china energy primer ERNEST ORLANDO LAWRENCE BERKELEY NATIONAL LABORATORY

China Energy Primer Chunchun Ni China Energy Group Environmental Energy Technologies Division November 2009 This manuscript has been authored by an author at Lawrence Berkeley National Laboratory under Contract No. DE-AC02-05CH11231 with the U.S. Department of Energy. The U.S. Government retains, and the publisher, by accepting the article for publication, acknowledges, that the U.S. Government retains a non-exclusive, paid-up, irrevocable, world-wide license to publish or reproduce the published form of this manuscript, or allow others to do so, for U.S. Government purposes. ERNEST ORLANDO LAWRENCE B ERKELEY N ATIONAL L ABORATORY Contents II Disclaimer DisclaimerDisclaimer Disclaimer This document was prepared as an account of work sponsored by the United States Government. While this document is believed to contain correct information, neither the United States Government nor any agency thereof, nor The Regents of the University of California, nor any of their employees, makes any warranty, express or implied, or assumes any legal responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product, process, or service by its trade name, trademark, manufacturer, or otherwise, does not necessarily constitute or imply its endorsement, recommendation, or favoring by the United States Government or any agency thereof, or The Regents of the University of California. The views and opinions of authors expressed herein do not necessarily state or reflect those of the United States Government or any agency thereof, or The Regents of the University of California. Ernest Orlando Lawrence Berkeley National Laboratory is an equal opportunity employer. Contents III Contents Preface XV Chapter 1 Energy Reserves and Resources 1 1. Coal 1 2. Crude Oil 1 3. Natural Gas 4 4. Uranium 6 5. Hydroelectricity 6 6. Renewable Energy Sources 8 Chapter 2 Energy Production 12 1. Energy Production Policy 12 2. Energy Regulation 28 3. Energy Production 30 Chapter 3 Energy Consumption 72 1. Energy Conservation Policy 72 2. Overview of Energy Consumption 83 3. Energy Consumption by Sector 87 4. Energy Consumption by Sources 99 Chapter 4 Equipment and Activities 106 1. Transportation Equipment and Modes 106 2. Penetration and Energy Efficiency of Major Appliances 110 3. Agricultural Machinery 112 4. Industrial Products 113 Chapter 5 Energy Prices 115 1. Coal Pricing 116 2. Oil Pricing 120 3. Natural Gas Pricing 125 4. Electric Power Pricing 132 5. Renewable Energy Pricing 147 Chapter 6 Energy Imports and Exports 151 1. Oil and Oil Products 151 2. Coal and Coal Products 156 3. Natural Gas 162 4. Electricity 163 5. Energy-intensive Products 164 Contents IV Chapter 7 Energy and Environment 168 1. Particulate Emissions 168 2. Sulfur Dioxide Emissions 169 3. Carbon Dioxide 173 4. Ambient Pollution in Urban Areas 176 Chapter 8 Energy Industry Investment 183 1. Investment in Energy Supply 183 2. Investments in Energy Conservation 189 3. Investment in Pollution Treatment 191 Annexes 194 List of Figures V List of Figures CHAPTER 1 ENERGY RESERVES AND RESOURCES Figure 1-1 CBM Resources in Major Regions 2 Figure 1-2 World Rank of China’s Proved Oil Reserves (2008) 2 Figure 1-3 China’s Major Oil Fields 3 Figure 1-4 China’s Major Natural Gas Reserves 5 Figure 1-5 China’s Proved Natural Gas Reserves (1998 - 2008) 5 Figure 1-6 China’s Solar Resources 