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5

The Biomass Energy Sector in China Gianluca Ghiara – May 7, 2014

A project funded by the European Union

Today’s Speaker

Gianluca Ghiara • Almost 10 years experience in the renewable energy and

environmental protection market in China; more that 5 years as Managing Director in Geapower and 4 years experience as Senior Project Manager in the Sino-Italian Cooperation Program for Environmental Protection (SICP).

• Managed a large amount of projects in different fields, mostly in the bio-energy sector (biogas, biomass and solid waste management); but also in the waste water management and heavy metal control areas.

• In EUCCC, elected vice-chair in the Renewable Energy Working Group.

• Geapower is a consulting company active in the environmental protection and renewable energy fields; it provides highly qualified engineering services in particular in the fields of bio-energy, heavy metals control, air quality emission control, waste management and water engineering.

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ghiara@geapower.com www.geapower.com

Agenda

• Introduction • The Bio-Energy Sector in China

• Biogas • Biomass • Waste-to-Energy • Bio-Fuels

• Market Trends and Development • Biomass Technology Utilisation • Market Opportunities • Market Barriers • Useful Contacts

• Conclusions

Introduction

Introduction

Current Status • China is the second largest energy consumption country in

the world • China’s per capital energy consumption is about the world

average • China’s energy is heavily relying on coal (1.9 billion TOE,

about 50% production of the world) • In the energy and the environmental sectors, remains a

developing country and its market reforms are incomplete • According to the Chinese Statistical Yearbook, the investment

in China’s clean technology market grows at an annual average of 60%

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Introduction

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Introduction

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The Biomass Energy Sector in China

Legislative Framework

• Aug 2007, NDRC, Mid- to Long-Term Development Plan for Renewable Energy

• Sep 2008, MEP & NDRC & NEA, Notice on Further Strengthening Environmental Impact Assessment Management on Biomass Power Generation Project

• Dec 2009, NPC, Renewable Energy Law of PRC (first issued in Feb 2005, revised in Dec 2009; most detailed law on renewable energy sector, including biomass)

• Aug 2010, NDRC, Notice on Biomass Power Generation Project Management

• July, 2012, NEA, Biomass Energy Development 12th Five-Year Plan

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Legislative Framework

• In January, 2013, the State Council issued the Bio-Industry Development Plan. As a major sector, bio-energy is elaborated with the aim to promote the commercial development of bio-liquid fuel, bio-gas and biomass moulding fuel (BMF), and biomass power generation.

• On May, 2013, the SFA (State Forestry Administration) issued the first National Forestry Biomass Energy Development Plan for 2011 - 2020, elaborating guidelines, basic principles, development goals and layout for China’s forestry biomass energy development.

• On June, 2013, the NEA issued the development/amendment plan of the first batch standards of 2013 for the energy industry, covering also the bio-energy sector, such as classification of biomass moulding fuel (BMF), test methods for slagging characteristics of BMF and technical conditions of burners of biomass particles.

• On August, 2013, the NDRC issued the Interim Measures for the Management of Distributed Generation, elaborating on project management, grid access, and relevant support policies and subsidies, encouraging the development of distributed generation, including biomass energy.

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The Bio-Energy Sector in China

The Chinese government is now trying to push the development of the bio-energy sector in order to:

• Increase the supply of a stable and clean form of energy

• Find a natural way to use the huge amount of biomass waste and residue

• Improve environmental protection and sustainable development and promote and improve the rural economy

• Biomass energy potential 500 MTCE: Straw from agriculture, forest industry, biogas from livestock waste and municipal solid waste

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The Biogas Sector

• Biogas technology is chiefly used to treat animal waste, domestic waste and other high concentration industrial waste water

• From 2005 to 2012, China invested a total of 61 billion RMB in its rural biogas programmes, 15 billion RMB from the National Investment Fund

• NDRC, in the Medium and Long Term Programme of Renewable Energy Development Plan 2006 - 2020, together with the Ministry of Finance and the Ministry of Agriculture defines the future development of the biogas sector.

