deals and development lng and climate: prices and pacing thomas c. heller
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Deals and Development LNG and Climate: Prices and Pacing Thomas C. Heller. Program on Energy & Sustainable Development Stanford University. Five Myths. Climate Change isn’t a problem Fossil Fuels will Run Out Shortly The “Engineers’ Myth” The “Planners’ Myth” The “Diplomats’ Myth” - PowerPoint PPT PresentationTRANSCRIPT
Slide 1Stanford University
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Five Myths
The “Engineers’ Myth”
The “Planners’ Myth”
The “Diplomats’ Myth”
All countries should be involved in the most effective solutions
Enforcement is based on sovereign state model
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Beyond Kyoto
Developing nations refuse mitigation commitments
Politically acceptable price signals too low for fuel switching or commercialization of new technologies
Global markets weakly regulated (gamed)
Only a few countries emit most GHGs
Wrong people at the diplomatic table
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A Madisonian Perspective:
Emerging Carbon Currencies
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Limitations of the CDM Model
Tropical “hot air”: currency devaluation
CH4: land fill and flaring
Rising natural gas prices
Baseline identification
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CDM Market by Sector
CDM mistakes
Inefficient subsidies
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Beyond Kyoto
Developing nations refuse mitigation commitments
Politically acceptable price signals too low for fuel switching or commercialization of new technologies
Global markets weakly regulated (gamed)
Only a few countries emit most GHGs
Wrong people at the diplomatic table
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Allocation of World Emissions:
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
World CO2 Emissions by Region
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Building Blocks: International Regimes
Multiple clubs with members sharing local cooperative solutions are more likely to support international regime growth than comprehensive multilateral arrangements
The more closely agreements are built around non-cooperative solutions, the more likely they will be implemented
Most international environmental regimes in the past half century have less than 7 members
Trading across fragmented international regimes is limited, reducing the value of wide and diverse membership in each regime
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Beyond Kyoto
Developing nations refuse mitigation commitments
Politically acceptable price signals too low for fuel switching or commercialization of new technologies
Global markets weakly regulated (gamed)
Only a few countries emit most GHGs
Wrong people at the diplomatic table
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Building Blocks: Sectors
Climate is a derivative problem of three economic sectors central to growth and development
Energy
Transportation
Building Blocks: Sectors
Government actors from these sectors make decisions on the development paths their economies will follow
Line ministries
Finance ministries
Political priorities of these actors are nowhere focused on climate, especially in developing countries
Environmental constraints on emitting sectors are resisted unless they advance higher priority goals
Actors from key emitting sectors are rarely represented in climate negotiations
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Background Shifts: IEA 2006
Oil price remains high
China overtakes US in CO2 emissions by 2010
Energy security emerges as core issue
Energy intensity increases in developing countries understated by IEA
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
A Simplified Story Line (1)
Power dominates transport given current fuel prices and technology development
Fleet turnover time is determinative
A low level carbon tax (equivalent) is a non-cooperative climate solution among OECD countries
Energy efficiency gains are non-cooperative solutions among emerging economies
If substantial, policy needed is information rather than international coordination or targets (IRP and DSM)
Issues shift from economic to political economic
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A Simplified Story line (2)
Emerging economies have potential for fuel switching in well-diffused commercial power technologies
Speeding the commercial diffusion of new technologies in power generation and distribution is the ultimate key to climate mitigation
Policies to affect fuel switching and technology innovation are likely to be more indirect and downstream than direct and upstream
Political economy and organization theory are keys
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Building Blocks: Problems
Climate change can be broken down into three separate problems
The immediate need for a low level carbon price signal
Incentives to look for mitigation opportunities that save costs and carbon (no regrets pools)
Incentives to adopt options to mitigate carbon whose incremental costs are only marginal (below price signal)
The mid-term need to diffuse more rapidly than business as usual existing commercial technologies that are relatively less climate damaging
Cooperative measures to engage leading developing countries with rapidly growing carbon emissions
The long-term need to develop energy, transport and land use technologies that are currently across the commercial horizon
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Potential CO2 emission reductions: IEA2006
Technology
2015
2030
2050
NGCC: midterm: IEA 2006
Average efficiency (LHV) 42%; new 60%
Capital costs below coal
US$450-600; typical coal US$1000-1200
varies with vintage
Peaking capacity & Modularity
Power as a regulated industry and organizational capacity
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Building Blocks: Pillars
Each separate climate problem is best approached through separate institutional pillars that are tailored to the specific problem
The climate regime should be composed of multiple pillars differentiated from one another according to:
The nations involved
The timelines demanded
The instruments and measures to be used
The Kyoto Protocol, particularly tailored to low level price signals, should be maintained in the UNFCCC framework, but should also be supplemented by new pillars tailored to the diffusion and technology development problems
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Deals as international relations
Baselines negotiated in the package
Baselines in transition or developing countries in flux
Endogenous to incentives
Non-cooperative solutions
Stay close to policy choices in play domestically among authorized agencies and engaged firms
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Deals
Close to policies in play in agencies with decision authority
Development priorities recognized
Often may be indirect climate effects (context)
Not necessarily focused on energy policies
UNFCCC compatible; IFI/Ex-Im supportable
Indirect focal points for deals
Asia-Pacific natural gas markets
Regional commodity market stabilization
Advanced nuclear generation
Elements for a Deal
Energy policy changes
May be related to upstream asset sales
Contextual changes
International cooperative mechanisms
A natural experiment?
The rise in oil and gas prices is equivalent to a carbon tax in those sectors of more than $100tonne/CO2
EIA and IEA energy outlooks for 2020/30 both indicate low reductions in emissions below earlier baselines with lower oil and gas prices, even with prices stable at these levels
Increased reliance on nuclear, wind power, conservation and demand declines are importantly offset by increased reliance on coal
Policy options to alter these outlooks include a general carbon tax in addition to the price rises or shifting gas-coal price formation mechanisms to reduce the offset effects
The issue is which policy option is more politically feasible in connection with key emerging economies
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
China case: Political Economy
The positive capacity of the central government is sporadic; its negative capacity is substantial
In periods of high growth, major decisions about economic policy are decentralized to provincial authorities
After the division of corporate and ministerial organization in the 1990s, concentrated areas of political and market power lie with leading state corporations
Hybrid or dual firms predominate
Successful examples of economic development are rapidly copied by other local authorities
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Primary Energy Consumption
Overview - capacity
Total
Hydro
Coal
Nuclear
Gas
Wind/RN
Total
Hydro
Coal
Nuclear
Hydro
Coal
Nuclear
Gas
Wind
1949
1.9
0.2
1.7
1949
1949
8.6
91.4
yuan
kw
kWh
kWh
1950
1.9
0.2
1.7
1950
1.1
6.3
0.6
1950
9.1
90.9
1981
476.9
0.1
309.1
258.8
1951
1.9
0.2
1.7
1951
0.5
5.9
-0.0
1951
9.6
90.4
1982
510.9
0.1
322.4
270.8
1952
2.0
0.2
1.8
1952
4.3
5.6
4.1
1952
9.7
90.3
1983
563.9
0.1
341.1
288.4
1953
2.4
0.3
2.0
1953
19.9
73.7
14.1
1953
14.0
86.0
1984
667.1
0.1
361.3
306.3
1954
2.6
0.4
2.2
1954
10.6
24.2
8.4
1954
15.8
84.2
1985
808.5
0.1
388.0
329.1
1955
3.0
0.5
2.5
1955
15.4
22.0
14.2
1955
16.7
83.3
1986
901.9
0.1
418.1
353.2
1956
3.8
0.9
2.9
1956
27.7
80.0
17.2
1956
23.5
76.5
1987
1033.9
0.1
455.0
384.3
1957
4.6
1.0
3.6
1957
20.9
13.3
23.2
1957
22.0
78.0
1988
1267.1
0.1
491.1
415.3
1958
6.3
1.2
5.1
1958
35.9
19.6
40.4
1958
19.4
80.6
1989
1419.1
0.1
518.9
439.4
1959
9.5
1.6
7.9
1959
51.7
32.8
56.2
1959
17.0
83.0
1990
1547.7
0.1
543.3
458.9
1960
11.9
1.9
10.0
1960
24.9
19.8
26.0
1960
16.3
83.7
1991
1747.2
0.1
584.9
493.7
1961
12.9
2.3
10.5
1961
7.9
20.1
5.5
1961
18.1
81.9
1992
2051.3
0.1
643.7
543.0
1962
13.0
2.4
10.7
1962
1.4
2.1
1.2
1962
18.3
81.7
1993
2647.7
0.2
706.6
589.1
1963
13.3
2.4
10.9
1963
2.2
2.1
2.3
1963
18.2
81.8
1994
3654.6
0.2
774.1
642.2
1964
14.1
2.7
11.4
1964
5.5
10.3
4.4
1964
19.1
80.9
1995
4767.0
0.2
831.4
694.4
1965
15.1
3.0
12.1
1965
7.3
12.7
6.0
1965
20.0
80.0
1996
5539.3
0.2
881.9
737.0
1966
17.0
3.6
13.4
1966
12.9
20.5
10.9
1966
21.4
78.6
1997
6048.2
0.2
917.4
763.2
1967
18.0
3.8
14.2
1967
5.7
5.5
5.8
1967
21.3
78.7
1998
6373.9
0.2
927.6
773.0
1968
19.2
4.4
14.8
1968
6.5
14.3
4.4
1968
22.9
77.1
1999
6516.9
0.2
979.4
814.7
1969
21.0
5.1
16.0
1969
9.8
15.0
8.3
1969
24.0
76.0
2000
7062.9
0.3
1081.1
999.6
1970
23.8
6.2
17.5
1970
13.0
23.4
9.7
1970
26.2
73.8
1971
26.3
7.8
18.5
1971
10.6
25.2
5.4
1971
29.7
70.3
1972
29.5
8.7
20.8
1972
12.3
11.5
12.6
1972
29.5
70.5
1973
33.9
10.3
23.6
1973
15.0
18.4
13.6
1973
30.4
69.6
1974
38.1
11.8
26.3
1974
12.4
14.8
11.3
1974
31.0
69.0
1975
43.4
13.4
30.0
1975
13.9
13.6
14.0
1975
30.9
69.1
1976
47.2
14.7
32.5
1976
8.6
9.1
8.4
1976
31.1
68.9
1977
51.5
15.8
35.7
1977
9.1
7.6
9.8
1977
30.6
69.4
1978
57.1
17.3
39.8
1978
11.0
9.6
11.6
1978
30.3
69.7
1979
63.0
19.1
43.9
1979
10.3
10.6
10.2
1979
30.3
69.7
1980
65.9
20.3
45.6
1980
4.5
6.3
3.7
1980
30.8
69.2
1981
69.1
21.9
47.2
1981
4.9
7.9
3.6
1981
31.7
68.3
1982
72.4
23.0
49.4
1982
4.7
4.7
4.7
1982
31.7
68.3
1983
76.4
24.2
52.3
1983
5.6
5.2
5.8
1983
31.6
68.4
1984
80.1
25.6
54.5
1984
4.8
6.0
4.3
1984
32.0
68.0
1985
87.1
26.4
60.6
1985
8.6
3.2
11.2
1985
30.4
69.6
1986
93.8
27.5
66.3
1986
7.8
4.2
9.3
1986
29.4
70.6
1987
102.9
30.2
72.7
1987
9.7
9.6
9.7
1987
29.3
70.7
1988
115.5
32.7
82.8
1988
12.2
8.3
13.9
1988
28.3
71.7
1989
126.6
34.6
92.1
1989
9.6
5.8
11.2
1989
27.3
72.7
1990
137.9
36.0
101.8
1990
8.9
4.2
10.6
1990
26.1
73.9
1991
151.5
37.9
113.6
1991
9.9
5.1
11.5
1991
25.0
75.0
1992
166.5
40.7
125.9
1992
9.9
7.4
10.8
1992
24.4
75.6
1993
182.9
44.6
137.1
1.2
1993
9.8
9.6
9.0
1993
24.4
75.0
0.7
1994
199.9
49.1
148.7
2.1
1994
9.3
10.0
8.5
75.0
1994
24.5
74.4
1.1
1995
217.2
52.2
162.9
2.1
1995
8.7
6.4
9.5
0.0
1995
24.0
75.0
1.0
1996
236.5
55.6
178.9
2.1
1996
8.9
6.5
9.8
0.0
1996
23.5
75.6
0.9
1997
254.2
59.7
192.3
2.1
1997
7.5
7.5
7.5
0.0
1997
23.5
75.6
0.8
1998
277.3
65.1
209.9
2.1
1998
9.1
8.9
9.1
0.0
1998
23.5
75.7
0.8
1999
298.8
73.0
223.4
2.1
1999
7.8
12.2
6.5
0.0
1999
24.4
74.8
0.7
2000
319.3
79.4
237.5
2.1
2000
6.0
875.0
631.0
0.0
2000
24.9
74.4
0.7
0.1
2001
338.6
83.0
253.1
2.1
2001
2001
2002
353.0
2003
377.7
2004
404.1
2005
430.0
105.4
302.4
9.2
10
3.01
24.5
70.3
2.1
2.3
0.7
2006
451.5
2007
474.1
2008
497.8
2009
522.7
2010
548.8
Year
Total
Hydro
Coal
Nuclear
Gas
Wind/RN
Year
Total
Hydro
Coal
Nuclear
Hydro
Coal
Nuclear
Gas
Wind
Note
2000 Coal power figure includes 15 GW of oil capacity and 0.64 GW of gas capacity. See Wu Jingru bellow
2005 total capacity was from the revised 10th Five-year plan in 2003.
