Modernizing District Heating Systems in Heilongjiang

Tongjiang city district heating source plant. Photo credit: Xinjian Liu.

A district heating project taps the help of private sector companies to promote higher energy efficiency and lower emissions.

Overview

A project supported by the ADB has provided safer, cleaner, and more reliable heating services to 1.21 million urban residents in six cities of Heilongjiang province in the PRC. As the primary users of heating services, the health of women and children in the project areas improved through better quality of indoor and outdoor air. It expanded and upgraded district heating systems to make them more energy-efficient, thereby reducing emissions of greenhouse gases and air pollutants in the project areas.

Project information

44011-013: Heilongjiang Energy Efficient District Heating Project

Project snapshot

      • Approval date: 25 Sep 2012
      • Closing date: 29 Nov 2019
      • Amount of loan: US$ 353 million
      • Executing agency: Heilongjiang Provincial Government, the PRC
      • Financing: Asian Development Bank

Context

Heilongjiang is an underdeveloped northeastern province regularly battered by frigid Siberian winds. The province experiences long winter seasons that last 6 to 7 months and temperatures that could fall as low as -40°C. Space heating is one of the basic needs and provides essential support to socio-economic activities. District heating systems are most suitable for areas where heating seasons are relatively long.

Challenge

Inadequate coverage of district heating in low-income urban areas forced poor households to use indoor coal-based stoves for space heating. These heating systems were old, inefficient, lacked proper emission control equipment, and a major source of respiratory diseases. Small heat-only boilers in many cities of Heilongjiang had a combustion efficiency of 55%, far below the 87% that modern combined heat and power plants or large heat-only boilers can achieve. The burning of coal through boilers and stoves worsened indoor and outdoor air quality. Women and children were particularly vulnerable to high indoor pollution as they tend to spend more time at home.

Solution

The Heilongjiang Energy Efficient District Heating Project was designed to expand and upgrade the district heating systems in Heilongjiang Province. Funded by a $150 million loan from ADB, the project installed energy efficient heating sources and heat exchangers; insulated pipelines; computerized monitoring and control systems; and removed and dismantled small, inefficient, and polluting neighborhood coal-fired boilers and coal-fired household stoves.

The project adopted environment-friendly boiler technology with high energy efficiency and lower emissions. The installment and use of computerized monitoring and control systems to manage the demand and supply of heat prevented the overheating of buildings and supported two private enterprises to promote private sector participation.

The project was implemented in six cities (Harbin, Jiamusi, Qitaihe, Tongjiang, Yichun Tangwanghe, and Hailin), installing 406 megawatt thermal-equivalent of three energy-efficient heat generators, 226 heating exchange stations, 161 km of insulated heating pipelines, and 5 computerized monitoring and control systems. It also removed 361 small, inefficient, and polluting neighborhood coal-fired boilers and 116,160 coal-fired household stoves.

The project supported two private heating companies―Tongjiang Changheng Cogeneration Company and Hailin Hailang Thermal Power Company―which operate in remote small cities through financing and capacity development. It also improved energy efficient heat generation capacity in the cities of Tongjiang and Hailin.

The capacity of the executing agency, the project management office, and the six subproject implementing agencies to supervise and manage project implementation was strengthened through training and logistics provision. Knowledge-sharing sessions were organized between private sector companies and state-owned enterprises to promote good business practices.

The project also raised the awareness of the public, particularly women, through energy conservation awareness programs. Women are the primary users of heating services and their participation in these sessions was critical for a gender-sensitive delivery and quality of district heating services.

Results

Low-carbon heating for residents

The expanded coverage of upgraded district heating systems reached 30 million m2 without a net increase in emissions benefiting about 1.21 million urban residents or 226,499 urban households, including 21,137 poor households and 1,829 households headed by women. The disposal of low-efficiency, high-pollution coal-fired household stoves has lessened the domestic chores working hour allowing women more time to spend for income-generating activities, learning, or recreation. Through heating tariff subsidies, waived connection fee, and discounts, the project benefited poor female-headed households with access to a cleaner, safer, and reliable heating system.

Better air quality and energy savings

By 2020, the project improved energy efficiency of the district heating systems in six urban areas in Heilongjiang. It saved 882,460 tons of estimated annual raw coal consumption. This has contributed to emission reductions of 5,787 tons of sulfur dioxide, 98,552 tons of total suspended particulates, 11,566 tons of nitrogen oxide, and 1,299,831 tons of carbon dioxide. The air quality in the project areas improved to meet Class II air quality standards. With reduced annual coal use and improved energy efficiency, the incidence of respiratory diseases and other air pollution-related health risks in the project areas are expected to decrease significantly in the long term.

Lessons

Commitment of project stakeholders is critical to the success of a project. Project implementation should be carried out under effective supervision, monitoring, and cost control. Emission of heat source pollutants during the operation period should be continuously monitored to ensure that standards are met.

