The Chinese Coal Value Chain & Climate Change Kevin Jianjun Tu, Senior Associate Carnegie Endowment for International Peace 1779 Massachusetts Avenue Northwest Washington, DC 20036 October 27 th, 2011
Presentation Outline Background of China s Energy Sector Chinese Coal Value Chain & Challenges Coal Project at Carnegie Endowment
80 60 40 20 0 China as a Hybrid Economy Per Capita GDP (thousand $) GDP (trillion $) 2010 2030 China US World 2010 2030 Source: World Bank, IEA and own calculation. Note: GDP by market exchange rates. 150 120 90 60 30 0 In 2010, China passed Japan as the 2 nd largest economy. Per capita GDP of China < half of world average & 10% of US. Pattern of wealthy government vs. relative poor people will last.
100% 75% 50% 25% 0% Driver Underlying Global Energy Trend 0.5% 1.3% 1.7% 0.7% 5.2% 8.4% 70% 30% 24% China World 23% 27% 4.0% 18% 34% 37% US Source: BP World Statistical Review 2011. Renewables Hydro Nuclear Coal Gas Oil China & US are leading energy consumers. Energy mix of US is similar to the world average. China consumes too much coal, too little oil, gas, nuclear and renewables. Convergence of primary energy mix is a key global energy driving force.
TPED (Gtoe) Share of Global Energy Supply: China vs. US 18 Annual Growth % (1990-2008) Annual Growth % (2008-2030) Rest of World 12 63% 6 0 68% 22% 10% 1.5% 1.0% 5.1% 64% 19% 17% 1990 2008 2030 Source: IEA International Energy Outlook 2010. 1.0% 0.1% 1.9% 14% 23% US China
Targeting Chinese Coal is Key to Climate Solutions MtCO 2 Source: NBS, IEA, US EPA, ERI and own estimation. In 2006, China passed US as the leading carbon emitter. In 2009, emissions from Chinese coal comprised 20 % of global carbon emissions, an amount greater than total US emissions.
Nuclear: Aftermath of Fukushima Daiichi Nuclear Capacity Target in China by 2020 (GW) Source: Carnegie Policy Outlook on the Chinese Nuclear Industry (in Chinese). August 2011. Will China s nuclear expansion be scaled back? More pressure on coal in terms of carbon abatement?
Coal Resources Source: Tu (2011). Characteristics of coal resource distribution determines pattern of coal transport in China. China s Total Coal Resources: 1,021 Gt, ranking 2 nd in the world after Russia. 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).
Coal Production in China Coal Output (Gt) Share of Output Source: Tu (2011). Industrial Organization of the Chinese Coal Industry. & CNCA.
Coal Transport Pattern Coal Imports Exports Domestic Marine Transport Coal Imports Source: Tu (2011).
Transport Deters CCS Deployment in China Source: Jaccard & Tu (2011). CCS can allow China to continue relying on coal to fuel economic development while retarding spiking carbon emissions. GreenGen & Shenhua CTL CCS are two examples of CCS demonstration in China. Carbon capture, utilization & storage is the recent trend in China. Energy penalty of CCS poses significant challenges for coal transport infrastructure in China.
Chinese Coal Consumption by Sector Coal Use (Gt) Source: NBS and CNCA.
Installed Power Capacity in China by 2030 Source: Tu (2011).
CTL in China Energy security was used as an excuse for coal-to-liquids, coal-tochemicals development. Should CTL be positioned as a backup tech. instead of a energy security strategy? Source: Shenhua.
Chinese Coal Imports by Country in 2010 60 33% 22% Mt 30 0 11% 10% 7.0% 4.2% 3.2% 2.9% 2.8% 2.3% 0.7% Indonesia Australia Source: China Customs. Vietnam Mongolia Russia South Africa Canada USA North Korea Columbia Rest of World
Mt of Coal 200 150 100 50 Chinese Coal Imports/Exports Imports Exports China encouraged coal exports Coal Exports Peaked in 2003 0 1980 1990 2000 2010 Source: NBS and China Customs. Global coal trade is about one third of China s domestic coal consumption level. China became a net coal importer in 2009. Chinese coal imports = carbon tax on global coal trade. Economic and environmental implications of US coal exports to China.
MRV Challenge Coal Statistical Distortion Coal Output (Gt) Discrepancy (%) Monthly Coal Output(Mt) 2.9 40 600 TVE Mines Local State 2.4 30 Key State-owned 1.9 20 400 1.4 10 200 0.9 1997 2002 2007-2010 revision 2006 Revision Original Output % of Discrepancy 0 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Source: Tu (2011) & CNCA.
Death Toll (thousands) Safety Challenge Laobaidong 682 (1960) Sunjiawang 214 (2005) Source: Tu (2011).
Coal Project at Carnegie Endowment Medium- to Long-term Energy & Climate Solutions - Phase I: Coal Value Chain and Climate Change. Focus: coal industry environmental issues, efficiency & safety.
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