Paladin the way to low carbon economy for circum-bohai-sea region-

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Paladin the way to low carbon economy for circum-bohai-sea region-

  1. 1. The Way to Low-Carbon Economy for Circum-Bohai-Sea Region PALADIN Pan Zhaoan,pugo_866@163.com Mo Yan, moyan86@gmail.com He Ni, near_hn@yahoo.com.cn Xiamen University
  2. 2. Necessity Situation Solution Citizen SK’s Way 1 2 3 4  Provide general solution for low-carbon economy in Circum-Bohai-Sea region  Specify the actions for SK on renewable energy in Circum-Bohai-Sea region Goal Contents
  3. 3. ◆ Avoid High Cost in the Future  Without any action, the loss of climate changing 〓 5% ~20%of GDP〓 loss of the First World War, the Second World War and the Great Depression.  In 2040, losses caused by severe weather will reach 3 trillion dollars per year, accounting for 3% of the current global GDP. ◆ Avoid Carbon Lock  Definition: with a huge economy , a country’s technologies and systems based on fossil fuel have great inertia.  If emission peak delays 10 years, the maximum annual emissions rate would expand its 1-fold, from current 2.5% to 5%. ◆ Energy Security  Reducing dependence on oil is the goal of the countries all over the world.  More balance energy structure, much safer energy security. 0 10 20 30 40 50 60 70 80 2000 2001 2002 2003 2004 2005 2006 2007 The Proportion of Energy Consumption in China Coal Share Oil Share Natural Gas Share Hydroelectric, Nuclear Power and Wind Power Share Unit:% The Necessity for Low-Carbon Economy in the World1.1 The Necessity in China1.2 China relies heavily on coal and oil, whose consumption accounts for 90% of all energy consumption.
  4. 4. ◆ Emission Reduction Commitment 0 5 10 15 20 25 0.00 1,000.00 2,000.00 3,000.00 4,000.00 5,000.00 6,000.00 7,000.00 8,000.00 China USA EU Russia India Japan Brazil Germany Canada UK Carbon Emissions Emissions(Million tons) per emission(ton) Unit: Unit: 0 1 2 3 4 5 6 7 8 World China USA Korea Japan Energy Consumption 2006 2005 2004 Unit: 10 thousand dollars GDP  2009.12.18, Jiabao Wen, Copenhagen,” Carbon dioxide emissions per unit of GDP of China in 2020 will reduce 40% - 45% than in 2005”. The Necessity for Low-Carbon Economy in China1.2 ◆ Economic Restructuring  China’s energy consumption per GDP is double of the world average level ;  Much higher than USA, Korea, Germany, UK and Japan . ◆ Pressure of Emission Reduction China is the country with the largest carbon emissions.
  5. 5. The Energy Distribution of SK in Three Regions1.3 SK international trade (Beijing) Co., Ltd. SK (China) Investment Co., Ltd. SK (Beijing) Highway Technology Co., Ltd. SK Energy oil (Tianjin) Co., Ltd. Offshore Oil Chemical Co., Ltd. Dalian Beijing Valley Fuel Chemical Co., Ltd. Dalian SK Energy Co., Ltd. Dandong SK Energy Co., Ltd. Shenyang SK Energy Development Co., Ltd. Shenyang SK High Oil Co., Ltd. Shandong SK Energy Co., Ltd. Zibo SK Asphalt Co., Ltd. Rizhao SK&Jinchao Plastic Industry (Yantai) Co., Ltd. SK Heruida oil fire Yantai Co., Ltd.Yantai SK Jinchao Plastic Industry (Yantai) Co., Ltd. SK Energy (Qingdao)Co., Ltd. SK Emerging Energy (Qingdao) Co., Ltd. SK Zhenhua Asphalt Co., Ltd.Shanxi Shanxi Huineng Coal Industry Co., Ltd. SK Energy International Trading (Shanghai) Co., Ltd. SK Takahashi Solvent Co., Ltd. Shanghai SK Shenxin Packaging Co., Ltd. Zhejiang SK Jin Hua Baoying Asphalt Co., Ltd. Taizhou Zhongran-SK City Gas Development Co., Ltd. SK Baoying Asphalt Storage Co., Ltd. Ningbo 19 6 0Energy enterprise resource is concentrated in the Circum- Bohai-Sea.
