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An Estimation of the Effect of Carbon Pricing for CO 2 Mitigation in China’s Cement Industry

This presentation provides an estimation of the effect of carbon pricing policies on CO2 mitigation in China's cement industry. It includes an analysis of technology diffusion, investment possibilities, and the potential for emissions reduction. The study concludes that a moderate carbon price can have a limited effect on CO2 mitigation, but there is still potential for technology-driven reductions in the cement sector.

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An Estimation of the Effect of Carbon Pricing for CO 2 Mitigation in China’s Cement Industry

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  1. An Estimation of the Effect of Carbon Pricing for CO2 Mitigation in China’s Cement Industry Presenter: Xianbing Liu Senior Policy Researcher Kansai Research Centre, IGES, Japan

  2. Structure of the presentation • Overall frame of the LCT policy research at KRC/IGES • Background and research needs in China • Estimation of the changes in LCT deployment in response to • carbon pricing policies • Estimation of the mitigation effect of carbon pricing for • cement industry of China • Summary GCET17

  3. Overall structure of LCT policy studies at KRC/IGES Geographical focus:Japan, China and the Republic of Korea Policy focus: Carbon pricing tools, i.e., carbon taxes and GHG emissions trading scheme Discussed in this presentation Overall objective: To clarify the linkage between policy and the change in technology deployment GCET17

  4. Background and research needs in China • Large efforts of China in energy saving during the 11th and 12th FYP period; • Strict becoming pressure for GHG emissions mitigation; • China-US joint statement: Peak in around 2030 and intend to peak earlier; • INDC of China: e.g., 60-65% reduction in carbon intensity by 2030 from 2005; • Tradition in relying on command & control regulations but laggard in practicing market-based instruments (MBIs); • Lack of studies to identify the viewpoints of businesses as major policy practitioners; • Lack of technology and policy solutions for achieving the mitigation target at sector level. GCET17

  5. Analysis procedures of LCT diffusion Measurement of possibility for companies to invest in technologies Calculation of technology diffusion changes Simulation of diffusion of target technologies in BAU case GCET17

  6. Survey to China’s cement companies and the samples • Questionnaire format: a) Company basic information; b) Energy saving management and adoption of target technologies; c) Factors determining LCT investment; d) Policies promoting technology diffusion • Implemented during November, 2014 to February, 2015 • Coordinated by China Cement Association (CCA) • Sent to a total of 270 cement companies with 78 valid respondents collected GCET17

  7. Observed and simulated technology diffusions Note: Oxygen-enriched combustion was omitted due to insufficient data collected for the analysis. GCET17

  8. Investment possibility in various technology payback times Result: Payback time on 50% of the samples corresponds to 2.5 and 3.9 years on the two curves GCET17

  9. EMOS diffusion paths with various carbon prices • Findings: • Carbon pricing indicates effectiveness in • promoting EMOS diffusion. • 2.6%, 6.3% and 9.2% increase in diffusion rate • at 20, 60 and 100 Yuan/t-CO2 From BAU in 2015. • Moderate price at 60 Yuan/t-CO2 may have • a similar effect with the high price of 100 Yuan/t-CO2. • The pricing policy may realize the full diffusion • of EMOS five years earlier than BAU. GCET17

  10. Process for estimating the mitigation at sector level GCET17

  11. LCT of cement industry covered in this analysis GCET17

  12. Statistics and prediction of cement production in China Prediction result of clinker/cement production in China (by CCA) Historical change of cement demand in Japan GCET17

  13. Distribution of NSP kilns by the scale 27.0% 39.2% 33.8% 2.1% 57.6% 34.0% 6.3% 3.5% 63.4% 32.5% 0.5% 10.0% 80.0% 10.0% GCET17

  14. Simulated technology diffusion curves at BAU (examples) Electricity saving technologies: T01 to T03 Coal saving technologies: T04 to T08 GCET17

  15. Calculation results of emissions in various scenarios 2020: 6.2% TFS: Technology frozen scenario; BAU: Business-as-usual; S01: 60 Yuan/t-CO2; S02: 100 Yuan/t-CO2 2025: 8.8% 2030: 10.2% GCET17

  16. Technology abatement costs under S01 Technology MACs under S01 in 2020 Technology MACs under S01 in 2030 GCET17

  17. Summary • This study estimates the effects of carbon pricing for carbon mitigation in China’s cement industry; • Cement production in China experienced fast growth and is now to plateau over next few years; • The energy saving low carbon technologies covered in the analysis are at different diffusion stages; • Full diffusion of energy saving technologies usually takes 10-20 years after initial commercialization; • There remains certain technology mitigation potential in China’s cement sector; • A moderate carbon price would generate very limited effect in CO2 mitigation; • Most of the technology mitigations can be achieved at the low abatement costs. GCET17

  18. Thank you for your attention! Contacts: Xianbing LIU KRC/IGES Tel: +81-78-262-6634 Fax: +81-78-262-6635 E-mal: liu@iges.or.jp URL: http://www.iges.or.jp GCET17

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