Remarks at Climate Workshop on Bingaman-Specter Discussion Draft
Senate Energy Committee Hearing Room
Friday, March 2, 2007
Kelly Sims Gallagher, Ph.D.1
Director, Energy Technology Innovation Project
Belfer Center for Science & International Affairs
John F. Kennedy School of Government
Harvard University
I direct the Energy Technology Innovation Project at Harvard University’s John F.
Kennedy School of Government in the Belfer Center for Science & International Affairs.
In our research group, we aim to analyze, inform, and shape energy policy in the United
States, China, and India, and we particularly focus on how to accelerate the development
and deployment of advanced energy technologies in these three countries. Much of my
own research since 1998 has been on energy and transportation in China, and I recently
published a book, China Shifts Gears: Automakers, Oil, Pollution, and Development (The
MIT Press, 2006). We have a number of current research projects in China in
collaboration with Chinese partners.
I’ve been asked to focus my remarks on the role of China in addressing global climate
change. My time is short, so I will first state the main points that I would like to leave you
with, then review the Chinese context for reducing CO2 emissions, and finally, elaborate
my main points with my remaining time.
Main Points:
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The Chinese government is well aware that China will soon be the world's largest
greenhouse-gas emitter.
China has already taken important steps to moderate future growth in greenhousegas emissions there, but there is more to be done.
It is unrealistic to think that China would move in lock-step with the United States
for a variety of reasons.
Symbolically, the United States should be the first to commit to slow, stop, and
reverse CO2 emissions, but my judgment is that it is likely that China would quickly
follow the U.S. lead, adapting policies to its own national circumstances.
The longer the United States delays, the longer China will delay, and we cannot
afford to wait any longer in either country if we wish to avoid a 2°C (3.6° F) global
average temperature increase.
By using the cheapest technologies currently available, China is rapidly locking
into high greenhouse-gas-emitting industrial facilities and power plants for
decades.
The United States should immediately launch an international effort to encourage
and assist China and other major developing countries to reduce the growth in
their greenhouse-gas emissions in the near-term, and I will make two specific
proposals in this respect.
[email protected]
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Chinese Context
China’s energy-related challenges are many, including the:
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Need for energy to sustain economic growth
Increasing foreign dependency for oil and gas
Provision of modern forms of energy to China’s poor
Increasingly severe urban air pollution
Already massive acid deposition
Growing concerns about global climate change
Access to advanced energy technologies to address all of the above challenges
China’s long term energy security, in my opinion, is not only dependent on having
sufficient supplies of energy to sustain its incredible rate of economic growth, but it will be
equally dependent on its ability to manage the growth in energy demand without causing
intolerable environmental damage.
Only with development and deployment of improved energy technologies can China
achieve its targets for development and economic growth.
Greenhouse-gas emissions
According to the latest official data available, China currently emits about 15% of the
world’s total carbon dioxide emissions from fossil fuel burning, as compared with 22% in
the United States. China’s per-capita emissions are one-sixth that of the United States. So,
currently, the United States is the largest emitter in the world in aggregate and per capita
terms, but China is catching up quickly in terms of aggregate emissions, but not in per
capita terms. The International Energy Agency’s World Energy Outlook 2006 projects
that China’s greenhouse gas emissions will surpass the United States in 2009, but the U.S.
Energy Information Administration’s latest projection is that China’s emissions will
exceed those of the United States around 2015.2
Most of China’s emissions come from the industrial and electricity sectors. As of 2000,
electricity accounted for 52% of CO2 emissions (and 75% of China’s electricity is consumed
by industry3), cement accounts for 28%, iron and steel for 9%, and transportation for 8%.4
In terms of energy comparisons, China:
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Consumes two-thirds as much commercial energy as the United States does;
Consumes one-third as much oil as the United States does;
Imports one-third as much oil as the United States, although growth rate in oil
imports has been much faster in recent years;
Uses two-thirds as much electricity as the United States does;
Consumes almost twice as much coal as the United States;
2
International Energy Agency, World Energy Outlook 2006, OECD/IEA, Paris, 2006 and Energy Information
Administration, International Energy Outlook 2006, U.S. Department of Energy, Washington, DC, 2006.
