coal fired capacity in the power sector is enormous Market potential to retrofit and up-rate existing units is also very large FGD needed Coal quality management needed Start of international cooperation on CCS issues BUT there are major uncertainties especially in the coal production and transportation sectors that could impact adversely on China s industrial expansion

30 The way forward? China s industrial expansion will continue to be based on coal fired power generation Will it be possible to build all power related components necessary to meet market projections? Coal will continue to dominate the energy mix but can production meet demand across all sectors? Emissions control is critical and at present it is policy and regulation limited rather than technology limited. Will this be changed? Can the centralised and market based energy policies be reconciled? Can the State Owned Enterprise culture be broken? Will the investment needs be met? Can CO2 emissions be constrained?