Exploring Implications to 2050 of Energy- Technology Options for China

The MARKAL energy-system modeling tool was used to assess potential energy-technology strategies to 2050 for China that would enable continued economic development while ensuring energy-supply security and environmental sustainability. Our analysis suggests that continued reliance on domestic coal, which would help avoid high dependence on imported energy, is not inconsistent with achieving environmental objectives. However, a fundamental shift would be required from coal technologies based on combustion to those based on gasification, which enables the production of clean liquid fuels from coal and which facilitates CO2 capture. Surprisingly, the total cumulative (1995-2050) discounted energy-system cost for an advanced-technology energy strategy that meets air pollution, energy security, and greenhouse gas emission goals would not be substantially higher than for a “business-as-usual” strategy that is unable to meet all these goals. To realize an advanced-technology future, China will need policies that i) encourage use of a wider variety of primary energy sources (especially biomass and wind) and clean synthetic fluid fuels from coal and biomass, ii) support the commercialization of radically new clean energy technologies, including those for CO2 capture and below-ground storage, to ensure that they are available beginning in 10 to 20 years, and iii) support aggressive end-use energy efficiency improvements. INTRODUCTION China faces daunting energy challenges: high public health costs from air pollution arising mainly from coal combustion; security concerns over growing oil imports; limited domestic fossil fuels other than coal; projected demands for energy that will exceed domestic supplies (even coal) within a few decades; and the prospect that China could be the world’s largest emitter of greenhouse gases by 2020. We developed a MARKAL model of China’s energy system [1,2], building on earlier work [3,4]. We ran the model to gain insight into alternative technological strategies China might pursue to 2050 to address these challenges. THE CHINA MARKAL MODEL MARKAL modeling [5] requires user-supplied values for the efficiency, costs, emissions, and other features of technologies for converting primary energy resources into final energy carrie rs and of technologies for converting final energy into energy services. The architecture of our model and the included technologies are summarized in Fig. 1. All user-specified parameters are provided at five-year time steps. With user-specified inputs for technologies, primary energy costs and supply availabilities, MARKAL finds the combination of energy resources and conversion/end-use technologies that meet user-specified energy service demands while minimizing the cumulative discounted energy-system cost for the full period, 1995-2050. Externality costs, such as health damages from pollution, are not included in our model, but may be significant [6-8]. The World Bank [6] estimates health damage costs from urban air pollution in China in 2020 under “business as usual” energy development would be $390 billion (in 1995$). This is three times the direct expenditures on energy calculated for 2020 in our reference scenario described later. We defined six energy-service demand sectors for China (Fig. 1). We projected energy service demands based largely on historical data for various OECD countries at similar levels of per capita GDP. We assumed that by 2050 China will be using energy services at levels equivalent to selected OECD countries in the mid1990s, which implies a tripling in final energy demand between 1995 and 2050. This projection falls in the mid-range of projections made by several analysts [9]. Final-energy intensities fall from 40 MJ/GDP$ in 1995 to 6 MJ/$ in 2050 in most of our scenarios, reflecting aggressive efficiency improvement rates. We categorized conversion and end-use technologies as “Reference”, “Base”, or “Advanced.” Reference technologies are already well-established in the market. Base technologies are either commercially available today or at an advanced stage of commercial demonstration. Advanced technologies are not commercially mature today. Commercializing many of the Advanced technologies will require focused government policies and support, the costs of which are not included in our analysis. In most cases, we assume technologies are introduced with commercially-mature cost and performance. Some technologies are introduced with costs that decline over time. For example the capital cost for largescale wind farms falls from $1050/kW in 2000 to $580/kW by 2030. We limited the growth rates of any new technology to 20-30% per year initially (and then declining), since MARKAL’s linear programming solution method would otherwise cause a complete shift to a new technology when it is the least-cost option. Conversion technologies were a main focus of our analysis. We defined 71 of these (Fig. 1). Table 1 gives assumed characteristics of some of these. We included a large number of coal technologies, reflecting the importance of coal in China. A key distinction between the Base and Advanced coal conversion technologies is that the latter all involve oxygen-blown gasifiers producing synthesis gas, whereas the Base technologies are almost entirely based on direct combustion. Synthesis gas can be used directly, or it can be converted into electricity or clean gas or liquid fuels in plants making only a single energy carrier or in plants producing several carriers simultaneously – polygeneration [10,11]. Another key distinction is the availability of CO2 capture and storage technologies in the Advanced set. RESULTS AND DISCUSSION The model chooses from among the various Base or Advanced technologies to meet environmental or energy import constraints in the least-costly manner. One set of model runs uses only the Base technologies. Resources Conversion Technologies