With rapid urbanization comes the need for investment and rehabilitation of old heating systems. Private sector participation helps fill the huge gap in investment demand. Good practices and knowledge from the private sector could also be shared with state-owned heating companies to enhance the viability of the heating business. Generally, private heating companies attain higher tariff collection rates because of market-oriented business practices with better customer orientation.

Author
Xinjian Liu

Xinjian Liu

Senior Project Officer (Energy), East Asia Department, ADB

This blog is reproduced from Development Asia.

Clean Heating Technologies: A Pilot Project Case Study from Northern PRC

Mitigating Energy Shortages in the PRC

In Heilongjiang, PRC, Modernizing of Heat Sources Spreads Warmth and Cuts Pollution

Boiler control room in Tongjiang's heating plant.

For many decades, heating in Heilongjiang Province, PRC, depended heavily on out-of-date, inefficient boilers. Coal stoves for space heating were a major cause of indoor air pollution and respiratory diseases in poor households.

In 2012, ADB approved a loan of $150 million for the Heilongjiang Energy Efficient District Heating Project to expand and upgrade district heating systems. The goal was to make heating systems energy efficient and reduce greenhouse gas emissions.

Overall living conditions improved through adequate and reliable heating services, while heating expenditures were reduced by switching from individual household stoves and decentralized heating systems to centralized energy efficient heating systems.

Winter falls hard in Heilongjiang Province, an underdeveloped inland area in the northeast of the People’s Republic of China (PRC). Temperatures drop as low as -40 degrees Celsius, and the province is often enveloped in sub-zero temperatures for more than six months.

“For many decades, heating in the province depended heavily on out of date and inefficient boilers,” says Xinjian Liu, Senior Project Officer for the Asian Development Bank. “Coal stoves for space heating were a major cause of indoor air pollution and respiratory diseases in poor households of Heilongjiang. Emissions from small neighborhood boilers also affect outdoor air quality and cause significant long-term harm to public health.”

The Heilongjiang provincial government has long recognized the importance of improving energy efficiency in district heating, and earmarked it as a priority as it works to improve energy efficiency and quality of life.

Walking outside the Harbin Taiping heating plant.

Upgrading Heating

In 2012, ADB in 2012 approved a $150 million loan for the Heilongjiang Energy Efficient District Heating Project. The aim was to expand and upgrade district heating systems in cities of Heilongjiang Province, to make heating systems more energy efficient, and reduce emission of greenhouse gases and air pollutants.

The project was carried out in six cities (Harbin, Jiamusi, Qitaihe, Tongjiang, Yichun Tangwanghe, and Hailin). Energy-efficient heating sources and heat exchangers were installed, pipelines were insulated and compuThe project was carried out in six cities (Harbin, Jiamusi, Qitaihe, Tongjiang, Yichun Tangwanghe, and Hailin). Energy-efficient heating sources and heat exchangers were installed, pipelines were insulated and computerized monitoring and control systems were introduced. The project also removed 361 small, inefficient, and pollution-generating neighborhood coal-fired boilers and 116,160 coal-fired household stoves.

By 2020, the project had extended the coverage of the district heating system in the six project cities and towns by 30 million meters2 without a net increase in emissions. It also promoted private sector participation in district heating sector in two project cities, and held three knowledge sharing sessions.

Some 226,499 urban households—including 21,137 poor households and 1,829 households headed by women—now have access to district heating systems. Conservation awareness campaigns covered 683,600 women within the project areas.

The project improved air quality and reduced greenhouse gas emissions across the six urban areas. By 2020, it reduced annual raw coal consumption by 882,460 tons, avoiding annual emissions of 1,299,831 tons of carbon dioxide, 5,787 tons of sulfur dioxide, 98,552 tons of total suspended particulates, and 11,566 tons of nitrogen oxides, compared with 2012 levels. By 2020, air quality in project-targeted areas improved to Class II of the PRC’s ambient air quality standards.

By 2020, the Heilongjiang Energy Efficient District Heating Project reduced annual emissions* of

0 tons
Carbon dioxide
0 tons
Nitrogen oxides
0 tons
Sulfur dioxide
0 tons
Annual raw coal consumption
0 tons
Suspended particulates
0 Improved to Class II
Air quality

*Compared to 2012 figures

Cleaner Environment

“The project achieved its intended impact of improving energy efficiency and a cleaner environment in Heilongjiang Province,” says Yolanda Fernandez Lommen, ADB Country Director in the PRC. “It created significant social and environmental benefits and helped reduce poverty by creating job opportunities, improving health and welfare, and driving economic growth while reducing pollution.”

A total of 1.21 million urban residents of the project areas—including 683,600 women, 55,246 people from poor families, 109,794 children and 14,020 teachers in 94 schools, along with 43,947 patients and 9,994 medical staff in 50 hospitals—benefited directly from improved energy efficiency and a cleaner environment.

