The  Chinese  Coal  Value  Chain    &  Climate  Change  

Kevin  Jianjun  Tu,  Senior  Associate  Carnegie  Endowment  for  Interna<onal  Peace  

 1779  MassachuseDs  Avenue  Northwest  

Washington,  DC    20036    

October  27th,  2011      

Presenta4on  Outline  

•  Background  of  China’s  Energy  Sector  •  Chinese  Coal  Value  Chain  &  Challenges  •  Coal  Project  at  Carnegie  Endowment  

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China  as  a  Hybrid  Economy  

•  In  2010,  China  passed  Japan  as  the  2nd  largest  economy.  •  Per  capita  GDP  of  China    <  half  of  world  average  &  10%  of  US.  •  PaDern  of  wealthy  government  vs.  rela<ve  poor  people  will  last.  

Per  Capita  GDP  (thousand  $)   GDP  (trillion  $)  

Source:  World  Bank,  IEA  and  own  calcula<on.    Note:  GDP  by  market  exchange  rates.    

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Driver  Underlying  Global  Energy  Trend  

Source:  BP  World  Sta<s<cal  Review  2011.  

•  China  &  US  are  leading  energy  consumers.  

•  Energy  mix  of  US  is  similar  to  the  world  average.  

•  China  consumes  too  much  coal,  too  liDle  oil,  gas,  nuclear  and  renewables.  

•  Convergence  of  primary  energy  mix  is  a  key  global  energy  driving  force.  

70%  

30%   23%  

4.0%  

24%   27%  

0.7%   5.2%   8.4%  

0.5%   1.3%   1.7%  

18%   34%   37%  

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Source:  IEA  Interna<onal  Energy  Outlook  2010.  

Share  of  Global  Energy  Supply:  China  vs.  US  

68%  64%  

63%  

5.1%  1.0%  

1.5%  

1.9%  

0.1%  

1.0%  

23%  

14%  

17%  

19%  22%  10%  

Annual  Growth  %  (1990-­‐2008)  

Annual  Growth  %  (2008-­‐2030)  

Targe4ng  Chinese  Coal  is  Key  to  Climate  Solu4ons  

•  In  2006,  China  passed  US  as  the  leading  carbon  emiDer.  •  In  2009,  emissions  from  Chinese  coal  comprised  20  %  of  global  

carbon  emissions,  an  amount  greater  than  total  US  emissions.  

MtCO2  

Source:  NBS,  IEA,  US  EPA,  ERI  and  own  es<ma<on.    

Nuclear:  AMermath  of  Fukushima  Daiichi  

Nuclear  Capacity  Target  in  China  by  2020  (GW)  

Source:  Carnegie  Policy  Outlook  on  the  Chinese  Nuclear  Industry  (in  Chinese).  August  2011.  

Ø Will  China’s  nuclear  expansion  be  scaled  back?  

Ø More  pressure  on  coal  in  terms  of  carbon  abatement?  

Coal  Resources  Ø China’s  Total  Coal  Resources:  1,021  Gt,  ranking  2nd  in  the  world  ader  Russia.  

Ø Proven  Coal  Reserves:     Gt   %  US   237   25.6  China   182   19.6  Russia   157   16.9  World   928   100.0  Source:  MLR,  CNCA  and  BP  (2010).  

Source:  Tu  (2011).  

Ø Characteris<cs  of  coal  resource  distribu<on  determines  paDern  of  coal  transport  in  China.  

Coal  Produc4on  in  China  

Source:  Tu  (2011).  Industrial  Organiza<on  of  the  Chinese  Coal  Industry.  &  CNCA.  

Coal  Output  (Gt)  

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Source:  Tu  (2011).  

Coal  Transport  PaRern  Exports  

Coal  Imports  

Domes4c  Marine  

Transport  

Coal  Imports  

Transport  Deters  CCS  Deployment  in  China  

Source:  Jaccard  &  Tu  (2011).  

Ø CCS  can  allow  China  to  con<nue  relying  on  coal  to  fuel  economic  development  while  retarding  spiking  carbon  emissions.  

Ø GreenGen  &  Shenhua  CTL  CCS  are  two  examples  of  CCS  demonstra<on  in  China.  

Ø Carbon  capture,  u<liza<on  &  storage  is  the  recent  trend  in  China.  

Ø Energy  penalty  of  CCS  poses  significant  challenges  for  coal  transport  infrastructure  in  China.      

Coal  Consump4on  by  Sector  in  China  

Source:  NBS  and  CNCA.  

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Coal  Use    (Gt)  

Installed  Power  Capacity  in  China  by  2030  

Source:  Tu  (2011).  

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CTL  in  China  

Source:  Shenhua.  

Ø Energy  security  was  used  as  an  excuse  for  coal-­‐to-­‐liquids,  coal-­‐to-­‐chemicals  development.  

Ø Should  CTL  be  posi<oned  as  a  backup  tech.  instead  of  a  energy  security  strategy?  

Source:  China  Customs.  

Chinese  Coal  Imports  by  Country  in  2010  !!"#

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Coal Exports Peaked in 2003

China encouraged coal exports

Source:  NBS  and  China  Customs.  

Chinese  Coal  Imports/Exports  Ø Global  coal  trade  is  about  one  third  of  China’s  domes<c  coal  consump<on  level.  

Ø China  became  a  net  coal  importer  in  2009.  

Ø Chinese  coal  imports  =  carbon  tax  on  global  coal  trade.  

Ø Economic  and  environmental  implica<ons  of  US  coal  exports  to  China.      

MRV  Challenge  –  Coal  Sta4s4cal  Distor4on  

Source:  Tu  (2011)  &  CNCA.  

Coal  Output  (Gt)   Discrepancy  (%)   Monthly  Coal  Output(Mt)  

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Safety  Challenge  

Source:  Tu  (2011).    

Laobaidong  682  (1960)  

Sunjiawang  214  (2005)  

Death  Toll  (thousands)  

Coal  Project  at  Carnegie  Endowment  

Ø Medium-­‐  to  Long-­‐term  Energy  &  Climate  Solu<ons  -­‐  Phase  I:  Coal  Value  Chain  and  Climate  Change.  

Ø Focus:  coal  industry  environmental  issues,  efficiency  &  safety.      

Thank  You  !