• For biogas purification, the Chinese technology is not as advanced as its European counterparts.

• In China rural biogas and LMBP are very popular; instead CBP still needs to find a market. 5/14/201430/11/10

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The Biogas Sector

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The Biomass Sector

• China is a country rich in biomass resources with a variety of applications for electricity and heating

• Currently, natural biomass contributes 5 GW to China’s total installed power generation capacity

• The biomass industry in China is at a stage of development and is supported by a feed-in tariff mechanism (power price to 0.75 RMB per KWh -including tax- and grand 0.25 RMB per KWh as subsidy)

• By 2015, most of the biomass technologies will complete R&D and demonstrations and are ready for industrial application

• 2015 to 2020 will be a fast development period for biomass technologies in China; biomass technologies will become a completed technical system

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The Biomass Sector

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Biomass Plant in China

The Waste-to-Energy Sector

• The rapid economic growth, industrialisation and urbanisation of China have produced a massive increase in the amount of solid waste generated

• Most of the cities’ waste disposal capacity does not catch up with garbage output; around 40% of total garbage is simply piled up in the suburbs or rural areas

• According to the 2013 China Energy Major Construction Project Overview, China has built about 140 waste-to-energy power plants in 28 provinces, autonomous regions and municipalities

• Local garbage is not professionally sorted, consequently it often has a low caloric value (around 3000–6700 kJ/kg)

• Incineration of waste meets several barriers, including incomplete combustion, unsteady/higher air pollutants emission and inefficient energy recovery

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The Waste-to-Energy Sector

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Reference information on the WTE market in China

The Bio-Fuel Sector

• By 2015, China biofuel production will reach almost 2 million tons, biodiesel more than 500,000 tons; by 2020, biofuel will reach 3,5 - 4 million tons, biodiesel 1 million ton

• Without government subsidies, producers work under inconsistent profit margins and price fluctuation

• Existing guidelines already reflect some key sustainable concerns: land, food and environment

• The main input for biodiesel is used kitchen oil or residue from vegetable oil crushes

• Legislation already in place to manage biofuel sector: land law, agricultural law and environmental law

• Chinese government introduced incentives like a 5% consumption tax on biodiesel production and subsidies for construction costs 5/14/201430/11/10

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The Bio-Fuel Sector

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Market Trends and Development

Biomass Technology Utilisation

In the near future (2015) • Low-subsidy technology: Biogas, pelleting, fuel ethanol, biodiesel,

power generation, CHP • Biomass power generation: 600MW • Biomass fuel: 2 million ton/yr

Mid-term target (2020) • High-subsidy technology: Synfuel from gasification, ethanol from

cellulose, biochemical engineering • Biomass power generation: 3000MW • Biomass fuel: 15 million ton/yr

Long-term target (2030) • New technologies to be explored: Algae technology, ocean

biomass, H2 production • Biomass power generation: 5000MW • Biomass fuel: 50 million ton/yr

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Biomass Technology Utilisation

Market Opportunities

In China, the bio-energy sector development still needs to strengthen both in the areas of policy incentives and technology introduction:

• Advanced technologies in clean energy development

• Advanced technologies in energy conservation, esp. in industrial sectors

• Advanced technologies in clean energy vehicles

• Energy service systems (smart grid, energy management contracts, etc.)