Shares are calcuated on the basis of orignial 10th Five-year plan and its implementation until mid year 2003
Yellow = projected
Year
Total
Hydro
Coal
Oil
Nuclear
Gas
Wind
Total
Agriculture
Industry
Tertiary
Residential
Agriculture
Industry
Tertiary
Residential
1980
276.3
27.0
227.6
11.2
10.5
9.8
82.4
4.1
3.8
100.0
1981
284.1
28.2
231.9
12.2
11.8
9.9
81.6
4.3
4.2
100.0
1982
301.8
28.6
247.9
13.2
12.1
9.5
82.1
4.4
4.0
100.0
1983
324.4
28.6
267.1
14.9
13.7
8.8
82.3
4.6
4.2
100.0
1984
348.4
28.8
286.6
17.1
15.9
8.3
82.3
4.9
4.6
100.0
1985
381.3
31.7
305.0
22.3
22.3
8.3
80.0
5.9
5.8
100.0
1986
417.5
32.2
337.0
23.5
24.8
7.7
80.7
5.6
5.9
100.0
1987
462.4
36.0
370.3
27.5
28.7
7.8
80.1
5.9
6.2
100.0
1988
508.7
37.9
404.8
31.7
34.3
7.4
79.6
6.2
6.7
100.0
1989
545.2
41.1
429.8
34.8
39.5
7.5
78.8
6.4
7.2
100.0
1990
579.6
42.7
450.4
38.5
48.1
7.4
77.7
6.6
8.3
100.0
1991
631.7
48.0
484.7
44.6
54.4
7.6
76.7
7.1
8.6
100.0
1992
704.3
52.2
536.7
51.4
64.0
7.4
76.2
7.3
9.1
100.0
1993
780.7
48.1
597.1
61.8
73.7
6.2
76.5
7.9
9.4
100.0
1994
866.4
53.1
653.7
73.0
86.7
6.1
75.4
8.4
10.0
100.0
1995
988.6
45.6
750.7
91.9
100.6
4.6
75.9
9.3
10.2
100.0
1996
1057.0
48.3
794.6
100.9
113.3
4.6
75.2
9.5
10.7
100.0
1997
1103.9
51.4
816.9
110.2
125.3
4.7
74.0
10.0
11.4
100.0
1998
1134.7
49.8
826.3
119.8
138.8
4.4
72.8
10.6
12.2
100.0
1999
1209.2
52.5
880.6
129.1
147.0
4.3
72.8
10.7
12.2
100.0
2000
1346.6
53.4
978.6
147.4
167.2
4.0
72.7
10.9
12.4
100.0
2001
1468.7
57.3
1063.8
163.6
183.8
3.9
72.4
2002
1620.0
59.0
1183
180
198
3.6
73.0
Note: Shortage was estimated at 10GW, 40TWh in 1978, 19.5% and 17.5% of power demand.
source: Reform and Planning in the Power Industry, Beijing China Electric Power Press 1996 pp 686-688
by Planning Division of the Ministry of Electric Power.
GW
GW
GW
1953
2
1954
3
1955
3
1956
4
1957
5
1958
6
1959
10
1960
12
1961
13
1962
13
1963
13
1964
14
1965
15
1966
17
1967
18
1968
19
1969
21
1970
24
1971
26
1972
30
1973
34
1974
38
1975
43
1976
47
1977
51
1978
57
1979
63
1980
66
1981
69
1982
72
1983
76
1984
80
1985
87
1986
94
1987
103
1988
115
1989
127
1990
138
1991
151
1992
167
1993
183
1994
200
1995
217
1996
237
1997
254
1998
277
1999
299
2000
319
2001
339
2002
353
353
2003
378
2004
404
2005
430
2006
452
2007
474
2008
498
2009
523
2010
549
Note:
Note growth rate between 2003 and 2005 calculated at 7% to reach the revised 10th Five-year plan target.
A moderate 5 percent annual growth rate is assumed for the years between 2006 - 2010.
I. Capacity Fuel Structure (GW)
Hydro
Coal
Oil
Nuclear
Gas
Wind
Total
1953
0.3
2.0
2.4
2000
79.4
222.5
15
2.1
0.36
319.3
2005
105.4
287.4
15
9.2
10
3.01
430.0
2020
260
563
15
40
72
10
960.0
Hydro
Coal
Oil
Nuclear
Gas
Wind
1953
14.0
86.0
2000
24.9
69.7
4.7
0.7
0.0
0.1
2005
24.5
66.8
3.5
2.1
2.3
0.7
2020
27.1
58.6
1.6
4.2
7.5
1.0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
China Transmission lines (35kv+)
6.475
233.732
707.142
use loss
125
4
500
200
6
1200
12
1400
300
4
1200
41
1200
GW
GW
1971
1.54
1889
154
12.23
Rest
95.43
1972
2.38
1918
238
8.06
1971-79
27.84
1973
3.16
1918
316
6.07
1980-89
47.53
1974
3.43
2128
343
6.2
1990-01
167.8
1975
3.86
1989
386
5.15
1976
2.46
2468
246
10.03
1977
2.92
2224
292
7.62
1978
4.12
2799
412
6.79
1979
3.97
2712
397
6.83
27.84
1980
2.11
2191
211
10.38
1981
1.83
2218
183
12.12
1982
2.14
2651
214
12.39
GW
Share
Unknown
95.43
28.2
1971-1979
27.84
8.2
1980-1989
47.53
14.0
1990-2001
167.8
49.6
Unknown
1971-1979
1980-1989
1990-2001
GW
95.4
27.8
47.5
167.8
Share
28.2
8.2
14.0
49.6
Size
Thermal
125
11.6
200
25.2
1940s-1950s Soviet design Chinese manufactured 3 exhaust flow type (390 gce/kWh)
300
8.7
Source: Xu 2002
elasticity
0
0
0
1990-2001 (167.8GW; 50%)
1980-1989 (47.5GW; 14%)
1971-1979 (27.8GW; 8%)
Unknown ( 95.4GW; 28%)
power share in energy
consumption structure
power balance sheet
interest rate 12%
Chinese
generation price: RMB 0.25/kWh
1998 Connection
Installed capacity
44.15 GW
0.61
0.14682
0.018
Other
2.17
0.10084
0.012
Wholesale
24.38
0.32971
0.040
Yuan/kWh
0.31
0.02
0.01
0.34
Average
0.61
0.02
0.01
0.10
0.01
0.74
$/MWh
37.35
2.41
0.84
40.60
Average
72.94
2.41
0.84
11.69
1.69
89.57
Chinese Electricity Generation and Consumption (TWh)
Average capacity util
1952
3800
6.17
11.29
727
1957
4794
5.99
6.61
604
1962
3554
7.87
8.73
549
605
1965
4920
6.98
7.31
477
518
1970
5526
6.54
9.22
463
502
1971
5810
6.68
9.48
465
505
1972
5746
6.68
9.43
464
504
1973
5530
6.26
9.53
457
496
1974
5010
6.19
9.91
450
488
1975
5197
6.23
10.13
450
489
1976
4869
6.34
10.32
449
487
1977
4947
6.41
10.19
446
484
1978
5149
6.61
9.64
434
471
1979
5175
6.54
9.24
422
457
1980
5078
6.44
8.93
413
448
1981
4955
6.4
8.98
407
442
1980
300.6
19.4
281.2
0.0
25.1
256.1
1982
5007
6.32
8.64
404
438
1981
309.3
19.8
289.5
0.3
26.0
263.8
1983
5101
6.21
8.53
400
434
1982
327.7
20.7
307.0
0.3
26.5
280.8
1984
5190
6.28
8.28
398
432
1983
351.4
21.8
329.6
0.4
28.1
301.9
1985
5308
6.42
8.18
398
431
1984
377.0
23.7
353.3
0.8
29.3
324.9
1986
5388
6.54
8.15
398
432
1985
410.7
26.4
384.3
1.1
31.4
354.0
1987
5392
6.66
8.48
398
432
1986
449.5
29.4
420.1
1.2
34.2
387.0
1988
5313
6.69
8.18
397
431
1987
497.3
33.1
464.2
1.3
39.4
426.1
1989
5171
6.81
8.18
397
432
1988
545.2
36.5
508.7
1.5
41.6
468.6
1990
5041
6.9
8.06
392
427
1989
584.7
39.8
544.9
1.7
43.7
502.9
1991
5030
6.94
8.15
390
424
1990
621.3
42.9
578.4
1.8
46.6
533.6
1992
5039
7
8.29
386
420
1991
677.6
47.0
630.6
2.9
51.4
582.0
1993
5068
6.96
8.52
384
417
1992
753.9
52.8
701.1
4.7
58.1
647.7
1994
5233
6.9
8.73
381
414
1993
839.5
58.4
781.1
4.4
66.5
714.5
1995
5216
6.78
8.77
379
412
1994
928.1
389.8
538.3
-2.0
59.6
478.7
1996
5033
6.88
8.53
377
410
1995
1007.7
372.8
634.9
-5.4
74.5
560.4
1997
4765
6.8
8.2
375
408
1996
1080.0
550.8
529.2
-3.6
77.0
452.3
1998
4501
6.66
8.13
373
404
1997
1134.5
567.2
567.2
-7.1
79.8
487.4
1999
4393
6.5
8.1
369
399
1998
1157.7
578.9
578.9
-7.2
79.1
499.8
2000
4517
6.28
7.7
363
392
1999
1233.1
2001
2000
1368.8
2001
1483.9
[1] Power sector consumption refers to in-plant consumption (see Table 4B.4, Fossil Fuel-Fired Electric Utility Fuel Use).
