1. The Rationale and Objectives
The rationale for the Working Group on Energy Strategies and Technologies stems from the dual observation that energy is fundamental bo both development and soc ioeconomic growth, and presently is a major contributor to environmental degrada tion. The present path of energy system development worldwide is not sustainable from an environmental point of view, nor is it compatible with the social, econ omic and environmental goals of China, as spelled out in, for exarmple, China's Agenda21. This conclusion has been elaborated on in earlier reports of the Worki ng Group to CCICED. A major change in energy system development in China is requ ired to meet the social, economic and environmental goals of China, which is sum med up as sustainable development. To achieve such development will require a co nsiderably longer time period than the five years of Phase II of CCICED; however , as outlined in the report on anctivities and in the workplan, the Working Grou p believes that significant contributions can be made during Phase II.
Therefore, in order to realize the social, economic and environmental goals and objectives of China, a new approach to energy needs to be developed and implemen ted. Such an approach is referred to here as a sustainable energy approach. The Working Group's role is to provide, in this context, independent analysis and ba lanced advice to the Government of China through the CCICED. By offering solid t echnical and logical justification for the adoption of a sustainable energy appr oach in China, and by providing realistic concrete examples and suggestions for such an approach, the Working Group can contribute to a process in China where e nergy developments will contribute to and strengthen sustainable development. Th e emphasis is on recommeading technically feasible and economically viable activ ities.
The Working Group observes that this approach to energy development will also st rongly support other efforts to alleviate poverty and improve the situation of t he disadvantaged, particularly women. While conventional approaches to energy te nd not to be conducive to such objectives, elements of a sustanable energy appro ach contan the menas for reaching objectives in these and other needful areas.
2. Focus of the Work
The process of modernization of China involves creating step-by -step a socialis t market economy. This economy will operate in a world characterized by globaliz ation and liberalization of markets. These overriding processes will create the setting in which the development of China's energy system will largely take plac e.
Investments in the energy system make up a significant fraction of total investm ents in any rapidly growing economy. They are projected to increase, as the econ omy continues to grow. However, traditional sources of finance (e.g., government finance), are not likely to be able to meet increasing demands for capital. Rea listically, only private financial markets, domestic and foreign, will be able t o contribute the major parts of the needed capital in the future. Foreign direct investment has been an important and rapidly growing new source of capital in C hina in recent years. In addition, Chin has an enormous potential for establishi ng private domestic capital markets based on domestic private savings.
This leads to a need to create conditions that will attract mobile private capit al. China has already moved in this direction, as witnessen by the foreign inves tments that are being made. From the point of view of overall development of Chi na, however, it is necessary but not sufficient those capital investments should grow. This capital must flow to investments that are compatible with sustainabl e development in a broad sense.
A fundamental issue in energy for China is in fact the design of a facilitating environment for such investments to happen. A system of incentives and disincent aslly positive areas in needed The Working Group has accepted the challenges of developing ideas in this context, as reported below.
The major elements in a sustainable energy approach are (i)more efficient use o f energy, especially at the point of end use, (ii)increased utilization of rene wable sources of energy, and (iii)developing and implementing a new generation o f cleaner fossil-fuel using technologies (UNDP, 1997).
The Working Group has analyzed the situation of China in its earlier reports to the CCICED, and concluded that all three elements are relevant and applicable to China's conditions. Detailed analysis in these areas may be found in the underl ying reports that have been prepared for the Working Group, and attached to the Working Group reports to the CCICED.
In Phase Iof CCICED. the Working Group also analyzed and made recommendations co ncerning the important contributions to sustainable development that may be obta ined in China from an increased utilization of natural gas from conventional gas sources. The Working Group has also discussed and made recommendations regardin g nuclear power in China. For the time being the Working Group is not pursuing n ew analyses in these areas.
The work of the Working Group in phase II of CCICED will continue to focus on a continued rapid improving of energy efficiency in all sectors in China, and on e xpanding the modernization and utilization of renewable sources of energy, espec ially biomass, wind and solar energy.
Also, because of the large resources of coal in China, and new long term options to use coal in ways compatible with sustainable development, the Working Group is developing and will contribute new ideas concerning the development of a long -term, sustainable coal strategy for China, based on recently developed and emer ging energy technologies.
