Unlocking Energy Effiency in China, Frances G. Beinecke

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On December 14, 2009, the Alliance to Save Energy and the Renewable Energy and Energy Efficiency Partnership (REEEP) held a side event at the COP15 climate conference in Copenhagen, Denmark, entitled, "Paradox to Paradigm: The Role of Energy Efficiency in Creating Low Carbon Economies."

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  • Energy Efficiency represents over one third of the total CO2 emissions reduction potential in China About 2.4 billion tonne reduction by 2030
  • Energy intensity is energy consumption per unit of GDP China’s energy intensity rose rapidly during its 10 th Five Year Plan (2001-2005) as its energy demand skyrocketed China vowed to cut its energy intensity by 20% from 2005 levels during its 11 th Five Year Plan (2006-2010) China is on track to achieve this highly ambitious target – if successful would avoid about 1 billion tons of CO2 emissions
  • China’s primary focus is on the industrial sector because industrial sector is responsible for about two-thirds of China’s total energy demand. Here are some examples of its successful policies and measures to cut industrial energy demand. Rating officials’ job performance on how well they meet the target Tough requirements for China’s Top 1000 largest energy using factories Financial incentives for energy saving measures in these enterprises Closing thousands of highly polluting and inefficient factories and power plants
  • Here are the results for one of China’s most successful industrial energy efficiency programs. These 1000 factories together account for about one-third of China’s total energy demand. Energy saving at these facilities will save 245 million metric tons of CO2
  • Here is a quick description of DSM (just read from slides)
  • NRDC has pioneered DSM in China over the last ten years Here’s a quick rundown of our progress (read from slides)
  • The building sector is key to addressing climate change globally At the price of <$100 per ton of CO2, the potential savings in the world’s building sector is close to 6 billion tonnes of CO2 emissions, close to US annual national emissions.
  • From NRDC’s joint report with the Boston Consulting Group This is the most optimistic scenario, assuming all the existing buildings and new buildings can cut energy use by 70%. This would result in savings of 2 billion tonnes of CO2 emissions annually. Very ambitious, but intended to show the full technical potential One of our projects in China has demonstrated, which I’ll show at the last slide, that it’s feasible to achieve 70% energy savings by existing building efficiency technologies. Still, retrofit all the existing buildings to the level of 70% energy savings is a very daunting task. Most of China’s existing buildings are inefficient.
  • Here is a more realistic and achievable scenario 50% energy savings for new buildings is mandated by China’s building code. Some cities and provinces go further to mandate 65% energy savings. However, compliance rate for new buildings is not high in China. Existing buildings are far below the current standards. This scenario will still result in CO2 emission reductions of 170 million tons each year, equivalent to not building 50 large coal fired power plants each year.
  • One solution for improving compliance that we’ve pioneered in the US is the use of a building energy rating and labeling system using simplified compliance software. NRDC helped Shanghai developed China’s first building rating and labeling standard, released in 2007, in collaboration with U.S. Residential Services Network. China’s Ministry of Housing and Rural-Urban Development borrowed the idea and developed a national building energy rating and labeling guidelines in 2008. Our next step is to help implement this system nationwide
  • China has initiated several incentive programs to promote building energy efficiency and renewable energy. However, they are not systematic or consistent. NRDC is advising the central and local governments to develop an integrated and comprehensive incentive system, including tax incentives, low interest loans, and subsidies, etc. We are providing best practices from other countries’ experience and helping adapt them to China
  • Strengthening enforcement if very important Here’s one example of a comprehensive building code enforcement system. The Beijing municipal government developed an “check point” approach for each phase from building preconstruction to final sale.
  • As mentioned before, here’s a good example of how typical office buildings in China can save up to 70% of their energy and 40% of water at a low cost premium. NRDC coordinated this project in collaboration with U.S. DOE and China’s Ministry of Science and Technology.