  6. 6. 0 20000 40000 60000 80000 2005 2006 2007 GDP&GDP Growth Rate Yangtze River Delta Pearl River Delta Circum-Bohai-Sea 5 10 15 20  GDP in Circum-Bohai-Sea is the compared with the other two(Reasons:It includes Beijing and Shandong which is in the third position nationwide in GDP )  Pearl River Delta has the largest growth rate, followed with Yangtze River Delta, Circum- Bohai-Sea the Analysis  The average car ownership is highest in Pearl River Delta with the highest growth rate.  The average car ownership in Circum-Bohai- Sea is the with a soft growth rate compared with the other districts. Analysis Average Civilian Car Ownership 1 3 5 7 0 2 4 6 8 Unit:everyhundredpersons Comparative Analysis for The Three Regions2.1 largest last. lowest
  7. 7. Low-Carbon Standard Evaluation System2.2 Province F1 Rank F2 Rank F3 Rank Score Rank Beijing 1.78 3 1.50 4 3.48 1 1.94 1 Shanghai 0.61 5 3.65 1 0.11 5 1.77 2 Tianjian 0.39 6 2.55 2 0.90 2 1.36 3 Guangdong 2.70 1 -1.91 10 -0.34 6 0.33 4 Zhejiang 1.82 2 -1.4 7 -1.42 11 -0.02 5 Jiangsu 1.29 4 -1.71 9 -1.37 10 -0.37 6 Inner Mongolia -2.50 10 1.71 3 -0.53 7 -0.46 7 Liaoning -1.22 8 -0.87 6 -0.72 8 -1.00 8 Hebei -1.38 9 -1.51 8 0.89 3 -1.07 9 Shandong 0.07 7 -2.58 11 -1.18 9 -1.22 10 Shanxi -3.56 11 0.59 5 0.18 4 -1.26 11 First level indicators Second level indicators Low-carbon production Carbon production level Energy consumption for unit GDP Energy consumption for unit industry added Industrial waste water emission Industrial exhaust emission Low-carbon consumption Carbon emission per capita Energy consumption per capita Electricity consumption per capita Low-carbon resource Forest coverage Average CDM project emission Low-carbon policy The yearly total investment resource for industrial pollution control Government subsidy ratio for industrial pollution control  Set up an evaluation system for low-carbon economic development level  Aim at comparing the low- carbon development level of three economic regions in China  Analyze the strengths, find out the potentials and problems as well as provide solid data base for next section’s analysis.
  8. 8. District F1 Rank F2 Rank F3 Rank Composite Score Rank Yangtze River Delta 1.24 2 0.18 2 -0.9 3 0.46 1 Pearl River Delta 2.7 1 -1.91 3 -0.3 2 0.33 2 Circum-Bohai-Sea -0.92 3 0.2 1 0.4 1 -0.25 3 F2: Low-Carbon Consumption and Resource Index  Circum-Bohai-Sea is in the first place;  However,the population size in Circum-Bohai-Sea is twice times of that in Yangtze River Delta,three time of that in Pearl River Delta;  Thus,overall industrial emissions and energy consumption are much higher than the other two districts. F3: Low-Carbon Policy Index  The average reductions of CDM projects is a little bit higher in Pearl River Delta.  Industrial pollution subside from the government in Circum-Bohai-Sea is 8%, which is much higher than the other two areas.  Combining the two factors, Circum-Bohai-Sea is NO.1 .  Circum-Bohai-Sea is in the last place;  Energy consumption of unit GDP and unit industry value added in Circum-Bohai-Sea is the highest;  Carbon production in Circum-Bohai-Sea is the lowest. F1: Low-Carbon Production Index Low-Carbon Standard Evaluation System2.2
  9. 9. Public Awareness  Weak public awareness  Lack of market power  The share from the companies in Circum-Bohai-Sea is the lowest Companies Carbon Productivity  Carbon production level is low  Economic growth pattern needs to be changed Government  Government’s low-carbon plan needs to be improved Problems for Low-Carbon Economy in Circum-Bohai-Sea2.3 Indicators ★ ★★ ★★★ Energy Consumption per GDP ★ ★★ ★★★ ★ ★★ ★★★ Average CO2 Emission ★ ★★ ★★★ ★ ★★ ★★★ ★ ★★★ ★★ Carbon Production Industrial Energy Consumption Average Energy Consumption The Share of the Companies’ Investment Sources of Current Industrial Pollution Control Circum- Bohai-Sea Yangtze River Delta Pearl River Delta
  10. 10. Power Valley, Solar City  National Renewable Energy Industrial Base  National Model City on Applied Solar Utilization  WWF China’s Low-Carbon City Development Project’s Pilot City Binhai City Case Green Low-Carbon Capital  Six “Golden Sunshine” Projects  The Guidance for Speeding up the Development and Utilization of Solar Energy  Promote the Industrial Development in Beijing Environmental Friendly to Live  China’s First Experimental Park on Recycling Economy  “Low-Carbon Life Starts from me”  TIANJIN Set Up the First Emissions Exchange Market in China  The First Low-Carbon House in China Solar City  National High Technology Biology Industrial Base  New Energy Industrial Base in State Torch Program  National Renewable Energy Model City on Construction Applications Beijing Baoding Dezhou