3. Methodology
The Working Group continues to be guided by its mandate which is to provide advi ce to the CCICED on energy strategies and technologies which are aimed directly at satisfying the energy service needs of China over the next decades of economi c development, and at the same time furthering achievement by China of its Agend a21 goals.
Recognizing China's abundant domestic energy resources, the Working Group seeks to find optimum ways of developing an energy supply mix which takes full advanta ge of those resources, including conventional and unconventional resources where ver it appears that meeting the objectives spelled out in China's Agenda21, and satisfying China's economic development, can be aided.
The approach tat the Working Group has evolved over phase I of CCICED and which continues to be effective we believe, is to pursue a four-fold strategy of
(i)internal expert study and reporting,
(ii)external promotion and running of workshops on key advanced sustanable techn oloside,as well as new institutional arrangements, that in the Working Group's o pinion merit wide recognition and application in China,and
(iv)direct efforts to build human capacity to analyze and manage energy issues i n a sustainable development perspective.
The Working Group relies on its extensive international and Chinese to achieve a s broad as possible a representation of presenters and attendees from interested organizations. The Working Group strictly resists being drawn into and hands-on project development and management, since it has neither the financial nor the human resources required.
The role of the Working Group with respect to demonstration projects is therefor e that of an adviser and facilitator. By convening and chairing Workshops, the Working Group itself gains valuable insights into the merits/demerits of specific technologies and strategies, and is brought into contact with the practical rea lities in China of achieving higher standards of sustainability. The Working Group maintains a close interest in the outcome and follow-up of these initiatives, and seeks always to be kept informed.
The Working Group has recently established a liaison office at Tsinghus University, with financial support from the CCICED secretariat in Canada. The office is intended to help keeping the Working Group informed about energy related develop ments in China, and to make the outcome of the Working Group's efforts more wide ly available in China. The office will also be helpful in keeping the Working Group informed about the advancements of various projects the Working Group has helped to initiate.
4. Report on Activities in 1997/98
4.1 General Status of Activities
This year has proven to be an active one for the Working Group, in all its main areas of activity, namely studies, workshops, demonstration projects and capacity building.
Furthermore, there has been an important focus on
．policies to save and make more efficient conversion and use of energy by encouraging the introduction of up to date technology and institutional development,
．continued promotion of renewable energy resource development,
．promotion of technologies to make better use of coal,
．studies of new technologies such as those based on hydrogen, and those involving the underground utilization and disposal of CO2.
In all these aspects, work is in progress and will continue for some time. Specific progress during the past year is summarized below, and ongoing and planned work is outlined in Chapter 6.
4.2 Studies and Research Work
A report on the current energy situation, and the program for renewable energy d evelopment in China was presented by Professor Zhou Fengqi. While the potential contribution of renewable energy in China is recognized to be large, the cost per unit of installed capacity is still high relative to current conventional energy systerns. It is clear that the increase in number of nuits manufactured needed to bring down the cost, but it can't be achieved without initial subsidies.
A study by Professor Zhou Feng - qi on the growth of the wind power industry in Ch ina provided useful background for the ongoing work on the Wind Resource Concess ion project (see below).
Professor Li Jingjing of the Center reported on a thorough assessment of China's biomass resources from agricultural residues, province by province, for Renewab le Energy Development of the SPDC.
Professor Wu Zhongxin presented a study made in Tsinghus University forecasting various oil products by 2000-2020. The study concludes total oil demand in China will reach 171 million tonnes of oil equivalent (Mtoe) in 2000 and 371 Mtoe in 2020, up from 150million tonnes in 1996.
Dr.Robert Williams presented important first contributions of an ongoing study t owards a strategic vision on coal utilization, in which a wide range of super-cl ean energy and chemical products are produced from "syngas" (a mixture of CO and H2). New developments in this area are potentially of the utmost importance to China's longer term energy situation, since they offer clean fuels for power, di stributed combined heat and power, and transportation based on China's huge coal resource, and the potential for reduced dependence on imported petroleum. In ad dition, the strategic vision on coal offers, for the first time, an effective pa thway to solving part of the CO2 emissions problem at the same time as extractin g value in enhanced recovery of deep coal bed methane and oil resources (see App endix I). The Working Group's recommendations in this area are presented in Sect ion 5.1
A study is underway for the Working Group in Tsinghua University of the potentia l, the costs and benefits of energy conservation in buildings, the obstacles and regarding implementing standards in conservation.