3 China Energy Database, Lawrence Berkeley National Laboratory.
4 Center for Clean Air Policy, “Greenhouse Gas Mitigation in China,” November 2006.
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Has only 13% of the world’s coal reserves compared with 27% for the United States,
but coal is China’s main domestic energy resource.
Energy
Coal accounts for three-quarters of commercial energy supply in China and it also
accounts for approximately 80% of China’s CO2 emissions.5
More than half of China’s power plants are smaller than 300 MW. In fact there are more
than 5,000 plants that are smaller than 100 MW (24% of total capacity), resulting in very
poor energy efficiency. There are a handful of supercritical plants, and the first ultrasupercritical pulverized coal plant came on line in November 2006 (Huaneng Group YuHuan plant). Thirty-four more ultra-supercritical plants are under construction.6
So far, transportation is not a big consumer of energy in China, accounting for only 8
percent overall.7
Impacts of Climate Change on China
The possible impacts of climate change on China are not as well studied as they have been
in the United States, but it is clear that there could be very adverse impacts with respect to
water supply, agriculture, and sea-level rise.
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Precipitation decreased 50-120 mm/year along the northern Yellow River between
1956 and 2000. Precipitation increased by 60-130 mm/year along the southern
Yangtze River from 1956-2000.
The mountain glaciers on the Tibetan plateau are receding rapidly, with major
implications for fresh water supply in already water-stressed northern China. The
glacier which is the source of the Urumchi river on the Tianshan mountain shrank
11.3% between 1962 and 2001.
A sea level rise of 30 cm would cause massive coastal inundation, which is
projected to cause 56 billion RMB in economic losses to the Pearl River Delta area,
9.6 billion RMB in losses for the Yangtze Delta area, and 52 billion RMB in losses
for the Yellow River delta, including the Gulf of Bohai.8
Elaboration of Main Points:
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The Chinese government is well aware that China will soon be the world's largest
greenhouse-gas emitter. It is also well aware of the projected impacts of climate
change in China, and has expressed concern about these impacts.
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China has already taken important steps to moderate future growth in greenhousegas emissions there, largely through energy efficiency and renewable energy
measures, but there is more to be done.
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Energy Information Administration, International Energy Outlook, U.S. Department of Energy, 2006.
Lifeng ZHAO, “Progress and Development of Clean Coal Technology in China,” Presentation at Energy
Technology Innovation Project seminar, Harvard University, February 13, 2007.
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7National
Bureau of Statistics, Statistical Yearbook of China, Chapter 7: Energy, 2005.
LIN, Erda and Ji ZOU, “Climate Change Impacts and its Economics in China,” Stern Review on the
Economics of Climate Change, HM Treasury, UK, January 2007.
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Energy intensity (amount of energy used to generate economic activity –
usually expressed as energy use divided by GDP) dramatically declined in
China from 1980-2004, which indicates that China’s overall energy
efficiency got much better. This means that China reduced the growth its
greenhouse gas emissions by becoming more energy efficient. But, overall,
China’s energy efficiency is considerably worse than the United States’ and,
unfortunately, it appears to have worsened in the last 2 years.
China has very aggressive energy efficiency targets for the coming years.
The 11th 5-Year Plan (2006-2010) calls for a 20% reduction in energy
intensity by 2010. This will be very hard to achieve.
If you include small hydropower, China has twice as much installed
renewable power capacity than the United States.9 In fact, China leads the
world in terms of total installed capacity of renewable energy at 42 GW
(compared with 23 GW in the United States) as of 2005. China accounts
for 63% of the solar hot water capacity in the world (the United States has
1.8%). As of 2005, China had installed 1.3 GW of wind capacity (the United
States had 9 GW).
China passed a Renewable Energy Law in 2005 that requires grid operators
to purchase electricity from renewable generators, and China set a target of
having 10% of its electric power generation capacity come from renewable
energy sources by 2010 (not including large hydro).