[2] Transmission and distribution losses; includes only losses from grids that have >500 kW of installed generation capacity and does not include losses from end user grids (mainly industry). Inclusion of line loss from end user distribution lines woul
figures
2000200MW
(MW)
(MW)
UTH
(MW/)
UTH
EAF
EFOR
EAF
EFOR
SH
RH
3.
3.
Shares of Electricity in primary energy and end energy consumption
share in
electricity energy
share in
coal consum
1980
17.98
20.6
4.81
1981
18.13
21.18
6.14
1982
18.25
21.33
6.24
1983
18.28
21.29
6.3
1984
18.78
21.16
6.3
1985
19.14
21.32
6.37
1986
20.63
22.13
6.63
1987
21.33
22.79
6.85
1988
22.38
23.27
7.01
1989
24.24
23.95
7.21
1990
25.13
24.68
7.55
1991
26.67
25.46
7.86
1992
28.68
26.67
8.32
1993
31.48
28.74
8.6
1994
32.32
28.84
9.12
1995
33.13
29.58
9.18
1996
34.78
30.76
9.25
1997
38.86
32.76
9.3
1998
42.12
34.69
9.35
1999
50.17
40.07
10.9
2000
60.85
41.72
11.2
1. Power sector coal consumption as a percentage of toal coal consumption
2 Power sector energy use as a percentage of primary energy use
3. Power consumption as a percentage of final energy consumption
Power consumption
Total consumption
317.4
426.8
582.4
618.3
639.8
623.5
660.4
RMB billion
Growth Rate %
Investor Structure
Financing Structure
0.6
1.1
0.8
0.3
0.1
2.3
0.6
1.1
0.8
0.3
0.1
2.3
Central govmnt special fund
0.6
1.1
0.8
0.3
0.1
0.6
2.305
78.5
-30.6
-60.0
-81.0
-23.3
29.6
39.2
56.7
67.0
54.7
42.8
260.4
20.8
33.9
30.7
26.4
12.7
9.5
113.2
35.5
40.2
42.4
47.1
47.5
44.9
44.6
25.0
34.7
22.9
18.6
11.0
10.0
19.4
1. 1997.2.21 Ministry of Electric Power issued 1.0752 billion RMB; term 3 years; annual rate of 11%
Enterprise internal funds
36.3
39.8
41.0
43.3
44.4
40.6
42.0
2. 1998.6.19 SPC issed 2.907 billion RMB; term 3 years; annual rate 8%. Traded on Shanghai security market since May of 1999
Foreign investment
Enterprise raised funds
Unclassified source
Source: energy statistical yearbook 1989
1981
1982
1983
1984
1985
1986
1987
1988
498.55
625.26
868.28
1456.6
1531.66
2211.09
0.0
0.0
372.2
439.6
752.6
1527.4
1376.5
378.4
1993
Total
55788.1
1541.1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Agriculture
Industry
Tertiary
Residential
TWh
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
GW
GW
1953
2
1954
3
1955
3
1956
4
1957
5
1958
6
1959
10
1960
12
1961
13
1962
13
1963
13
1964
14
1965
15
1966
17
1967
18
1968
19
1969
21
1970
24
1971
26
1972
30
1973
34
1974
38
1975
43
1976
47
1977
51
1978
57
1979
63
1980
66
1981
69
1982
72
1983
76
1984
80
1985
87
1986
94
1987
103
1988
115
1989
127
1990
138
1991
151
1992
167
1993
183
1994
200
1995
217
1996
237
1997
254
1998
277
1999
299
2000
319
2001
339
2002
353
353
2003
378
2004
404
2005
430
2006
452
2007
474
2008
498
2009
523
2010
549
Note:
Note growth rate between 2003 and 2005 calculated at 7% to reach the revised 10th Five-year plan target.
A moderate 5 percent annual growth rate is assumed for the years between 2006 - 2010.
1
#REF!
2000
1
1
#REF!
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
GW
GW
GW
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
1
1
1
#REF!
#REF!
#REF!
#REF!
TWh
1
1
1
1
1. Growth Rate (%)
3. Power expansion
Overview -- 2004 Boom
Central Government Plan to 2020
Real GDP grows 7-8% per year; GDP p.c. reaches $10,000 (PPP basis)
Primary energy consumption grows 4.5-5% per year
520 GW (30 GW per year) generation capacity will be added
Natural gas to provide new and clean sources of energy
Over 7% annual growth rate
Consumption to increase from 40 bcm to between 140 and 200 bcm under various policy scenarios
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Chinese total energy consumption: IEA
2000
Thought experiment:
Gas Deal in China
Best estimates new generation capacity at least 50 GW in 2004 and 60-70 GW in 2005
Rising production of 14.9% between 2004 and 2005 [
Energy intensity exceeds 1.0; electricity 1.4
June 2006, total installed capacity was 531 GW
More than 70 GW of newly installed capacity to be placed in service this year
New capacity more than 80% coal fired
Approximately 250GW in new power station projects under construction
Approximately 25% planned new capacity supercritical coal
Imagine China replaces 50 GW of planned coal capacity with natural gas (baseload CCGT) by 2020
15% reduction over IEA’s baseline for coal capacity in 2020
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
CO2 Savings in Perspective
China Reference Scenario
China Deal: Load Factor and Carbon Intensity Assumptions
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
China Deal: CO2 Savings
Overview – fuel structure
Central Government Plan
Demand Uncertainty
Domestic (Chinese) gas forecast driven by higher price for gas than coal, driven by
Higher gas costs
Domestic production costs
Infrastructure development costs
China’s gas power development
First 2 plants come on line in June 2005
Gas transported from Tarim Basin by E-W pipeline
18.4 GW under construction
6% national electricity capacity
2 re-gasification terminals to open to 2006-07 in Guangdong and Fujian
15 LNG re-gasification terminals announced by Chinese national oil companies
9 terminals reported approved by NDRC
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Challenges to gas market development
Gas dedication to premium use (residential) with coal reserved for power
Energy security concerns reduce supply to domestic gas sources
Gas-fired power pricing
Competitive power pools?
First of a kind projects
Anchor projects with assured off-take generally needed for infrastructure investment
Need for downstream market (local distribution companies and end-use expansion) to support infrastructure for power
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Benefits of gas market development
Lower unit investment costs
Smaller requirement for land occupancy and cooling water
Modularity and lower economies of scale
Local grid networks for high reliability power;
Distributed urban power
Small unit unreliability (Guangdong 45%, often oil)
Local support at load center for long distance transmission
Peak shaving
Source: IEA, World Energy Outlook 2004
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
2. Potential Markets: Beijing, Shanghai,Guangdong
Beijing
(pipeline)
Shanghai
Three regions may account for ~ 50% of total gas consumption
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Beijing – Energy consumption
Beijing -- NG Consumption Structure (2003)
Chart3
Residential
Industrial
Commercial
Transprt.
Beijing Seasonal NG Load Curve
Chart1
37622
37623
37624
37625
37626
37627
37628
37629
37630
37631
37632
37633
37634
37635
37636
37637
37638
37639
37640
37641
37642
37643
37644
37645
37646
37647
37648
37649
37650
37651
37652
37653
37654
37655
37656
37657
37658
37659
37660
37661
37662
37663
37664
37665
37666
37667
37668
37669
37670
37671
37672
37673
37674
37675
37676
37677
37678
37679
37680
37681
37682
37683
37684
37685
37686
37687
37688
37689
37690
37691
37692
37693
37694
37695
37696
37697
37698
37699
37700
37701
37702
37703
37704
37705
37706
37707
37708
37709
37710
37711
37712
37713
37714
37715
37716
37717
37718
37719
37720
37721
37722
37723
37724
37725
37726
37727
37728
37729
37730
37731
37732
37733
37734
37735
37736
37737
37738
37739
37740
37741
37742
37743
37744
37745
37746
37747
37748
37749
37750
37751
37752
37753
37754
37755
37756
37757
37758
37759
37760
37761
37762
37763
37764
37765
37766
37767
37768
37769
37770
37771
37772
37773
37774
37775
37776
37777
37778
37779
37780
37781
37782
37783
37784
37785
37786
37787
37788
37789
37790
37791
37792
37793
37794
37795
37796
37797
37798
37799
37800
37801
37802
37803
37804
37805
37806
37807
37808
37809
37810
37811
37812
37813
37814
37815
37816
37817
37818
37819
37820
37821
37822
37823
37824
37825
37826
37827
37828
37829
37830
37831
37832
37833
37834
37835
37836
37837
37838
37839
37840
37841
37842
37843
37844
37845
37846
37847
37848
37849
37850
37851
37852
37853
37854
37855
37856
37857
37858
37859
37860
37861
37862
37863
37864
37865
37866
37867
37868
37869
37870
37871
37872
37873
37874
37875
37876
37877
37878
37879
37880
37881
37882
37883
37884
37885
37886
37887
37888
37889
37890
37891
37892
37893
37894
37895
37896
37897
37898
37899
37900
37901
37902
37903
37904
37905
37906
37907
37908
37909
37910
37911
37912
37913
37914
37915
37916
37917
37918
37919
37920
37921
37922
37923
37924
37925
37926
37927
37928
37929
37930
37931
37932
37933
37934
37935
37936
37937
37938
37939
37940
37941
37942
37943
37944
37945
37946
37947
37948
37949
37950
37951
37952
37953
37954
37955
37956
37957
37958
37959
37960
37961
37962
37963
37964
37965
37966
37967
37968
37969
37970
37971
37972
37973
37974
37975
37976
37977
37978
37979
37980
37981
37982
37983
37984
37985
37986
load
Beijing -- Gas Demand Projection
Shanghai – Energy consumption
Shanghai – Future NG Applications
Guangdong – Energy consumption
Guangdong – Natural gas application
End 2004: 40 GW projected to 100 GW (2020)
9 units nuclear @ 1 GW per unit
7 or 8 (4x600) MW coal plants being built (17-20+GW)
11 gas units (online 2006) or 3.3 GW of planned 30-40 units (10 GW gas fired power total) by 2020
Hydro contracts from West and Three Gorges (11-18GW)
Residential and commercial sector
Plans and prices: is the standard story about to change?