A report prepared by the Energy Research Institute of SDPC for the Working Group and introduced by Professor Wand Zhongying presented the current status of ener gy consumption and relative energy inefficiency in TVEs. The report highlighted key concerns and proposed a number of institutional and technological remedies. Given the large energy consumption for this sector of the economy, the subject d eserves to remain a high priority in the short term. The Working Group's recomme ndations in this area appear in Section 5.3.
A list of publications and papers appear in Section 8 of this Report.
4.3 Workshops on Technology/Demonstration Projects
A small workshop on Energy Efficiency in Buildings was organized in Changchun, J ilin Province, in January 1998. Dr. Huang Yu of Lawrence Berkeley Laboratory, Ca lifornia, Proposed two demonstration projects to be built in Jilin Province, one a residential building with an incremental investment of $ 1.3 million, the oth er a commercial building with an incremental invertment at $ 4 million. The conc ept is to work with the Government and the relevant authorities on buildings tha t are already in the pipeline, with funding to be raised to cover incremental co sts of the analysis and design work, and the energy efficiency components. Propo sals are in preparation for these projects.
A two-day workshop on Small-Scale Power Generation from Biomass was also held in January 1998, in Changchun. There were50attendees, including several Chinese an d two international experts on biomass technology, officials from the central an d local governments, and Working Group members. The topic was comprehensively tr eated, with an overall ressource review, presentations of proven technologies in actual Chinese and interhational rural settings, and longer term technology dev elopment options. The workshop concluded with firm commitments to take the next three steps to establish demonstrations of modernized biomass utilization in Jil in Province based on biomass gasification: (i)
the production of cooking gas, (ii) small-scal cogeneration of heat and electric ity based on the use of commercially available reciprocating engines, and (iii) small-scale gas turbine cogeneration systems. Proceedings from the workshop are available, see Section8. The recommendations of the Working Group in this area a ppear in Section 5. 4.
4.4 Demonstration Projects
Work continues, with UNDP funding, to develop the institutional framework for th e Wind Resource Concession Approach to Wind Energy Development. Initially focuse d on a concrete opportunity in Jilin Province, as discussed in the previous Wori ng Group meeting in mid-1997, following reorganization of the power secto the pr oject is now considered open-ended with respect to siting, as the framework, onc e developed, is applicable to any site. An initial candidate for application now appears to be Zhangbei in Hebei Provnce, where the concept has suppotr form the North China Power Network. The project consists of two collaborative elements: (i) concept development in the context of internationat analogues and with consu ltation with potential bidders, and (ii) relating the concept to the realities o f the concrete opportunity to develop large wind resources in Northern Hebei Pro vince. It ist anticipated that this enabling framework should be ready for consi deration and potential application by the end of 1998.
The Fuel-Cell Bus demonstration project has moved on from its stage of direct pr omotion and involvement with the Working Group, through the feasibility study (f unded by UNDP) to the bidding stage, the closing date for which was June 30, 199 8. There will follow a period of negotiations with the successful bidder before the implementation of the specific demonstration activities commences. A team fr om China visited the United States, Germany, and Canada to assess at first hand the realities of the first trials of this new technology.
4.5 Progress on Capacity Buildung
A workshop on Mechanisms of Resource Allocation for Sustainable Development of t he Energy Sector was conducted in Beijing on June23-24, 1998. Two Chinese expert s, Professor mao Yu-shi and Professor Ding Ningning of the Development and Resse arch Center, State Council, for international experts, Working Group members Pro fessor Mark Jaccard and Dr. Robert Williams, and Trent Berry of Commpass Resourc e Management, and Hao Liu of Monenco AGRA, addressed39participants from 7 instit utions and 5 provinces in China. The subjects addressed included the principoant s from 7 institutions and 5 provinces in China. The subjects addressed included the prinziples and methods of social costing in energy planning, and the relevan t instruments available for incorporatng societal concerns about external social costs in market transactions. in a plenary discussion, progress was made in rai sing awareness of the relevance of China's institutional and markets structure i n the energy sector for achieving Chins's major goals in social, economic and en vironmental terms. Potential pathways to achieving specific environmental object ives throug market-based instruments were also explored. For proceedngs from the Workshop, see Section 8.
