**Lessons Learned From TCAPP/CACETC Program in China**

**Interim Report**

### **September 2002**

The Technology Cooperation Agreement Pilot Project (TCAPP) is a
bilateral program supported from 1998 through 2001 by the US
Environmental Protection Agency, the US Agency for International
Development and the US Department of Energy. The program has worked with
partners in seven developing countries around the world to promote clean
energy investments that support development goals and reduce greenhouse
gas emissions. In China the program has been supported by EPA and is
also known as the Cleaner Air and Cleaner Energy Technology Cooperation
(CACETC). It is part of an ongoing commitment between the US and Chinese
governments to promote clean energy technology in China.

This paper will introduce TCAPP/CACETC activities in efficient motor
systems and grid-connected wind power over the past two years, and lay
out a range of institutional, technical, and practical lessons learned.
Background information such as the process used to determine technology
priority areas, the evolution of the bilateral climate technology
transfer program from 1998 until now, and general management structure
are also discussed.

#### 1. INTRODUCTION

TCAPP bilateral collaborative climate programs have been supported by
the US government in partnerships with Brazil, China, Egypt, Kazakhstan,
Korea, Mexico, and the Philippines. TCAPP goals were three-fold: 1)
foster private investment in clean energy technologies that meet
development needs and reduce greenhouse gas emissions; 2) engage host
country and international donor support for actions to build sustainable
markets for clean energy technologies; and 3) establish a model for
international technology transfer under the UNFCCC (United Nations
Framework Convention on Climate Change).

In 2001, the US Agencies supporting TCAPP, in consultation with partners
around the world and other stakeholders, evaluated the program, and
determined that it was appropriate to end the pilot program after 4
years and transition to a different, more focused type of program. The
evaluation found that the TCAPP work on a large range of technologies in
7 key countries had been very successful in the initial technology
assessment, prioritization and strategy development stages. It was
recognized, however, that limited resources available for this program
would need to be concentrated on fewer technology areas, and linked with
other programs to demonstrate full implementation of some country driven
strategies. In China 2002 has been a transition year involving
significant efforts to wrap up TCAPP activities in an orderly way, and
planning for a follow-on program called the Climate Technology
Partnership (CTP) to promote implementation of grid connected wind power
generation.

In early 1998, TCAPP was initiated in China as a partnership between the
EPA and the Chinese Ministry of Science and Technology (MOST). Technical
lead organizations were the National Renewable Energy Laboratory (NREL)
in the US and Tsinghua University in China. The partnership built on
earlier successful bilateral cooperation in the US Country Studies
program. The partners worked together to identify government and
technical experts who would be engaged in the initial scooping process.
The US and Chinese project teams then convened a scooping meeting to
carry out a technology needs assessment, and the drafting of a
technology cooperation framework that detailed technology priorities
which were both important for China's development as well as mitigation
of greenhouse gas emissions. The framework also discussed market
barriers and technology options to overcome these barriers for each
technology priority. Grid-connected wind power generation, high
efficiency electric motor systems, energy efficiency improvements in
industrial boilers, and advanced clean coal power generation technology
were among the high priority technologies selected.

The climate change technology cooperation work under TCAPP/CACETC was
formalized with a Statement of Intent for a three-year effort between
the minister of the State Development and Planning Commission (SDPC) of
China and the administrator of the U.S. Environmental Protection Agency
(EPA), signed in 1999. The National Renewable Energy Laboratory (NREL)
in the US and Tsinghua University in China were confirmed as lead
technical agencies. Each technology priority area then formed an expert
technology team, with an appointed team lead. Technology cooperation was
defined as collaboration between the US and China that enables China to
adapt, manufacture, install, operate, maintain, or diffuse priority
energy technologies.

TCAPP/CACETC activities emphasize capacity-building for technology
transfer. Specifically, pilot projects can serve as proof-of-concept
models, or as demonstrations of the benefits of clean energy
technologies. Initial pilot projects can be expanded and then replicated
through a systematic market transformation strategy that combines
multiple actions to address barriers.

TCAPP/CACETC actions in grid-connected wind and efficient motors have
been implemented over the past two years and have made good progress in
market development for these technology areas. Because initiation of
work in technology priority areas was staggered, wind and motors began
the earliest and therefore have the most comprehensive results thus far.
Highlights include three successful efficient motors pilot projects with
the second largest oil company in China, with replication efforts
underway; training in design evaluation and hands-on turbine testing to
support a Chinese certification scheme for wind turbines; and
participation in a wind concessions workshop to present two 80-100 MW
projects to private sector developers and investors.

#### 2. TECHNOLOGY NEEDS ASSESSMENT IN CHINA

The technology needs assessment process, including priority technology
selection, developing a technology cooperation framework and defining
technology cooperation actions, took place during 1998 and 1999.

##### 2.1 Priority Technology Selection

In March 1998, Tsinghua University and the State Science and Technology
Commission organized a Climate Change Technology Cooperation Scoping
Meeting to begin the technology needs assessment process. NREL sponsored
and facilitated this meeting with participation from US NGOs and
companies. Sixteen Chinese energy experts, from a range of Chinese
government agencies, research institutions, and investment groups
participated in the scoping meeting. These included the Ministry of
Agriculture, the State Economic and Trade Commission (SETC), the China
Energy Conservation Investment Corporation, the Ministry of Electric
Power, Ministry of Coal Industry and others. Tsinghua University
presented results of their compilation of energy sector studies,
including the US Country Studies program, which detailed climate change
mitigation potential for various measures. Based on these data, they
recommended a list of 19 technologies that would be suitable for the
TCAPP/CACTEC needs assessment process, which was limited to GHG
mitigating technologies in the energy sector. The group discussed and
refined the list and defined a set of criteria to rank the technologies.
These criteria were partly based on experiences from other TCAPP
countries, but adapted to the Chinese situation:

-   Environmental benefits: GHG mitigation, other pollutants reduction

-   Economic development: new economic growth, job creation

-   Conditions for technology transfer: local capacity, localization of
    manufacturing

-   Investment: scale of investment, investment time period, state
    corporations, private investment

Using an analytical hierarchical process, the group scored each of the
19 technologies according to each criterion. Each criterion was given
equal weight and scores were added. The top five technologies were
identified as the priority energy technologies for GHG mitigation in
China. The selected priorities included:

-   high efficiency electric motors

-   grid-connected wind electric power

-   efficiency improvements in coal-fired industrial boilers

-   cleaner coal technologies for power generation

-   coal bed methane recovery (ultimately pursued under a different
    bilateral program)

Using this methodology, the Chinese ensured that their technology
priorities had substantial environmental and economic benefits, were
viable candidates for successful technology transfer, and had sizeable
investment opportunities.