China passed its first fuel efficiency standards for passenger cars in 2005,
and they will be strengthened in 2008. The 2008 standards are more
stringent than existing fuel-efficiency standards in the United States. China
also implemented vehicle excise taxes so that if you purchase a car or SUV
with a big engine, you will pay a much higher tax than if you purchase a car
with a small energy-efficient engine.
The Chinese government is investing in advanced energy technologies.
During the Eleventh Five-Year Plan (starting Sept. 2006) the Ministry of
Science and Technology’s (MOST) budget authority for energy research,
development, & demonstration is about 3.5 billion RMB (approx. $425
million). Budget authority for advanced coal technology is about 0.7 billion
RMB (approx. $85 million). This accounts for 21 percent of the total energy
budget. Five coal co-production and gasification demonstration projects
are planned for the next 5 years, in collaboration with Chinese industry.
It is unrealistic to think that China would move in lock-step with the United States for
a variety of reasons.
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135 million Chinese still live in absolute poverty (less than $1/day) and
millions more just above that arbitrary poverty line, so there is a
tremendous imperative to foster economic development and high economic
growth rates there;
China has a gigantic population of more than 1.3 billion people; and,
China’s only significant domestic energy resource is coal, which is the most
greenhouse-gas intensive fuel
Renewable Energy Policy Network, Martinot, Eric (Lead Author), “Renewables 2006 Global Status Report,”
Washington, DC: Worldwatch Institute, 2006.
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By using the cheapest technologies currently available, China is rapidly locking into
high greenhouse-gas-emitting industrial facilities and power plants for decades.
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Coal use in China’s industrial and electric power sectors is growing very
rapidly, and many of the plants and facilities that are being built will last
for multiple decades. In the last year alone, China installed 101 GW of new
coal-fired power, 90 GW of which was coal-fired power. To put that
number in perspective, India’s entire electricity system is 131 GW (2004
data).10 Only 1 GW of that new capacity was high-efficiency coal (ultrasupercritical technology). None of it was integrated combined cycle coal
gasification (IGCC), which lends itself well to carbon capture and storage.
The lifetime CO2 emissions from the coal-fired power plants projected to be
built worldwide in the next two decades will be equivalent to all the CO2
emissions from coal-fired power plants from 1751-2000.11 According to the
reference case of the International Energy Agency’s World Energy Outlook,
55% of the incremental coal-fired electricity generation between 20042030 will take place in China. Together, China and India are projected to
account for 60% of the increase in global carbon dioxide emissions from
electricity by 2030.12 CO2 emissions from Chinese coal-fired power plants
alone are expected to be 5450 MMT CO2 in 2030, business as usual
(equivalent to 13% of global emissions in that year.13
By using the cheapest technologies available at the current time for its
power plants and industrial facilities (which is perfectly rational in strict
economic terms), China is effectively locking itself and the world into high
greenhouse-gas-emitting technologies because they are neither energy
efficient nor capable of easily capturing and storing the carbon dioxide.
This is happening in the United States too, of course, but at a slower rate of
growth.
The rapid growth in energy-related plants and infrastructure in China is
expected to continue during the next few years, so “leapfrogging” to lowercarbon technologies in the near term is absolutely critical. This point must
be underlined. If we wait to address the character of the growth in China’s
energy infrastructure, it really could be too late. Will all these new power
plants utilize best-available low-carbon technologies, or conventional highcarbon technologies? The United States’ entire electricity system is 992
GW, so at China’s recent growth rate, they will have installed the same
amount of electricity capacity as the United States in 5-10 years, and
virtually all of it will be coal-fired power. One cannot imagine that China
will pre-maturely retire their power plants or factories (just as the United
States would not).
But, the leapfrogging will not be automatic. You need to either have
policies in place that effectively require the use of low-carbon technologies
(e.g. CO2 performance standards or carbon taxes), or you need to have
incentive programs that make the use of low-carbon technologies
financially attractive (e.g. coal gasification loan guarantee program), or you
need to mandate the use of certain technologies.