A number of recommendations arose from the two-day workshop. These formed imprta nt input in the Working Group's formulation of recommendations to CCICED, see Se ction 5.2
The Integrated Resource Planning promotion Network is continuing its work, with the responsibility on the Chinese side being assumed by Professor Wu Zhongxn, fo llowing the tragic deach of Professof Qiu Daxing. The next Workshop is planned f or the fall of 1998, pendng funding.
5. Recommendations to CCICED
Following the request from the CCICED secretariat for suggested specific recomme ndations in a standard format for the CCICED to consider for its recommendatiosn to the Government of China, the Working Group puts forward below specific propo sals in 4 areas:
5.1 Long-Term Coal Utilization in China and Sustainable Development Background
China has vast, low-cost resources that will be exploited to support Chinese ene rgy needs for a long time to come.
The challenge is to identify and pursue a path for expanding coal production, tr ansport, conversion, and use in economical, environmentally friendly, and flexbl e ways that are consistent with sustainable development objectives. Under the pr esent approach, the exploitation of coal is not being carried out in ways that a re consistent with sustainable development objectives. Evidence for this is seen in severe environmental problems specially the effects of local, regional, and global emission of air pollutants and greenhouse gases.
China must strive to find economical and environmentally friendly ways to use co al so as to satisfy its evolving energy needs. China must also develop the capac ity to so use coal to meet needs, which other countries satisfy with oil and nat ural gas, because these are relatively scarce in China, Some present"clean coal" technolgies under development will be helpful but will be inadequate to meet the sustainable development challenges posed by China's daunting present and future needs.
Theoretical basis and feasibility
The Working Group has identified four key elements of a sustainable long-term vi sion for coal use in China. The key enabling technolgies needed for realizing th is vision are available in China, primarily in the chemical industry
Syngas for primary coal conversion A coal development strategy emphasizing the p roduction of synthesis gas (or"syngas") would make it possible for China to expl oit its coal resources in ways that are consistern with sustainable development objectives and at the same time providing the flexibility to pursue a wide range of alternate energy products as well as chemical products that are "super-clean ."
Hydrogen and fuel cells One key lon-term non-polluting option under a syngas str ategy involves the production of H2 and its use byfuel cells for small-scale com bined heat and power(CHP) in commercial and residential buildings and for transp ortation applications as an alternative to petroleum-fueled internal combustion engines.
CO2 resource management The syngas strategy leads to the production of hydrogen or hydrogen-rich products. The accompanying CO2, which is normally produced in d ilute streams along with other combustion products and vented in stack gases at coal burning facilities, is avaiable in concentrated streams as a byproduct of t hese products. This byproduct CO2 can be used for enhanced oil recovery and meth ane production from deep beds of unminable coal. In the recovery of these resour ces the CO2 remains sequestered in the reservoirs. It is also feasible to seques ter this concentrated CO2 at low incremental cost in deep aquifers.
Rationalizng the logistics of coal mining / transpor / conversion / use The syst em of coal mining and conversion and the coal energy transport links between min ing and conversion should be optimized in a manner consistent with a transition to the production of syngas for primary coal conversion.
These elements are elaborated upon in the Appendix I of this Working Group Repor t.
Expected economic and environmental benefits
Development of coal utilization along the lines indicated here would reduce the environmental problems with coal significantly. Such development is likely to be competitive overall, when prices of conventional coal technologies more truly r eflect the full costs of their operations, and some newer technologies more trul y reflect the full costs of their operations, and some newer technologies have m oved down their learning curves. Prospective costs and environmental benefits wo uld be especially favorable for large centralized coal processing facilities tha t co-produce multiple products (e.g., fluid fuels, electricity, process heat, an d industrial chemicals).
