Frances G. BeineckePresidentNatural Resources Defense Council

Alliance To Save Energy Side EventCopenhagen, DenmarkDec 14, 2009

Unlocking Energy Efficiency in China

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Energy Efficiency in China—Key Solution to Climate Change

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China’s Remarkable Progress in Cutting Energy IntensityDuring its 11th Five Year Plan (2005-2010)

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China’s Focus To Date: Industrial Energy Efficiency

• Ambitious energy efficiency goal–reduce energy intensity 20% from 2006 to 2010

• Revised Energy Conservation Law - officials’ career now dependent in part on energy-saving performance

• Initiated “Top-1000” program to target largest enterprises

• Incentives to reward energy saving in large enterprises

• Phasing out obsolete production capacity in 13 energy-intensive sectors

• Establishing efficiency requirements for obtaining loans, insurance and listing on stock exchange

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Impressive Results from Top-1000 Program

• Launched by the central government in April 2006

• Improve energy efficiency of the biggest energy industrial users in 9 industrial sub-sectors

• The selected enterprises jointly consumed 33% of national energy use and 47% industrial energy consumption

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Further Unlocking China’s Efficiency Potential—Demand Side Management (DSM)

• DSM means utility-sponsored programs that use ratepayer funds to help customers upgrade to more efficient technologies such as commercial lighting, industrial motors and commercial and residential air conditioners

• Uses tools such as rebates, investment incentives and energy audits

• Stringent monitoring and verification of energy savings

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NRDC Has Pioneered DSM in China

• NRDC brokered cooperative agreements between California and Jiangsu on Energy Efficiency and Climate • Our work over the last 4 years has helped Jiangsu

• Develop China’s first large-scale DSM program

• Allocate $35 million in government incentives

• Save 2 billion KWh of electricity annually• Cut 1.84 million tons of CO2 emissions

• Jiangsu’s DSM program was promoted as a national model by China’s Premier Wen Jiabao• The partnership between CA and Jiangsu was cited by Secretary Hilary Clinton as a model for US-China cooperation• We are now scaling up our DSM programs nationwide

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Building Sector: Key to Climate Change Globally

Source: The Kyoto Protocol, the CDM and the buildings and construction sector, UNEP/SBCI Report

The building sector has the greatest potential of any sector for reducing GHG…We can’t meet the climate change commitment without addressing building energy performance

The potential exists in both developing and developed countries, as well as in economies in transition 。

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Greening all China's buildings would avoid 2 billion tonnes of CO2 emissions annually, equivalent to any of the following every year:1

Potential of Chinese building sector: best scenario

EfficientBuildings2

Halting all air traffic

globally for three years5

Building 20 Three

Gorges Dams

Filling 50,000

Tiananmen Squares

with rainforest3

Shutting down

current world steel production

Building 370,000

wind turbines4

Avoid building

550 500 MW coal-fired

power plants

Removing all cars from the

UK, Spain and Italy

Turningoff all the lights in

America for 12 months

Source: BCG/NRDC Joint Research Paper, “From Gray to Green: How Building Energy Efficiency Can Help Make China’s Rapid Urbanization Sustainable”, 2009

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Halting all air traffic

globally for 4 months6

Building two Three

Gorges Dams

Filling 4,000 Tian'anmen

Squares with

rainforest3

Shutting down

current world steel production for 5 weeks4

Building 30,000 wind

turbines5

Avoiding building 50

500 MW coal-fired

power plants

Efficientbuildings2

Removing all cars

from Sweden,

Norway and Denmark

Turningoff all the lights in

America for 1 month

Source: BCG/NRDC Joint Research Paper, “From Gray to Green: How Building Energy Efficiency Can Help Make China’s Rapid Urbanization Sustainable”, 2009

Potential of Chinese building sector: moderate scenarioCut energy use by 50% in 5% of existing buildings and 60% of new buildings by 2015 would avoid 170 million tonnes of CO2 emissions annually, equivalent to any one of the following1