Relative Electricity Costs: Guangdong, August 2004
Hydro: 32-34 cents/kwh (fen in levelized costs);
Coal without FGD: 37 cents/kwh;
Coal with FGD: 40 cents/kwh;
LNG (all in): 43 cents/kwh;
Nuclear: 47-50 cents/kwh
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Relative prices: Coal, gas ,oil
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Mine mouth coal price
2004: Jan – Sept.
Actual price for power generation is higher ($22/ton) due to sellers’ resistance against planned price
End-user prices are much higher, reaching $60 – $70/ton ($50 - $60 for power generation).
Chart6
1996
1996
1997
1997
1998
1998
1999
1999
2000
2000
2001
2001
2002
2002
2003
2003
2004
2004
Coal Balance
mil ton
40.59
20.33
20.69
14.41
14.51
17.18
China Primary Energy Production and Structure
Coal Balance
mil ton
Coal Balance
20
17
1.5
1.2
20
21
1.5
1.4
1377
1383
100
1377
1447
100
100
coal
oil
hydro
GW
GW
Coal
Oil
Hydro
Nuclear
Gas
Wind
Hydro
Nuclear
Industry
Agriculture
Tertiary
Residential
1953
2
1953
86.0
14.0
1953
83.7
16.3
1980
228
27
11
11
1954
3
1954
84.2
15.8
1954
80.0
20.0
1981
232
28
12
12
1955
3
1955
83.3
16.7
1955
80.5
19.5
1982
248
29
13
12
1956
4
1956
76.5
23.5
1956
78.9
21.1
1983
267
29
15
14
1957
5
1957
78.0
22.0
1957
75.1
24.9
1984
287
29
17
16
1958
6
1958
80.6
19.4
1958
85.1
14.9
1985
305
32
22
22
1959
10
1959
83.0
17.0
1959
89.6
10.4
1986
337
32
23
25
1960
12
1960
83.7
16.3
1960
87.5
12.5
1987
370
36
27
29
1961
13
1961
81.9
18.1
1961
84.6
15.4
1988
405
38
32
34
1962
13
1962
81.7
18.3
1962
80.3
19.7
1989
430
41
35
40
1963
13
1963
81.8
18.2
1963
82.2
17.8
1990
450
43
38
48
1964
14
1964
80.9
19.1
1964
81.1
18.9
1991
485
48
45
54
1965
15
1965
80.0
20.0
1965
84.6
15.4
1992
537
52
51
64
1966
17
1966
78.6
21.4
1966
84.7
15.3
1993
597
48
62
74
1967
18
1967
78.7
21.3
1967
83.1
16.9
1994
654
53
73
87
1968
19
1968
77.1
22.9
1968
83.9
16.1
1995
751
46
92
101
1969
21
1969
76.0
24.0
1969
83.0
17.0
1996
795
48
101
113
1970
24
1970
73.8
26.2
1970
82.3
17.7
1997
817
51
110
125
1971
26
1971
70.3
29.7
1971
81.9
18.1
1998
826
50
120
139
1972
30
1972
70.5
29.5
1972
81.1
18.9
1999
881
52
129
147
1973
34
1973
69.6
30.4
1973
76.7
23.3
2000
979
53
147
167
1974
38
1974
69.0
31.0
1974
75.5
24.5
1975
43
1975
69.1
30.9
1975
75.7
24.3
1976
47
1976
68.9
31.1
1976
77.5
22.5
1977
51
1977
69.4
30.6
1977
78.7
21.3
1978
57
1978
69.7
30.3
1978
82.6
17.4
1979
63
1979
69.7
30.3
1979
82.2
17.8
1980
66
1980
69.2
30.8
1980
80.6
19.4
1981
69
1981
68.3
31.7
1981
78.8
21.2
1982
72
1982
68.3
31.7
1982
77.3
22.7
1983
76
1983
68.4
31.6
1983
75.4
24.6
1984
80
1984
68.0
32.0
1984
77.0
23.0
1985
87
1985
69.6
30.4
1985
77.5
22.5
1986
94
1986
70.6
29.4
1986
79.0
21.0
1987
103
1987
70.7
29.3
1987
79.9
20.1
1988
115
1988
71.7
28.3
1988
80.0
20.0
1989
127
1989
72.7
27.3
1989
79.8
20.2
1990
138
1990
73.9
26.1
1990
79.6
20.4
1991
151
1991
75.0
25.0
1991
81.5
18.5
1992
167
1992
75.6
24.4
1992
82.4
17.6
1993
183
1993
75.0
24.4
0.7
1993
81.7
18.1
0.2
1994
200
1994
74.4
24.5
1.1
1994
80.4
18.0
1.6
1995
217
1995
75.0
24.0
1.0
1995
79.8
18.9
1.3
1996
237
1996
75.6
23.5
0.9
1996
81.3
17.4
1.3
1997
254
1997
75.6
23.5
0.8
1997
81.5
17.3
1.3
1998
277
1998
75.7
23.5
0.8
1998
81.0
17.8
1.2
1999
299
1999
74.8
24.4
0.7
1999
82.4
16.4
1.2
2000
319
2000
74.4
24.9
0.7
0.1
2000
80.9
18.0
1.1
2001
339
2001
2001
80.0
18.9
1.2
2002
353
353
2002
2002
2003
378
2003
2004
404
2004
2005
430
2005
70.3
24.5
2.1
2.3
0.7
2006
452
2007
474
Coal
Oil
Hydro
Nuclear
Gas
Wind
2008
498
1953
86.0
14.0
2009
523
2000
69.7
4.7
24.9
0.7
0.1
2010
549
2005
66.8
3.5
24.5
2.1
2.3
0.7
2020
58.6
1.6
27.1
4.2
7.5
1.0
Note:
* 2005 total capacity was from the revised 10th Five-year plan in 2003. A moderate 5% annual growth is assumed for 2006-2010
* 15 GW oil capacity is seperated from 2000 thermal capacity figure. See Wu Jingru bellow
* 2005, 2010, and 2020 fuel structure projection is from Wu Jingru (China Electric Power News 2003 April)
Mine mouth coal price
power sector price
Supply Chains in Comparison
Non-price drivers of gas development in coastal cities
Local autonomy (federalism)
Afford market development subsidies
Chinese oil majors
Contextual factors for Gas Utilization
Energy security
Financial deregulation
Regulatory decentralization
Gas/coal relative price formation in Asia- Pacific region (levels and volatilities)
Supplier needs and agendas (Gazprom)
International politics (Iran)
White: where the lights are on, satellite imagery
Blue Red : Gas resources, with increasing size (USGS)
Source: Baker Institute (Rice) and PESD (Stanford) Joint Study on the Geopolitics of Gas (CUP, forthcoming
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Revolution in Global LNG Markets
Shift from “old world” defined by:
Few importers
Muted price incentives to divert cargoes
“Buyer takes the volume risk and seller takes the price risk”
Captive customers of regulated utilities ultimately backed contracts
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Revolution in Global LNG Markets
Toward a “new world” defined by more flexible LNG trade and driven by:
Liberalization of gas and electricity markets
Declining LNG costs (esp. liquefaction and re-gas)
Growth of new markets (Spain, US, UK)
Entry of energy super-majors to gas trade
Flexible LNG trade will integrate US and European gas (and electric power) markets
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Pricing: Volatility in global gas markets
Price de-linking from oil (fuel oil and distillates)
Gas at projected scale no longer a side product of oil
Flexible spot markets separate gas from oil prices
Gas and oil seen as non-substitutable quality products
Low cost oil reserves lower than gas reserves
Volume justifies specialized contracting
Decrease demand (diversified power portfolio)
Regulation to encourage long term off-take contracts
Need for anchor projects (creditable for CO2)
Storage increases
Pacing (organizational issues)
Risk re-distribution
New hedging or risk bearing mechanism to absorb quantity risks upstream
Mercantile energy security perceptions
Scarcity and price increases in equipment and downstream facilities (ships)
Supply nation political economics
Limited contracting management capacity
http://pesd.stanford.edu/
Nuclear Deal In India
U.S. - India technology transfer could facilitate the installation of 30 GW of new nuclear capacity.
This would save 230 million tonnes of CO2 if it displaced only coal capacity and 87 million tonnes if it replaced gas.
In practice, nuclear would likely replace a mix of both coal and gas
emissions reduction would fall between 87 and 230 million tonnes.
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
India Reference Scenario
India Deal: Load Factor and Carbon Intensity Assumptions
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
India Deal: CO2 Savings
India Deal: Carbon Implications
CO2 Savings in Perspective
Amazonian deforestation: sources
Intraregional
Speculation
Large farms and ranches
Amazonian deforestation: dynamics
Amazonian deforestation: dynamics
No stumpage fees or logging fines
Weak macroeconomic stability encourages land speculation
Failure to provide agricultural technology or credit encourages turnover
Insecure title leads to social violence and relocation
Opportunity costs exceeded land rents without government action (pace of deforestation induced)
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Amazonian deforestation: dynamics
Land reclassification away from forest preservation (cerrado)
Urban development
National security
Zona franca
Little actual surrounding deforestation
Amazonia deforestation: deal structure
Tax income and stumpage fees for productive farmers
Capital gains taxation for relocating farmers
Opportunity costs compared to sustainable forestry concessions
Private property rights enforcement better than regional government
Biofuels development on cleared land for family income
Domestic costs avoided from climate change
Hydrology shifts in Amazonia precipitation patterns will curtail Southern rains and reduce value of hydropower system
Carbon storage payments internationally
Net US Gas Imports, 1970 – 2025
EIA-AEO 2005
LNG
Canada
Mexico
--LNG climbing from less than 2% in 2000, to over 20% by 2025;
--EIA (and others) projections have changed quite dramatically over the past five years;
--US domestic production previously expected to grow faster, Canadian gas imports expected to be larger;
--EIA suggests that Alaska North Slope gas will come on in about 2016; starting at around 1 Tcf and increasing to 2 Tcf by 2025;
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
US Spot, Japanese & European LNG Prices ($/MMbtu)
*Henry Hub for U.S. data, average of Japanese & European landed LNG prices
--Continental gas prices driven by oil-indexed contracts---risen for the last seven consecutive quarters (WGI, 27 July 2005)
Sourced from Pervin & Gurtz (2005).