Essential measures for inplementation
The implementation of a long-vision is highly dependent upon contnued studies le adng to demonstration projects and market incentives, and on building of bridges between the different sectors of the economy involved. It is also important to focus on the "next steps" indicated in the Appendix to the Working Group report.
Recommendations
The Working Group proposes that CCICEDrecommends that the Government of China:
1. endores the necessity of developing a long-term starategy for using coal in w ays compatible with sustainable development, in light of the significance of coa l as a domestic resource and of the role of coal utilization in environmental de gradation at the local, regional, and global levels,
2. create a taskforce involving concerned Commissions, Ministries, Agencies, Adm inistrations, and Academia to discuss and develop the proposed vision,
3. evaluate the proposed"next steps"carefully with a view to early implementatio n,
4. conduct an in-depth study of the overall life-cycle economics and environment al impacts of "conventional"vs. "syngas" coal strategies, and
5. identify via investigations the optimal logistics for production, transprot, and conversion for the proposed coal vison vs. conventional coal strategies.
5.2 Instituational and Market Strategies for Sustainable Energy Policies
Background
china's institutions and markets are evolving rapidly. However, the externality costs of energy production and use are still inadequately dealt with in the mark et place. Reforms and innovations are possible for the key institutions and mark ets that have high external costs, such as the energymarkets. Such reforms shoul d take into account the evolutionary path of these markets, yet lead to the inco rporation of social and environmental extermalities as internalized costs that a re taken into account in the development of energy policy, in energy supply inve stment decisions and in decisions by firms and households for energy-using equip ment.
Theoretical basis and feasibility
It is well recognized that there are no perfect markets. A key market failure, w hich affects the felative viabilityof energy products is caused bypricing that d oes not reflect the full costs of production, distribution and use, nor reflect their negative and positive effects on society and the environment. Inadequacy o f information and incentives for market actors and various institutional barrier s are implicated in other market failures. Given the social and environmental ch allenges facing China, it is critical that the emerging marketoriented system cr eates market conditions for the participants in these markets that fully feflect all relevant costs and benefits.
Market conditions can be altered in a positive direction: through measures affec ting price (e.g., taxes or duties), through regulations on procedures to ensure access to markets, through fari competition among participants, by performance s tandards for energy efficiency.
Expected economic and environmental benefits
It is expected that the level playing field that would be created by applying th e above measures would lead to an energy system that performs better from an ove rall point of view, with much reduced environmental impact at the local, regiona l and global levels. It is a matter of creating the system that leads to optimal investments from the integrated perspecitve of standard economic accounting and social and environmental concerns.
Essential means for implementation
At the Government level, the methodology of Integrated Resource Planning(IRP)is useful to identify the more optimal energy systems rather than conventional syst ems. IRP integrates energy efficiency with energy supply, considering social and environmental externalities, thereby seeking minimum overall cost for energyser vices.
Recommendations
The Working Group proposes that CCICED recommends that the Government of China:
1. use IRP at all levels to
a) establish a sense of the proper balance of investments between the supply and demand sides at the level of the energy-economy,
b) determine their energy-related investments
c) set policies for energy-related investments by private energy supply firms
d) set policies for energy utilities
e) set policies to regulate or influence energy related consumption decisions by fims and households
2. make the relationship between government and publicly owned industrial activi ties more distinct. Corporatization of industrial activities is important.
3. further develop its use of market instruments to match the expanding role of the market-place in determining energy investments, especially energy-using tech nologies. Gradually incorporate environmental cost into energy pricing. However, currently China's price system of energy products is distorted, under such a co ndition, environmental pricing does not make much sense. But in project feasibil ity studies, to adopt shadow price and shadow environmental cost will be benefic al for the development of renewable energy and other environmental friendly ener gy products.
4. continue to phase out subsidies to environmentally undesirable energy sources /forms process that is already well underway.
5. continue to seek lending agencies and foreign interests in new, environmental ly desirable energy technologies.
6. gradually introduce competiton in price setting, especially in electric power sector and oil sector to remove price distortions and enhance economic efficien cy. Remove all artificial monopoly. All energy producers have to be in equal sta tus to compete each other, especially in coal sector, i. e. small miners should have the same access to capital, market, technology, information, etc. For oil s ector, several oil companies is better than one big oil company. For natural mon opoly business, governmental regulation and public monitoring should be applied.