  • Unlocking Energy Effiency in China, Frances G. Beinecke

    1. 1. Frances G. Beinecke President Natural Resources Defense Council Alliance To Save Energy Side Event Copenhagen, Denmark Dec 14, 2009 Unlocking Energy Efficiency in China
    2. 2. Energy Efficiency in China— Key Solution to Climate Change
    3. 3. China’s Remarkable Progress in Cutting Energy Intensity During its 11 th Five Year Plan (2005-2010)
    4. 4. China’s Focus To Date: Industrial Energy Efficiency <ul><li>Ambitious energy efficiency goal–reduce energy intensity 20% from 2006 to 2010 </li></ul><ul><li>Revised Energy Conservation Law - officials’ career now dependent in part on energy-saving performance </li></ul><ul><li>Initiated “Top-1000” program to target largest enterprises </li></ul><ul><li>Incentives to reward energy saving in large enterprises </li></ul><ul><li>Phasing out obsolete production capacity in 13 energy-intensive sectors </li></ul><ul><li>Establishing efficiency requirements for obtaining loans, insurance and listing on stock exchange </li></ul>
    5. 5. Impressive Results from Top-1000 Program <ul><li>Launched by the central government in April 2006 </li></ul><ul><li>Improve energy efficiency of the biggest energy industrial users in 9 industrial sub-sectors </li></ul><ul><li>The selected enterprises jointly consumed 33% of national energy use and 47% industrial energy consumption </li></ul>
    6. 6. Further Unlocking China’s Efficiency Potential— Demand Side Management (DSM) <ul><li>DSM means utility-sponsored programs that use ratepayer funds to help customers upgrade to more efficient technologies such as commercial lighting, industrial motors and commercial and residential air conditioners </li></ul><ul><li>Uses tools such as rebates, investment incentives and energy audits </li></ul><ul><li>Stringent monitoring and verification of energy savings </li></ul>
    7. 7. NRDC Has Pioneered DSM in China <ul><li>NRDC brokered cooperative agreements between California and Jiangsu on Energy Efficiency and Climate </li></ul><ul><li>Our work over the last 4 years has helped Jiangsu </li></ul><ul><ul><li>Develop China’s first large-scale DSM program </li></ul></ul><ul><ul><li>Allocate $35 million in government incentives </li></ul></ul><ul><ul><li>Save 2 billion KWh of electricity annually </li></ul></ul><ul><ul><li>Cut 1.84 million tons of CO2 emissions </li></ul></ul><ul><li>Jiangsu’s DSM program was promoted as a national model by China’s Premier Wen Jiabao </li></ul><ul><li>The partnership between CA and Jiangsu was cited by Secretary Hilary Clinton as a model for US-China cooperation </li></ul><ul><li>We are now scaling up our DSM programs nationwide </li></ul>
    8. 8. Building Sector: Key to Climate Change Globally Source: The Kyoto Protocol, the CDM and the buildings and construction sector, UNEP/SBCI Report The building sector has the greatest potential of any sector for reducing GHG…We can’t meet the climate change commitment without addressing building energy performance The potential exists in both developing and developed countries, as well as in economies in transition 。
    9. 9. Potential of Chinese building sector: best scenario Greening all China's buildings would avoid 2 billion tonnes of CO2 emissions annually, equivalent to any of the following every year: 1 Halting all air traffic globally for three years 5 Building 20 Three Gorges Dams Filling 50 ,000 Tiananmen Squares with rainforest 3 Shutting down current world steel production Building 370,000 wind turbines 4 Avoid building 550 500 MW coal-fired power plants Removing all cars from the UK, Spain and Italy Turning off all the lights in America for 12 months Source: BCG/NRDC Joint Research Paper, “From Gray to Green: How Building Energy Efficiency Can Help Make China’s Rapid Urbanization Sustainable”, 2009 Efficient Buildings 2
    10. 10. Potential of Chinese building sector: moderate scenario Halting all air traffic globally for 4 months 6 Building two Three Gorges Dams Filling 4,000 Tian'anmen Squares with rainforest 3 Shutting down current world steel production for 5 weeks 4 Building 30,000 wind turbines 5 Avoiding building 50 500 MW coal-fired power plants Removing all cars from Sweden, Norway and Denmark Turning off all the lights in America for 1 month Source: BCG/NRDC Joint Research Paper, “From Gray to Green: How Building Energy Efficiency Can Help Make China’s Rapid Urbanization Sustainable”, 2009 Cut energy use by 50% in 5% of existing buildings and 60% of new buildings by 2015 would avoid 170 million tonnes of CO2 emissions annually, equivalent to any one of the following 1 Efficient buildings 2