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Forward Prices in Key LNG Markets
(US$/MMbtu; 20 July 2005)
Source: Heren LNG Markets
*UK prices are from Heren (real data), US prices from Nymex, others based on Heren forecasts, contract oil-linkages and oil-futures
--converted at today’s exchange rate
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
US Gas Prices Linked to Oil Products
Purvin & Gertz 2005
Global LNG Supplies
Source: James Jensen
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Factors Driving U.S. Natural Gas Demand
% Δ Gas Demand =
+ 0.250 x % Δ Heating Degree Days
+ 0.075 x % Δ Cooling Degree Days
+ 0.075 x % Δ Real Oil Price
- 1.000 x % Δ Real Gas Price (lag)
- 0.300 (constant)
Volume, distances determine transit mode
CE Tech
Volume (tonnes/yr x 106 )
Source: CE Tech, Doha 5 LNG Conference
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Full Range of Published Scenarios
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Top Innovators and Emitters by World Region
Percent of World Total
(1994)
Elements of a Technology Strategy
Diverse Country-Based Initiatives
Loose international coordination among nations with diverse national cultures of innovation
Price and technology progress are not either/or
Politically acceptable price signals tend to operate at margins, while vintage shifts may require dedicated policy programs
Technology development involves a long pipeline from scientific conceptualization through diffusion of commercial production
Common pitfall: premature selection of winners
The pace of development along a pathway is affected by predictable and diverse problems that will crop up along the pipeline, which may be subject to diverse policy influence
Infrastructure development, finance (risk allocation) and law may dominate engineering in much of the pipeline
The feasible technology portfolio may be limited with search space more diverse within a particular pipeline than between technologies in the portfolio
Industries with experience in R&D in particular pipelines more likely than governments to explore successfully this internal search space
(10)
(5)
Post-Validation, or Validation Stage by CDM Board as of 23.12.05
Other
1%
Hydro
4%
1
-
2
renewables.
CO
2
2
renewables.
Displaced Capacity (GW) 3230
Total Generation (TWh) 237237
LNG LIQUEFACTION CAPACITY BY REGION
MILLION TONS OF LNG
Average Annual Capacity
Increase - 4.2 MMTPY
Average Annual Capacity
Increase - 7.9 MMTPY
We deliver Front Office software to Usage-based Businesses
Examples of usage based businesses are telephone, internet, water, electric or gas.
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Five Myths
The “Engineers’ Myth”
The “Planners’ Myth”
The “Diplomats’ Myth”
All countries should be involved in the most effective solutions
Enforcement is based on sovereign state model
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Beyond Kyoto
Developing nations refuse mitigation commitments
Politically acceptable price signals too low for fuel switching or commercialization of new technologies
Global markets weakly regulated (gamed)
Only a few countries emit most GHGs
Wrong people at the diplomatic table
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
A Madisonian Perspective:
Emerging Carbon Currencies
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Limitations of the CDM Model
Tropical “hot air”: currency devaluation
CH4: land fill and flaring
Rising natural gas prices
Baseline identification
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
CDM Market by Sector
CDM mistakes
Inefficient subsidies
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Beyond Kyoto
Developing nations refuse mitigation commitments
Politically acceptable price signals too low for fuel switching or commercialization of new technologies
Global markets weakly regulated (gamed)
Only a few countries emit most GHGs
Wrong people at the diplomatic table
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Allocation of World Emissions:
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
World CO2 Emissions by Region
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Building Blocks: International Regimes
Multiple clubs with members sharing local cooperative solutions are more likely to support international regime growth than comprehensive multilateral arrangements
The more closely agreements are built around non-cooperative solutions, the more likely they will be implemented
Most international environmental regimes in the past half century have less than 7 members
Trading across fragmented international regimes is limited, reducing the value of wide and diverse membership in each regime
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Beyond Kyoto
Developing nations refuse mitigation commitments
Politically acceptable price signals too low for fuel switching or commercialization of new technologies
Global markets weakly regulated (gamed)
Only a few countries emit most GHGs
Wrong people at the diplomatic table
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Building Blocks: Sectors
Climate is a derivative problem of three economic sectors central to growth and development
Energy
Transportation
Building Blocks: Sectors
Government actors from these sectors make decisions on the development paths their economies will follow
Line ministries
Finance ministries
Political priorities of these actors are nowhere focused on climate, especially in developing countries
Environmental constraints on emitting sectors are resisted unless they advance higher priority goals
Actors from key emitting sectors are rarely represented in climate negotiations
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Background Shifts: IEA 2006
Oil price remains high
China overtakes US in CO2 emissions by 2010
Energy security emerges as core issue
Energy intensity increases in developing countries understated by IEA
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
A Simplified Story Line (1)
Power dominates transport given current fuel prices and technology development
Fleet turnover time is determinative
A low level carbon tax (equivalent) is a non-cooperative climate solution among OECD countries
Energy efficiency gains are non-cooperative solutions among emerging economies
If substantial, policy needed is information rather than international coordination or targets (IRP and DSM)
Issues shift from economic to political economic
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
A Simplified Story line (2)
Emerging economies have potential for fuel switching in well-diffused commercial power technologies
Speeding the commercial diffusion of new technologies in power generation and distribution is the ultimate key to climate mitigation
Policies to affect fuel switching and technology innovation are likely to be more indirect and downstream than direct and upstream
Political economy and organization theory are keys
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Building Blocks: Problems
Climate change can be broken down into three separate problems
The immediate need for a low level carbon price signal
Incentives to look for mitigation opportunities that save costs and carbon (no regrets pools)
Incentives to adopt options to mitigate carbon whose incremental costs are only marginal (below price signal)
The mid-term need to diffuse more rapidly than business as usual existing commercial technologies that are relatively less climate damaging
Cooperative measures to engage leading developing countries with rapidly growing carbon emissions
The long-term need to develop energy, transport and land use technologies that are currently across the commercial horizon
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Potential CO2 emission reductions: IEA2006
Technology
2015
2030
2050
NGCC: midterm: IEA 2006
Average efficiency (LHV) 42%; new 60%
Capital costs below coal
US$450-600; typical coal US$1000-1200
varies with vintage
Peaking capacity & Modularity
Power as a regulated industry and organizational capacity
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Building Blocks: Pillars
Each separate climate problem is best approached through separate institutional pillars that are tailored to the specific problem
The climate regime should be composed of multiple pillars differentiated from one another according to:
The nations involved
The timelines demanded
The instruments and measures to be used
The Kyoto Protocol, particularly tailored to low level price signals, should be maintained in the UNFCCC framework, but should also be supplemented by new pillars tailored to the diffusion and technology development problems
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Deals as international relations
Baselines negotiated in the package
Baselines in transition or developing countries in flux
Endogenous to incentives
Non-cooperative solutions
Stay close to policy choices in play domestically among authorized agencies and engaged firms
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Deals
Close to policies in play in agencies with decision authority
Development priorities recognized
Often may be indirect climate effects (context)
Not necessarily focused on energy policies
UNFCCC compatible; IFI/Ex-Im supportable
Indirect focal points for deals
Asia-Pacific natural gas markets
Regional commodity market stabilization
Advanced nuclear generation
Elements for a Deal
Energy policy changes
May be related to upstream asset sales
Contextual changes
International cooperative mechanisms
A natural experiment?
The rise in oil and gas prices is equivalent to a carbon tax in those sectors of more than $100tonne/CO2
EIA and IEA energy outlooks for 2020/30 both indicate low reductions in emissions below earlier baselines with lower oil and gas prices, even with prices stable at these levels
Increased reliance on nuclear, wind power, conservation and demand declines are importantly offset by increased reliance on coal
Policy options to alter these outlooks include a general carbon tax in addition to the price rises or shifting gas-coal price formation mechanisms to reduce the offset effects
The issue is which policy option is more politically feasible in connection with key emerging economies
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
China case: Political Economy
The positive capacity of the central government is sporadic; its negative capacity is substantial