Also, overall living conditions were improved through adequate and reliable heating services, while heating expenditures were reduced by switching from individual household stoves and decentralized heating systems to centralized energy efficient heating systems. The new systems also provided a better schooling environment during the winter by providing cleaner and reliable heating services.

“This upgraded district heating system created a more comfortable and conducive environment for residents in the project areas,” says M. Teresa Kho, ADB’s Director General for East Asia. “The reliable indoor heating ensured residents a warm and cozy living environment, particularly during the COVID-19 pandemic, when most residents had to spend a major portion of their daily lives indoors. With reduced annual coal use and improved energy efficiency, the incidence of respiratory diseases and other air pollution related health risks are expected to reduce significantly in the long term.”

Author
 Graham Dwyer

Graham Dwyer

Principal Communications Specialist, Department of Communications, ADB

This article is reproduced from Asian Development Bank.

Building Sustainability and Resilience in the Energy Sector

There is a need for a holistic approach that not only reduces carbon emissions in the energy sector but also addresses its climate-vulnerability. Photo credit: ADB.

Strengthen power systems against climate and other risks to minimize damage to infrastructure, disruption of service, and economic loss.

Overview

Continued economic growth and urbanization are projected to almost double energy demand in the Asia and Pacific region by 2030. Securing energy supply for the region involves not only increasing capacity and improving access to affordable and reliable electricity for millions of people but also protecting energy infrastructure from climate-related and other risks.

A webinar organized by ADB in April 2021 discussed approaches and solutions for strengthening infrastructure resilience by incorporating climate and disaster risk considerations into power system planning and design.

Aligning Energy and Climate Strategies

The term “carbon neutral” refers to net-zero carbon dioxide emissions. It means not adding new emissions to the atmosphere, and this can be done by balancing out carbon dioxide (CO2) emissions with their removal (often through carbon offsetting). Carbon peaking, on the other hand, means that CO2 emissions from all sectors in an economy reaches the highest level and then gradually goes down.

Priyantha Wijayatunga, Chief of the Energy Sector Group at ADB, started the session by discussing briefly how the new energy policy of ADB aligns with its strategy for tackling climate change, building climate and disaster resilience, and enhancing environmental sustainability. ADB supports universal access to reliable and affordable energy services, while promoting the low-carbon transition in Asia and the Pacific. The deployment of new and advanced technologies will play a vital role in achieving these objectives.

Strategies and approaches, such as conducting vulnerability assessments, use of multiple scenarios for extreme climate and geophysical events, preparation of emergency and recovery plans, use of smart grids, climate-proofing of infrastructure, diversification of and distribution of energy system, are all important for improving power system resilience. Costs associated with these approaches should also be considered to prioritize resilience investments. For example, burying distribution and transmission lines is a “no regrets” investment, but it is more expensive than overhead lines. The value of climate-proofing needs to be weighed against other options to establish priorities.

Electricity grids of countries in the region are at different stages of development. While most of the developing economies are on track to achieve 100% electrification (or are already there), many of the grids remain underdeveloped and vulnerable to impacts of climate change. With population changes and increasing demand for clean energy, radical transformation of electricity systems is happening or will happen, with more variable-output generation sources, grid-connected energy storage, and behind-the-meter storage as key components of system resilience.

Case Studies

Belize

Migara Jayawardena, Founder and Managing Director of AMALA Clean Energy Advisors, presented the results of a study on power systems in the Caribbean country of Belize, which identifies climate vulnerabilities and solutions to enhance systems resilience to adverse weather and climate change impacts.

Extreme weather events have taken its toll on the country’s economy. For example, Hurricane Dean struck Belize in 2007 and caused a near blackout with more than 88% of customers losing power completely. This resulted not only in foregone revenue from unserved demand for the power sector but also lost valued added of $4.8 million for the national economy.

Jayawardena explained that improving energy resilience requires adopting such measures as long-term energy planning, segmentation of transmission networks, collection and use of meteorological and hydrological data, operational and dispatch capabilities, and systems strengthening of transmission and distribution substations. Measures for rapid response and recovery are equally important to minimize damage and losses. These include emergency response plans, emergency repair access, awareness and communication plan, and recovery and reconstruction plan.

Lao People’s Democratic Republic (Lao PDR)

Maythiwan Kiatgrajai, a renewable energy senior planning and policy specialist at Abt Associates/USAID Clean Power Asia, highlighted the importance of stakeholder engagement in undertaking vulnerability assessment and resilience strategies based on a case study from the Lao PDR.

The vulnerability assessment covered the four main power systems components: generation, transmission, distribution, and consumers. The assessment included identifying threats, defining impacts, assessing vulnerabilities, calculating risks, and developing solutions.