7. continue to encourage foreign direct energy investments, provided that such i nvestments. are consitent with China's long term environmental and economic deve lopment goasl. Ensuring greater independence and long-run consistency of regulat ors of financial markets, securities markets, energy networks and environmental regulators would facilitat this.
8. use targeted sector-sector-specific mechanisms, to shift the market toward en vironmentally desirable technologies to achieve maximum economic benefits:
．introduce competition-inducing instruments such as the Renewable Portfolio Sta ndards or the Non-Fossil Fuel Obligation to efficiently "buy-down the price" of new renewable energy technologies and destablish their industries in power secto r markets,
．use marginal cost prcng incorporated with environmental external cost for infr astructure expansion
．the future of district heating has to be reconsidered according to its overall economic and environmental benefit. The emerging smaller-scale combined heat an d power technologies that require much less investment in distribution infrastru cture is a promising developmnt, but this is different from the old system of di strict heating. Introducing central air conditioning in high building to replace the household air conditioning should catch the public attention.
9. continue to apply the polluter pays principle. This improves the competitiven ess of environmentall cleaner options. It can be done in several ways. Wherever possible, the Chinese government should try to use its own expenditures as a lev er to advance environmentally sound technologies, and promote
．research and development
．demonstration projects
．information-dissemination and education, and
．efforts to buy down the cost of environmentally desirable technologies Wheneve r there are substantial mutual benefits there activities should be pursued in in ternational collaborations.
10. experiment with resource development concessions as they pertan to environme ntallysound energy technologies using solar, wind, micro-hydro and biomass energ y.
5.3 Energy Efficiency in TVE
Background
The township and village enterprises (TVEs) account for one quarter of the Chine se GDP, employing nearly 130 million people. In 1995, TVEs consumed334 Million t onnes of coal equivalent (Mtce). The largest energy consumers among TVE industri es are among the least energy efficient: brick making, cement, coking and metal casting. In1995, the energy consumption of these four sectors of TVEs, which acc ounted for 58% of the whole China's TVEenergy consumption, contributed only 13. 7% of value added in TVE.
At the present, the outstanding problem faced by the development of China's TVE are the environment protection problems caused by the use of backward technologi es and ignorance on how to use energy efficient technologies.
Lack of skilled personnel, constrained availability of capital and lack of evide nce of economic viability of energy-efficient technologies in the current, econo mic, institutional and policy environment aggravate these problems.
Theoretical basis and feasibility
Comparison with the performance of state owned enterprises (SOEs) show that TVEs have a large scope for improving energy(and therefore economic) efficiency, whe re typically they lag behind SOEs by 20-60%. By international standards they hav e an even larger potential for improvement. The energy saving potential via retr ofitting using well proven technologies, e.g. bychanging the structure of produc ts(e.g., from solid to hollow bricks) and by changing procedures (retaining oven and kiln warmth) is very large and achievable. Technical feasibility is assured , but the problems to be overcome also concern finance, institutional barriers, and capacity building.
Expected economic and environmental benefits
Increased energy efficiency will improve the economic situation of TVEs and the communities where they operate. Demand for centrally provided electrical power w ill be relatively less. Improved economic conditions will enhance TVE's capacity to raise environmental awareness and performance in complying with the necessar y higher environmental standards.
Essential means for implementation
The following means are essential for the government and non-governmental organi zations, and experts to consider:
1. Capacity buidling
．enhance the knowledge of TVE's on the availability of more energy efficient te chnologies through the provision of information, advisory services, technology d emonstration, and training byindustrial organizations and other non-governmental organziations, state, provincial, city, townshi and village governments,
．encourage the dissemination of information on the available energy efficient a nd environment friendly technologies through industrial organizations and other nongovernmental orgarizations, state, provincial, city, otwnship and village gov ernments and the cooperation arnong them,
．disseminate the information of successful cases, and
．organize workshops to demonstrate the available energy efficiency technologies for selected TVE sectors.
2. Monitoring and auditing
．monitor ad audit the energy consumption in energy intensive TVE's and analyze causes of high energy consumption,
．monitor and audit performance of TVE's in solid, liquid and gaseous waste meas urement and management,
．make best use of the "Energy Conservation Act" to enhance the monitoring of en ergy use in key energy intensive TVE's, and
．set bench marks for performance.