8 Figure 1-7 China’s Wind Resources 9 CHAPTER 2 ENERGY PRODUCTION Figure 2-1 China’s Overseas Oil and Natural Gas Development 27 Figure 2-2 Organization of China’s Energy Administration 30 Figure 2-3 Primary Energy Production - Coal (1980-2006) 31 Figure 2-4 Coal Production by Producer Type (1980-2006) 32 Figure 2-5 Coal Production by Type of Coal (1980-2006) 35 Figure 2-6 Production Share by Type of Coal in 2006 36 Figure 2-7 Production of Washed Coal (1980-2006) 37 Figure 2-8 Coke Production (1980-2006) 39 Figure 2-9 China’s Oil Major Territory in General 40 Figure 2-10 Primary Energy Production - Crude Oil (1980-2006) 42 Figure 2-11 Crude Oil Production by Oilfield (1980-2006) 42 Figure 2-12 Refinery Capacity and Capacity Utilization (1980-2007) 44 Figure 2-13 Primary Energy Production - Natural Gas (1980-2006) 48 Figure 2-14 NG Demand and Supply Projection (2000-2020) 51 Figure 2-15 LNG Terminals in China 52 Figure 2-16 Gross Electricity Generation (1980-2006) 54 Figure 2-17 Gross Electricity Generation (Shares) (1980-2006) 54 Figure 2-18 Power Shortage (2004-2008) 56 Figure 2-19 Closure of Small-size Thermal Power Plants (2001-July 2009) 58 Figure 2-20 National Average Capacity Factors by Source (1980-2006) 59 Figure 2-21 In-plant Power Consumption and T&D Losses (1980-2006) 59 Figure 2-22 Shares of Installed Capacity and Power Generation (2006) 60 Figure 2-23 Restructuring of the SPCC 63 List of Figures VI Figure 2-24 Power Network Operators in China 64 Figure 2-25 Electric Power Supply System in China 64 Figure 2-26 Capacity of PV Cells (1995-2006) 66 Figure 2-27 Capacity of Wind Power (1990-2007) 67 Figure 2-28 Capacity Scale of Wind Power Stations 67 Figure 2-29 Wind Power Generation Capacity by Province (2007) 68 CHAPTER 3 ENERGY CONSUMPTION Figure 3-1 Energy Conservation Institutional Framework 74 Figure 3-2 Energy Efficiency Logo 77 Figure 3-3 China Energy Label 78 Figure 3-4 Status of Energy Efficiency Standards and Labeling 79 Figure 3-5 Government Special funds for Energy Efficiency in 2007 80 Figure 3-6 Primary Energy Consumption (1980-2006) 83 Figure 3-7 Energy Intensity (1980-2006) 84 Figure 3-8 Comparison of Primary Energy Consumption by Selected Countries (2005) 84 Figure 3-9 Per Capita Primary Energy Consumption (1990-2006) 85 Figure 3-10 Comparison of Primary Energy Production and Consumption (1980-2006) 86 Figure 3-11 Biomass Consumption (1979-2005) 87 Figure 3-12 Industrial Energy Consumption (1980-2006) 88 Figure 3-13 Industrial Energy Consumption by Energy Type (1980-2006) 89 Figure 3-14 Industrial Sector End-use by Subsector (2006) 89 Figure 3-15 Average Heat Rates of Fossil Fuel-Fired Power Plants (1980-2006) 90 Figure 3-16 Power Sector In-Plant Electricity Consumption (1980-2006) 91 Figure 3-17 Energy Used as Feedstock (1991-2006) 91 Figure 3-18 Industrial Sector Energy End-use by Province (2006) 92 Figure 3-19 Transportation Energy Use (1980-2006) 93 Figure 3-20 Commercial Sector Energy Consumption (1980-2006) 94 Figure 3-21 Residential Energy Consumption (1980-2006) 95 Figure 3-22 Urban and Rural Residential Coal Consumption (1985-2006) 96 Figure 3-23 Urban and Rural Residential Electricity Consumption (1985-2006) 96 Figure 3-24 Residential Energy Consumption by Region (2006) 97 List of Figures VII Figure 3-25 Agricultural Sector Energy Consumption (1980-2006) 98 Figure 3-26 Agricultural Energy Consumption by Energy Type (Shares) (1980-2006) 