Coal-bed methane was ultimately pursued through a separate bilateral
program. Because the original agreement stipulated 6 technology areas
for cooperation, in late 1999, Tsinghua University reviewed the original
list of 19 technologies and selected five for further investigation.
They presented these to an interagency team meeting in January 2000 and
two additional priority technologies, biomass gasification and natural
gas combined cycle power generation, were selected using the same
analytical hierarchical process from the 1998 scoping meeting. SDPC and
EPA agreed to focus on wind and motors in the first year of the project,
then add clean coal and boilers during the second year, and finally
focus on biomass and natural gas in the third year. Because the decision
to wrap up the TCAPP global program was made before work was initiated
on the last two technology priorities, it was agreed that they would not
be pursued and resources instead concentrated on wrapping up work on the
four initial priority areas.

#### 

**2.2 [Technology Cooperation Framework and Actions]{.underline}**

During 1998, TU and NREL guided a team of Chinese technical experts
through the process of developing a technology cooperation framework.
This framework details the GHG mitigation potential of each technology
areas, market barriers, present initiatives, and technology actions to
overcome these barriers. The actions were divided into domestic actions,
donor needs, and future work. In October 1998, Tsinghua University
participated in a TCAPP donors meeting in the US in which they presented
this framework and described the donor actions needed. They also
received input from donors and other countries' TCAPP teams to help
refine the framework. An excerpt from the technology framework is
included in Appendix A of this report.

A delegation of US organizations including national laboratories, NGOs,
and private sector companies traveled to China in July 1999 to hold
technical workplan development meetings in each of the four priority
technology areas: high efficiency electric motors, grid-connected wind
electric power, efficiency improvements in coal-fired industrial
boilers, and cleaner coal technologies for power generation. Canadian
government agencies interested in cooperation in this program or at
least leveraging the needs assessment process, also participated. (It
was later decided that Canada and China would pursue a separate
bilateral program.) Chinese participants included technical experts,
government representatives, utility staff, and experts from local
offices of foreign corporations and institutions. The main purpose of
these meetings was to discuss the various technology options within each
of the four priorities, the barriers to implementation of these options,
and possible solutions for overcoming these barriers.

In the fall of 1999, motors and wind teams and an interagency team were
established. The technology teams included representatives from
government agencies, US and Chinese companies, investment companies,
NGOs, and research institutions. For example, the motors team included
on the Chinese side: 3 state-level and 1 municipal government agencies,
the China Energy Conservation Investment Corporation, 2 research
centers, a university, and on the US side: 2 NGOs, 2 international
companies, and 2 national laboratories. The interagency team included
the key Chinese government agencies involved in energy and climate
change: SDPC, SETC, MOST, and State Environmental Protection
Administration.

The motors and wind teams analyzed the technology situation in China and
completed reports on the current status of these technologies in China,
analysis on case studies of past technology transfer efforts, needs for
advanced technologies, difficulties and obstacles for development of
these technologies, and market strategies for development of these
technologies. Each team proposed 6 action options to overcome barriers
and facilitate investment in each sector. They presented their results
to an interagency meeting in January 2000 in Beijing, at which 3 actions
in each technology area were selected for implementation. Teams then
detailed action proposals that included background information,
objectives for each action, specific activities to be undertaken, key
institutional roles, schedule, funding requirements (both from the TCAPP
program and further needs for international support), and technical
assistance requirements from the program.

#### 3. TCAPP/CACETC ACTIVITIES IN HIGH EFFICIENCY MOTOR SYSTEMS

Work in high-efficiency motor systems began in 2000, with activities
primarily targeted at making efficient motors more economical,
addressing the lack of awareness about energy and costs savings from
efficient or permanent magnet motors, and creating technical capability
in Energy Service Companies (ESCOs) and financing. Total installed
capacity of motors in China exceeds 400 GW, with consumption of 600 TWh,
over 60% of total power generation. Motors in China are generally 3-5
percentage points lower in efficiency than that of foreign motors and
system efficiency is 20-30 percentage points lower than foreign systems
in operation. The motors team identified three major barriers to the
implementation of high-efficiency motors:

-   Energy efficient motors are not cost-competitive with standard
    motors in China

\- Low power tariffs do not encourage energy efficiency

\- Insufficient availability of finance

\- Energy efficient equipment has higher up-front costs

-   Lack of awareness of energy savings from energy efficiency
    improvements and lack of information on retrofit opportunities

-   Lack of technical capabilities in service institutions, repair
    institutions, management of motors systems

In order to coordinate international activities in motors, a working
group was formed. Participants included LBNL, ACEEE, ICA, IIEC, NREL,
PNNL, DOE, World Bank, and the W. Alton Jones Foundation. Key
implementation activities in motors training; motors testing, labeling,
standards and certification; and motors financing and business
partnerships include:

**Motors training**: The motors team co-sponsored and attended
conferences in which they presented a proposal to establish an efficient
motors exhibition and training center.

**Motors testing, labeling, standards and certification:** The motors
team participated in the process to develop voluntary and mandatory
standards for motors.

**Motors financing and business partnerships workshop:**

-   The motors team and the International Institute for Energy
    Conservation (IIEC) co-sponsored an International Financing Seminar
    on China High Efficiency Motors during July 2000 in Shanghai to
    develop pilot projects between end-users, suppliers and financiers.
    This seminar involved 80 participants from international and local
    investment communities, motors manufacturers and end-users. Through
    the efforts of the CACETC/TCAPP team, IFC, Environmental Market
    Solutions, and others participated in the seminar..

-   During September 2000, members of the motors team, SDPC and Tsinghua
    University participated in a study tour of the US. This included
    visits to Rockwell, Robicon, Magnadrive, and Bechtel and a
    roundtable discussion hosted by the Business Council for Sustainable
    Energy, which included several companies and financiers. The motors
    team followed up by initiating efforts to demonstrate the technology
    in China and line up potential joint venture partners for the
    Magnadrive technology.

-   The motors team leveraged the efforts made by IIEC in providing
    technical assistance to two high-efficiency motors pilot projects
    with Shengli Oil Company, the second largest oil company in China.
    Shengli Oil Company has more than 14,000 motors installed, consuming
    14.2% of total production cost. Assistance included monitoring of
    the energy savings and analysis of the results from installation of
    10 A/C motors. After the results of these pilot projects
    demonstrating 9.6% energy savings were presented to SINOPEC, the
    parent company of Shengli Oil Company, all seven subsidiaries were
    requested to assess their potential for similar energy-efficiency
    retrofits and report back with proposals to implement these
    retrofits. Another subsidiary, Xinjiang Oil Company, attended this
    presentation and has subsequently purchased 42 high-efficiency
    motors for retrofits. A third Shengli Oil Company pilot is currently
    underway and includes \$60,000 of motor retrofits.