  11. 11. Government Actions for Low-Carbon Economy3.1 Policy  Start low-carbon economic development strategy as soon as possible , which includes the 12th Five-Year Plan  Improve energy statistics system, and gradually introduce carbon emission statistics  Develop and improve the energy efficiency standards, and strengthen the implementation of energy efficiency standards Economy  Credit support: increase the budget, promote “green credit " via banks  Explore various financing channels: financial allocation , policy bank loans & VC  Tax incentives  Product subsidies  Reform the energy pricing mechanism  Explore the "Carbon trading" in the field of financial innovation  Implement the contract of energy management, international CDM transaction and other new financing means R & D  Strengthen international cooperation in low- carbon technology innovation  Set up special funds to support energy technological R & D and innovation  Promote R & D cooperation between Schools and firms  Personnel training  Scientific research  Project development  Information technology  National energy R & D institutions Government Actions
  12. 12. Citizen Shape sustainable consumption patterns Reuse Re-calculate Recycle Re-evaluate Reduce Rescue  Select energy-saving appliances  Less use of air conditioners  Turn off lights  Purchase new energy vehicles  Select the green low-carbon construction  Select green food  Buy less disposable products  Buy more second-hand or refurbished items  Use reusable shopping bags  Do waste sorting and recycling  Use readily biodegradable lunch box  Use more bio-energy  Establish special conservation areas to save species  Refuse fur products  Against deforestation and protect the forest  Calculate the direct economic costs  Calculate the carbon emission  Choose the products with lower price and less carbon emission Citizen Operations for Low-Carbon Economy3.2
  13. 13. Enterprise Movements for Low-Carbon Economy3.3 Set up a new firm Co- operation R&D Purchase Deposits Open Shanghai's first hydrogen service station for cell vehicles. Establish two EPR in the UAE with Suez and Areva Group. Built the megawatt solar photovoltaic power generation system with China in 2004 , whose total installed capacity ranking first in Asia with total investment of 7.5 million U.S. dollars. Cooperate with Shell in the development and production of natural gas in Sichuan. Shell China Exploration and Production Co., Ltd. was awarded a CBM project in Shanxi Province with 55% participating interest in 2007. Invest nearly 180 million Yuan building a 60,000 t / year scale biodiesel demonstration plant. Plan to spend 3.5 billion Australian dollar on the acquisition of Australian coal bed methane and liquefied natural gas company in 100% equity with Shell Energy Holdings Australia Ltd. Cooperation . Plan to buy Australia's largest coal bed methane producer Arrow Energy Ltd with Petro China in 2010. Invest in new energy field more than one billion U.S. dollars annually. M&A In December 2009, enter the clean energy field by the acquisition of XTO Gas Company with 41 billion U.S. dollars.
  14. 14. SK will increase its investment in China on renewable energy, Combined with other areas, SK will invest 1 billion Yuan in total. “ ” SK's Current Decisions in Low-Carbon Industry4.1 1, improve the efficiency to break technological barriers; 2, provide more low-carbon energy 3, find any way possible to cut the carbon emission and other polluted emission. “ ” We mainly realize the technological revolution in three areas: Solar Energy Wind Energy Biology Energy
  15. 15. Challenges for SK in Low-Carbon Industry4.2 2004 2005 2006  The area is new and has a great potential in Circum- Bohai-Sea region  The industry has not set up its competition bar  The industrial scale is relatively low  For SK, it needs to lead the technology ability In China’s rural areas, the firewood and coal saving stoves reach 0.2 billion Approximately 70% of rural households benefit 3,764 large and middle digesters 0.341 billion cube meters biogas 0.12 billion ton organic waste and waste water 80 billion cube meters biogas . Supporting Policies  China has invested 4.8 billion Yuan for the enterprise .  For the fuel ethanol companies, the government exempts 5% of the consumption tax. Shortage  The shortage of raw resources limits the mass production of biomass energy  It does not set up a comprehensive biomass energy industrial system . Solid Biomass Energy Biology Energy Analysis Gas Biomass Energy 2.26 billion rural household biogas digesters 9.2% of the total rural households The 8.7 billion cube meters per year for biogas production Benefit 0.75 billion people Add 18 billion Yuan directly to the farmers . Liquid Biomass Energy 1