98 Figure 3-27 Coal End-use and Inputs to Conversion (Shares) (1980-2006) 99 Figure 3-28 Coke Oven Gas End-use and Inputs to Conversion (Shares) (2006) 100 Figure 3- 29 Total Petroleum End-use (Shares) (1980-2006) 101 Figure 3-30 Petroleum End-use by Sector (Shares) (1980-2006) 102 Figure 3-31 Natural Gas End-use by Sector (Shares) (2006) 103 Figure 3-32 Electricity End-use by Sector (Shares) (1980-2006) 104 CHAPTER 4 EQUIPMENT AND ACTIVATES Figure 4-1 Freight Movements by Mode (1980-2006) 106 Figure 4-2 Passenger Travel by Mode (Shares) (1980-2006) 107 Figure 4-3 Motor Vehicles Production in 2006 108 Figure 4-4 Stock of Trucks and Passenger Vehicles (1980-2006) 108 Figure 4-5 Stock of Railway Locomotives by Engine Type (1980-2006) 109 Figure 4-6 Production of Major Appliances (1980-2006) 111 Figure 4-7 Comparison of Ownership of Major Appliances in Urban and Rural Households (2006) 112 Figure 4-8 Shares of Rural Equipment Capacity by Type of Engine (2005) 113 CHAPTER 5 ENERGY PRICES Figure 5-1 Major Coal Price Reforms (1980-Present) 117 Figure 5-2 Ex-Factory Coal Price Index (1980-2006) 118 Figure 5-3 Production Cost and Average Sale Price of State-owned Mines (1953-2003) 118 Figure 5-4 Qinhuangdao FOB Price and CIF Prices in Shanghai and Guangzhou (2002-2008) 119 Figure 5-5 Major Oil Price Reform (1980-present) 122 Figure 5-6 Retail Gasoline Prices in Selected Countries (1990-2007) 125 Figure 5- 7 Current Gas Pricing System 127 Figure 5-8 China’s Ex-factory Natural Gas Price between January and October 2008, Compared to Selected International Prices 128 Figure 5-9 Residential Gas Prices by Province (As of the end of October 2008) List of Figures VIII 130 Figure 5-10 Natural Gas (LNG) Price in Selected Countries (2004-2008) 131 Figure 5-11 LNG Import Price (2006-2009) 131 Figure 5-12 Major Electricity Power Price Reforms (1980-present) 134 Figure 5-13 Coal Contract Price and Coal Market Price for Power Generation (1990-2007) 135 Figure 5-14 Average On-grid Electricity Prices of the Five Major Power Companies (2005-2008) 136 Figure 5-15 Retail Power Price by User in Guangdong Province (As of July 2008) 140 Figure 5-16 Total Surcharges and Fees by Province in 2008 143 Figure 5-17 Average Retail Power Price (1980-2008) 145 Figure 5-18 Comparison of Retail Power Prices between China and US (1995-2008) 146 Figure 5-19 Comparison of Retail Power Price between China and US in 2008 146 Figure 5-20 Allocation of RE Surcharge in 2006 149 CHAPTER 6 ENERGY IMPORTS AND EXPORTS Figure 6-1 Crude Oil Imports and Exports (1980-2006) 151 Figure 6-2 Petroleum Products Imports and Exports (1980-2006) 152 Figure 6-3 Net Import of Petroleum Products (1995-2007) 152 Figure 6-4 Crude Oil Imports by Source (1990-2007) 153 Figure 6-5 Top Ten Crude Oil Imports by Source (2007) 153 Figure 6-6 Crude Oil Exports by Destination (1998-2007) 154 Figure 6-7 Oil Products Imports and Exports (1999-2006) 155 Figure 6-8 Oil and Oil Products Exports Earnings (1975-2006) 155 Figure 6-9 Coal Imports and Exports (1980-2007) 157 Figure 6-10 Coal Net Exports (2000-2007) 157 Figure 6-11 Coal Exports by Destination (1998-2007) 158 Figure 6-12 Coal Imports by Source (1998-2007) 159 Figure 6-13 Coal Imports by Type of Coal (1998-2007) 159 Figure 6-14 Comparison of Coal Prices in China’s Domestic Market and International Markets (2003-January 2008) 161 Figure 6-15 LNG Imports by Source (2006-2008) 162 Figure 6-16 Natural