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Solution 1: Fully implement building energy label in new and existing buildings

1. Ministry of Housing, Urban-Rural DevelopmentSource: MOHURD; interviews; literature search; BCG analysis

Credible building energy rating system will helpcreate a market for green buildings

MOHURD1 introduced building energy rating and labeling system in April 2008MOHURD1 introduced building energy

rating and labeling system in April 2008

5-star energy rating system for both residential and commercial buildings

Building label can play a key role in driving building efficiency

improvements

Building label can play a key role in driving building efficiency

improvements

Drive awareness and understanding among end-users

Serve as a marketing tool to sell high energy efficiency buildings

Reinforce power of incentives• Credible system of building energy

certificates will distinguish best performers from others

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Solution 2: An integrated and comprehensive incentive system

Tax incentivesTax incentives

Tax benefits for:• Windows, doors and roofs

conforming to certain requirements

Tax exemptions for purchase of approved energy-efficient technology and appliances

Accelerated depreciation for energy efficient products

Higher tax for heating oil for buildings

Tax exemption on 111 energy efficient products

Low interest loansLow interest loans

Cash refunds and low interest loans for owners purchasing energy efficient buildings

Interest-free loans of 10 mn GBP for energy-efficient buildings

Special fund providing guarantees for SMEs for energy efficient investments

Low interest loans for retrofitting projects

• Interest rate: 1-3%• Total loans <75% of total

investment

Government subsidiesGovernment subsidies

Cash subsidies to buyers of "Energy Star" products

Cash subsidies to local government for energy efficient retrofitting

Subsidies for retrofitting projects

50% subsidies to household owners installing solar energy equipment

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Solution 3: Strengthen building code enforcement

Pre-constructionConstruction

permitConstruction

Building “check and accept”

Sales

Local administration for urban planning

Submitted reports and files

Building construction plan and building energy efficiency design plan

Local administration for urban planning

Local administration of building efficiency

Results of pre-construction inspection and verification of execution of energy saving standards

Filing and registration for Beijing residential building energy efficiency inspection

Local administration of building efficiency

Construction supervision company

Materials quality

Construction quality

Materials and construction completed according to design

Local MOHURD bureau

Administration for building quality supervision

Specific “check and accept” on energy efficiency measures

Various energy efficiency inspection reports

Local administration of building efficiency

Buyers

Energy efficiency information at sales site and disclosure of energy efficiency measures in contracts

Residential quality warrant and residential manual

Buyers

Source: Beijing municipal construction bureau, "Energy Efficiency Rules for Civil Buildings", lit search

Inspection content

Reporting and

submission

Inspector

Submit to...

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AGENDA21 is an example of a green building in China...

AGENDA21 is an example of a green building in China...

• An eight-floor office tower; home to China’s Ministry of Science and Technology in the heart of Beijing

• A model of cooperation between US and China promoting energy efficiency, sustainable technologies and integrated design

...which earned China's first LEEDcertification in 2005

...which earned China's first LEEDcertification in 2005

Note: LEED stands for Leadership in Energy & Environmental DesignSource: NRDC

1999• NRDC coordinated the project jointly

sponsored by the U.S. Department of Energy and China's Ministry of Science and Technology

2002• Project broke ground

2004• Building's official opening ceremony took

place

2005• Earned LEED Gold certification• NRDC obtained top award in 1st National

Green Building Awards• Led to adoption of China's first green building

standard

Successful example: Agenda 21 BuildingThe first LEED-certified building in China

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Conclusion

• Energy efficiency is the largest, cheapest, fastest, and greenest resource available to address both China’s growing energy demand and global warming.

• China has made great progress in reducing its energy intensity. However, more can and should be done.

• Now is the time to build on the momentum that has been gathering and propel energy efficiency to the front and center of China’s energy agenda

• By significantly improving the efficiency of its energy use, China will be able to reap the benefits of energy efficiency, meet its rising energy demands, and join the global community in the fight against climate change.