AIM/MATERIAL CHINA
Yang Hongwei
Energy Research Institute
The 8th AIM International Workshop
13-15 March 2003
National Institute for Environmental Studies, Tsukuba, Japan

I. Country Specific Features
II. Data Sources
III. Model Overview
IV. Some Results of Application
V. Ongoing / Future Activities

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I. Country Specific Features• Disaggregated Electricity Sectors– Fossil: ELC, ELO, ELG– Hydro: ELH– Nuclear: ELN– New Renewables: ELW, ELP, ELB• Soft Link with Bottom-up Approach– Technology Improvement– Efficiency Change
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II. Data Sources• Latest China Input-output Table (1997)– 124 Sectors Æ 31 Sectors Æ 38 Sectors• China Energy Balance Tables• Other Statistics– China Environmental Statistics– Biomass Energy Resources and Uses
– Other New Renewables

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III. Model Overview• 38 Sectors × 31 Commodities• More Details in Energy-related Activities– Electricity Disaggregated into 8 Sectors– Other 6 Sectors for Energy Production and Conversion/Processing– 5 Sectors For Energy-intensive Industries•••••

Iron & SteelPulp & PaperNon-metal Mineral Products
Non-ferrous
Chemical– Other Energy-intensive Sectors•••

Heat Supply
Passenger Transportation
Freight Transportation• Environmental Industry Sector and Environmental Investment• 1997-2030, Step = 1 Year
• Wastes: SO2 , Solid Wastes, Waste Water
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IV. Some Results of Application• General Trend
GDP (10,000 元)
2.50E+09
2.00E+09
1.50E+09
1.00E+09
5.00E+08

ModelStatistics

0.00E+00
1995
2000
2005
2010
2015
Source of statistics: China Statistical Yearbook 2001, SSB China.
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SO2 Emissions (10,000 t)
3000
2500
2000
1500
1000
500

ModelStatistics

01995
2000
2005
2010
2015
Source of statistics: China Environmental Annual Reports, SEPA China.
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7• Evaluating the Effects of CDM between China and Japan– Soft Link between Bottom-up and Top-down– Two Priority Areas Identified by Bottom-up• Electric Power Generation• Iron & Steel Production;– Energy Efficiency Gaps between China and Japan• 42% (Iron & Steel)• 24% (Electric Power Generation)– Potential Scale of CDM Cooperation Based on Bottom-up• CDM Fund / Domestic Annual New Investment= 17% (Iron & Steel)= 15% (Electric Power Generation)

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– Excluding Transition Cost;– Several Efficiencies Improvement through CDM:
• Energy Efficiency• Labor Efficiency• Capital Efficiency• Pollution Generation and Treatment Efficiency
Accordingly, the results tend to be the upper bond estimation.
– Scenarios• Bau: without CDM Cooperation• CDM: with CDM Cooperation since 2003, No Upper Bound on
Total Investment• CDMB: with CDM Cooperation since 2003, Total Investment
Upper-bounded
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9Percentage of CO2 Emission Changes in Sectoral Total
CDM CDMB Difference
Iron & steel
2005 -3.18% -3.38%-0.20%

2010 -4.26% -4.33%-0.07%

2015 -3.80% -3.84%-0.05%

Electricity
2005 -1.20% -1.31%-0.11%

2010 -2.59% -2.76%-0.17%

2015 -2.55% -2.70%-0.15%

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AIM/Material China•For the two sectors
with CDM projects, CO2emissions will be
reduced by around 4%
in iron and steel
production sector and
3% in electric power
generation sector.
•Both of them havemore reductions inCDMB scenario.

10• Compared to the BaU scenario, national GDP is increasing in both
CDM and CDMB scenarios.
• However, the scale of GDP increase is much different: in CDM
scenario, GDP increases by 0.12% in 2005, 0.22% in 2010 and0.18% in 2015; while in CDMB scenario, GDP increase is as minor
as 0.01% in 2005, 0.02% in 2010 and 0.01% in 2015.
• The reason for this difference is that in CDMB scenario total
investment is assumed to be constant as BaU scenario. While inCDM scenario, not only the efficiency is improved, the total
investment is increased as well.
• For this reason, in CDM scenario, even though the CO2 reduction
is not as many as the reduction in CDMB scenario, the effect ofcarbon intensity change is more obvious than that in CDMBscenario.

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112005

2010

2015

CO2 Reductions as
Percentages of
National Total

2010

2015

Changes ofCarbon Intensity

0.0%
-0.5%
-1.0%
-1.5%
-2.0%

CDM
CDMB

2005
0.0%
-0.5%
-1.0%
-1.5%
-2.0%

CDM
CDMB

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12• In China, local environmental pollution control has a higherpriority than global environmental issues. Environmental
protection against air pollution, water pollution and solid wastes
disposal requires immediate attention. Mitigation of thesepollutions will cause a loss in GDP because capital, labor and otherintermediate inputs are required by these environmental activities.
• To analyze the possible effects of Clean Development Mechanism
cooperation under such specific circumstances, a scenario for SO2
control is proposed as SO2 reduction by 0.5% every year
compared to the previous year since 1998.
• Part of the GDP loss from SO2 control can be recovered by CDM:
0.07% in 2005, 0.26% in 2010 and 0.35% in 2015.

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13Change of SO2 emissions (relative to BaU)
-50%
-40%-30%-20%-10%

0%-1%-2%-3%-4%

SO2 Control + CDM
SO2 Control-5%-6%-7%-8%-9%Change of GDP (relative to BaU)

0%-10%
SO2 Reduction and GDP Loss
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2005

20102015

Change of GDP (relative to BaU)

0%-2%-4%-6%-8%-10%

Recovered by CDM
SO2 Control-12%
Recovery of GDP Loss from SO2 Control by CDM
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15• From a point of view of macroeconomics, CDM will influence not
only the sectors where CDM projects are implemented, but also
other relevant sectors and the whole national economy.
• The effects of CDM are generated through the changes ofinvestment and its re-allocation across sectors, and theimprovement of technology efficiencies for production andpollution management activities.
• GDP loss from a moderate SO2 control can be recovered by 0.07%- 0.35% by CDM implemented around the first commitment
period.
• The scale of possible CDM cooperation is a very uncertain issue.
Soft link to the bottom-up model helps reduce the subjectiveconjectures.
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V. Ongoing / Future Activities• Biomass Energy– Biomass Electric Power Generation• Bagasse-based– Rural Residential• Forest Residues: Firewood• Crop Residues: Stalk• Animal Dung and Organic Refuses: Biogas/Direct Burning

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crop residues

forest residues

animal dungorganic refuses

10%
20%

52%
18%

Major sources of biomass energy in China
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Mix of rural energy in China1998(10000tce)
Commercial energy1999(%) (10000tce)(%)

5990.1622.4%

5956.36

22.6%

Bio-gas

118.9

0.4%

143.1

0.5%

Stalks12279.7

45.8%

12502.4

47.4%

Firewood

8400.931.4%7790.6

29.5%

Total

26789.66 100.0%

26392.46 100.0%

Source: China Energy Statistical Yearbook 1997-1999,
China State Statistics Bureau, 2001.

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19• Environmental Industry (?)• Health Impact (?)• Waste Recycling (?)– Iron & Steel• Waste Steel– Pulp & Paper• Domestic Waste Paper Recycled• Imported Waste Paper

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