Engaging stakeholders in the process ensures context-specific inputs and buy-in from relevant organizations for implementation. Key success factors include involving relevant stakeholders, the role of experts in facilitating and encouraging discussions among stakeholders, and clearly communicating the objectives and expected outcomes of the study.

People’s Republic of China (PRC)

Xiaoming Jin shared measures taken by China Southern Power Grid to adapt to natural hazards, specifically to minimize impacts from typhoon and ice hazards that commonly affect the system.

The state-owned company covers five southern provinces of the PRC—Guangdong, Guangxi, Yunnan, Guizhou, and Hainan.

Jin, a former chief technical expert of the grid operator’s Electrical Power Research Institute, explained procedures, and technical measures to protect the power grid, including substations and power lines. Measures include pre-risk assessment and pre-control measures, emergency management systems and command platforms, establishment of design standards and guidelines, use of high-level technology for collecting and transmitting real-time information, and refinement of minimum power grid, such as tower reinforcement, upgrade of distribution lines, and use of underground cable.

Key Takeaways

1. The energy sector facilitates economic growth and supports key service sectors that drive the development of a country. Understanding and addressing the sector’s climate vulnerability is critical to inform efforts to improve power sector resilience, minimize damage and disruption, and sustain development.

2. The broader economic impact from unserved energy puts greater emphasis on the need to strengthen the sector’s resilience and to keep the system operating. The longer there is unserved energy, the more financial and economic losses for the economy. These costs should be taken as part of economic evaluation of resilience measures.

3. Enhancing resilience of power systems requires a comprehensive approach that includes strengthening infrastructure, planning and operational capabilities, preventive measures, and emergency response and reconstruction plans. Resilience improvements, such as burying distribution lines, should be viewed as insurance policies that can avoid economic losses caused by grid failure in extreme weather events.

4. Engaging a wide range of stakeholders from policymakers, planners, and system operators ensures in-depth and comprehensive analyses to identify and assess sector vulnerabilities from climate and non-climate hazards. Stakeholder engagement also creates greater buy-in to support implementation of action plans.

References

Asian Development Bank. 2021. Building Resilience of the Power System in the Low-Carbon Transition. Virtual Dialogues on Resilient Infrastructure series (Season 2: Dialogue 3). 28 April.

Author
 Priyantha Wijayatunga

Priyantha Wijayatunga

Chief of Energy Sector Group, Sustainable Development and Climate Change Department, ADB

Migara Jayawardena

Migara Jayawardena

Founder and Managing Director, AMALA Clean Energy Advisors

 Maythiwan Kiatgrajai

Maythiwan Kiatgrajai

Senior Renewable Energy Planning and Policy Specialist, Abt Associates/USAID Clean Power Asia

Xiaoming Jin

Xiaoming Jin

Former Chief Technical Expert, Electrical Power Research Institute, China Southern Power Grid

This blog is reproduced from Development Asia.

Hydrogen Energy Could Be Key to Carbon Neutrality in the PRC

The People’s Republic of China is working toward carbon neutrality. Photo: Wong Zihoo

Renewable hydrogen is an essential direction for the development of green and low-carbon energy in the future as the People’s Republic of China seeks to lower greenhouse gas emissions.

Hydrogen energy is clean and storable with no tailpipe emission except water vapor after combustion. It produces neither carbon dioxide.

Unfortunately, most hydrogen energy still produces the carbon dioxide that contributes to climate change. Across the world, more than 95% of hydrogen energy is produced using fossil fuels containing carbon. As a result, the emissions avoided at the tailpipe are shifted to the production process upstream.

Why low carbon hydrogen now? In order to make low carbon hydrogen, there are two options. Carbon dioxide emissions from the production of hydrogen can be abated with carbon capture and storage technologies or it can be produced using renewable electricity— often called renewable hydrogen or green hydrogen.

Low carbon hydrogen is an important initiative right now for countries around the world and particularly in the People’s Republic of China, one of the world’s largest producers of hydrogen energy. In 2020, the world’s production of hydrogen was approximately 72 million tons. The People’s Republic of China produced about 20 million tons in 2019. One percent or less was renewable energy hydrogen with the remainder being hydrogen produced from fossil energy (70-80%) and from industrial by-products (more than 20%).

According to the country’s hydrogen industry development report 2020, the proportion of hydrogen produced using renewable energy will increase from about 1% to 5% by 2025 and to 10% by 2030.

So, while the most desirable form of renewable energy-based hydrogen—“green” hydrogen—will be available in substantial quantities only after 2030, between now and then useful experience can be gained. Now is a good time to start building the engineering code, infrastructure and uses of hydrogen.

Hydrogen produces neither carbon dioxide nor pollutants such as

sulfur oxide and nitrogen oxide.

Policymakers in the People’s Republic of China shall consider these steps when moving forward with hydrogen energy:

What is the role of carbon capture utilization and storage for low carbon hydrogen?