In periods of high growth, major decisions about economic policy are decentralized to provincial authorities
After the division of corporate and ministerial organization in the 1990s, concentrated areas of political and market power lie with leading state corporations
Hybrid or dual firms predominate
Successful examples of economic development are rapidly copied by other local authorities
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Primary Energy Consumption
Overview - capacity
Total
Hydro
Coal
Nuclear
Gas
Wind/RN
Total
Hydro
Coal
Nuclear
Hydro
Coal
Nuclear
Gas
Wind
1949
1.9
0.2
1.7
1949
1949
8.6
91.4
yuan
kw
kWh
kWh
1950
1.9
0.2
1.7
1950
1.1
6.3
0.6
1950
9.1
90.9
1981
476.9
0.1
309.1
258.8
1951
1.9
0.2
1.7
1951
0.5
5.9
-0.0
1951
9.6
90.4
1982
510.9
0.1
322.4
270.8
1952
2.0
0.2
1.8
1952
4.3
5.6
4.1
1952
9.7
90.3
1983
563.9
0.1
341.1
288.4
1953
2.4
0.3
2.0
1953
19.9
73.7
14.1
1953
14.0
86.0
1984
667.1
0.1
361.3
306.3
1954
2.6
0.4
2.2
1954
10.6
24.2
8.4
1954
15.8
84.2
1985
808.5
0.1
388.0
329.1
1955
3.0
0.5
2.5
1955
15.4
22.0
14.2
1955
16.7
83.3
1986
901.9
0.1
418.1
353.2
1956
3.8
0.9
2.9
1956
27.7
80.0
17.2
1956
23.5
76.5
1987
1033.9
0.1
455.0
384.3
1957
4.6
1.0
3.6
1957
20.9
13.3
23.2
1957
22.0
78.0
1988
1267.1
0.1
491.1
415.3
1958
6.3
1.2
5.1
1958
35.9
19.6
40.4
1958
19.4
80.6
1989
1419.1
0.1
518.9
439.4
1959
9.5
1.6
7.9
1959
51.7
32.8
56.2
1959
17.0
83.0
1990
1547.7
0.1
543.3
458.9
1960
11.9
1.9
10.0
1960
24.9
19.8
26.0
1960
16.3
83.7
1991
1747.2
0.1
584.9
493.7
1961
12.9
2.3
10.5
1961
7.9
20.1
5.5
1961
18.1
81.9
1992
2051.3
0.1
643.7
543.0
1962
13.0
2.4
10.7
1962
1.4
2.1
1.2
1962
18.3
81.7
1993
2647.7
0.2
706.6
589.1
1963
13.3
2.4
10.9
1963
2.2
2.1
2.3
1963
18.2
81.8
1994
3654.6
0.2
774.1
642.2
1964
14.1
2.7
11.4
1964
5.5
10.3
4.4
1964
19.1
80.9
1995
4767.0
0.2
831.4
694.4
1965
15.1
3.0
12.1
1965
7.3
12.7
6.0
1965
20.0
80.0
1996
5539.3
0.2
881.9
737.0
1966
17.0
3.6
13.4
1966
12.9
20.5
10.9
1966
21.4
78.6
1997
6048.2
0.2
917.4
763.2
1967
18.0
3.8
14.2
1967
5.7
5.5
5.8
1967
21.3
78.7
1998
6373.9
0.2
927.6
773.0
1968
19.2
4.4
14.8
1968
6.5
14.3
4.4
1968
22.9
77.1
1999
6516.9
0.2
979.4
814.7
1969
21.0
5.1
16.0
1969
9.8
15.0
8.3
1969
24.0
76.0
2000
7062.9
0.3
1081.1
999.6
1970
23.8
6.2
17.5
1970
13.0
23.4
9.7
1970
26.2
73.8
1971
26.3
7.8
18.5
1971
10.6
25.2
5.4
1971
29.7
70.3
1972
29.5
8.7
20.8
1972
12.3
11.5
12.6
1972
29.5
70.5
1973
33.9
10.3
23.6
1973
15.0
18.4
13.6
1973
30.4
69.6
1974
38.1
11.8
26.3
1974
12.4
14.8
11.3
1974
31.0
69.0
1975
43.4
13.4
30.0
1975
13.9
13.6
14.0
1975
30.9
69.1
1976
47.2
14.7
32.5
1976
8.6
9.1
8.4
1976
31.1
68.9
1977
51.5
15.8
35.7
1977
9.1
7.6
9.8
1977
30.6
69.4
1978
57.1
17.3
39.8
1978
11.0
9.6
11.6
1978
30.3
69.7
1979
63.0
19.1
43.9
1979
10.3
10.6
10.2
1979
30.3
69.7
1980
65.9
20.3
45.6
1980
4.5
6.3
3.7
1980
30.8
69.2
1981
69.1
21.9
47.2
1981
4.9
7.9
3.6
1981
31.7
68.3
1982
72.4
23.0
49.4
1982
4.7
4.7
4.7
1982
31.7
68.3
1983
76.4
24.2
52.3
1983
5.6
5.2
5.8
1983
31.6
68.4
1984
80.1
25.6
54.5
1984
4.8
6.0
4.3
1984
32.0
68.0
1985
87.1
26.4
60.6
1985
8.6
3.2
11.2
1985
30.4
69.6
1986
93.8
27.5
66.3
1986
7.8
4.2
9.3
1986
29.4
70.6
1987
102.9
30.2
72.7
1987
9.7
9.6
9.7
1987
29.3
70.7
1988
115.5
32.7
82.8
1988
12.2
8.3
13.9
1988
28.3
71.7
1989
126.6
34.6
92.1
1989
9.6
5.8
11.2
1989
27.3
72.7
1990
137.9
36.0
101.8
1990
8.9
4.2
10.6
1990
26.1
73.9
1991
151.5
37.9
113.6
1991
9.9
5.1
11.5
1991
25.0
75.0
1992
166.5
40.7
125.9
1992
9.9
7.4
10.8
1992
24.4
75.6
1993
182.9
44.6
137.1
1.2
1993
9.8
9.6
9.0
1993
24.4
75.0
0.7
1994
199.9
49.1
148.7
2.1
1994
9.3
10.0
8.5
75.0
1994
24.5
74.4
1.1
1995
217.2
52.2
162.9
2.1
1995
8.7
6.4
9.5
0.0
1995
24.0
75.0
1.0
1996
236.5
55.6
178.9
2.1
1996
8.9
6.5
9.8
0.0
1996
23.5
75.6
0.9
1997
254.2
59.7
192.3
2.1
1997
7.5
7.5
7.5
0.0
1997
23.5
75.6
0.8
1998
277.3
65.1
209.9
2.1
1998
9.1
8.9
9.1
0.0
1998
23.5
75.7
0.8
1999
298.8
73.0
223.4
2.1
1999
7.8
12.2
6.5
0.0
1999
24.4
74.8
0.7
2000
319.3
79.4
237.5
2.1
2000
6.0
875.0
631.0
0.0
2000
24.9
74.4
0.7
0.1
2001
338.6
83.0
253.1
2.1
2001
2001
2002
353.0
2003
377.7
2004
404.1
2005
430.0
105.4
302.4
9.2
10
3.01
24.5
70.3
2.1
2.3
0.7
2006
451.5
2007
474.1
2008
497.8
2009
522.7
2010
548.8
Year
Total
Hydro
Coal
Nuclear
Gas
Wind/RN
Year
Total
Hydro
Coal
Nuclear
Hydro
Coal
Nuclear
Gas
Wind
Note
2000 Coal power figure includes 15 GW of oil capacity and 0.64 GW of gas capacity. See Wu Jingru bellow
2005 total capacity was from the revised 10th Five-year plan in 2003.
Shares are calcuated on the basis of orignial 10th Five-year plan and its implementation until mid year 2003
Yellow = projected
Year
Total
Hydro
Coal
Oil
Nuclear
Gas
Wind
Total
Agriculture
Industry
Tertiary
Residential
Agriculture
Industry
Tertiary
Residential
1980
276.3
27.0
227.6
11.2
10.5
9.8
82.4
4.1
3.8
100.0
1981
284.1
28.2
231.9
12.2
11.8
9.9
81.6
4.3
4.2
100.0
1982
301.8
28.6
247.9
13.2
12.1
9.5
82.1
4.4
4.0
100.0
1983
324.4
28.6
267.1
14.9
13.7
8.8
82.3
4.6
4.2
100.0
1984
348.4
28.8
286.6
17.1
15.9
8.3
82.3
4.9
4.6
100.0
1985
381.3
31.7
305.0
22.3
22.3
8.3
80.0
5.9
5.8
100.0
1986
417.5
32.2
337.0
23.5
24.8
7.7
80.7
5.6
5.9
100.0
1987
462.4
36.0
370.3
27.5
28.7
7.8
80.1
5.9
6.2
100.0
1988
508.7
37.9
404.8
31.7
34.3
7.4
79.6
6.2
6.7
100.0
1989
545.2
41.1
429.8
34.8
39.5
7.5
78.8
6.4
7.2
100.0
1990
579.6
42.7
450.4
38.5
48.1
7.4
77.7
6.6
8.3
100.0
1991
631.7
48.0
484.7
44.6
54.4
7.6
76.7
7.1
8.6
100.0
1992
704.3
52.2
536.7
51.4
64.0
7.4
76.2
7.3
9.1
100.0
1993
780.7
48.1
597.1
61.8
73.7
6.2
76.5
7.9
9.4
100.0
1994
866.4
53.1
653.7
73.0
86.7
6.1
75.4
8.4
10.0
100.0
1995
988.6
45.6
750.7
91.9
100.6
4.6
75.9
9.3
10.2
100.0
1996
1057.0
48.3
794.6
100.9
113.3
4.6
75.2
9.5
10.7
100.0
1997
1103.9
51.4
816.9
110.2
125.3
4.7
74.0
10.0
11.4
100.0
1998
1134.7
49.8
826.3
119.8
138.8
4.4
72.8
10.6
12.2
100.0
1999
1209.2
52.5
880.6
129.1
147.0
4.3
72.8
10.7
12.2
100.0
2000
1346.6
53.4
978.6
147.4
167.2
4.0
72.7
10.9
12.4
100.0
2001
1468.7
57.3
1063.8
163.6
183.8
3.9
72.4
2002
1620.0
59.0
1183
180
198
3.6
73.0
Note: Shortage was estimated at 10GW, 40TWh in 1978, 19.5% and 17.5% of power demand.
source: Reform and Planning in the Power Industry, Beijing China Electric Power Press 1996 pp 686-688
by Planning Division of the Ministry of Electric Power.
GW
GW
GW
1953
2
1954
3
1955
3
1956
4
1957
5
1958
6
1959
10
1960
12
1961
13
1962
13
1963
13
1964
14
1965
15
1966
17
1967
18
1968
19
1969
21
1970
24
1971
26
1972
30
1973
34
1974
38
1975
43
1976
47
1977
51
1978
57
1979
63
1980
66
1981
69
1982
72
1983
76
1984
80
1985
87
1986
94
1987
103
1988
115
1989
127
1990
138
1991
151
1992
167
1993
183
1994
200
1995
217
1996
237
1997
254
1998
277
1999
299
2000
319
2001
339
2002
353
353
2003
378
2004
404
2005
430
2006
452
2007
474
2008
498
2009
523
2010
549
Note:
Note growth rate between 2003 and 2005 calculated at 7% to reach the revised 10th Five-year plan target.
A moderate 5 percent annual growth rate is assumed for the years between 2006 - 2010.
I. Capacity Fuel Structure (GW)
Hydro
Coal
Oil
Nuclear
Gas
Wind
Total
1953
0.3
2.0
2.4
2000
79.4
222.5
15
2.1
0.36
319.3
2005
105.4
287.4
15
9.2
10
3.01
430.0
2020
260
563
15
40
72
10
960.0
Hydro
Coal
Oil
Nuclear
Gas
Wind
1953
14.0
86.0
2000
24.9
69.7
4.7
0.7
0.0
0.1
2005
24.5
66.8
3.5
2.1
2.3
0.7
2020
27.1
58.6
1.6
4.2
7.5
1.0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
China Transmission lines (35kv+)
6.475
233.732
707.142
use loss
125
4
500
200
6
1200
12
1400
300
4
1200
41
1200
GW
GW
1971
1.54
1889
154
12.23
Rest
95.43
1972
2.38
1918
238
8.06
1971-79
27.84
1973
3.16
1918
316
6.07
1980-89
47.53
1974
3.43
2128
343
6.2
1990-01
167.8
1975
3.86
1989
386
5.15
1976
2.46
2468
246
10.03
1977
2.92
2224
292
7.62
1978
4.12
2799
412
6.79
1979
3.97
2712
397
6.83
27.84
1980
2.11
2191
211
10.38
1981
1.83
2218
183
12.12
1982
2.14
2651
214
12.39
GW
Share
Unknown
95.43
28.2
1971-1979
27.84
8.2
1980-1989
47.53
14.0
1990-2001
167.8
49.6
Unknown
1971-1979
1980-1989
1990-2001
GW
95.4
27.8
47.5
167.8
Share
28.2
8.2
14.0
49.6
Size
Thermal
125
11.6
200
25.2
1940s-1950s Soviet design Chinese manufactured 3 exhaust flow type (390 gce/kWh)
300
8.7
Source: Xu 2002
elasticity
0
0
0
1990-2001 (167.8GW; 50%)
1980-1989 (47.5GW; 14%)
1971-1979 (27.8GW; 8%)
Unknown ( 95.4GW; 28%)
power share in energy
consumption structure
power balance sheet
interest rate 12%
Chinese
generation price: RMB 0.25/kWh
1998 Connection
Installed capacity
44.15 GW
0.61
0.14682
0.018
Other
2.17
0.10084
0.012
Wholesale
24.38
0.32971
0.040
Yuan/kWh
0.31
0.02
0.01
0.34
Average
0.61
0.02
0.01
0.10
0.01
0.74
$/MWh
37.35
2.41
0.84
40.60
Average
72.94
2.41
0.84
11.69
1.69
89.57
Chinese Electricity Generation and Consumption (TWh)
Average capacity util
1952
3800
6.17
11.29
727
1957
4794
5.99
6.61
604
1962
3554
7.87
8.73
549
605
1965
4920
6.98
7.31
477
518
1970
5526
6.54
9.22
463
502
1971
5810
6.68
9.48
465
505
1972
5746
6.68
9.43
464
504
1973
5530
6.26
9.53
457
496
1974
5010
6.19
9.91
450
488
1975
5197
6.23
10.13
450
489
1976
4869
6.34
10.32
449
487
1977
4947
6.41
10.19
446
484
1978
5149
6.61
9.64
434
471
1979
5175
6.54
9.24
422
457
1980
5078
6.44
8.93
413
448
1981
4955
6.4
8.98
407
442
1980
300.6
19.4
281.2
0.0
25.1
256.1
1982
5007
6.32
8.64
404
438
1981
309.3
19.8
289.5
0.3
26.0
263.8
1983
5101
6.21
8.53
400
434
1982
327.7
20.7
307.0
0.3
26.5
280.8
1984
5190
6.28
8.28
398
432
1983
351.4
21.8
329.6
0.4
28.1
301.9
1985
5308
6.42
8.18
398
431
1984
377.0
23.7
353.3
0.8
29.3
324.9
1986
5388
6.54
8.15
398
432
1985
410.7
26.4
384.3
1.1
31.4
354.0
1987
5392
6.66
8.48
398
432
1986
449.5
29.4
420.1
1.2
34.2
387.0
1988
5313
6.69
8.18
397
431
1987
497.3
33.1
464.2
1.3
39.4
426.1
1989
5171
6.81
8.18
397
432
1988
545.2
36.5
508.7
1.5
41.6
468.6
1990
5041
6.9
8.06
392
427
1989
584.7
39.8
544.9
1.7
43.7
502.9
1991
5030
6.94
8.15
390
424
1990
621.3
42.9
578.4
1.8
46.6
533.6
1992
5039
7
8.29
386
420
1991
677.6
47.0
630.6
2.9
51.4
582.0
1993
5068
6.96
8.52
384
417
1992
753.9
52.8
701.1
4.7
58.1
647.7
1994
5233
6.9
8.73
381
414
1993
839.5
58.4
781.1
4.4
66.5
714.5
1995
5216
6.78
8.77
379
412
1994
928.1
389.8
538.3
-2.0
59.6
478.7
1996
5033
6.88
8.53
377
410
1995
1007.7
372.8
634.9
-5.4
74.5
560.4
1997
4765
6.8
8.2
375
408
1996
1080.0
550.8
529.2
-3.6
77.0
452.3
1998
4501
6.66
8.13
373
404
1997
1134.5
567.2
567.2
-7.1
79.8
487.4
1999
4393
6.5
8.1
369
399
1998
1157.7
578.9
578.9
-7.2
79.1
499.8
2000
4517
6.28
7.7
363
392
1999
1233.1
2001
2000
1368.8
2001
1483.9
[1] Power sector consumption refers to in-plant consumption (see Table 4B.4, Fossil Fuel-Fired Electric Utility Fuel Use).