  16. 16.  Strong competition  SK lacks of technology power Company Strength  First install in Shandong in 1985, later in Tianjin,own the biggest wind power manufacture in China .  Form the industrial arrangement with Beijing as the center and Dalian, Inner Mongolia as the production bases.  In 2006, set up Tianjin Gamesa Wind Power Company.  In Jan, 2007, set up a blade manufacture in Dongying.  In Tianjin ,set up a joint venture manufacture-Ruineng North Fans Manufacturer.  Representative is in Beijing ;Set up Tianjin Suzlon Energy Company. Wind Energy Industry Ranking for Countries 0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 Million Watt Challenges for SK in Low-Carbon Industry4.2 Wind Energy distribution in China Wind Energy Analysis 2
  17. 17.  60% to 70% of the solar battery industry in China is controlled by the above companies, which set the industry line bar extremely high and difficult for others to enter in.  For SK, it is urgent to set up a R&D center, which will help SK to take advantage of the convenient management. Companies Strength Weakness  Solar battery production level is the second internationally.  No specific R&D or sales department in Circum-Bohai-Sea  Headquarter is in Baoding  Inefficient management team  Representative is in Beijing, set up a solar company in Tianjin  It is a joint venture company with China Yiqing Group, which bring operation risk  Complete running arrangement in Circum-Bohai-Sea  No R&D center in Circum-Bohai-Sea Challenges for SK in Low-Carbon Industry4.2 Company Names 2007 2008 2009 Supply (MW) Sales (MUS$) Sales (MUS$) Supply (MW) Sales (MUS$) Suntech Power Holding. Co., Ltd 64 1348.3 497.5 1923.5 704 1693.3 Canadian Solar Inc 83.4 302.8 167.5 709.2 325.3 643.3 Solarfun Power Holdings. Co., Ltd 78.4 328.3 172.8 725.4 313.4 553.5 Trim Solar Limited 67.96 301.8 201.01 831.9 399 845.1 JA Solar Holdings Co. Ltd 132.4 369.3 277 800 509 553.7 Yingli Green Energy Holdings Co. Ltd 142.5 580 281.5 1107.1 525.3 1062.8 China Sunergy Co., Ltd 74 234.3 107.2 350.9 194 284.9 Competitors Analysis for SK in solar industry in Circum-Bohai-Sea region Solar Industrial Analysis 3 Domestic Companies’ Supply and Sales Supply (MW)
  18. 18. Renewable Energy Current Development Future Picture Technology Requirement Entering Threshold Government Support Money Resource Solar ★★★ ★★ ★ ★ ★★ ★★ Wind ★★★ ★★ ★★ ★★ ★★ ★★ Biomass ★ ★★★ ★★★ ★★★ ★★★ ★ Weakness  International management style  Large investment package  Complete running arrangement in Circum-Bohai-Sea  No R&D center in Circum- Bohai-Sea  Unstable fund resources problem  Government Support: The Circum- Bohai-Sea region has make its low- carbon economy as its main development road in the future  Technology Innovation  Investors’ enthusiasm for the low- carbon economy  Single financial resource  Depend on the business cycle  Operation risk S W O T Evaluation on Renewable Energy4.3 SWOTAnalysisforSKon RenewableEnergy 4.4
  19. 19. Wind 1.Fans Manufacture ★ Abandon the industry. 2.Wind Farm ★ Our suggestion for SK is to cooperate with some local state-owned power groups to own a share in the business. 3.Additive Market ★ SK could use the opportunity to share the Circum-Bohai-Sea market with its high technology level in battery field, sales net and local government policy. ★ SK could use its technology advantage to enter the field along with the well-prepared sales channels and sufficient capital. ★ Another method SK could use is to joint venture with the local companies. Solar Products for SK in Low-Carbon Industry4.5 ★ Develop its Fuel ethanol : It is a blank field in Circum- Bohai-Sea region. ★ Explore biodiesel: Because the companies at home and abroad are entering the field consecutively, SK needs to seize opportunities. Biomass For Maintain Core Competitiveness Set up a R&D Center
  20. 20.  It’s the national politics center, which helps to know and master the policy changes in time  There are many universities and research centers in Beijing, which helps the process of the R&D  Close to SK headquarter, easy to manage Strength Tianjin Beijing Shanghai  High living cost,lower the employee’s happiness  High housing price, which increases the running cost Weakness  It’s a national new energy center  Local governments provide preferential policies for the companies  Intercity Highway makes Beijing and Tianjin as a whole  Relative low housing price Strength  Inefficient human resources  Hard for SK headquarter to manage Weakness  SK has stable sales net in Yangtze River Area  Competitive Human Resources Strength  The Farthest from SK headquarter  High living cost  High housing price Weakness Advice: Choose Tianjin R&D Center Decision for SK in China4.6 R&D Center in China
  21. 21. Necessity Situation Solution Citizen SK’s Way 1 2 3 4Summary
  22. 22. Thank You!

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