In the initial stages, hydrogen can be sourced in the most cost-effective way available and later be switched to the most environmentally cost-effective method. Green hydrogen can unlock approximately 8% of global energy demand with a hydrogen production cost of $2.50 per kg. If the hydrogen price drops to $1.80 per kg it would unlock as much as 15% of global energy demand by 2030.

Low carbon hydrogen can be a transition fuel which will avoid stranded assets and prepare the world to shift to a new way to deliver energy, which is environmentally friendly as well as economical. This approach is also in line with climate science which shows that early actions today are much better than more massive responses later.

Carbon capture utilization and storage in the hydrogen production process has also attracted much attention and is more economical at present than electrolysis-based green hydrogen. It could also provide an early opportunity to transit to a low carbon hydrogen economy. The early availability of low carbon hydrogen using carbon capture will ensure that the downstream hydrogen infrastructure is ready by the time electrolysis-based green hydrogen is cost effective.

The People’s Republic of China has well-established coal mining infrastructure but lacks availability of cheap domestic natural gas. Carbon capture technology can decarbonize fossil fuel-based hydrogen, which will enable hydrogen economy and reduce carbon dioxide emissions in the short and medium term.

While the production and consumption of green hydrogen is a long-term goal, carbon capture is becoming more viable and could be a great accelerator for the expansion of the hydrogen economy.

What is the trend for low carbon hydrogen?

In near term, the existing hydrogen supply, marketing and utilization systems are relatively mature and stable. On the other hand, carbon capture technology will not be commercialized and popularized in five years because of its high cost. As a result of this, the current structure of hydrogen production will not change greatly in the near future.

The annual increment in low carbon hydrogen supply of about 2 million tons cannot be filled by the development of renewable energy hydrogen. Renewable hydrogen can only supplement about 40% of the increment. Therefore, in the near term, hydrogen production from fossil energy (especially from coal) will still be dominant in the People’s Republic of China. Carbon capture technology shall be promoted to help in the decarbonization of hydrogen production from fossil energy.

In the medium term, say until around 2030, the annual demand for hydrogen in People’s Republic of China will reach about 35 million tons, an increase of 75% in absolute terms. By this time, the proportion of hydrogen production from renewable energy will reach 10%, which is 10 times that of the present 1%.

From now to 2030, carbon capture technology, electrolyzer cost and renewable energy cost will continue to decline, and various hydrogen production demonstration projects will continue to appear. By 2030, carbon capture technology will be more mature and the cost of hydrogen will be reduced.

Many carbon capture technologies will be demonstrated in the early stage of commercialization, and many industries will enter the time window of this transformation. Combined with carbon capture technology, coal hydrogenation and renewable energy electrolytic water hydrogen production will become the main effective hydrogen suppliers.

In long term, by 2050, the People’s Republic of China’s annual demand for hydrogen will reach 60 million tons. Its energy structure will change from traditional fossil energy to a diversified energy structure with renewable energy as the main body, and the electricity price of renewable energy will be further reduced.

At that time, hydrogen energy supply will be based on renewable energy electrolytic water hydrogen as the main body of effective hydrogen supply. Carbon capture technology used for fossil energy hydrogen production, biomass hydrogen production, and nuclear hydrogen production will be effective supplements.

Carbon 2030 and 2060 targets need low carbon hydrogen.

Hydrogen is an important medium during energy transition, and renewable hydrogen is an essential direction for the development of green and low-carbon energy in the future. Under the background of carbon neutral and zero carbon goals, carbon capture is becoming more and more important. If the People’s Republic of China wants to achieve the goal of carbon neutrality by 2060, the development of renewable energy hydrogen and carbon capture technology are indispensable.

Author
Jinmiao Xu

Jinmiao Xu

Energy Specialist, Energy Sector Group, Sustainable Development and Climate Change Department, ADB

Darshak Mehta

Darshak Mehta

Consultant, Energy Sector Group, Sustainable Development and Climate Change Department, ADB

This blog is reproduced from Asian Development Blog.

Accelerating Clean Energy Transition in the PRC

The use of solar, wind and other renewable energy sources continues to grow in the People’s Republic of China. Photo: Vista Wei

The move to clean energy and carbon neutrality in the People’s Republic of China will require conservation, conversion to new energy sources beyond coal and changing people’s energy consumption habits. 

The People’s Republic of China is working to peak its carbon dioxide emissions before 2030 and achieve carbon neutrality by 2060. The only way to achieve its climate change targets is by adopting an aggressive low carbon pathway. Reducing reliance on coal will be a major challenge for this clean energy transition.

Coal is deeply embedded in the energy system and economy of the People’s Republic of China – the world’s largest coal consumer and producer. It is widely used in electricity generation, steel and cement production, building materials, chemicals, and heating and cooling of buildings.