Where possible, the working group members have linked the TCAPP/CACETC
activities to the LBL/ACEEE/DOE Motor Challenge, the
LBL/ACEEE/BECON/UNIDO/UNF Motors Energy Conservation (training) Program,
the IIEC/ICA China Energy Efficiency Program, and the World Bank/GEF
Energy Conservation (ESCO) Project. The results of the high-efficiency
motors activities, particularly the Shengli Oil Company pilot projects,
can be the basis for a longer term market transformation strategy.

**4. GRID-CONNECTED WIND POWER**

Activities in wind power development also began in 2000. The main
objective for China's development of wind power is to accelerate
adoption of indigenous energy sources that have low air pollution
emissions and reduced environmental impacts. China has world-class wind
energy resources, estimated at 250 GW, and demand for power in the next
decade is estimated to grow by 200 GW. Specifically, wind power can help
in meeting national development objectives, such as the Grand Western
Development Initiative, which funnels resources to poorer provinces to
help them develop, and the 10^th^ Five Year Plan, which calls for a
nearly five-fold increase in China's wind capacity by 2005 to 1.5 GW. In
order to reach these goals, China hopes to reduce the local cost of wind
power through local manufacturing and service capabilities. In addition,
China needs to improve resource assessment and identify sites for
development with the large international investment resources that have
been earmarked.

## 

Key barriers to reaching this goal are inadequate resource assessment
data, the cost of wind power compared to conventional power sources,
lack of financial incentives and policies to promote wind power.
Therefore, in order to reduce cost through local manufacturing and
service capabilities, improve resource assessment, and identify sites
for development, key activities in wind include:

**Wind resource assessment:** The team translated NREL's resource
assessment and monitoring handbook into Chinese for training. Based on
this handbook, national standards in wind measurement and in resource
assessment were formulated and will be issued in 2002. The team
identified high-priority regions for assessment and prepared part of a
proposal that has been packaged into a larger UNEP/GEF solar and wind
energy resource assessment project to secure funding to expand earlier
assessment activities. A CD-ROM of wind maps and data for Southeast
China is being prepared.

**Wind turbine testing for certification:** NREL provided IEA
Recommended Practices and international standards information to the
wind team and met with members of the wind team to explain the testing
and certification process in the US. NREL and MOST co-sponsored a wind
turbine testing workshop during July 26-27 2000 in Beijing to build
local capacity in type testing for certification, testing protocols and
testing equipment. The China Classification Society (CCS) is preparing
the Chinese certification scheme for wind turbines. Six CCS staff
attended a training at NREL on design evaluation certification in June
2001, and this was followed by a hands-on training on turbine testing at
NREL in March 2002. CCS and Underwriters Laboratories are pursuing a
Memorandum of Understanding.

Wind business partnerships: Members of the wind team, Chinese wind
companies, and US wind industry met in April 2000 in Washington DC to
discuss business partnerships between international and Chinese
companies, private investment for Chinese wind farms, and competition to
reduce wind power costs. SDPC held a wind concessions workshop in
November 2001 for 80-100MW concessions for wind farm development in
Guangdong and Jiangsu. The TCAPP/CACETC program provided simultaneous
translation so that international developers could participate in the
workshop, and helped to invite important international organizations
such as UNDP and multi-national corporations such CLP Power. Over 110
private sector developers and investors as well as wind experts and
donors provided input to SDPC's wind concessions guidelines and
policies.

The TCAPP/CACETC wind resource assessment activities leverage
investments for wind development by helping to identify and assess sites
for wind farms. At the same time, establishing a turbine testing and
certification program in China can assure utilities that local and joint
venture turbines meet international standards. This action also helps
China to adopt standards that are in accordance with US and
international standards, thus helping to reduce the possibility of trade
barriers. The wind business partnerships action helps to develop
partnerships between international and domestic companies for not only
manufacture of equipment but also development of wind farms, financing
of projects and other aspects of wind development. These foundations
will be built upon in future work.

#### 5. LESSONS LEARNED 

#### The TCAPP/CACETC needs assessment process as well as activities in motors and wind varied widely and institutional partners differed, but several lessons can be generalized.

#### 

#### 5.1 [Technology Needs Assessment]{.underline} 

This needs assessment process was recognized as one such useful
approach, providing decision-makers with valuable input from relevant
experts and stakeholders. It also **facilitated linkage with related
activities**. For instance, using criteria for selection which included
sustainable development and environmental benefits led to priority areas
that focused on energy efficiency and renewable energy, matching the
targets of the priority projects for clean production and environmental
protection given by China\'s Agenda 21 project.

The experience gathered from the practical application of this needs
assessment process is worth disseminating in other areas. It has been
suggested that improvements could be made to a technology needs
assessment in the future, including **matching the goals with those in
the upcoming national 5-year plan** and **ensuring an expert sample
large enough** to cover the diversity of technologies and markets in
China. For future needs assessments, adding criteria such as commercial
market potential and potential for US contribution to technology
transfer may be useful. Also, involving **more international private
sector participation early in the process** may be useful to highlight
those technology areas which the private sector thinks are most ripe for
transfer.

There is **a need to establish focus on specific mitigation or
adaptation sectors** as a prior step to the technology needs assessment
described in this report. It is not possible to assemble experts and
compare technology priorities across many different sectors and
mitigation or adaptation technologies. In the TCAPP/CACETC case the
energy focus was defined by the program. For countries starting a new
needs assessment process, existing national communications, country
studies, or development plans may be a basis for selecting a sector (or
sectors) to carry out a technology needs assessment.

Given the ultimate goal of technology transfer implementation, a balance
between gathering all relevant information to select priorities which
are likely to achieve multiple benefits and the need to move quickly
through this process and on to action should be considered. In other
words, making use of readily available information may be more
appropriate than engaging in an elaborate technology needs assessment.

##### 5.2 Project Design and Management

The IIEC and TCAPP/CACETC effort in motors indicates that **focus on one
sector (petroleum, in this case) can be an effective strategy** for
identifying and replicating pilot projects. Shengli Oil Company was
identified as a potential host for a retrofit of efficient motors
because they are the second largest petroleum company in China and have
a receptive Demand-Side Management arm already in place. The motors
pilot projects were successful because the collaborator was motivated
and willing to invest the company's resources. They presented the
results at regional conferences and to their parent company, SINOPEC.
Subsequently, all seven subsidiaries were requested to assess their
potential for similar energy-efficiency retrofits and report back with
proposals to implement these retrofits. One subsidiary, Xinjiang Oil
Company, has already purchased 42 high-efficiency motors for retrofits,
based on Shengli Oil Company's presentation.