Energy Information Administration, India Country Analysis Brief, U.S. Department of Energy, Washington,
DC, January 2007.
11 As calculated by David Hawkins, Natural Resources Defense Council.
12 International Energy Agency, World Energy Outlook 2006, OECD/IEA, Paris, 2006.
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International Energy Agency, World Energy Outlook 2006, OECD/IEA, Paris, 2006.
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The longer the United States delays, the longer China will delay, and we cannot afford
to wait any longer in either country if we wish to avoid a 2°C (3.6° F) global average
temperature increase.14
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Symbolically, the United States should be the first to commit to slow, stop, and reverse
CO2 emissions, but my judgment is that it is likely that China would quickly follow the
U.S. lead, adapting policies to its own national circumstances.
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The Scientific Expert Group Report on Climate Change and Sustainable
Development released earlier this week states that to confine globalaverage temperature increases to 2°C to 2.5°C above the 1750 value, the
entire world would have to be on a declining trajectory of total emissions by
2020 to 2025.15
The United States has had more than a century to industrialize and develop,
and during this process, it has emitted much of the greenhouse gases that
are already up in the atmosphere. Also, the United States ratified the UN
Framework Convention on Climate Change, which explicitly states that “the
developed countries should take the lead in combating climate change and
the adverse effects thereof.” For these reasons, among others, I believe that
the United States needs to take the symbolic “first step” in committing to
mandatory measures to reduce emissions of greenhouse gases.
U.S. policy is influential in China, both in terms of policies (or lack thereof)
to manage carbon dioxide and in terms of policies to promote innovation in
energy technologies. They have modeled many of their energy R&D
programs on U.S. government programs, for example,.
As soon as China becomes the largest emitter in the world, it will face
tremendous pressure to act, but the pressure will be even more intense if
the United States has already committed to slow, stop, and reverse
emissions of greenhouse gases. To avoid the damages from climate change,
the embarrassment of being the world’s largest polluter, to alleviate
conventional air pollution, and to improve energy security, China is likely
to take many steps to reduce its emissions beyond what it has already done.
The United States should immediately launch an international effort to encourage and
assist China and other major developing countries to reduce the growth in their
greenhouse-gas emissions in the near-term, and I will make two specific proposals in
this respect.
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Although I already stated that the United States needs to take the symbolic
first step, we cannot afford to wait to engage China and other rapidlyindustrializing countries in a meaningful way because of the problems I
have already articulated.
First, I propose the creation of an international low-carbon investment
fund that would pay for the incremental costs for installing low-carbon
See Intergovernmental Panel on Climate Change, Working Group I, “Summary for Policymakers,” Paris,
February 2007.
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Scientific Expert Group Report on Climate Change and Sustainable Development, Confronting
Climate Change: Avoiding the Unmanageable and Managing the Unavoidable, Prepared for the
15th Session of the Commission on Sustainable Development, February 2007.
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technologies in China, India, Brazil, and Mexico. China and the other
major developing countries should contribute to the fund along with other
OECD countries, and then the developing countries should be obliged to
use the fund whenever making major investments such as new coal-fired
power plants and industrial facilities. Corporations could also donate to the
fund as a matter of public service.
• The Montreal Protocol on Substances that Deplete the Ozone
Layer has such a fund attached to it that has worked extremely
well, the Multilateral Fund for Ozone Depletion.
• Although I support the Clean Development Mechanism in
principle, it is simply not getting the job done at the scale that
needs to be achieved. A simpler, much more aggressive financing
tool is needed.
Second, the United States and other OECD countries should embark on
several high-priority energy-technology research and development
initiatives together with China and the other major developing countries.
Two examples would be large-scale demonstration projects of geologic
storage of carbon dioxide and joint R&D on advanced solar technologies.
Both initiatives would be good for American jobs and technology because
until or unless the major developing countries have developed the
advanced low-carbon technologies, they would be sourced from the existing
technology providers, many of which are based in the United States.
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