Making the Leap to Cleaner Technology Lingering Challenges in Technology Diffusion Examples from...

Making the Leap to Cleaner Technology

Lingering Challenges in Technology Diffusion

Examples from Chinese Industry

Prof. Stephanie B. Ohshita University of San [email protected]

RAEL Seminar, UC Berkeley ~ March 2004

Stephanie B. Ohshita, USF

Motivations: More than Climate Change

A per capita climate accord “must drive a rapid process of technology “leapfrogging” in the South. Indeed, it must prevent the South from building a fossil fuel infrastructure that mimics the unsustainable path of the North, even as it drives decarbonization in the North. The key is that the South’s leapfrogging must be part of a genuine development process, and the North must pay for it. This can’t be just another false promise.” Athanasiou & Baer 2002


Lingering Challenges / A Question

. . . Inappropriate technology . . . High capital costs . . . Limited operational and maintenance know-how . . .

Poor technical training . . . Missing regulatory incentives . . . Difficulty obtaining financing . . .

Concerns over intellectual property and return on investment . . .

How can the same old problems in energy technology transfer be overcome,

to mitigate climate change and a host of other problems in the developing world?


China Energy & Environment

China is the world’s 2nd largest coal consumer, energy consumer, and CO2 emitter.

Coal accounts for 75% of China’s energy, 30% of which is directly consumed by industry.

Over 75% of China’s SO2 pollution, acid rain, and CO2 emissions come from coal combustion.

Acid rain affects more than 30% of the country.

500 major cities in China exceed safe air quality levels.

Nearly 30% of respiratory disease in China is attributed to air pollution.


Chinese Energy ConsumptionSource: Based on LBNL 2001; EIA 2003a, 2003b. Author estimates were used to reconcile differences in data sets.

0

5

10

15

20

25

30

35

40

1980 1985 1990 1995 2000

Year

Primary Energy Consumption (EJ)

HydroNatural GasOilCoal


Cleaner Coal Technology

Preparation

Processing

Conversion

Combustion

Pollution Control

Coal Washing (e.g. Jigs, Control Systems)

Briquetting, Coal Water Mixture (CWM)

Coking, Gasification, Liquefaction

Circulating Fluidized Bed Boilers (CFB)

Flue Gas Desulfurization (FGD), Ash Utilization

COAL FLOW TECHNOLOGY


China CCT Facts & Figures

Coal Washing Costs 500~600 yuan/ton SO2

Roughly 30% of coal is washed. Now required for mines >1.5% S. Have simple domestic technology;

need foreign control systems, water saving technology.

Flue Gas Desulfurization Costs 1,400~1,600 yuan/ton SO2

Less than a dozen in all of China. Now required for new power stations,

not yet for industrial enterprises. Not available domestically.


5 Int’l Programs on CCT for China

1) Japan’s Green Aid Plan, CCT Program2) Global Environment Facility (GEF)-World

Bank Industrial Boiler Project3) US Dept. of Energy (DOE) CCT Promotion

(IGCC)4) UK Dept. for Int’l Development (DFID)

Guizhou and Shanxi Energy Efficiency (GASEE) Programme

5) UK Dept. of Trade and Industry (Dti) CCT Promotion


Japan’s Green Aid Plan, CCT Program

Approach: Demonstrate proven technology at existing enterprises (retrofit approach) with government grants; supplement with technical assistance

Technology: multiple, commercially proven Players: nat’l and local agencies, Japanese private

manufacturers, Chinese industrial enterprises Theoretical Advantages: Lower risk of introducing proven

technology; potentially wide diffusion by targeting existing enterprises. Foster long-term relationships through dialogue, cooperative studies, and training.

Actual Experience: Demonstrated technical feasibility of selected CCT, but no diffusion. To promote diffusion, conducting more economic analysis and working with Chinese government on specific policy actions.


Technology Transfer

NEDO Beijing

NEDO

Industry Associations

Industrial Firms

Policy Dialogue

Japan-China Network for Cleaner Energy Technology Transfer

MITI(Lead Agency)

China Japan

Industry Bureaus

Industrial Enterprises

Local Government

SDPC (Lead Agency)


GEF-World Bank Industrial Boiler Project

Approach: Fund license acquisition from foreign firms for CCT manufacture in China; supplement with technical assistance.