A technology **team lead with similar goals to the expert team and the
management team is critical to creating positive synergy**. In an effort
to meet this target, goals and proposed actions should be clearly
discussed during annual kick-off meetings. When the expert team already
has ties with industry and does not need to focus energy on seeking out
and cultivating new relationships, activities are naturally more
practical.

Also of key importance, **level of funding must realistically match the
scope of activities**. The TCAPP/CACETC program needed to both meet the
expectations of partners as well as make the best use of funding.
Therefore, a fundamental strategy was to work together with existing
programs and programs under development, to leverage resources. Although
increased funding often seems like an attractive option, modest funding
creates a need for coordinating with other programs and can be highly
beneficial. In this case, the moderate amounts of TCAPP/CACETC resources
committed to translating NREL's resource assessment and monitoring
handbook into Chinese for training contributed to the formulation of two
new national standards, in wind measurement and resource assessment.
This program did not fund actual wind farms but addressed barriers,
which will create the foundation for a strong wind market in the future.

##### 5.3 Business and Stakeholder Involvement

It is clear that the **government can play a critical role in opening
and supporting new markets**. For instance, in the development of large
grid-connected wind farms in China the government has played a pivotal
role, particularly in the last two years. The goal of 1200MW of
installed wind capacity by 2005 in the current national Five-Year Plan
(2001-2005) has been a widely quoted target, with provincial level
governments, private-sector companies, and international developers
eager to push forward and participate.

In support of these targets, the government has committed to developing
a new concept of wind concessions, or rights to develop a parcel of land
for 100 MW wind farms. The TCAPP/CACETC program has played a part in
supporting international participation in these projects, but the
government is playing the primary role in moving this concept from paper
to reality. This wind concessions concept and policy incentives are
supported at a high level in the government, and are therefore moving
towards implementation.

In addition, other recent reforms have been proposed by SDPC will play a
large role in creating interest in wind markets. The Mandatory Market
Share (MMS) proposed in the 10^th^ Five Year Plan has drawn
international attention. The recent passage of a 50% reduction in the
VAT tax on wind power demonstrates the government's commitment to clean
energy and stimulates investment by the private sector.

From the motors experience it is also clear that developing
**partnerships with international non-governmental organizations with
similar goals is valuable**. In this case, the TCAPP/CACETC experts
teamed with the International Institute for Energy Conservation (IIEC)
to seek out motors pilot projects and to participate in the motors
standards development process. IIEC has a field office based in Beijing
and sought similar goals of increasing motor efficiency and developing
the market for efficient and permanent magnet motors in China. In
addition, IIEC has a regional focus in Asia and was able to bring
valuable perspective to the table.

The **international nature of a bilateral cooperation project is
beneficial to development of technology, policy, and markets**, offering
perspectives and resources that may not be present in national-level
programs. For example, the wind concessions workshop attracted major
international players, in part because it was a good business
opportunity and in part because international wind experts with broad
networks of contacts disseminated invitations to the workshop. Lessons
learned from state and national wind policy in the U.S. over the last
decade are offering insight to SDPC experts determining Chinese policy
(e.g. pricing of wind).

##### 5.4 Projects on the Ground

Particularly in project-based activities where a factory, building, or
piece of machinery is already up and operating but retrofits would be
beneficial, **financing mechanisms can be a fundamental barrier to
project implementation**. ESCO models are good, but market mechanisms
need to be in place in order for energy efficiency measures to be
implemented using the model. Workshops and trainings, such as the
"International Financing Seminar on China High Efficiency Motors" can
bring together the appropriate partners, but follow-up activities are
essential to reap the benefits. The successful pilot projects at Shengli
Oil Company illustrate that private sector companies can be excellent
partners, as they have resources to invest and are motivated by a
profitable bottom line. Large corporations tend to have the budget for
such retrofits when upper management supports the goals.

#### 

The TCAPP/CACETC program in wind has shown that **capacity-building
activities provide an excellent foundation for market transformation**.
Although it is sometimes difficult to foresee tangible results when
investing in capacity-building exercises, it is clear that these efforts
are valuable and can offer an obvious role for government or other
non-commercial entities, to kick-start a market. For instance, training
in wind turbine certification and testing for the appropriate Chinese
experts ensured in-country expertise and international engagement in the
future. The wind team lead emphasized that this activity satisfied an
urgent need in China and without this type of training, wind turbine
certification capability could take several years to build and Chinese
wind turbines could lose valuable market opportunity.

**Capacity-building can also create opportunities to leverage other
larger sources of financing**. The TCAPP/CACETC activity to identify
high-priority regions for wind resource assessment formed the basis of a
proposal to secure multi-lateral funding to expand earlier assessment
activities. The market transformation process, especially in a new area
such as wind, requires patience and concerted effort from various
organizations, businesses, and government agencies.

#### 6. MAJOR RESULTS

The lessons learned in wind and in motors illustrate the range of
circumstances in creating a market for a power generation technology
versus retrofitting or encouraging use of an energy efficient technology
with clear benefits for cost savings.

Overall, the types of activities were appropriate, given the partners,
budget, timeline and goals. The original plan to stagger the start of
the technology priorities was not as effective as anticipated, since it
takes a certain amount of time to launch a program and develop networks.
It's also valuable to sustain a project over multiple years in order to
make a real impact. Substantive wrap-up activities are essential to
ensure results are utilized even after the program concludes. Although
TCAPP/CACETC was considered a pilot phase technology transfer program,
the success of the wind initiatives and the increasingly favorable
climate for wind power in China prompted the follow-on project, called
the Climate Technology Partnership, to focus on grid-connected wind
power development. Thus, the institutional knowledge was maintained and
projects could be developed beyond the initial stages.

The TCAPP/CACETC program also illustrated that focusing resources in 1-3
key technology areas may be the best way to make a strong impact. The
design of the project around 5-6 technology areas was too ambitious and
it was useful to have the flexibility to re-think the project in 2001.
It was decided then that four technologies was more realistic, and that
only one technology should be selected for a follow-on, focused,
multi-year effort. This flexibility to shift scope was ultimately
beneficial to the program.

In reality, the actual technology transfer has been equally important as
the surrounding climate technology transfer dialogue. The U.S.-China
relationship in the climate and technology arena already has a clear
pathway to move forward. The major players have been introduced and
important relationships have already been built and nurtured between
SDPC and EPA. The commitment to hold annual inter-agency meetings was
excellent for maintaining communication between the Chinese and U.S.
sponsoring agencies, implementing agencies, and technical leads. Both
sides consistently maintained a collaborative attitude, which could be
more time consuming at times, but held true to the spirit of the
original statement of intent and was ultimately superior to the
alternative.

