Energy and Environment Issues in China from Japanese Perspective
Kazuhiro Ueta, Kyoto University
Our concern onclimate change policies
Japan : Negative impactChina : Not urgent issue
Positive strategy for both China and Japan
Basic Idea and Viewpoint
Environment vs. Economy
Global (CO2) vs.
Local-Regional (SO2)
China vs. Japan
MAC of CO2 Emissions
0
100
200
300
400
500
600
700
800
900
1000
0 10
0
20
0
30
0
40
0
50
0
60
0
70
0
80
0
90
0
10
00
11
00
12
00
USA
JPN
EEC
CHN
IND
MAC 1985USD per ton
Mill. Carbon ton
Source: Ellerman, A. D., Jacoby, H. D., and A. Decaux (1998),http://web.mit.edu/globalchange/www/MITJPSPGC_Rpt41.pdf
Japan
China
CO2 Emissions in China and Japan
0
100
200
300
400
500
600
700
800
900
Japan China
Mill. ton
1971 1980 1990 2000
Comparison: Energy Balance Table in 2001
Energy share in China Coal 56%,Petroleum 20% ,Biomass 19%Natural gas 3%
Nuclear Power0.4%
Coal55.9%
Crude Oil18.9%
New Energy18.9%
Hydro Power2.1%
Natural Gas2.8%
Petroleum1.0%
Natural Gas12.4%
Coal19.2%
Crude Oil41.0%
Petroleum8.2%
Nuclear Power16.0%
New Energy1.7%
Hydro Power1.4%
Energy share in JapanCoal 19%Petroleum 49% ,Nuclear Power 16% ,Natural gas 12%
Potentiality of Energy Savingin China
Coal power plant’s heat rate China 0.317 and Japan 0.425
Efficiency of coal power plant China 3.157 (=1/0.317) Japan 2.354 (=1/0.425)
China’s energy efficiency is 25% lower than Japan’s
EBM Simulation Menu
Baseline forecast
Sim1: 25% efficiency improvement in coal power plants
Sim3: Energy switch: coal to natural gas by 2%
EBM Simulation ResultsSim1: 25% efficiency improvement
⇒ CO2 reduction by 9.6%
Sim3: Coal to natural gas by 2% point
CO⇒ 2 reduction by 1.3% SO2 reduction by 3.5%
Simulation results of EBM Technology transfer in CDM =Win-Win game⇒
Source: China Environment Yearbook (2000)
Distribution of SO2 Emissions (1999)
Total and Marginal Damage Costs in China
Total Damage Costs
Marginal Damage Costs
1993(mil.RMB) 1995 ($ by SO2-ton)
Health 13,800 221.24
Acid Rain
Forest 10,600
128.26Crops 2,200
Building 3,200
Investment for Environment Protection (Million RMB)
Drainage Waste GasSolid
WasteNoise Others Total
1991 29.21 19.73 6.72 1.83 2.24 59.73
1992 29.81 21.51 8.01 1.78 3.55 64.67
1993 29.42 25.46 8.56 1.54 4.34 69.33
1994 34.70 30.36 12.10 1.85 4.30 83.33
1995 45.59 33.16 14.07 2.15 3.76 98.73
1996 47.36 28.12 9.10 0.96 10.08 95.61
1997 72.79 28.72 6.31 0.83 7.79 116.44
1998 71.68 32.38 8.72 0.77 8.50 122.05
1999 68.83 50.98 8.34 0.92 23.51 152.73
2000 109.59 90.92 11.47 6.02 21.44 239.44
Source: China Environment Yearbook (2001)
Amount of SO2 Charge
0
100
200
300
400
500
600
1993 1994 1995 1996 1997 1998
(Million RMB)
SO2 Emission Charge in China
1st Phase 2nd Phase 3rd Phase
1982-93 1993-97 1997-99
Scope of charge
Nation wide2 provinces
9 cities2 control
zonesNew charge rate schedule
Objective of charge
Waste gas Fuel burning Fuel burningFuel burning and waste gas
(total emissions)
Character of charge
Standard-exceeding
Total emissions
Total emissions
New charge
rate
Demonstrative charge rate
Rate of charge
0.04 RMB/kg
0.2 RMB /kg
0.2 RMB /kg
1.26
RMB /kg0.63
RMB /kg
Waste Gas by Industries (in 2000) Industry
Waste Gas100 Mill. m3
SO2
1,000 ton
Electricity 48,028 7199.6
Cement 22,850 1003.4
Chemicals 8,787 822.7
Steel and Iron 21,343 755.3
Non ferrous 8,533 715.0
Foods 3,218 410.4
Oil products 3,915 378.2