Due to progress made between 2011 and 2020, the country’s total coal consumption declined after 2013. It has increased again in recent years, approaching its 2013 peak, driven up by the fast-rising demand for electricity. The country’s coal consumption grew by 0.6% from 2019 to 3.86 billion tons in 2020.

The country needs to adopt a new approach to coal. A shift from controlling coal growth to accelerating a phaseout of coal in all sectors is the way forward, coupled with sufficient financial resources for long-term low-carbon investments in renewable energy, green transportation, green buildings, and low-carbon manufacturing.

During the last 10 years, renewable energy such as solar, wind, and battery storage have grown, with an average annual growth rate of non-fossil energy consumption in the total energy consumption at 0.7% since 2013. In 2020, the combined newly added capacity for wind and solar energy reached a record high of 120 GW. However, with total clean energy accounting for about a quarter of the total energy consumption more is needed in light of government commitments.

The only way to achieve its climate change targets is by adopting an aggressive low carbon pathway.

By 2020, the installed capacity for renewable energy reached 930 GW, accounting for 42.4% of the total installed capacity. The country has further committed to bringing its combined installed wind and solar capacities to more than 1.2 terawatts by 2030. As fossil fuel wanes, renewable energy needs to become the main pillar of the “new power system’’ proposed by the government in March 2021.

The People’s Republic of China must not only use less energy but use energy more efficiently, while reducing pollutant emissions (including greenhouse gases), consumption of natural resources, and improving energy security by reducing reliance on energy imports.

Energy conservation is dependent to a great extent on changing human behavior. But some energy efficiency measures can now be automated, e.g., through the use of automated demand response systems such as smart thermostats and other smart building energy management systems.

Electrification of transport and other infrastructure that historically rely on fossil fuels will also help improve energy efficiency on a scale that helps meet global climate change and national energy security objectives.

Moving to clean energy and carbon neutrality in the People’s Republic of China is not just a matter of phasing out coal. It will require a broad effort encompassing conservation, conversion to new energy sources and changing people’s energy consumption habits.

Author
Xinjian Liu

Xinjian Liu

Senior Project Officer (Energy), East Asia Department, ADB

This blog is reproduced from Asian Development Blog.

Momentum Builder

Li Min/China Daily

By scaling up carbon capture, use and storage, China can play a leading role in achieving the global ambition of climate neutrality

China’s commitment to achieve carbon neutrality before 2060 has been acclaimed as one of the most important climate actions in the world. Scholars at Cambridge Econometrics estimate that China’s commitment alone could cut global warming by 0.25 C-which would be a very significant contribution to the Paris Agreement’s goal of limiting global warming to well below 2 C, and preferably to 1.5 C above pre-industrial levels.

To translate the carbon neutrality vision into reality, the world needs to deploy clean energy technologies on a massive scale, starting with solar photovoltaic. Between 2010 and 2020, the global capacity of solar PV increased about 18-fold from 40 gigawatts to 707 GW. During the same period, China’s solar PV capacity increased from 1 GW to 254 GW-growing at a phenomenal annual rate of 74 percent on average. By the end of 2020, solar PV in China accounted for 36 percent of the world total, followed by the United States (10 percent), Japan (9 percent), Germany (7 percent) and India (6 percent). China is also the major exporter of solar panels, having supplied more than 70 percent of demand in international markets.

The open recipe for such a great success for solar PV includes three main ingredients: international cooperation, enabling policies by governments and economies of scale.

In 2000, solar PV was still very costly at about $5 per watt. However, that year, Germany adopted its Renewable Energy Act and began providing attractive feed-in tariffs-essentially subsidies-to the developers of solar PV, which quickly helped Germany become the world’s largest solar market. As many countries followed suit by introducing similar incentive policies for solar energy, Chinese companies, mostly private entrepreneurs, developed full supply chains for solar PV to meet the growing demand in Europe, North America and Asia, including China’s own market.

China’s solar PV capacity overtook that of Germany in 2015, and since then China has maintained its position as the world’s leading solar nation. As solar PV has been deployed at such scale worldwide, the average cost of solar power has declined by more than 80 percent over the last decade. Solar power has become the cheapest form of energy in modern history and is now being deployed all over the world including in the least developed countries in Asia, Africa, and South America.

Beyond solar energy, China is also the world leader in wind power (38 percent of the world total), hydropower (28 percent), bioenergy (15 percent) in 2020, and sales of electric vehicles in China reached 1.3 million that year, representing 41 percent of the global EV market.

While all these clean technologies are an indispensable part of the low carbon transition, on their own they will not be sufficient to achieve carbon neutrality. The modeling work of Tsinghua University shows that, before 2060 when China is supposed to achieve carbon neutrality, fossil fuels would still account for about 19 percent of the primary energy consumption mix. This means that some advanced engineering must be developed to capture the carbon dioxide molecules produced from the burning of fossil fuels, use the captured CO2 if possible, and then store it permanently underground.