#### 7. NEXT STEPS: Focused wind effort 

The EPA, SDPC, and other US and Chinese partners have agreed to
implement a follow-on program building on the TCAPP/CACETC experience.
The Climate Technology Partnership (CTP) will be a multi-year strategy
to facilitate implementation of grid-connected wind power in China.
Proposed wind power activities over the next several years include:

-   Wind strategy development and coordination

-   Wind project facilitation for wind concessions pilots and
    conventional wind farms

-   Large-scale wind farm management workshop

-   Wind resource assessment

-   Policy assistance

Appendix B summarizes the major activities in the TCAPP/CACETC effort in
China from 1998 until 2003.

# **Appendix A. Excerpt Adopted From Original Technology Cooperation Framework, 1998** 

**1. Process for technology cooperation framework**

The process used for preparation of the technology cooperation framework
(TCF) is as follows:

(1) A team of five technical experts was established by the Global
    climate Change Institute of Tsinghua University (TU) and the
    Administration Center for China's Agenda 21 (ACCA21) to develop TCF.
    They are all experienced in international climate technology
    activities and are familiar with GHG mitigation technologies and
    strategies in China.

(2) An interagency consultant team consisting of experts from relevant
    ministries and commissions was established to select technology
    priorities and provide guidance for the development of the options
    in the framework. These experts were from China Energy Conservation
    Investment Corporation; Energy Research Institute of State
    Development Planning Commission; Department of Planning of former
    Ministry of Electric Power; Hydropower Planning General Institute of
    former Ministry Electric Power; and Coal-bed Methane Clearing House
    of former Ministry Coal Industry.

(3) Research work on selecting technology priorities was carried out
    based on the results of domestic and international cooperative
    projects on GHG mitigation.

(4) A scoping meeting was held to discuss and evaluate the technology
    priorities.

(5) Research was conducted and market barriers and some key technology
    options to overcome these barriers were identified.

(6) This draft report was prepared and reviewed by the framework team.

**2. Process for Screening and Validating Technology Cooperation
Priorities**

The current domestic studies reveal that energy intensity of GDP will
drop down greatly from 1.92 kgce/US\$ in 1995 to 0.72 kgce/US\$ in 2020,
so energy efficiency improvement will be the most important strategy to
abate GHG emissions. Another important strategy is energy substitution,
especially renewable energy development. For the long term these are the
two main areas where technical options for GHG mitigation should be
focused.

Generally, there are many technical GHG mitigation options in the two
areas. For identifying those options suitable for China's own situation,
achieving maximum GHG mitigation through minimum cost as well as gaining
national economic and social benefits, the method of AHP (analytic
hierarchy process) was used for identifying and assessing GHG mitigation
options.

Attended by international experts from the U.S. DOE, NREL, and domestic
experts from SETC, SSTC, Ministry of Electric Power, Ministry of
Agriculture etc., a scoping meeting of technology cooperation framework
regarding China was held in Beijing. One of the tasks of the meeting was
to identify the most priority GHG mitigation technologies in China. A
simplified AHP approach was used in the meeting.

First, both international and domestic experts discussed and agreed on
the following criteria for identification. The criteria were divided
into four categories:

\(1\) environmental benefits

\- GHG mitigation

\- other pollutants reduction

\(2\) economic development

\- new economic growth

\- job creation

\(3\) conditions for technology transfer

\- local capacity

\- localization of manufacturing

\(4\) investment

\- scale of investment

\- investment time period

\- state corporations

\- private

Second, referring these criteria, experts proposed mitigation
technologies based on their experiences in different sectors. A total of
19 technologies were proposed:

(1) high efficiency boilers

(2) large thermal power generation (300-600 MW)

(3) cogeneration

(4) high efficiency electric motors

(5) green lighting

(6) energy saving buildings

(7) coal-bed methane recovery and utilization

(8) biomass gasification

(9) wind energy

(10) solar thermal heat

(11) biogas

(12) waste heat and energy recovery

(13) village hybrid renewable energy (wind & PV)

(14) high efficiency cook stoves

(15) alternative fuel transportation for urban regions

(16) small-scale hydropower

(17) combined cycle natural gas power generation

(18) central heating

(19) waste gas recovery

Third, a matrix involving technologies and the criteria was designed and
only domestic experts were asked to fill it in by scoring each criterion
of each technology. For simplicity, an equal weight here was assigned to
each criterion. About 20 experts were surveyed at the meeting.

Fourth, the first top five high scored technologies were identified.
These were thermal power generation, high efficiency motors, high
efficiency boilers, wind energy and coal bed methane recovery.

An estimation of GHG mitigation potential, including CO~2~ and CH~4~,
for the five priority technologies and the accumulated investment
required for achieving full potentials are summarized in Table 1.

Table 1 Estimation of GHG mitigation potential and required investment
(2005-2010)

  -------------------- ------------ ---------- ------------- ------------
  Priority             Annual GHG              Cumulative    
  Technologies         Mitigation              Investment    

                       CO~2~ (Mt-C) CH4        (Billion      (Billion
                                    (Mm^3^)    Yuan)         US\$)

  1\. CFBC             2.4                     165.0         19.9

  2\. HE Motor         16.5                    26.6          3.2

  3\. Boiler           22.0                    40.0          4.8

  4\. Wind power       0.63                    10.0          1.2

  5\. CBM power gen.   0.26         4.86       2.4           0.3
  -------------------- ------------ ---------- ------------- ------------

Notes: 1. Assuming the exchange rate: 1 US\$ = 8.3 Yuan.

2\. Total mitigation for CBM power generation is 1.03 million tonnes of
CO2 equivalent.

(1) Annual mitigation potential of the five priority technologies are
    estimated based on proposed development programs and current
    technology level in some relevant industries. However, because the
    development programs in some industries are still being modified,
    obvious changes of current equipment, technology level and
    management status may happen, so the above figures should be
    considered a rough estimation only.

(2) Cumulative investment here refers to the total investment needed to
    obtain the expected targets of technology diffusion, instead of the
    incremental costs relative to baseline technologies. In addition,
    cumulative investment is estimated by using constant prices.

(3) Among these GHG mitigation technologies, some have much lower
    operation costs than current technologies, even being considered as
    "no-regret" technologies, such as some projects of high-efficiency
    electric motor and industry boilers. However, there would be some
    difficulties in raising funds under current mechanisms. TCF may
    provide assistance in solving this problem.

(4) China has achieved some beneficial experiences from past technology
    diffusion conducted through either international cooperation
    projects or domestic projects, such as industry boiler replacement,
    wind power generation and so on. These experiences will help to
    promote future technology diffusion through TCF and other mechanism.

