June 4, 1998
BATTELLE REPORT: CHINA NEEDS ENERGY TECHNOLOGY
China can afford to meet its burgeoning electric power needs without compromising environmental goals by applying new technologies and accelerating market reforms, according to a report issued today by Battelle.
The report, “China’s Electric Power Options: An Analysis of Economic and Environmental Costs,” is a joint effort by Battelle’s Advanced International Studies Unit, the Beijing Energy Efficiency Center, and China’s Energy Research Institute.
Rapid economic growth over the past two decades has made China the fastest growing market for electric power in the world. Since 1990, the country has added the equivalent of one large power plant (600 megawatts) every two weeks.
China’s heavy reliance on coal to fuel most of these power needs, however, has caused extensive environmental damage. Sulfur dioxide emissions alone, the main precursor of acid rain, cost the economy over $13 billion each year, erasing 2 percent of the country’s gross national product.
“Chinese planners and government officials have often placed economic growth ahead of environmental concerns,” says Jeff Logan, lead author of the report. “But we found that when you consider the full environmental costs of producing electricity, it’s actually more economical to use cleaner alternatives, like flue gas desulfurization equipment, natural gas, and clean coal technologies.”
Logan says China also should accelerate its research and development programs on fuel cells, gas and wind turbines, gasification processes, and other advanced power technologies as a way to meet its future energy and environmental goals with the least cost. “We think China could become a leading exporter of these advanced technologies within two decades.”
Results of the study indicate that:
“Natural gas has been largely ignored for most of China’s history,” says Bill Chandler, Director of Battelle’s Advanced International Studies Unit. “However, if China combines new exploration technology with market and regulatory reforms, then it could rapidly increase the amount of gas available for residential, industrial, and power applications.”
Chandler says the benefits of using natural gas over coal include near-zero emissions of harmful sulfur and particulates, shorter power plant construction times, low capital costs, and a reduction of 60 percent in carbon dioxide emissions.
Logan says Beijing has taken some steps to increase the availability and use of natural gas, including the construction of a natural gas pipeline that supplies the clean fuel to over 300,000 users in the capital. But he notes other barriers still remain, including “the lack of a natural gas champion within the government, along with artificially low prices for natural gas, which inhibit further exploration and development.”
Beijing is also taking steps to develop the country’s huge reserves of coal bed methane and wants to begin importing natural gas from countries of the former Soviet Union. Additionally, China is studying the economics of building facilities on the southeastern coast to import liquefied natural gas, which has became more readily available since the Asian financial crisis lowered demand in countries such as Japan and South Korea.
The report indicates that nuclear power is not competitive with other electricity options in China. “Even if China manufactures all the components of a nuclear power plant domestically and cuts capital costs by a third, nuclear power will still be 45 percent more expensive than electricity generated from combined-cycle gas turbines,” says Logan.
Working more than a year on the project, the joint research team first estimated future power demand in China and predicted that electric power demand will increase four-fold by 2020 from the 1995 level. The team then determined the least-cost combination of generation technologies to meet future demand, given a range of economic and environmental constraints. Researchers also simulated the effects of command-and-control regulations (such as imposing limits on the amount of sulfur and carbon dioxide that a certain region may emit) and market-based policies (such as a sulfur dioxide tax).
The report, funded in part by the W. Alton Jones Foundation, is available on the China web page of Battelle’s Advanced International Studies Unit (http://www.pnl.gov/china). For more information, contact Paulette Killgo (paulette.killgo@pnl.gov) or William Chandler (202) 646-7811.
Battelle serves industry and government by developing, commercializing, and managing technology. With a wide range of scientific and technical capabilities, Battelle puts technology to work for clients in 30 countries.
The study determined that expanding the availability of low-cost natural gas is critical for China’s energy future.
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