The Challenge of Reducing Energy Consumption of the Top-1000 Largest Industrial Enterprises in China Presented at the 2009 ECEEE Summer Study by Nan Zhou C hina Energy Group, Energy Analysis Department Environmental Energy Technologies Division L awrence Berkeley National Laboratory Authors: Lynn Price C hina Energy Group, Energy Analysis Department Environmental Energy Technologies Division L awrence Berkeley National Laboratory Xuejun Wang College of Environmental Sciences, Peking University Jiang Yun China Energy Conservation Association �
Background Economic Energy Intensity (E/GDP) • Between 1980 and 2000 Declined Steadily From 1980 to 2002 energy use/GDP declined an average of 5% per year in China due to strong energy Average Annual Decline of efficiency policies 5% per year • In the 1990s many energy efficiency programs were dismantled • Between 2001 and 2005 Average Annual China’s energy use/GDP Increase of increased 2% per year • Unsustainable situation since China has a goal of quadrupling GDP Source: National Bureau of Statistics, China Statistical Abstract , various years. between 2000 and 2020
Establishment of 20% E/GDP Target • November 2005 • Premier Wen Jiabao told the Plenary of the Communist Party: “ Energy use per unit of GDP must be reduced by 20% from 2005 to 2010 ” • March 2006 • Statement reiterated by the National Peoples Congress • China ’ s 11th Five Year Plan (2005-2010): outlined goal of reducing energy consumption per unit of GDP by 20% between 2005 and 2010 • Depending upon the GDP growth rate - 2010 energy savings need to be around 700 Mtce (21 EJ, 19.5 Quads) • Targets were allocated to each Province
Top-1000 Energy-Consuming Enterprise Program • Announced – April 2006 • Energy-saving agreements were signed with the 1000 largest energy-consuming enterprises • Enterprises commit to: • Formulate energy conservation plans • Conduct energy audits and benchmarking • Establish monthly energy use reporting system • Adopt comprehensive energy conservation measures • Submit an “ Enterprise Energy Usage Annual Report ” • Provincial authorities: • Signed a contract with the National Development and Reform Commission outlining the Top-1000 program savings targets for the enterprises in its province • Signed a contract with each enterprise that stipulates the amount of energy they must save by 2010 • Track, supervise, and monitoring the energy-saving activities of the enterprises • Improve monitoring of the enterprises through audits and sampling
Top-1000 Enterprises Represent a Significant Share of China’s Energy Use 2005 final energy use of the 1000 enterprises was 733 Mtce (20.4 Quads, 21.5 EJ) Total energy savings goal for all Top-1000 enterprises is 100 Mtce (2.8 Quads, 2.9 EJ) between 2006 and 2010 from their expected 2010 energy consumption. 33% of total energy 45% of industrial energy Note: Top-1000 program energy consumption is typically reported in final energy units (dark blue box). The shaded area provides the Mtce equivalent of electricity generation, transmission, and distribution losses so that the Top-1000 program can be compared in primary energy terms with the other two bars. Industry sub-sector breakdown based on LBNL LEAP model, not Chinese statistics. Note: Mtce >> EJ = 0.0293; EJ >> Quads = 0.9478
Top-1000 Program Model: Shandong Province Voluntary Agreement Pilot • Industrial energy efficiency policy project launched in 1999 • LBNL teamed with China Energy Conservation Association (CECA) • Convened experts from Energy Research Institute, Tsinghua University, and others • Undertook industrial policy research and organized international workshop on industrial energy efficiency policies and programs • Voluntary agreement programs chosen as model policy for pilot • China ’ s government launched policy pilot using “ energy efficiency agreements ” with 2 steel mills in Shandong Province
Top-1000 Program Model: Shandong Province Voluntary Agreement Pilot • LBNL led study tour to UK and Netherlands • Developed benchmarking and energy-saving tool (BEST) for steel • Trained CECA on the use of BEST-Steel to work with steel mills to determine potential and negotiate targets • Agreements signed April 24, 2003 • Steel mills committed to: – Energy intensity targets by 2005 – Implement energy-efficiency technologies and management practices – Report energy use and other indicators annually • Shandong Province Economic and Trade Commission committed to provide: – Assistance in obtaining loans for energy-efficient technologies – Government-backed technical experts – Positive publicity for steel mills