Gas Exports (2003-2008) 163 List of Figures IX Figure 6-17 Electricity Imports and Exports (1981-2007) 164 Figure 6-18 Steel Products Imports and Exports and Share of Global Crude Steel Production 164 Figure 6-19 Rolled Aluminum Imports and Exports and Their Share of Global Primary Aluminum Production 165 Figure 6-20 Cement Exports and Share of Global Cement Production 165 CHAPTER 7 ENERGY AND ENVIRONMENT Figure 7-1 Particulate Emissions by Sector and Total Removal Efficiency (2000-2006) 169 Figure 7-2 SO2 Emissions by Province (2006) 170 Figure 7-3 Top Ten High SO2 Emissions Density Cities (2006) 170 Figure 7-4 SO2 Emissions by Sector and Total Removal Efficiency (2000-2006) 171 Figure 7-5 Major SO2 Projects for Existing Coal-fired Power Plants by Capacity 172 Figure 7-6 FGD Capacity and Its Share (2005-2008) 173 Figure 7-7 Carbon Dioxide Emissions by Source (1980-2006) 175 Figure 7-8 Per Capita Emissions (1980-2006) 175 Figure 7-9 Per Capita CO2 Emissions by Selected Countries for 2006 176 Figure 7-10 Ambient Air Quality Achievement by City (1999-2006) 178 Figure 7-11 Ambient TSP Achievement by City (1998-2006) 178 Figure 7-12 Ambient Sulfur Dioxide Levels (1990-2005) 179 Figure 7-13 Cities with Annual Average Precipitation PH Values Lower than 5.6 and Their Share of In-zone Cities (1996-2006) 180 Figure 7-14 Map of Regional Distribution of Acid Rain in China in 2006 180 CHAPTER 8 ENERGY INDUSTRY INVESTMENT Figure 8-1 Energy Investment by SOEs and Its Share of Total Energy Sector Investment (1990-2005) 184 Figure 8-2 Share of Total Energy Industry Investment by Subsector (1997-2005) 185 Figure 8-3 Fix Assets Investment in Oil and Natural Gas Extraction by SOEs (1990-2006) 186 Figure 8-4 Fix Asset Investments in Oil Refining by SOEs (1990-2006) 187 List of Figures X Figure 8-5 Investment in Power Generation and Power Grids (2006-2009) 189 Figure 8-6 Components of the Adjusted 4,000 Billion Yuan Stimulus Plan 190 Figure 8-7 Components of the 120 Billion Yuan Central Government Investment Plan in the Fourth Quarter of 2008 190 Figure 8-8 Investment in Pollution Treatment (2000-2006) 191 Figure 8-9 Components of Investment in Pollution Treatment in 2006 192 [...]... the China Energy Databook Version 7 (October 2008) (here after Databook v.7.0), this Primer for China s Energy Industry (here after Primer) draws a broad picture of China s energy industry with the two goals of helping users read and interpret the data presented in Databook v.7.0 and understand the historical evolution of China s energy industry Primer provides comprehensive historical reviews of China s... regarding energy pricing in China and the complicated pricing mechanisms used by authorities Simplified flow charts of pricing mechanisms for each energy source, including renewables, are presented in a clear and, hopefully, readily-useable format for readers keen to analyze China s energy market from their own perspectives This Primer also compares China s domestic energy prices with international energy. .. 2008), China Energy Databook v 7.0., Table 2A.1.1, and Table 2B.9, Lawrence Berkeley National Laboratory (LBNL) 7 “New Oilfield Found in Bohai Bay”, People’s Daily, May 12, 2007 8 Takehara, Mika (2003), Bohai Bay – China s Major Offshore Oil Field, Japan Oil, Gas and Metal National Corporation 9 ConocoPhillips, http://www.conocophillips.com/EN/about/worldwide_ops/country/asia/pages /china. asp x 10 China. .. 