Paper 2,553 337.9
Mining 3,541 330.8
others 10,890 2315.8 Source:China Environment Yearbook (2001)
Sulfur Emissions of Each Province in China 1990
SO2 Emissions of Each Province in China 1995
Sulfur Deposition in Japan by Sources in 1990 and 1995
0 50 100 150 200 250 300 350
1990
1995
Japan North East China Rest of China South Korea North Korea Others
K-ton Sulfur
Japan
North E
ast China
Domestic & Regional Optimal Solution
Cost
Abatement
MACD
MDCR
MDCD
MDCH
Domestic Health
Domestic Total
Regional Aggregation
QH QD QR
Marginal Abatement Cost Curves for SO2, Japan and China
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
10,000
0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000
Abatement(kt-SO2)
Cost ($)
Marginal Abatement CostSO2 in Japan (1995)
Marginal Abatement Costof SO2 in China (1995)
Source of data: IIASA, Rains-Asia CD-ROM ver.7.52
Domestic Optima for China in 1990 and 1995
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000
Abatement (kt-SO2)
Cost ($)
MAC in China(1995)
MAC in China(1990)
Willing to pay in China (1995)
Willing to pay in China (1990)
WTP in China (1995)
WTP in China (1990)
Domestic and Regional Optima for China in 1990 and 1995
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
0 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000
Abatement (kt-SO2)
Cost ($)
Willing to pay in Japan(upper: 1995, lower 1990)
MAC in China(1990)
MAC in China(1995)
Willing to pay in China(upper: 1995, lower 1990) WTP in China + Japan
WTP in China
Outline of the CDM
Base line Case CDM Case
New Chongming(IGCC)
Power Power
Project #3
10years
2005
2008
2009
2014
2015
2025
2034
New Chongming(Semi -Critical)
Comparison
CreditPeriod
EvaluationPeriod
21years
30years
Base line Case CDM Case
New Chongming(IGCC)
Power
Project #3
10years
2005
2008
2009
2014
2015
2025
2034
2005
2008
2009
2014
2015
2025
2034
New Chongming(Sub -Critical)
Comparison
CreditPeriod
EvaluationPeriod
21years
30years
Power
Cost & Benefit Structure of CDM
InvestorPower Plant
China
Gov.Local
ResidentsJapan Korea D. C.
Cost of CDM
Project
(1)Construction
Fuel Saving
(2)Fuel Saving
(*)
Reduction of
GHG(3) CER (*)
(7) 2% of CER
Reduction of SO2
(*)(4)
Charge(4)
Charge(5) Air quality
(6) Acid rain
(6) Acid rain
Reduction of Air Pollutant of Each Project
0
50,000
100,000
150,000
200,000
250,000
Project #1 Project #2 Project #3 Project #4 Project #5
SO2(ton)NOx(ton)Dust(ton)
Benefit from Reduction of Air Pollutant (RMB)
0
100
200
300
400
500
600
700
800
Project #1 Project #2 Project #3 Project #4 Project #5
SO2
NOx
Benefit from Reduction of Acid Rain
0
5
10
15
20
25
30
35
Million RMB
Project #1 Project #2 Project #3 Project #4 Project #5
Japan SO2
Japan NOx
Korea SO2
Korea NOx
Revenue and Cost for the Investor
-6,000
-5,000
-4,000
-3,000
-2,000
-1,000
0
1,000
2,000
3,000
Project #1 Project #2 Project #3 Project #4 Project #5
Cost of Project
Fuel Saving
Revenue from CER
Million RMB
Net Benefit of Stakeholders
-600
-400
-200
0
200
400
600
800
1000
1200
10 Year Project
21 Year Project
Million LMB
Local
Resid
ents
Ch
inese
Govern
men
t
Local P
ower
Gen
erator
Investor
Japan
Korea
Develop
ing
Cou
ntries
Discount Rate, CER Price and Revenue in Project #3
-1,000
0
1,000
2,000
3,000
4,000
5,000
0 5 10 15 20 25
CER=$0(USD/tonCO2e )
CER=$5 CER=$10 CER=$20 CER=$50
Revenue: Million RMB
Discount Rate(%)