Such technology, known as “carbon capture, utilization and storage”, or CCUS, is an important option for reducing CO2 emissions in the energy sector and will be essential to achieving carbon neutrality. According to the International Energy Agency, for the whole world to achieve carbon neutrality by 2070, CCUS technologies alone will need to make up approximately 19 percent of global CO2 reductions, with other clean energy technologies making up the rest.

Despite the indispensable role of CCUS in achieving carbon neutrality, its deployment worldwide has been slow-so far there are only around 20 CCUS facilities in operation around the world. One of the main reasons for this is the high cost of CCUS technology, currently around $100 per metric ton of CO2. The situation of CCUS today is similar to solar PV 20 years ago, so the world needs to apply the same successful recipe for solar PV of cooperation, policies, and scale to the development of CCUS.

The good news is that momentum is building behind CCUS. Plans for more than 30 new CCUS facilities have been announced in recent years, and despite the COVID-19 pandemic, governments and industry have committed more than $4.5 billion to CCUS in 2020. In particular, the global energy industry is counting on China to once again play a crucial role in the development of CCUS as it did for solar PV. They have good reasons for this, as China has solid R&D capacity, a complete industry supply chain, very active entrepreneurship and strong policy commitments from the government to develop CCUS.

China also has a huge domestic market for the deployment of CCUS that will help bring down the cost to a more affordable level in the next decade. In terms of incentive schemes, unlike solar PV that benefited from public subsidies in the beginning of its development, CCUS deployment will primarily be driven by market forces such as carbon pricing. In January 2021, China launched its national carbon trading market, covering 2,225 thermal power plants which account for about 30 percent of China’s CO2 emissions. The carbon price will be a strong market signal for investors in low carbon technologies, as every single dollar increase in carbon price would mean a dollar cost reduction in favor of the competitiveness of CCUS technologies.

Carbon neutrality is a global mission and so far more than 110 countries and regions have announced their intentions to pursue carbon neutrality. In this essential journey to a more sustainable future, China will cooperate with the international community and lead the way by making clean technologies affordable for the benefit of the whole world. And just as China helped to drive global take-up of solar PV, it now has a golden opportunity to do the same for CCUS and play a leading role in achieving global climate neutrality.

Author
 Yongping Zhai

Yongping Zhai

Chief of Energy Sector Group, Sustainable Development and Climate Change Department

This Op-Ed is reproduced from China Daily.

Danish District Energy Technologies: Application to the PRC

Emrah Öztunc, Danish Embassy in the PRC, introduces the Danish district heating system, one of the world’s most advanced and proven technology, and how this can be implemented in the PRC to achieve a green and sustainable energy sector.

Mobilizing Private Capital and Know-How to Turn Waste into Energy

A waste-to-energy plant in Suzhou, the People's Republic of China has helped create better living conditions in the city. Photo credit: China Everbright Environmental Energy Limited.

Public-private partnerships can help make clean technologies for turning waste into energy accessible to cities.

Overview

Relevant and practical integrated waste management approaches are crucial for countering public health impacts of uncollected waste and environmental impacts of open dumping and burning. Medium to large cities in the People’s Republic of China (PRC) considers this as a pressing need to help them attain environmental sustainability and improve the quality of life of their citizens.

Turning municipal solid waste into energy through the waste-to-energy process is one of the popular strategies of solving the rise of generated waste. It involves incinerating waste to produce energy in the form of electricity or heat. Unfortunately, lack of access to finance and a gap in technological knowledge made it difficult for cities to adopt this strategy.

Project information

43901-014: China, People’s Republic of: Municipal Waste to Energy Project

Project snapshot

      • Approval date: 4 June 2009
      • Extended annual review report date: September 2015
      • Amount of loan: $100 million
      • Executing agency: China Everbright International Limited
      • Financing: Asian Development Bank

Context

The People’s Republic of China is the world’s largest producer of municipal solid waste, generating about 215 million tons in 2017. This is expected to increase to 500 million tons per year by 2025 as urban population continues to rise.

The ineffective disposal of solid waste poses serious environmental and social challenges in the cities. It contaminates soil and groundwater when dumped in un-engineered landfills. Meanwhile, a number of emission control and leachate treatment facilities in engineered landfills also lack adequate clean technologies and operational know-how. These expose many urban poor, especially those living near landfills, to severe air and water pollution and the threat of infectious diseases.

Incineration is recognized as an effective method for waste treatment since it reduces waste volume by 90% and eliminates methane emissions. Waste-to-energy technologies recover energy from the incineration process to produce electricity and heat. By replacing fossil fuel combustion and avoiding methane, these technologies help avoid greenhouse gas emissions and mitigates climate change.