    11. 11. Solution 1: Fully implement building energy label in new and existing buildings 1. Ministry of Housing, Urban-Rural Development Source: MOHURD; interviews; literature search; BCG analysis Credible building energy rating system will help create a market for green buildings MOHURD 1 introduced b uilding energy rating and labeling system in April 2008 5-star energy rating system for both residential and commercial buildings Building label can play a key role in driving building efficiency improvements <ul><li>Drive awareness and understanding among end-users </li></ul><ul><li>Serve as a marketing tool to sell high energy efficiency buildings </li></ul><ul><li>Reinforce power of incentives </li></ul><ul><ul><li>Credible system of building energy certificates will distinguish best performers from others </li></ul></ul>
    12. 12. Solution 2: An integrated and comprehensive incentive system Tax incentives <ul><li>Tax benefits for: </li></ul><ul><ul><li>Windows, doors and roofs conforming to certain requirements </li></ul></ul><ul><li>Tax exemptions for purchase of approved energy-efficient technology and appliances </li></ul><ul><li>Accelerated depreciation for energy efficient products </li></ul><ul><li>Higher tax for heating oil for buildings </li></ul><ul><li>Tax exemption on 111 energy efficient products </li></ul>Low interest loans <ul><li>Cash refunds and low interest loans for owners purchasing energy efficient buildings </li></ul><ul><li>Interest-free loans of 10 mn GBP for energy-efficient buildings </li></ul><ul><li>Special fund providing guarantees for SMEs for energy efficient investments </li></ul><ul><li>Low interest loans for retrofitting projects </li></ul><ul><ul><li>Interest rate: 1-3% </li></ul></ul><ul><ul><li>Total loans <75% of total investment </li></ul></ul>Government subsidies Cash subsidies to buyers of &quot;Energy Star&quot; products Cash subsidies to local government for energy efficient retrofitting Subsidies for retrofitting projects 50% subsidies to household owners installing solar energy equipment
    13. 13. Solution 3: Strengthen building code enforcement Pre-construction Construction permit Construction Building “check and accept” Sales Local administration for urban planning Submitted reports and files Building construction plan and building energy efficiency design plan Local administration for urban planning Local administration of building efficiency Results of pre-construction inspection and verification of execution of energy saving standards Filing and registration for Beijing residential building energy efficiency inspection Local administration of building efficiency <ul><li>Construction supervision company </li></ul><ul><li>Materials quality </li></ul><ul><li>Construction quality </li></ul><ul><li>Materials and construction completed according to design </li></ul><ul><li>Local MOHURD bureau </li></ul>Administration for building quality supervision Specific “check and accept” on energy efficiency measures Various energy efficiency inspection reports Local administration of building efficiency <ul><li>Buyers </li></ul><ul><li>Energy efficiency information at sales site and disclosure of energy efficiency measures in contracts </li></ul><ul><li>Residential quality warrant and residential manual </li></ul><ul><li>Buyers </li></ul>Source: Beijing municipal construction bureau, &quot;Energy Efficiency Rules for Civil Buildings&quot;, lit search Inspection content Reporting and submission Inspector Submit to...
    14. 14. Successful example: Agenda 21 Building The first LEED-certified building in China AGENDA21 is an example of a green building in China... <ul><li>An eight-floor office tower; home to China’s Ministry of Science and Technology in the heart of Beijing </li></ul><ul><li>A model of cooperation between US and China promoting energy efficiency, sustainable technologies and integrated design </li></ul>...which earned China's first LEED certification in 2005 Note: LEED stands for Leadership in Energy & Environmental Design Source: NRDC <ul><li>1999 </li></ul><ul><ul><li>NRDC coordinated the project jointly sponsored by the U.S. Department of Energy and China's Ministry of Science and Technology </li></ul></ul><ul><li>2002 </li></ul><ul><ul><li>Project broke ground </li></ul></ul><ul><li>2004 </li></ul><ul><ul><li>Building's official opening ceremony took place </li></ul></ul><ul><li>2005 </li></ul><ul><ul><li>Earned LEED Gold certification </li></ul></ul><ul><ul><li>NRDC obtained top award in 1st National Green Building Awards </li></ul></ul><ul><ul><li>Led to adoption of China's first green building standard </li></ul></ul>
    15. 15. Conclusion <ul><li>Energy efficiency is the largest, cheapest, fastest, and greenest resource available to address both China’s growing energy demand and global warming. </li></ul><ul><li>China has made great progress in reducing its energy intensity. However, more can and should be done. </li></ul><ul><li>Now is the time to build on the momentum that has been gathering and propel energy efficiency to the front and center of China’s energy agenda </li></ul><ul><li>By significantly improving the efficiency of its energy use, China will be able to reap the benefits of energy efficiency, meet its rising energy demands, and join the global community in the fight against climate change. </li></ul>

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