Technology: industrial boilers Players: int’l agencies, foreign tech manufacturers, Chinese

manufacturers & industrial enterprises Theoretical Advantages: Reduce costs through local

manufacture; encourage diffusion by making technology available domestically; enhance local knowledge of cleaner and more advanced technology.

Actual Experience: Strong interest from Chinese enterprises, but prominent international firms unwilling to participate due to concerns over competitive advantage, patent protection, and guarantee risks.


US DOE CCT Promotion (IGCC)

Approach: Study and demonstrate advanced technology (e.g., IGCC) at new facilities with government support

Technology: advanced CCT, Integrated Gasification Combined Cycle power generation

Players: nat’l agencies, US tech suppliers, Chinese power plants

Theoretical Advantages: Achieve greater pollution reduction and energy efficiency benefits by leapfrogging to advanced new technology; reduce new technology risks through government support.

Actual Experience: US government unwilling to fund demonstration for political and economic reasons; newness, complexity, and high cost of technology present barriers to demonstration and diffusion.


UK DTI CCT Promotion

Approach: Promote CCT exports, support commercial activities

Technology: multiple, commercially proven Players: UK tech suppliers, Chinese industrial enterprises, nat’l

agencies Theoretical Advantages: Reduce risk through government

backing; commercially viable technology more likely to diffuse widely; promote diffusion without large cost of government-funded technology demonstration.

Actual Experience: A few large UK firms successful in CCT transfer; looking to foster long-term relationships among UK and Chinese SMEs, research institutes, and government agencies.


UK DFID GASEE Programme

Approach: Make incremental improvements in existing equipment through technical assistance and use of mostly local technology.

Technology: existing, mostly local Players: UK engineers, Chinese industrial enterprises, nat’l

and local agencies in Guizhou and Shanxi Theoretical Advantages: Achieve quick, low-cost

improvements in energy efficiency and environmental quality through bottoms-up cooperation at existing enterprises.

Actual Experience: Positive achievements during first stage of program and Chinese interest in disseminating results, but funding limitations halted further progress.


China Domestic Policies: Coal Washing

1992 Trial Collection of (Higher) SO2 Fees 1994 CCT Plan 1995 Air Pollution Control Law (Revised) 1996 Total Emissions Control Policy 1996 "15 Smalls" Policy 1997 9th Five Year Plan: Clean Coal Technologies 1997 9th Five Year Plan: Environmental Protection 1997 China Trans-Century Green Project 1998 Two Control Zones Policy: Acid Rain, SO2

1998 Energy Conservation Law 1998 Guidance on Foreign Investment (Revised) 2000 Air Pollution Control Law (Revised)


China Domestic Policies: The Story of Coal Pricing


246

280

52174

40

533

Central-Washed

Central-Unwashed

Local-Washed

Local-Unwashed

TVE-Washed

TVE-Unwashed

Central Mines 47% Washed

Local Mines 23% Washed

TVE Mines 7% Washed

Total 26% Washed

Chinese Washed Coal (Mt) by Mine OwnershipSource: Data for 1997 from CCPUA and EPRI 2000.


Chinese Coal Production by Ownership TypeSource: Based on LBNL 2001: Table 2B.1; US Embassy Beijing 2001; Asia Pulse 2002.

Note: Data for 1999-2002 are estimates, as the official Chinese statistics have been undergoing revision.

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400

600

800

1,000

1,200

1,400

1,600

1980 1985 1990 1995 2000

Year

Mt

Private Mines

Collective Mines

Local State-Owned Mines

Large State-Owned Mines


Implications for Climate Change Mitigation in China

Coal still dominating, even as nat’l gas and renewables make inroads -- need CCT

Must align with economic reforms to promote cleaner energy technology diffusion

Sub-national networks are crucial for info and technology exchange, training, and financing

At the same time, int’l financing needed Need supporting engineering/ manufacturing/

management/ maintenance infrastructure

Making the Leap to Cleaner Technology Lingering Challenges in Technology Diffusion Examples from...

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