Development Challenges

The government of the People’s Republic of China enacted laws and regulations between 2004 to 2007 to promote waste management and control environmental pollution and city-level public-private partnership (PPP) based on concession agreement.

Despite the recent policy shift in favor of waste-to-energy and the increased interest of municipal governments in clean technologies, market barriers still limit the expansion of waste-to-energy projects with clean technologies in the country.

One of the key bottlenecks is the lack of access to finance due to the following:

  • There are gaps in clean technology knowledge and misperceptions of actual technology risks.
  • Clean technologies require higher initial capital expenditure, making the total investment requirement higher, while commercial banks are often unfamiliar with environment and health benefits that are difficult to quantify.
  • The due diligence costs associated with waste-to-energy projects with clean technologies are high because of the need for technical evaluation regardless of the project size.
  • Under PPP arrangements, municipal governments often require private sector partners to fund project equity in hard currency. However, the availability of long-term loans to finance project equity, in US dollar, in particular, is limited.

Solution

To reduce the environmental impact of unhygienic waste disposal, ADB in 2009 approved a $100 million long term loan to support, through PPP, the construction and operation of waste-to-energy projects in the People’s Republic of China. The project aimed to:

  • build, own and operate waste-to-energy plants with clean technologies;
  • treat 8,000 tons of municipal solid waste daily to benefit an urban population of 16 million; and
  • generate 800 gigawatt-hours of electricity by 2013.

China Everbright International Limited served as the project sponsor while China Everbright Environmental Energy Limited (CEEEL)—in charge of building, operating, and maintaining waste-to-energy plants based on the concession agreements with the municipal governments —was the borrower.

The project featured an efficient private sector participation model in waste-to-energy projects through PPP for multiple projects in medium-sized municipalities. Located in different cities, these multiple waste-to-energy projects are often too small for banks to finance on a standalone basis. ADB structured a facility to support portfolio subprojects efficiently using a portfolio approach. Under this approach, the ADB loan was provided to a holding company and channeled to the waste-to-energy project companies.

This model encouraged the private sector to invest in waste-to-energy projects with clean technologies. It mobilized available domestic funds, creating better awareness among commercial banks and willingness to finance more waste-to-energy efforts.

A $653,000 technical assistance grant funded by the Clean Energy Fund was also used to support the reporting and environmental management of the waste-to-energy facilities.

Results

The project benefited approximately 18 million city dwellers, 12.5% more than the target. It helped create better living standards in the cities of Jinan, Suzhou, Zhenjiang, Pizhou, and Sanya. By reducing the amount of untreated waste delivered to landfills, the waste-to-energy plants reduced pollutants and improved air quality in the said cities.

Likewise, the project diversified energy sources and reduced greenhouse gas emissions in the People’s Republic of China. In 2014, the project generated 956 gigawatt-hours (GWh) of green electricity and reduced 1.2 million tons of carbon dioxide emissions by eliminating methane and replacing fossil fuels. Since 2011, the project has generated 3,642 GWh of electricity and reduced 4.7 million tons of carbon dioxide emissions.

Waste-to-energy plants received local awards and served as demonstration models for efficient municipal solid waste management. For example, the Jinan plant received the Luban Award–the nation’s highest honor for project quality in 2012–2013, while the Zhenjiang plant received the highest score in the Jiangsu Provincial Assessment.

Moreover, the project has encouraged other cities in the People’s Republic of China to replicate the business model. As of 2014, several local governments such as Fujian, Qinghai, Anhui, Hunan, and Sichuan have been piloting or implementing PPP projects. China Everbright International Limited has set market standards and benchmarks and helped the government plan enabling laws at both the national and municipal levels.

Lessons

The project highlighted the importance of ensuring a robust project design, partnering with the right sponsor, providing technical assistance for capacity building to upgrade operations and skills, and facilitating the transfer of knowledge and technology.

Choosing the right project sponsor is key to ensuring smooth and successful implementation. China Everbright International Limited is a leading environmental protection company in the People’s Republic of China focusing on waste-to-energy, wastewater management, and renewable energy businesses.

The technical assistance that was implemented together with the loan helped China Everbright International Limited upgrade its operations and management process, and establish new municipal solid waste management and waste-to-energy standards. Many subsequent private sector projects have replicated this dual-assistance arrangement and applied the knowledge and technology improvements learned from this project.

In 2012, ADB signed another loan with China Everbright International Limited to reduce the environmental impact of agricultural waste through municipal-level PPP projects in Viet Nam.

In 2017, ADB approved a USD$100 million facility which will support the construction and operation of a series of waste-to-energy plants with advanced clean technologies, including flue gas emission control to meet European Union standards, in multiple municipalities in Viet Nam.

Author
Xiang Li

Xiang Li

Senior Project Officer, Infrastructure Finance Division 2, Private Sector Operations Department, Asian Development Bank

This blog is reproduced from Development Asia.

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