[2] Transmission and distribution losses; includes only losses from grids that have >500 kW of installed generation capacity and does not include losses from end user grids (mainly industry). Inclusion of line loss from end user distribution lines woul
figures
2000200MW
(MW)
(MW)
UTH
(MW/)
UTH
EAF
EFOR
EAF
EFOR
SH
RH
3.
3.
Shares of Electricity in primary energy and end energy consumption
share in
electricity energy
share in
coal consum
1980
17.98
20.6
4.81
1981
18.13
21.18
6.14
1982
18.25
21.33
6.24
1983
18.28
21.29
6.3
1984
18.78
21.16
6.3
1985
19.14
21.32
6.37
1986
20.63
22.13
6.63
1987
21.33
22.79
6.85
1988
22.38
23.27
7.01
1989
24.24
23.95
7.21
1990
25.13
24.68
7.55
1991
26.67
25.46
7.86
1992
28.68
26.67
8.32
1993
31.48
28.74
8.6
1994
32.32
28.84
9.12
1995
33.13
29.58
9.18
1996
34.78
30.76
9.25
1997
38.86
32.76
9.3
1998
42.12
34.69
9.35
1999
50.17
40.07
10.9
2000
60.85
41.72
11.2
1. Power sector coal consumption as a percentage of toal coal consumption
2 Power sector energy use as a percentage of primary energy use
3. Power consumption as a percentage of final energy consumption
Power consumption
Total consumption
317.4
426.8
582.4
618.3
639.8
623.5
660.4
RMB billion
Growth Rate %
Investor Structure
Financing Structure
0.6
1.1
0.8
0.3
0.1
2.3
0.6
1.1
0.8
0.3
0.1
2.3
Central govmnt special fund
0.6
1.1
0.8
0.3
0.1
0.6
2.305
78.5
-30.6
-60.0
-81.0
-23.3
29.6
39.2
56.7
67.0
54.7
42.8
260.4
20.8
33.9
30.7
26.4
12.7
9.5
113.2
35.5
40.2
42.4
47.1
47.5
44.9
44.6
25.0
34.7
22.9
18.6
11.0
10.0
19.4
1. 1997.2.21 Ministry of Electric Power issued 1.0752 billion RMB; term 3 years; annual rate of 11%
Enterprise internal funds
36.3
39.8
41.0
43.3
44.4
40.6
42.0
2. 1998.6.19 SPC issed 2.907 billion RMB; term 3 years; annual rate 8%. Traded on Shanghai security market since May of 1999
Foreign investment
Enterprise raised funds
Unclassified source
Source: energy statistical yearbook 1989
1981
1982
1983
1984
1985
1986
1987
1988
498.55
625.26
868.28
1456.6
1531.66
2211.09
0.0
0.0
372.2
439.6
752.6
1527.4
1376.5
378.4
1993
Total
55788.1
1541.1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
Agriculture
Industry
Tertiary
Residential
TWh
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
GW
GW
1953
2
1954
3
1955
3
1956
4
1957
5
1958
6
1959
10
1960
12
1961
13
1962
13
1963
13
1964
14
1965
15
1966
17
1967
18
1968
19
1969
21
1970
24
1971
26
1972
30
1973
34
1974
38
1975
43
1976
47
1977
51
1978
57
1979
63
1980
66
1981
69
1982
72
1983
76
1984
80
1985
87
1986
94
1987
103
1988
115
1989
127
1990
138
1991
151
1992
167
1993
183
1994
200
1995
217
1996
237
1997
254
1998
277
1999
299
2000
319
2001
339
2002
353
353
2003
378
2004
404
2005
430
2006
452
2007
474
2008
498
2009
523
2010
549
Note:
Note growth rate between 2003 and 2005 calculated at 7% to reach the revised 10th Five-year plan target.
A moderate 5 percent annual growth rate is assumed for the years between 2006 - 2010.
1
#REF!
2000
1
1
#REF!
1
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
GW
GW
GW
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
1
1
1
#REF!
#REF!
#REF!
#REF!
TWh
1
1
1
1
1. Growth Rate (%)
3. Power expansion
Overview -- 2004 Boom
Central Government Plan to 2020
Real GDP grows 7-8% per year; GDP p.c. reaches $10,000 (PPP basis)
Primary energy consumption grows 4.5-5% per year
520 GW (30 GW per year) generation capacity will be added
Natural gas to provide new and clean sources of energy
Over 7% annual growth rate
Consumption to increase from 40 bcm to between 140 and 200 bcm under various policy scenarios
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Chinese total energy consumption: IEA
2000
Thought experiment:
Gas Deal in China
Best estimates new generation capacity at least 50 GW in 2004 and 60-70 GW in 2005
Rising production of 14.9% between 2004 and 2005 [
Energy intensity exceeds 1.0; electricity 1.4
June 2006, total installed capacity was 531 GW
More than 70 GW of newly installed capacity to be placed in service this year
New capacity more than 80% coal fired
Approximately 250GW in new power station projects under construction
Approximately 25% planned new capacity supercritical coal
Imagine China replaces 50 GW of planned coal capacity with natural gas (baseload CCGT) by 2020
15% reduction over IEA’s baseline for coal capacity in 2020
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
CO2 Savings in Perspective
China Reference Scenario
China Deal: Load Factor and Carbon Intensity Assumptions
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
China Deal: CO2 Savings
Overview – fuel structure
Central Government Plan
Demand Uncertainty
Domestic (Chinese) gas forecast driven by higher price for gas than coal, driven by
Higher gas costs
Domestic production costs
Infrastructure development costs
China’s gas power development
First 2 plants come on line in June 2005
Gas transported from Tarim Basin by E-W pipeline
18.4 GW under construction
6% national electricity capacity
2 re-gasification terminals to open to 2006-07 in Guangdong and Fujian
15 LNG re-gasification terminals announced by Chinese national oil companies
9 terminals reported approved by NDRC
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Challenges to gas market development
Gas dedication to premium use (residential) with coal reserved for power
Energy security concerns reduce supply to domestic gas sources
Gas-fired power pricing
Competitive power pools?
First of a kind projects
Anchor projects with assured off-take generally needed for infrastructure investment
Need for downstream market (local distribution companies and end-use expansion) to support infrastructure for power
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Benefits of gas market development
Lower unit investment costs
Smaller requirement for land occupancy and cooling water
Modularity and lower economies of scale
Local grid networks for high reliability power;
Distributed urban power
Small unit unreliability (Guangdong 45%, often oil)
Local support at load center for long distance transmission
Peak shaving
Source: IEA, World Energy Outlook 2004
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
2. Potential Markets: Beijing, Shanghai,Guangdong
Beijing
(pipeline)
Shanghai
Three regions may account for ~ 50% of total gas consumption
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Beijing – Energy consumption
Beijing -- NG Consumption Structure (2003)
Chart3
Residential
Industrial
Commercial
Transprt.
Beijing Seasonal NG Load Curve
Chart1
37622
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load
Beijing -- Gas Demand Projection
Shanghai – Energy consumption
Shanghai – Future NG Applications
Guangdong – Energy consumption
Guangdong – Natural gas application
End 2004: 40 GW projected to 100 GW (2020)
9 units nuclear @ 1 GW per unit
7 or 8 (4x600) MW coal plants being built (17-20+GW)
11 gas units (online 2006) or 3.3 GW of planned 30-40 units (10 GW gas fired power total) by 2020
Hydro contracts from West and Three Gorges (11-18GW)
Residential and commercial sector
Plans and prices: is the standard story about to change?
Relative Electricity Costs: Guangdong, August 2004
Hydro: 32-34 cents/kwh (fen in levelized costs);
Coal without FGD: 37 cents/kwh;
Coal with FGD: 40 cents/kwh;
LNG (all in): 43 cents/kwh;
Nuclear: 47-50 cents/kwh
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Relative prices: Coal, gas ,oil
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Mine mouth coal price
2004: Jan – Sept.
Actual price for power generation is higher ($22/ton) due to sellers’ resistance against planned price
End-user prices are much higher, reaching $60 – $70/ton ($50 - $60 for power generation).