3. Incentives
．TVEs should be given equal status in competiton for funding, technology and la tor,
．eliminate energypricing distorion which will discourage less efficient energy use,
．give financial and tax incentives to TVE's which will adopt the advanced energ y efficient technologies following the advice provided by certified experts,
．introduce a system of combining an incentive to the best performer with a disn centive to the worst perormer in energy efficiency and waste control, and
．encourage the government's fnancial institutions to give preferential treatmen t for the credible energy efficiency projects to be undertaken by the TVE's.Reco mmendations
The Working Group proposes that CCICED recommends that the Government of China:
1. enhance capacity building in TVEs on energy efficiency,
2. facilitate the creation of monitoring and auditing functions,
3. provide balanced incentives for TVE development.
5.4 Modernizing Village-based Biomass for Energy
Background
Traditional biomass utilization provides 61% of the energyfor living for China's almost 900 million people in the rural areas, and a substantial part of the ene rgy for Township and Village Enterprises (TVE). The main biomass resources at pr esent are residues from agriculture and forestry, fuelwood, and animal husbandry . Cropstraw and stalk output alone corresponds to 300 million tonnes of coal equ ivalent (Mtce) per year, of which the annually available amount of agricultural residues used for energy is approximately 170 Mtce. Much of this is used with a conversion efficiency of only 10-20%. In addition, 80 Mtce of animal husbandry w astes are generated annually. Considerable amounts of residues are burnt in the fields.
The projected amount of sustainably available straw and stalks for energy in the year 2010 is essentially the same as at present, approximately 170 Mtce. If hsi s was used for electricity production, and process and space heating in conjunct ion with the provision of gaseous fuels for cooking and daily living, there is a potential for 120 GW of power generation producing 450 TWh (corresponding to 42 % of 1996 total electricity generation in China).
Theoretical basis and feasibility
The Working Group arranged a two-day workshop in January 1998 on the theoretical , technical, and economic feasibility of modernizng the use of agricultural resi dues through small-scale power generation from biomass.
Samll, commercially available available bomass gasifiers could provide gas for cooking and for use in engines for combined heat and power (CHP) generation Recovery and use of engine waste heat via the CHP option makes it possible to avoid burning fuel to provide heat needs, thereby freeing up more residues for power generationvia CHP.
At present, spark-assisted diesel engines are available in China that could be a dapted to biomass power generation when coupled to gasifiers that produce low le vels of tars. More advanced biomass power generation technolgies that offer the potential for higher efficiencies as well as lower capital and/or mantenance cos ts are being developed in several countries.
The report from the workshop provides further details, see Section 8.
Expected economic and environmental benefits
It is the intention to realize more of the economic value of agricultural residu es as a fuel than is currently the situation for the benefit of the rural popula tion, thereby also saving on investment of centrally generated electricity. In J ilin province available residues are sufficiently abundant that this bioenergy s trategy could have major economic impacts. Village-scale residue conversion faci lites could provide cooking gas to haouseholds via pipeline plus hot water from ergin waste heat via village-scale district heating plus electricity for househo ld electric needs. The produced electricity would often exceed local needs and c ould be exported to urban users, thus earning villagers income by wire.
The environment benefits include: (i) reduced outdoor air pollutant emissions re sulting from substituting small, clean biomass gasifie/CHP power plants for larg e, dirty coal power plants, (ii) reductions in indoor air pollutant emissions(an d associated reduced exposures to smoke, esp. for women and children) associated with replacing polluting coal or biomass cookstoves with stoves operated on cle an biomass-derived gas, and (iii) reduced local and regional air pollution assoc iated with the burning of crop residues in the field.
Essential measures for implementation
The governmant of Jilin Province has been working with the Working Group in deve loping projects on modernized biomass utilization on a village scale to demonstr ate the technology and to investigate the economic feasibility and institutional arrangements in the practical situation of village conditions. A demonstration project funded by Jilin Province of gasification for the provision of gas for co oking and heating will be in operation late summer of 1998, In addition, a propo sal for international funding of a demonstration of gasification for combined he at and power generation has also been developed and submitted for funding.
