China-EU Energy Conference looks at China's energy future from all sides

A thick, smoggy Shanghai sky said it all for the scores of delegates and business representatives that gathered at the Pudong Shangri-la Hotel on the morning of February 20th: China needs to get serious about reducing pollution. As luck would have it, they were there for the first day of the sixth China-European Union Energy Coopereration Conference to discuss carbon dioxide emission reduction and countless other energy challenges the country faces as it continues its bounding economic growth.

The two-day biannual event, held alternately in Chinese and European cities, featured speakers running the gamut from government officials and academics to executives from domestic as well as multinational energy and power companies, who spoke on subjects ranging from securing a stable energy supply to encouraging growth in new areas like renewable fuels and clean energy technologies.

European Commissioner for Energy Andris Piebalgs, in Shanghai to sign a Memorandum of Understanding (MoU) on near-zero emissions power generation technology, called the meeting a "durable and visible sign" of practical cooperation in energy between China and the EU in his address at the conference's opening.

"Energy efficiency is a practical answer both to the challenge of energy security and the challenge of climate change," Piebalgs said. "The EU and China share the same objectives in this respect." The memorandum, signed in the wings while the conference proceeded, was the next step after China and the EU agreed on action plans in March 2005 to investigate clean coal technologies, energy sufficiency and renewable energy. Ma Songde, Vice Minister of the Chinese Ministry of Science & Technology (MOST), signed the agreement on behalf of the Chinese side.

Ma, in his remarks at the conference, said that China would continue to give "primary attention" to coal, by far the country's most abundant fuel source, though he encouraged efforts to "optimize the energy mix". He also noted China's desire to exploit new techniques on the supply side to "resolve bottleneck issues" where breakthroughs are needed. He pointed out that it is essential to conserve energy on the consumption side as well, thereby building an "energy-efficient society", a phrase that became a refrain throughout the event.

Steady stream "Sustainable development" was another watchword of the conference.

As China's economy grows, its demand for energy can only increase, which will put ever-greater importance on the security of its energy supply to support it.

China's energy security is crucial to world security, said Xavier Chen, a Vice President at BP China and Chairman of the European Chamber's Energy & Utility Policy Working Group. "There cannot be one without the other," he said.

Chen, quoting Winston Churchill, said the key to a secure energy supply is "diversity, and diversity alone". He stressed that China needs a broader range of energy types, structures and suppliers to ensure a stable long-term stream. "China will go through a learning curve," he said, as it moves from a unilateral approach to more market-based multilateral cooperation with other countries and outside institutions.

Wang Yonggan, Secretary General of the China Electricity Council, said power supply safety will be important to maintain as China copes with an "intense" situation between the supply and demand of electricity, particularly in the heavily populated east. A major problem, according to Wang, is that the country is still in the midst of a reform-driven transformation to a grid-based power system, and as a result the supply framework continues to be weak.

"In most areas there is still a shortage of power," Wang said. The large-scale power outages that commonly plague Chinese cities during the summer will continue, he said, but should decrease overall as power grids and long-distance transmission systems become more developed.

Renewable faith Renewable energy sources such as hydro, wind, solar and biomass power figure to play a larger role in China's energy makeup, said Li Junfeng, Vice President of the China Renewable Energy Association. "The initial idea is to increase renewable energy from the current level of 6 percent to 15 percent by 2020," he said in his speech. Li said that European countries' progress in renewable fuels was encouraging and is serving as a guide for the objectives laid out in the recently enacted Renewable Energy Law.

The main obstacle for renewable technologies is that many of them are currently too expensive to have any success in the market. "Substantial growth in renewables is unlikely without a strong public-private partnership," said Graeme Sweeney of Shell International Renewables. Government encouragement of market expansion and demand through legislation, subsidies and promotion, is a must to get renewable technology costs down to a level competitive with fossil fuels.

Overall, China will continue to rely on fossil fuels such as coal and oil to meet its energy needs, Sweeney said, but it will have to find ways of making them cleaner and more efficient.

Less is more On the consumption side, panelists had no shortage of ideas on how to improve the efficient use of energy. Lu Wenbin, director of the National Development & Reform Commission's (NDRC) Energy Conservation Office, said China plans to use administra-tive measures to promote and enforce energy-saving practices in industry as part of its 11th Five-Year Plan. He said China wanted to foster a more "circular" economy in which resources could be conserved through large-scale recycling.

Carsten Sorensen of Danfoss China said China could save vast amounts of energy if it used better materials in its countless new buildings to allow residents to regulate their own heating. "Of all the construction happening in the world, half of it is in China," he said, adding that inefficient Chinese buildings consume three times the energy of their European counterparts. "There is no need for experimentation бн the materials are available now." Sorensen added that the need is for urgency, as it is more expensive to retrofit buildings with insulation and better heating systems than to include them in the original construction.

ABB's Anders Jonsson explained that frequency converters and turbochargers, also available now, can dramatically cut energy consumption in practically any situation where a motor is involved. "A converter costs about 1 percent of the energy it saves during its lifespan - the cost is practically negligible," he said.

Jonsson praised Baoshan Iron & Steel, China's largest steel maker, as a "progressive role model in energy saving". Baosteel Vice President Li Haiping spoke on the various methods his company uses across its operations to conserve energy, including residual heat recovery and water saving. Li said energy-efficient measures have increased Baosteel's productivity "between eight and 10 times".

Later in the day Commissioner Piebalgs went to a Shanghai Baosteel plant, which is developing energy-saving technology, as part of his visit. "It is important to make energy efficiency a global priority. It is perhaps the most practical way of reconciling improving living conditions with an ever-increasing demand for energy-consuming goods and the need to take concrete action on global warming," he said at the conference. "The EU and China share the same objectives in this respect".