Chart6
1996
1996
1997
1997
1998
1998
1999
1999
2000
2000
2001
2001
2002
2002
2003
2003
2004
2004
Coal Balance
mil ton
40.59
20.33
20.69
14.41
14.51
17.18
China Primary Energy Production and Structure
Coal Balance
mil ton
Coal Balance
20
17
1.5
1.2
20
21
1.5
1.4
1377
1383
100
1377
1447
100
100
coal
oil
hydro
GW
GW
Coal
Oil
Hydro
Nuclear
Gas
Wind
Hydro
Nuclear
Industry
Agriculture
Tertiary
Residential
1953
2
1953
86.0
14.0
1953
83.7
16.3
1980
228
27
11
11
1954
3
1954
84.2
15.8
1954
80.0
20.0
1981
232
28
12
12
1955
3
1955
83.3
16.7
1955
80.5
19.5
1982
248
29
13
12
1956
4
1956
76.5
23.5
1956
78.9
21.1
1983
267
29
15
14
1957
5
1957
78.0
22.0
1957
75.1
24.9
1984
287
29
17
16
1958
6
1958
80.6
19.4
1958
85.1
14.9
1985
305
32
22
22
1959
10
1959
83.0
17.0
1959
89.6
10.4
1986
337
32
23
25
1960
12
1960
83.7
16.3
1960
87.5
12.5
1987
370
36
27
29
1961
13
1961
81.9
18.1
1961
84.6
15.4
1988
405
38
32
34
1962
13
1962
81.7
18.3
1962
80.3
19.7
1989
430
41
35
40
1963
13
1963
81.8
18.2
1963
82.2
17.8
1990
450
43
38
48
1964
14
1964
80.9
19.1
1964
81.1
18.9
1991
485
48
45
54
1965
15
1965
80.0
20.0
1965
84.6
15.4
1992
537
52
51
64
1966
17
1966
78.6
21.4
1966
84.7
15.3
1993
597
48
62
74
1967
18
1967
78.7
21.3
1967
83.1
16.9
1994
654
53
73
87
1968
19
1968
77.1
22.9
1968
83.9
16.1
1995
751
46
92
101
1969
21
1969
76.0
24.0
1969
83.0
17.0
1996
795
48
101
113
1970
24
1970
73.8
26.2
1970
82.3
17.7
1997
817
51
110
125
1971
26
1971
70.3
29.7
1971
81.9
18.1
1998
826
50
120
139
1972
30
1972
70.5
29.5
1972
81.1
18.9
1999
881
52
129
147
1973
34
1973
69.6
30.4
1973
76.7
23.3
2000
979
53
147
167
1974
38
1974
69.0
31.0
1974
75.5
24.5
1975
43
1975
69.1
30.9
1975
75.7
24.3
1976
47
1976
68.9
31.1
1976
77.5
22.5
1977
51
1977
69.4
30.6
1977
78.7
21.3
1978
57
1978
69.7
30.3
1978
82.6
17.4
1979
63
1979
69.7
30.3
1979
82.2
17.8
1980
66
1980
69.2
30.8
1980
80.6
19.4
1981
69
1981
68.3
31.7
1981
78.8
21.2
1982
72
1982
68.3
31.7
1982
77.3
22.7
1983
76
1983
68.4
31.6
1983
75.4
24.6
1984
80
1984
68.0
32.0
1984
77.0
23.0
1985
87
1985
69.6
30.4
1985
77.5
22.5
1986
94
1986
70.6
29.4
1986
79.0
21.0
1987
103
1987
70.7
29.3
1987
79.9
20.1
1988
115
1988
71.7
28.3
1988
80.0
20.0
1989
127
1989
72.7
27.3
1989
79.8
20.2
1990
138
1990
73.9
26.1
1990
79.6
20.4
1991
151
1991
75.0
25.0
1991
81.5
18.5
1992
167
1992
75.6
24.4
1992
82.4
17.6
1993
183
1993
75.0
24.4
0.7
1993
81.7
18.1
0.2
1994
200
1994
74.4
24.5
1.1
1994
80.4
18.0
1.6
1995
217
1995
75.0
24.0
1.0
1995
79.8
18.9
1.3
1996
237
1996
75.6
23.5
0.9
1996
81.3
17.4
1.3
1997
254
1997
75.6
23.5
0.8
1997
81.5
17.3
1.3
1998
277
1998
75.7
23.5
0.8
1998
81.0
17.8
1.2
1999
299
1999
74.8
24.4
0.7
1999
82.4
16.4
1.2
2000
319
2000
74.4
24.9
0.7
0.1
2000
80.9
18.0
1.1
2001
339
2001
2001
80.0
18.9
1.2
2002
353
353
2002
2002
2003
378
2003
2004
404
2004
2005
430
2005
70.3
24.5
2.1
2.3
0.7
2006
452
2007
474
Coal
Oil
Hydro
Nuclear
Gas
Wind
2008
498
1953
86.0
14.0
2009
523
2000
69.7
4.7
24.9
0.7
0.1
2010
549
2005
66.8
3.5
24.5
2.1
2.3
0.7
2020
58.6
1.6
27.1
4.2
7.5
1.0
Note:
* 2005 total capacity was from the revised 10th Five-year plan in 2003. A moderate 5% annual growth is assumed for 2006-2010
* 15 GW oil capacity is seperated from 2000 thermal capacity figure. See Wu Jingru bellow
* 2005, 2010, and 2020 fuel structure projection is from Wu Jingru (China Electric Power News 2003 April)
Mine mouth coal price
power sector price
Supply Chains in Comparison
Non-price drivers of gas development in coastal cities
Local autonomy (federalism)
Afford market development subsidies
Chinese oil majors
Contextual factors for Gas Utilization
Energy security
Financial deregulation
Regulatory decentralization
Gas/coal relative price formation in Asia- Pacific region (levels and volatilities)
Supplier needs and agendas (Gazprom)
International politics (Iran)
White: where the lights are on, satellite imagery
Blue Red : Gas resources, with increasing size (USGS)
Source: Baker Institute (Rice) and PESD (Stanford) Joint Study on the Geopolitics of Gas (CUP, forthcoming
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Revolution in Global LNG Markets
Shift from “old world” defined by:
Few importers
Muted price incentives to divert cargoes
“Buyer takes the volume risk and seller takes the price risk”
Captive customers of regulated utilities ultimately backed contracts
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Revolution in Global LNG Markets
Toward a “new world” defined by more flexible LNG trade and driven by:
Liberalization of gas and electricity markets
Declining LNG costs (esp. liquefaction and re-gas)
Growth of new markets (Spain, US, UK)
Entry of energy super-majors to gas trade
Flexible LNG trade will integrate US and European gas (and electric power) markets
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Pricing: Volatility in global gas markets
Price de-linking from oil (fuel oil and distillates)
Gas at projected scale no longer a side product of oil
Flexible spot markets separate gas from oil prices
Gas and oil seen as non-substitutable quality products
Low cost oil reserves lower than gas reserves
Volume justifies specialized contracting
Decrease demand (diversified power portfolio)
Regulation to encourage long term off-take contracts
Need for anchor projects (creditable for CO2)
Storage increases
Pacing (organizational issues)
Risk re-distribution
New hedging or risk bearing mechanism to absorb quantity risks upstream
Mercantile energy security perceptions
Scarcity and price increases in equipment and downstream facilities (ships)
Supply nation political economics
Limited contracting management capacity
http://pesd.stanford.edu/
Nuclear Deal In India
U.S. - India technology transfer could facilitate the installation of 30 GW of new nuclear capacity.
This would save 230 million tonnes of CO2 if it displaced only coal capacity and 87 million tonnes if it replaced gas.
In practice, nuclear would likely replace a mix of both coal and gas
emissions reduction would fall between 87 and 230 million tonnes.
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
India Reference Scenario
India Deal: Load Factor and Carbon Intensity Assumptions
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
India Deal: CO2 Savings
India Deal: Carbon Implications
CO2 Savings in Perspective
Amazonian deforestation: sources
Intraregional
Speculation
Large farms and ranches
Amazonian deforestation: dynamics
Amazonian deforestation: dynamics
No stumpage fees or logging fines
Weak macroeconomic stability encourages land speculation
Failure to provide agricultural technology or credit encourages turnover
Insecure title leads to social violence and relocation
Opportunity costs exceeded land rents without government action (pace of deforestation induced)
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Amazonian deforestation: dynamics
Land reclassification away from forest preservation (cerrado)
Urban development
National security
Zona franca
Little actual surrounding deforestation
Amazonia deforestation: deal structure
Tax income and stumpage fees for productive farmers
Capital gains taxation for relocating farmers
Opportunity costs compared to sustainable forestry concessions
Private property rights enforcement better than regional government
Biofuels development on cleared land for family income
Domestic costs avoided from climate change
Hydrology shifts in Amazonia precipitation patterns will curtail Southern rains and reduce value of hydropower system
Carbon storage payments internationally
Net US Gas Imports, 1970 – 2025
EIA-AEO 2005
LNG
Canada
Mexico
--LNG climbing from less than 2% in 2000, to over 20% by 2025;
--EIA (and others) projections have changed quite dramatically over the past five years;
--US domestic production previously expected to grow faster, Canadian gas imports expected to be larger;
--EIA suggests that Alaska North Slope gas will come on in about 2016; starting at around 1 Tcf and increasing to 2 Tcf by 2025;
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
US Spot, Japanese & European LNG Prices ($/MMbtu)
*Henry Hub for U.S. data, average of Japanese & European landed LNG prices
--Continental gas prices driven by oil-indexed contracts---risen for the last seven consecutive quarters (WGI, 27 July 2005)
Sourced from Pervin & Gurtz (2005).
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Forward Prices in Key LNG Markets
(US$/MMbtu; 20 July 2005)
Source: Heren LNG Markets
*UK prices are from Heren (real data), US prices from Nymex, others based on Heren forecasts, contract oil-linkages and oil-futures
--converted at today’s exchange rate
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
US Gas Prices Linked to Oil Products
Purvin & Gertz 2005
Global LNG Supplies
Source: James Jensen
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Factors Driving U.S. Natural Gas Demand
% Δ Gas Demand =
+ 0.250 x % Δ Heating Degree Days
+ 0.075 x % Δ Cooling Degree Days
+ 0.075 x % Δ Real Oil Price
- 1.000 x % Δ Real Gas Price (lag)
- 0.300 (constant)
Volume, distances determine transit mode
CE Tech
Volume (tonnes/yr x 106 )
Source: CE Tech, Doha 5 LNG Conference
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Full Range of Published Scenarios
Program on Energy and Sustainable Development - http://pesd.stanford.edu/
Top Innovators and Emitters by World Region
Percent of World Total
(1994)
Elements of a Technology Strategy
Diverse Country-Based Initiatives
Loose international coordination among nations with diverse national cultures of innovation
Price and technology progress are not either/or
Politically acceptable price signals tend to operate at margins, while vintage shifts may require dedicated policy programs
Technology development involves a long pipeline from scientific conceptualization through diffusion of commercial production
Common pitfall: premature selection of winners
The pace of development along a pathway is affected by predictable and diverse problems that will crop up along the pipeline, which may be subject to diverse policy influence
Infrastructure development, finance (risk allocation) and law may dominate engineering in much of the pipeline
The feasible technology portfolio may be limited with search space more diverse within a particular pipeline than between technologies in the portfolio
Industries with experience in R&D in particular pipelines more likely than governments to explore successfully this internal search space
(10)
(5)
Post-Validation, or Validation Stage by CDM Board as of 23.12.05
Other
1%
Hydro
4%
1
-
2
renewables.
CO
2
2
renewables.
Displaced Capacity (GW) 3230
Total Generation (TWh) 237237
LNG LIQUEFACTION CAPACITY BY REGION
MILLION TONS OF LNG
Average Annual Capacity
Increase - 4.2 MMTPY
Average Annual Capacity
Increase - 7.9 MMTPY