• Capacity building (tech training, policy consulting, etc.) 5/14/201430/11/10

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Market Opportunities

• Introduction of high level technology and equipment in biomass power generation, including: boiler manufacturing for direct combustion, specific machines for harvesting, packaging, transportation and storage

• Solid waste disposal equipment manufacturing: landfill leakage-proof geo-membranes, hazardous waste treatment equipment, landfill gas power equipment and large-scale livestock farm waste

• Construction and operation of sewage and hazardous waste treatment plants (incineration and dry anaerobic digestion) and other pollution treatment facilities

• The bio diesel sector has not been exploited yet; it is foreseen that the demand for transportation fuel will increase by 10%

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Market Barriers

• Technical barriers: high investments costs, low biomass productivity

• Financial barriers: lack of investment in the biomass energy sector, difficulty in accessing finance, lack of incentives

• Institutional barriers: lack of coordination among different government agencies, lack of mechanisms to attract the private sector, lack of a designated agency for the promotion of the biomass sector and lack of local expertise

• Policy barriers: unclear, unsupportive government policies and absence of clear national strategy or priority promotion

• Protecting IPR: Chinese laws do not sufficiently protect foreign intellectual property rights 5/14/201430/11/10

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Market Barriers

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Useful Contacts

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EU SME Centre www.eusmecentre.org.cn

European Union Chamber of Commerce in China www.euccc.com.cn

China IPR SME Helpdesk www.china-iprhelpdesk.eu

EC2 www.ec2.org.cn

National Energy Administration www.nea.gov.cn

Ministry of Environment Protection www.mep.gov.cn

Ministry of Agriculture http://english.agri.gov.cn/

China Solid Waste www.solidwaste.com.cn

Chinese Research Academy of Environmental Sciences (CRAES)

www.creas.cn

China Association of Environmental Protection Industry

www.caepi.org.cn

China Environment Chamber of Commerce (CECC) www.cecc-china.org

Useful Contacts

List of main Chinese player in the biomass sector • Anhui Jinli Power Development Co. Ltd.

• National Bio Energy Group

• Jiangsu Dongsheng Biomass Power Generation Co. Ltd.

• Biomass Investment Group Inc.

• China Power International New Energy Holding Ltd.

• Guodian Longyuan Power Technology Engineering Co. Ltd.

• Guoneng Biologic Technology Consultancy Co. Ltd.

• China Everbright International

• Green Power Holding Group Co. Ltd.

• Shenzhen Dongjiang Environmental Co. Ltd.

• Beijing Dadi Sunshine Biotech Co., Ltd.

• Shenzhen Dongjiang Environmental Co. Ltd.

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Conclusions

Conclusions

• By 2020, overall performance of most bio-energy technologies will be improved, opening the door to real market deployment

• Solid waste incineration power generation will have much better overall performance and become a dominant technology in China

• Co-firing generation will have greater overall performance than direct combustion, becoming the mainstream for crop biomass plants

• By 2020, crop residue biomass gasification technology will become a driving force for energy solutions in rural areas

• Biomass projects should follow the principles of utilising local resources, social development and environmental protection

• Biomass technologies must be chosen taking into account the overall performance 5/14/201430/11/10

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Conclusions

Fundamental issues to keep in mind when developing your business: • Best technology = cheapest one

• Contract barrier

• Consultancy issue

• Extremely variegated market

• Localise your product

• Protect your IPR 5/14/201430/11/10 35

Conclusions

Final thoughts: • China has undergone huge social and economic changes at

an unprecedented rate • Many businesses mistakenly believe that doing business in

China is unprofitable for foreign firms • The Chinese market can be very cruel towards people /

companies not sufficiently equipped for it • European SMEs can play an important role in all segments

of the bio energy sector • It is possible to develop a profitable business in China, but

only with good knowledge of the market 5/14/201430/11/10

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Exhibitions

• Bio Energy Expo Wuhan Wuhan, May 18-20,2014

• NEC 8th International Photovoltaic Power Generation Conference & Exhibition

Shanghai, May 20-22, 2014

• International Biomass Energy Exhibition Guangzhou, August, 26-28,2014

• The 7th Annual China Smart Grid Forum Beijing, September 18-19, 2014

• The 6th Chinese Renewable Energy Conference Wuxi, November 6-8, 2014 5/14/201430/11/10

www.eusmecentre.org.cn info@eusmecentre.org.cn

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