1 Energy Reserves and Resources 6 Renewable Energy Sources China s renewable energy sources had not been well integrated into energy planning until the government enacted the Renewable Energy Law in February 2005 (the Law took effect on January 1, 2006) amidst a surging demand for energy as well as a growing desire for energy security, pollution reduction, and poverty alleviation According to the National. .. Energy Efficiency Target for Power Industry (2006-2010) 22 Table 2-8 China s Development Plan for Nuclear Power (2005-2020) 24 Table 2-9 Middle and Long Term Development Plan for Rewable Energy (2005-2020) 25 Table 2-10 Regulations Issued under the Renewable Energy Law 25 Table 2-11 China s Energy Diplomacy in Different Regions and Countries 27 Table 2-12 History of China s Energy. .. provide both a window into differences between China s energy prices and those of international markets and an overview of the variations in these market differences No attempt has been made to question or rectify any of China s published official data Primer aims to provide a wider understanding of China s fluctuating and fast changing energy industry, to allow energy analysts and experts, policymakers... fuel”, and “environment vs fuel” Wu, Guihui, presentation paper: Renewable Energy in China, September 5, 2007 in Tokyo, Japan 17 Wu, Guihui 18 Wu, Guihui 11 Chapter 2 Energy Production Chapter 2 Energy Production 1 Energy Production Policy 1.1 Coal Coal is a primary energy source for China, accounting for 75.8% of the country’s primary energy production in 20061 In the 11th Five-year Plan, the Chinese government... Projects in China 70 CHAPTER 3 ENERGY CONSUMPTION Table 3-1 CECP Certificated Products 77 Table 3-2 Catalogue of Products Requiring Energy Efficiency Labels 78 Table 3-3 Major Energy Prices Adjustment (1985-July 2009) 81 Table 3-4 Ten Key Energy Conservation Projects .82 Table 3-5 Energy Intensity Reduction Targets by Province (2005-2010) 85 Table 3-6 Final Energy Consumption... Demand”, Interfax -China, June 17, 2008 11 Cui, Minxuan (ed.) (2008), Annual Report on China s Energy Development, Beijing: Social Sciences Academic Press 12 China Uncovers Country’s Biggest Uranium Deposit”, People’s Daily, February 25, 2008 13 “11th Five-Year Plan for the Nuclear Industry”, August 2006, Commission of Science Technology and Industry for National Defense, China 14 “Summary of China s Hydroelectricity... generation Nonetheless, China is at the top of the list of countries that directly use geothermal energy The North of China is of particular note here Overall, China has abundant renewable energy resources Establishing a stable and sustainable market demand and creating robust financial incentive policies and mechanism are the most significant factors for the development of China s renewable energy potential . Figure 1-5 China s Proved Natural Gas Reserves (1998 - 2008) 5 Figure 1-6 China s Solar Resources 8 Figure 1-7 China s Wind Resources 9 CHAPTER 2 ENERGY PRODUCTION Figure 2-1 China s Overseas. Figure 2-2 Organization of China s Energy Administration 30 Figure 2-3 Primary Energy Production - Coal (198 0-2 006) 31 Figure 2-4 Coal Production by Producer Type (198 0-2 006) 32 Figure 2-5 Coal. CHAPTER 3 ENERGY CONSUMPTION Figure 3-1 Energy Conservation Institutional Framework 74 Figure 3-2 Energy Efficiency Logo 77 Figure 3-3 China Energy Label 78 Figure 3-4 Status of Energy Efficiency