**3. Technology Priorities**

**3.1 High Efficiency Electric Motor (HEEM)**

3.1.1 Background

Motors are the most important energy end use equipment in China. It is
estimated that the electricity consumption of motors account for more
than 50% of the total amount of the whole country. Currently, the total
installed capacity of all types of motors exceeds 400 GW in China, with
electricity consumption of about 600 TWh. Among the motors, which are
actually being operated in China, the 0.55-100 KW three-phase
asynchronous motors are the main part, in which, 70% are JO2 series, 30%
are Y series. The former is similar to the technology level of the
1950's internationally, and the later is similar to the technology level
in the late of the 1970's. Compared with those of foreign countries, the
motors made in China are inferior in such aspects as energy efficiency,
operation lift cycle, operation reliability, material usage, noise and
vibration, etc.

In the last ten years, the related departments of China's government
have paid greater attention to the fields of motor energy saving. The
manufacture and utilization scale of high efficiency motors is being
gradually enlarged, and the efficiency of motor's driving system is
being gradually increased. But generally speaking, the efficiency of
China's motors is 3 to 5 percent lower than that of foreign motors on an
average level, and the system efficiency during actual operation process
is 20 to 30 percent lower than that of foreign motors.

The main reasons for low motor efficiency in China are: (1) high
efficiency motors manufactured and utilized is in a low amount. (2) The
energy efficiency of motors during operation process is low. (3) The
maintenance service for motors can't maintain and improve the motor's
efficiency.

5.2.2 GHG Reduction Potential of HEEM

The available technology options can be divided into three aspects:

(1) Popularize high efficiency motor. If China can install high
    efficiency motors (annually 6.5 GW) in newly manuafactured machines
    and equipment and accelerate the substitution of low efficiency
    motors (annully 5 GW), annual electricity saving can reach 15.5 Twh
    by 2010 which equals a CO2 abatment of 4.6 Mt-C annually.

(2) Use adjustable-speed motors. The electricity saving rate is 10-25%
    if low efficiency speed adjustment technology is adopted, and can
    reach 20-50% for high efficiency speed adjustment technology.
    According to statistics on such industries as metallurgy, chemical
    industry, bulding material, etc., the energy saving potential in
    promoting speed adjustment operation of motors is 40 TWh annually,
    which equals an annual CO2 abatement of 12 Mt-C.

(3) Efficient maintenance and repair of motors. Adopting advanced energy
    saving maintenance technologies can increase motor's efficiency by
    1-10 percent. Annual electrity saving can reach 9.6 TWh, which
    equals to CO2 abatement of 2.9 Mt-C annually.

3.1.3 Main barriers for HEEM implementation

The main barriers for this technology's implementation are:

(1) Lack of competitiveness of energy efficient motors in Chinese market

(2) Lack of awareness of energy efficient motors

(3) Lack of energy efficiency service institutions specializing in motor
    driven systems

(4) Lack of qualified motor repair service

(5) Lack of appropriate and practical information of energy efficiency
    motor driven system retrofitting

(6) Too few local manufacturers

3.1.4 Present initiatives and future work needed

In order to fully solve the problem of lower gross energy efficiency of
China's motors, various macro measures may be adopted including
adjusting energy policies, strengthening energy saving regulations and
laws, and rationally fixing energy (electic power) price. In addition to
these, other options and measures can be implemented to improve the
market for high efficient motors. Detailed actions include:

(1) Increase the market competitiveness of high efficiency motors in
    China

(2) Guide and encourage enterprises to increase motor efficiency

(3) Invest the construction of joint ventury of HEEM, including the
    manufacture of drawing system devices

(4) Establish energy saving service system which can meet market demands

(5) Establish service centers for motor maintenance and repair, increase
    motor maintenance and repair level

(6) Establish effective system for dissemination of motor energy saving
    information, especially the benefits

(7) Initiate a demonstration project in one large-scale enterprise for
    HEEM

(8) Conduct a more detailed market survey of HEEM

A brief overview of the development barriers, donor actions, domestic
actions and future work needed is shown in Table 2.

Table 2 Priorities for Motor Sector

  ------------------ ----------------- ----------------- -----------------
  **Development      **Donor Action**  **Domestic        **Future Work
  Barriers**                           Action**          Needed**

  Lack of            Assistance in     Increase input on Follow technology
  competitiveness of introducing       R&D, regulate     development in
  energy efficient   advanced          market behavior,  world, analysis
  motors in Chinese  technologies and  provide favorable of feasibility of
  market             equipment into    market conditions introducing
                     China,            for energy        advanced
                     identifying       efficiency motor  technologies and
                     partner for joint manufacturers,    equipment, and
                     ventures          encourage         relevant policy
                                       introduction of   research
                                       energy efficiency 
                                       motor             
                                       technologies and  
                                       equipment         

  Lack of awareness  Support for       Improving         Following
  of energy          educational and   awareness of      technology
  efficiency of      training programs benefit of energy development in
  motor driven       and pilot         efficiency motor  world, analysis
  system             projects          driven system,    of feasibility of
                                       conduct pilot     introducing
                                       project on energy advanced motor
                                       efficiency motor  operation control
                                       driven system,    technologies and
                                       improve           equipment,
                                       production and    conduct pilot
                                       quality of ASD in project on
                                       China             retrofitting of
                                                         motor driven
                                                         system

  Lack of energy     Introducing       Establishing      Introducing
  efficiency service experiences of    energy efficiency methodologies and
  institutions for   energy efficiency service           experiences of
  motors             services systems, institutions with ESCOs in
                     financial and     financial and     developed
                     technical support technical         countries,
                     for establishing  capabilities      analysis on
                     and developing                      feasibility of
                     energy efficiency                   developing energy
                     services                            efficiency
                                                         service
                                                         institutions in
                                                         China

  Lack of qualified  Introducing       Regulating market Establishing
  motor repair       advanced motor    of motor repair   pilot motor
  service            repair            service,          repair service
                     technologies and  introducing and   center
                     experiences into  diffusing energy  
                     China             efficiency motor  
                                       repair service    

  Lack of            Assistance in     Collecting        Identify
  appropriate and    establishing      practical         appropriate
  practical          effective         information on    content and
  information of     information       energy efficiency methodology for
  energy efficiency  collection and    motor driven      information
  motor driven       dissemination     system            collection and
  system             system in China   retrofitting,     dissemination,
  retrofitting                         establishing      and establish
                                       effective         effective
                                       information       information
                                       dissemination     dissemination
                                       systems           systems
  ------------------ ----------------- ----------------- -----------------

**3.2 Wind power**

3.2.1 Background

The main benefits of wind power generation are its economic
competitiveness, its environmental benefits, and the fact that it does
not cause waste production or resettlement problems. In 1997 there were
19 wind farms with 433 turbines nationwide with total installed capacity
of 167 MW. Annual electricity production was up to 400 million kWh.