Top-1000 Program Model: Shandong Province Voluntary Agreement Pilot • 13 performance indicators monitored, including: – Energy consumption per ton steel – Total energy savings – Cost savings from reduction in energy use – CO2 emissions reductions • Jigang saved 292,000 tce (8.6 PJ, 8.1 Tbtu) and reduced energy consumption per ton of steel by 9.5% • Laigang saved 130,000 tce (3.8 PJ, 3.6 Tbtu) and reduced its energy consumption per ton of steel by 9% • Both plants: – Implemented strong energy management programs – Established monitoring and reporting protocols – Enjoyed extensive positive publicity • Pilot considered a success and a model for national program
Top-1000 Energy-Consuming Enterprise Program
Top-1000 Program - Players • National Development and Reform Commission (lead agency) • Office of the National Energy Leading Group • National Bureau of Statistics • State Owned Assets Supervision and Administration Commission • General Administration of Quality Supervision, Inspection and Quarantine • Provincial DRCs (or Economic and Trade Commissions) • Industrial Associations • Enterprises in the iron/steel, non-ferrous metal, chemicals, petroleum/ petrochemicals, construction materials, textiles, paper, coal mining, and power industries
Top-1000 Program - Responsibilities Government ’ s Role • Program oversight and management • Incentive policies and awards • Information and reporting system Role of Enterprises • Formulate energy conservation targets • Formulate energy conservation plans • Conduct energy audits • Adopt comprehensive energy conservation measures • Submit “ Enterprise Energy Usage Annual Report ” every year Role of Industrial Associations • Supply enterprises with information and technical assistance • Reporting and evaluation system • Monitor and manage enterprise performance
Top-1000 Energy-Consuming Enterprise Program • Estimated 2004 final energy use of the 1000 enterprises was 673 Mtce (18.7 Quads, 19.7 EJ) • Each enterprise signed an energy conservation agreement with the local government outlining its 2010 energy- saving target • Energy reduction goal for these 1000 enterprises after five years is 100 Mtce (2.8 Quads, 2.9 EJ)
Top-1000 Energy-Consuming Enterprises Program Program Activities • Announced – April 2006 • Targets established and signed – Summer 2006 • Training workshops – October 2006 • Energy audits – Winter/Spring 2007 – Mixed experience regarding quality of audits • Development of energy action plans • 1 st progress reports – Fall 2007 • Benchmarking – ongoing
Evaluation of Top-1000 Program Design • Target-setting – International practice: - Assessment of energy-efficiency or GHG mitigation potential of facility or sector - Results provided to government as basis for target- setting negotiations – Top-1000 program: - Due to time constraints and large number of enterprises, NDRC set targets based on facility’s “general situation” (e.g. sector, technology level)
Evaluation of Top-1000 Program Design • Supporting Policies – International practice: - Establish a harmonized set of supporting programs for participating enterprises at the start of the policy/ program - Such support typically includes financial incentives, technical assistance, rewards and penalties, publicity – Top-1000 program: - Supporting policies or programs were not established when the program was announced - Initially, there was confusion and concern regarding how the provincial and national government would support the enterprises
Evaluation of Top-1000 Program Design • Information Dissemination – International practice: - Provides participants with unbiased information on energy-efficiency or mitigation options - Includes energy-efficiency guidebooks, databases, software tools, case studies, and reports – Top-1000 program: - Does not have a systematic means for gathering or disseminating energy- efficiency information to participating enterprises
Evaluation of Top-1000 Program Design • Monitoring and Reporting – International practice: - Clear monitoring and reporting guidelines established at the beginning of the program - Annual program evaluation used as a mechanism to judge progress and make any needed adjustments – Top-1000 program: - Top-1000 enterprises report directly to NBS via a website using a generic spreadsheet - Only one evaluation-type report issued to-date (2007), second report expected later this summer
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