Analysis of CO 2 Abatement Strategies in China’s Electricity Sector

1. Analysis of CO2 Abatement Strategies in China’s Electricity Sector Hu Junfeng (胡军峰) NorthChina Electric Power University July, 2010

2. Outline • Background • Research Objectives • Main Partners • Analysis Framework • Completed Research • Ongoing Research • Future Research

3. 1. Background • Globally, CO2 emissionswere 29.2 billion tons in 2006 (EIA). • Global CO2 emissions need to be reduced to 10 billion tons per year by 2050 to mitigate climate change. • China’s share of global CO2 emissions has rapidly increased, from 8% in 1980 to 21% in 2006; China has replaced the United States as the world’s largest CO2 emitter.

4. 1. Background • The Chinese government set an objectivetoreduce the CO2intensity of GDP per capita by 40-45% over 2005 levels by 2020. • The electricity sector is China’s largest CO2 emitter (40% of gross CO2 emissions), and should be specially regulated. • Reduction of CO2 emissions in the electricity sector should include both the demand and the supply side.

5. 1. Background • Supply-side Mitigation Measures • Increase the share of non-fossil energy • Increase the efficiency of fossil fuel generation • Capture and sequester carbon from fossil fuel generation • Reduce transmission losses • Demand-side Mitigation Measures • Increase demand-side efficiency (e.g., efficiency power plants) • Adjust industry structure (e.g., through differential pricing) • Develop distributed generation (e.g., PV and CHP)

6. 2. Research Objectives • What policy portfolios can best reduce CO2 intensity in the electricity sector? • How much could electricity sector CO2 emissions be reduced by 2020? • How much should the electricity industry, and society, pay to reduce CO2 emissions intensity by 2020? • What could electricity sector CO2 reductions contribute to the national CO2 intensity goal?

7. 3. Main Partners • Government • State Electricity Regulatory Commission (SERC) • Climate Change Department, NDRC • State Administration of Taxation • Ministry of Finance • Ministry of Industry and Information Technology • International Organizations • Regulatory Assistance Project (RAP) • World Bank • Energy and Environmental Economics (E3)

8. 4. Analysis Framework Non-fossil fuel generation Macroeconomy Demand Transmission Distribution Fossil fuel generation CO2 emissions Electricity sector CO2 mitigation policies Economy-wide CO2 emissions

9. 5. Completed Research • A Comparison of Electricity Sector CO2 Emissions between China and the U.S. (2008) • Benefit-Cost Analysis of Differential Pricing Policy (2008) • Benefit-Cost Analysis of “Closing Small Power Plants” Policy (2009) • Development of Wind Power in China (2009) • Electricity Sector Supply Planning during the 12th Five-Year Plan (2010) • Generation Costs in Electricity Sector (2010) • Adjustments to the Electricity Sector’s Accounting System (2010)

10. 6. Ongoing Research • Relationship between electricity sector CO2 intensity and cost • Macroeconomic impacts of CO2 emission reduction policies in the electricity sector • Scenarios for electric vehicle development • Models for electrical vehicle charging stations • Allocation scenarios for a carbon tax in China

11. 7. Future Research • LCA for different generating technologies • Renewable energy integration, including required reserve margins • Regional transmission system integration • Models for transmission-distribution unbundling • Smart grid economics • System design for a carbon tax • System design for carbon cap and trade • Electric vehicle integration • Intelligent transportation

12. 谢谢！Thank you! Comments Welcome Hu Junfeng (胡军峰) NorthChina Electric Power University hu-junfeng@sohu.com