3.2.2 Mitigation Potential of Wind Power Generation Technology

Grid connected wind power is the most economic way of utilizing wind
energy on a large scale. During the past 20 years great progress has
been achieved in this technology, with 1.5 MW capacity now entering the
market. Even though the cost of wind technologies is still high, the
costs are going down continuously. At the same time, the costs of fossil
fuel fired conventional power plants will go up, due to the decrease of
resources and more strict environmental rules.

The wind energy resources that can be economically utilized in China are
estimated up to 253 GW. This amount is even larger than the total
installed capacity of the power industry nationwide in China. It shows
that China is rich in wind energy potential. However, the real
exploitable wind energy resources need be investigated in more detail.

Based on the assessment mentioned above, 630 TWh of electricity could be
generated by wind annually, and 700 million tons of CO2 emission could
be mitigated.

3.2.3 Key Barriers to the Implementation of Wind Power Generation
Technology

The main barriers are:

\(1\) Availability of resource and cost data

There is a lack of funding support for detailed investigation of wind
energy resources. Very little on-site measurement data has been
obtained, making accurate assessment more difficult. Further information
on costs of wind power technologies is also needed.

\(2\) Local capacity to manufacture, install, and operate turbines

Domestic manufacturing is needed for large-scale development, but very
high inputs are required for prototype R&D projects and
commercialization. Currently it is difficult to introduce foreign
technology, and there is a need to increase the proportion of domestic
made components gradually. It is expected that 20 to 30% of cost could
be reduced compared to imported machines by employing locally made main
components.

\(3\) Financing to purchase turbines

There is great difficulty in mobilizing funds, especially equity
financing. Interest rates for domestic commercial bank financing is very
high.

\(4\) Lengthy approval process for wind farm projects

Usually two years is needed from the issue of project proposals to
signing an equipment procurement contract. In addition, even for a 3 MW
wind farm project approval by the SPC is required.

\(5\) Awareness of environmental benefits of wind power for local air
pollution control

Many people consider wind power to be a small decentralized home power
system, impossible to develop on a large scale, and providing high cost
for unstable power supply. In addition, there is not widespread
awareness of the benefits of wind power in addressing air pollution.

5.4.4 Current Initiatives and Needs to Promote Implementation

\(1\) There are national programs currently in place to promote the use
of wind power generation technology

By the end of 1996, about 140,000 small-size wind generators with a
total capacity of 19 MW were put into operation. In addition, the total
capacity of large-size wind power systems in grid-connection exceeded 57
MW.

According to the document "Outlines for New and Renewable Energy
Development during 1996-2010" by SPC, SETC, and SSTC in 1994, by the end
of 2000 and 2010, the total wind farm capacity will increase to around 1
GW and 3 GW, respectively.

Domestic manufacturers will increase their capacity to produce wind
generators totaling 200 KW per year. For implementing wind power
development, the State Power Corporation is considered the most
appropriate unit.

\(2\) The potential for increasing the use of wind power generation
technology

Many small coal fired power plants have to be phased out due to high
consumption of coal and air pollution. Large thermal power plant
construction is also limited to the mouth region of Yangtze river. It
provides a good opportunity to develop wind power.

\(3\) Investment required to achieve the development target

To reach the wind power development target, huge investment is required.
Now there is an international cooperation project supported by the World
Bank being processed. The objective of the project is to build wind
power generating capacity of 190 MW. The investment includes two part,
including US\$100 million from the World Bank to be used for purchasing
key equipment of wind generators and 2 billion RMB from domestic
sources. The project is expected to be signed in March 1999 and is
expected to be completed in 2001.

\(4\) Other cooperation activities for promoting wind generation
technology

Low interest government loans are available from Denmark, Germany, the
Netherlands, Spain and USA. Funds from international financing
organizations are also available. For example, There was a project of
wind power in Inner Mongolia Autonomous Region between China and Denmark
to install nine wind generators with an unit capacity 600 KM each. The
equity, 20% of total investment, was prepared by the owner and the
remaining investment came from loans. Funding from Denmark side was a
mix of government grant and low interest loan, mainly used for importing
Danish generator cores. The rest of the investment was borrowed from
domestic banks with favorable conditions set specially for promoting
renewable energy development (import tax and loan interest are cut down
by 50%) after the fulfillment and verification of the project.

The other way is to a establish joint venture. For example, some
agreements to form joint ventures between two Chinese manufactures and
two foreign wind generator companies have been signed.

Table 3 presents a brief overview of wind power development barrier,
donor actions, domestic actions and future work needed.

Table 3 Priorities for Wind Power Generation

  ------------------ ----------------- ----------------- -----------------
  **Development      **Donor Actions** **Domestic        **Future Work
  Barriers**                           Actions**         Needed**

  Availability of    Funding and       Implement wind    Define geographic
  resource data      technical         resource          scope
                     assistance for    assessment and    
                     data collection   create data       
                                       center            

  Local capacity to  Identify          Identify local    Characterize
  manufacture,       international     investors and     market potential
  install, and       investors and     expedite approval for wind turbines
  operate turbines   provide training  of new businesses 
                     and financing for and joint         
                     new wind turbine  ventures          
                     companies and                       
                     joint ventures                      

  Financing to       Provide technical Establish project propose design
  purchase turbines  assistance and    companies to      for loan funds
                     speed funding for manage loan funds 
                     revolving loan    and provide       
                     funds             matching seed     
                                       funding           

  Lengthy approval   Technical         Implement actions Identify
  process for wind   assistance in     to streamline     opportunities to
  farm projects      identifying       wind farm         streamline
                     approaches to     projects approval approval
                     expedite approval                   
                     of wind farm                        
                     projects                            

  Awareness of       Provide data and  Disseminate tools Identify local
  environmental      tools for         to local          users who would
  benefits of wind   estimating air    environment       most benefit from
  power for local    pollution         protection        this tools
  air pollution      benefits of wind  authorities and   
  control            power over        promote           
                     conventional      consideration of  
                     energy            wind power as an  
                     technologies      alternative to    
                                       conventional      
                                       energy sources    
  ------------------ ----------------- ----------------- -----------------

**3.3 Summary of Proposed Actions for the Priority Technologies**

In order to assist the implementation of preferential mitigation
technologies, relevant departments of the government need to strengthen
studies on how to remove the barriers and promote the implementation.
Proper and effective ways should be analyzed and evaluated for raising
funds, expediting the reconstruction of institutions and organizations,
formulating necessary policies and regulations, improving market
mechanism, expanding international cooperation, and selecting and
implementing demonstration projects.

