China s Energy Development in the Era of Global Engagement Kevin Tu China Program Manager International Energy Agency Dublin, 21 April 2016
China and the IEA About the International Energy Agency Found in 1974 in wake of 1973 oil embargo. Energy security, Economic development, Environmental awareness, Engagement worldwide IEA new ED s first official mission to China Vision speech in CASS in September 2015. 2015 IEA Ministerial Meeting Activation of IEA Association along with Indonesia and Thailand in November 2015. 20 th Anniversary Ceremony of IEA-China Engagement (30 March 2016) IEA-China Energy Cooperation Centre. Chinese senior official to work at the IEA. China launch of WEO 2016 special report WEO 2017 special report on China
Shifting global energy landscape 100% 75% 33.8% 7.1% 40.6% 50.2% Others 50% 25% 0% 22.2% 22.4% 59.0% 37.2% 27.4% 1974 2013 2040 China IEA China s ascendance in the energy sector has brought both opportunities and challenges in terms of global energy governance.
Comparison of energy mix 100% 75% 2.6% 8.3% 4.7% 16% 1.0% 4.8% 10% 11.3% 5.6% 2.4% 1.1% 21% 28% Nuclear Other renewables 50% 25% 0% 68% 31% 29% 36% 20% China World U.S. Hydro Gas Oil Coal The convergence of energy mixture between China and world average has profound implications on global energy & environmental agenda
Post-COP21 reality check 60 GtCO 2 50 40 30 20 10 Other OECD 9% United States 13% European Union 7% Other non-oecd 15% Other emerging economies 14% India 13% China 29% 0 1990 2000 2010 2020 2030 2040 2050 About 70% of the decarbonisation actions need to take place in non-oecd countries especially China
Air pollution as key policy driver Beijing Paris Los Angeles Photochemical Smog, 1940s 16 14 March 2014 index 43/100 >100 6 days earlier 2 days later Pictures courtesy of AirParif Great London Fog, 1952
PM2.5 Emissions by Source China Beijing Coal & Secondary Emissions, 45% Coal, 17% Vehicle, 22% Others, 15% Construction/ Industrial, 20% Vehicle, 20% Adjacent Regions, 24.5% Solvent, 16% Construction, 16% Source: Deutsche Bank & Beijing Municipal Government. Agriculture, 4.5%
Governance structure & 13 th FYP New normal of GDP growth: 7% in 12th FYP, 6.5-7% in 13th FYP. Energy intensity and carbon intensity reduction targets: 16% & 17% in 12th FYP, and 15% and 18% in 13th FYP. First ever absolute national energy consumption cap at 5 billion tce by 2020.
1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 Has coal use in China already peaked? 3500 3000 2500 The end of two digit growth Peak coal in China? Mtce 2000 1500 1000 Coal demand declined two years in a row China joined the WTO 500 0 After the take off in 2001 and a golden decade of average annual growth around 10%, a new era for coal in China has started
Has coal use in China already peaked? National Coal Consumption (billion tonnes) Growth Rate (%) 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 2011 2012 2013 2014 2015 2020 2025 2030 Demand 3.89 4.12 4.24 4.12 3.94 4.08 3.70 3.61 Growth % 11.4 5.9 3.1-3 -4.3-0.9-2 -0.5 18 15 12 9 6 3 0-3 -6-9 Source: CERS (2016) China Energy Outlook 2030.
Oil and Gas Sector Reform in China Document Date Authority Key issues on Reform Not known yet Near future Not known yet (Expected) Liberalization of crude import licensing Further deregulation in pricing Futures and spot trading of Chinese oil and gas Third party access of pipeline infrastructure Opening upstream oil and gas exploration Reform on resource taxation system Mineral rights of unconventional gas
Nuclear development after Fukushima State Council (2014) Before Fukushima High Before Fukushima Medium Before Fukushima Low NDRC (2007) Operational capacity in 2010 0 20 40 60 80 100 120 China s operational nuclear capacity target in 2020 (GW) Post-Fukushima political reality: higher safety standards, technological uncertainties, public attitude towards inland nuclear construction, rapid development of renewables, and overcapacity of coal-fired power plants
China leads global Renewable growth Shares of net additional renewable capacity, 2014-20 India 9% Brazil 5% Africa 4% Rest of non - OECD 9% EU - 28 13% United States 9% Japan 5% Rest of OECD 8% China 38% China alone is expected to add more renewable power capacity than all OECD countries together, and than all other non-oecd countries together
Period Level of Milestone events Historical engagement Development No Pre- 1980s 1980s 1990s Since 2000 engagement Start of engagement More active engagement More influential engagement Overview of China s Engagement in Global Energy Governance Beginning of oil exports, without direct contacts with international energy governance bodies. Became a member of the WEC in 1983. Joined IAEA in 1984. Together with Hong Kong and Chinese Taipei, joined the APEC Energy Working Group in 1991. Signed UNFCCC treaty in 1992. Signed a MOU with IEA in 1996. Became a founding member of JODI in 2001. Established co-operation relationship with Energy Charter in 2001. Founding member of IEF in 2002. Established co-operation relationship with OPEC in 2005. Founding member of SCO Energy Club in 2007. Founding member of IFNEC (International Framework for Nuclear Energy Cooperation) in 2010. Engaged in in-depth energy discussions under the G20 process since early 2010s. Joined IRENA in 2014. Activation of Association with the IEA in 2015 Driving forces Increasingly closer energy interdependence between China and the world; Bilateralism -> multilateralism; China s evolving views and practices in global governance; Transitions in global energy landscape; Global and local environmental challenges especially climate change and air pollution.
Concluding remarks Alleviating air pollution ASAP and peaking carbon emissions around 2030 are two most important energy policy drivers in China. Coal is expected to continuously fuel China s economic growth in the foreseeable future, cleaner coal technology, air pollution control and lower carbon energy transition are key to coal s future in China. Comprehensive energy sector reform is the prerequisite to realize the full potential of natural gas utilization and renewable development in China. Large scale nuclear development could move China s climate agenda forward, but has to face post-fukushima political reality including less supportive public attitude and overcapacity of coal-fired power plants. Recent progress between China and the IEA has laid a solid foundation for China s engagement in global energy governance, the future of bilateral relations depends on efforts at both sides.
Thank you very much! Kevin Jianjun Tu China Program Manager International Energy Agency Kevin.Tu@IEA.org