Recommendations
The Working Group proposes that CCICED recommend that the Government of China:
1. endorse the modernization of biomass energy conversion technology to support the development of rural areas,
2. endorse demonstrations of village-scale biomass gasification for the generati on of cooking gas and combned heat and power applications, and
3. encourage the cooperative development of grid connected rural electrical powe r schemes using biomass.
6. Workplan for 1998-1999
6.1 General Considerations
The follwing workplan is based on the approach outlined in Sections 1 through 3 above, and the Five-Yean Worplan advanced in last year report from the Working G roup to CCICED. In the overall context outlined there, the Working Group will co ntribute to the development of maret rules for sustainable energy development in China, incluing contributions to the discussion of the role of government in sh aping these rules. Further, the Working Group will identify and analyze importan t new technologies for sustainable energy, propose demonstration projects. for n ew technologies and new institutional arrangements, and discuss the institutiona l and human capacity issues that are crucial for making rull use of sustainable energy options in China.
With the time limitation of two meetings per year, at which studies are reported , technological and capacity-building workshops are convened and demonstration p rojects are followed up, it is necessary to be selective in what the Working Gro up hopes to achieve in the next few years. Human resources and funding also exer t constraints upon what can be effectively tackled.
As workshops stem from mature studies, and the choice of studies is arrived at t hrugh an ongoing discussion of priorities, if follows that the portfolio of thes e activities remains dynamic. The Working Group's attention will continue to be directed into those areas and themes that seem most important to Chinese members , seeking at the same time to ensure a balanced attention over the twin concerns of socio-economic development and the environment. The international members wi ll strive to ensure that the most appropriate, clean and efficient technologies, and the most efficient institutional arrangements experienced worldwide, are br ought to the attention of the Working Group.
6.2 Studies
During the next year, studies will address
1. the potential for cogeneration in China, both with and without a syngas orien ted energy future. The study will include cogeneration in district heating netwo rks, industrial cogeneration, and decentralized cogeneration. Modern technologie s characterized by high electricity to heat ratios will be explored.
2. the pollution situation and mitigation options in the city of Chongqing, in c ooperation with the Working Group on Pollution
3. the wind resouce concession, the focus of an ongoing studies being carried ou t under a UNDP project by Working Group members Professor Ni and Dr. Brennand. I f possible, the idea will be Working Group members Professor Ni and Dr. Brennand . If possible, the idea will be explored for other forms of renewable energy as well,
4. energy market structuring options, in a more detailed follow-up of the June 1 998 Workshop on Mechanisms of Resourcw Allocation for Sustainable Development of the Energy Sector.
6.3 Technology-oriented Workshops
For its Jnuary 1999 meeting, the Working Group is planning a one-day workshop on recovery of coalbed methane via both conventional technology and via the injeot ion of CO2 into the coalbed, to be followed by a one-day workshop on a coal/coal -bed methanebased hydrogen economy for China, based on the analysis in the coal vision presented in the Appendix of this report.
In mid-year 1999, there will be at last one workshop, the subject(s)of which hav e still to be selected.
6.4 Demonstration Projects
During the coming year, the Working Group intends to foucs on the already initia ted demonstration projects, the biomass project in Jilin, the fuel cell bus, the wind resource concession, and energy-efficient buildings, see Section 4 above, and the initiation of additional steps on modernized bionass in Jilin Province. By mid-year 1999, it is to be expected that studies/workshops may have generated an additional demonstration project, or projects.
6.5 Capacity Building
The Integrated Resource Planning Promotion Network is planning a Third Workshop that has had to be postponed until the fall of 1998.
7. Report on Funding
The costs of meetngs of the Working Group have been funded by the Canadian secre tariat of the CCICED, covering the participation of the international members an d direct local costs. Funding for workshops and other local activities have been identified by the Working Group during Phase I from other sources. For the last year these costs have been covered by the Canadian secretariat of the CCICED, u sing grants from Canada and Norway. A large number of contributors have been sup portive, as acknowledged in the reports of the Working Group to the CCICED. In t he judgment of the Working Group, a larger contribution to total activities from CCICED funds would be desirable.