3.3.1 Domestic Actions

Undoubtedly, government measures with economic and price reforms will
enhance the profitability for the implementation of preferential
mitigation technologies. These economic reforms will not be discussed in
more detailed here, because their targets are not focused only on the
GHG mitigation. This discussion focuses on actions that go beyond
present economic reform.

1.  Establishing favorable financing mechanisms

The government is making efforts to create favorable policies for
stimulating investments in energy conservation technologies and
projects. The government should expand the scope of these programs to
promote renewable energy and alternative energy, and intensify efforts
to promote energy efficiency.

2.  Conducting institutional restructuring

In China, the government is carrying out restructuring of governmental
institutions, with emphases on separating the governmental
administrative functions from the production management functions. A
mechanism that may help to promote GHG mitigation technologies should be
embodied in the institutional restructuring. This period of
restructuring should promote appropriate policy reforms and create new
appropriate institutions if necessary.

3.  Importing and mastering technologies and management

To make rapid progress in the production and management of some priority
technologies, it will be important to improve the understanding of
foreign advanced technologies. The responsible administrative
departments of the government should work together with the institutions
in charge of organizing and implementing technology imports to formulate
plans and programs to learn and use these technologies.

4.  Training personnel

Capacity building is critical to guaranteeing the successful
implementation of diffusing priority GHG mitigation technologies. The
government needs to establish programs and legal guidelines to conduct
and guide personnel training activities.

5.  Enhancing information exchange and dissemination

With the support and help of international organizations and experts,
the government should organize and coordinate relevant institutions to
establish a common information management system so as to strengthen and
assist information exchange and dissemination.

6.  Studying the barriers to GHG mitigation and response strategies and
    making programs to address barriers

During the implementation of priority GHG mitigation technologies, a
series of problems concerning financing, policies, technology
adaptation, personnel capabilities and so on will be identified. In
order to address these problems, the government administrative
department should coordinate, support and organize research activities
among concerned organizations, and work out feasible measures and
response strategies. TCF may provide help in this regard under the
overall framework of China.

3.3.2 International Actions

International support can assist with implementation of priority GHG
mitigation technologies by helping to find foreign donor funding and
private sector partners, to share technology information, to assist with
policy reform, to organize training programs and to establish
information exchange channels. These actions are summarized below:

(1) Search for funding for projects. Identifying high priority projects
    among the selected priority technologies, and then providing
    assistance in preparing project proposals for the international
    donors.

(2) Organize technical consultation activities. Inviting international
    consultants and experts to provide advice on programs for overcoming
    technology implementation barriers.

(3) Organize and support training programs. Providing funds for
    organizing training programs and assisting with the training courses
    on GHG mitigation technologies.

(4) Support the establishment of an information service center. The
    tasks of this center are to remove obstacles due to lack of
    information on the cost-effectiveness of mitigation technologies. In
    addition, this center can also provide international organizations,
    investment organizations, foreign companies and individuals with
    domestic market information and a more complete picture of China and
    GHG mitigation opportunities.

(5) Facilitating direct private investment in clean energy technologies
    through assistance in finding international business partners and
    business financing.

**6. Conclusions**

\(1\) In China a lot of technology measures can be adopted for
mitigating GHG emissions, e.g. technologies for improving energy
efficiency, using renewable energy and alternative energy. It is shown
from research on technology priorities that many barriers will hinder
the development of these GHG mitigation technologies. The TCF activities
may be helpful to overcome those barriers, and implement UNFCCC
provisions on technology transfer.

\(2\) Currently, the technologies considered in TCF are development
priorities and included in the corresponding government departments'
plans. Some specific projects are already placed in national or
department development plans. The next steps will focus on specific
projects. The TCF will also be integrated with China's "National
Communication" and "National Action Plans".

\(3\) For the projects involved in national or departmental development
plans, funds will be provided by relevant departments. If these projects
are selected in TCF activities, then support from relevant departments
will be guaranteed. All the five priority technologies mentioned above
have corresponding projects to be supported by government. Therefore,
the next step TCF activities will be ensured.

\(4\) Next Steps

(a) Further complete the organization of in-country team to guarantee
    the fulfillment of all TCF tasks. This may include establishment of
    implementation teams for each priority technology.

(b) Review existing market information for the priority technologies and
    conduct further market assessments to better define the specific,
    near-term opportunities for accelerating technology investment.

(c) Develop private investment programs for each priority technology
    that defines actions that can be taken to directly stimulate private
    investment, including facilitating joint venture formation, business
    capacity building, and business financing support.

(d) Select several technology priority projects for implementing the
    private investment programs and removing market barriers, and
    prepare financing proposals to international investment
    organizations for these actions.

(e) Develop project proposals in accordance with general criteria for
    evaluating technology priorities and send them to international
    donors to search for finance support and matching donor support.

**Appendix B. Timeline of Major Activities in the TCAPP/CACETC Effort in
China**

1998

[Technology Needs Assessment]{.underline}: Chinese experts and
government representatives gathered and developed a technology
cooperation framework that detailed technology priorities that were both
important for China's development as well as mitigation of greenhouse
gas emissions. Grid-connected wind power generation, high efficiency
electric motors, advanced industrial boilers, and higher efficiency
power generation technology were among the high priority technologies
selected.

1999

[High-level commitment]{.underline}:

SDPC of China and U.S. EPA signed a Statement of Intent for a three-year
effort, under the new name of Clean Air and Clean Energy Technology
Cooperation. The National Renewable Energy Laboratory in the U.S. and
Tsinghua University in China were selected as lead implementing
agencies.

2000

[Wind and motors]{.underline}: Work was initiated in wind and motors,
beginning with the development of expert teams, drafting of technology
reports, and the design of detailed work plans. Accomplishments included
International Financing Seminar on China High Efficiency Motors in
Shanghai, motors study tour to U.S., and wind turbine testing workshop
in Beijing.

2001

[Industrial boiler and CCT added]{.underline}: Expert teams were formed
and work plans were developed for advanced industrial boilers and CCT,
while work continued in motors and wind. Four potential boiler pilot
projects were identified, six CCS staff attended training at NREL on
design evaluation certification, the motors team participated in the
development of voluntary and mandatory motors standards, and 100
permanent magnet motors and 10 A/C motors were installed and monitored
at Shengli Oil Company as a pilot project, and plans are underway for
expansion.

2002

[Shift from pilot phase into CTP program]{.underline}: Decision made to
focus on wind power development, with wrap-up activities continuing in
motors, boilers, and CCT. Activities this year include implementation of
boilers pilot projects, boilers study tour and business facilitation,
and PFBC workshop in the U.S.

2003

The CTP effort will continue to focus on grid-connected wind. Other
activities this year will include integration of lessons learned from
TCAPP, boilers pilot project dissemination workshop, and development of
Boiler Owners Association.