Electricity Supply Security and Decarbonisation for China

Can China decarbonise its economy and if yes what will be the cost for its energy supply security?

We argue that continuous fuel mix shifting towards renewable energy will allow the Chinese electricity sector to improve its supply security while reducing its GHG emissions.

The Chinese economy is very carbon intensive. Substantial improvements in this front brought China from the worst end of the list of countries ranked by carbon intensity, closer to the middle. While the detailed determinants of the Chinese carbon intensity require further investigation it can be said that it is primarily owned to its largely manufacturing driven economy (services can generally be less emissions intensive) and the fact that China uses a highly carbon intensive fuel mix.

Carbon intensity is prevalent in the Chinese electricity sector where the fuel mix is moving from a simple 62% coal; 21% hydro; 17% oil in 1972 (see Figure 1) to a predicted 73% coal; 14% hydro; 7% nuclear; 3% wind; and about 0.5 for solar and biofuels respectively in 2020. (see Figure 2)

Figure 1: Electricity Fuel Mix in China (1972)

As it becomes obvious the role of coal has grown substantially to support China's economic growth. and no despite the record breaking investment in renewable energy, coal will remain the dominant fuel in China until 2020 and beyond.

Similar to several developed countries (USA, UK, Australia, Germany) China has relied on its indigenous coal reserves to fuel its economy. 

Figure 2: Electricity Fuel Mix in China (2020)

This approach reflected a supply security paradigm that focused on control of national resources against imports. While mature economies were forced to abandon this paradigm because of national resource depletion, costs, environmental concerns etc China is just about reaching that point. 

Figure 3: Import Dependence of Chinese Electricity Sector

Inevitably that leads to the current energy security paradigm, that of diversity. As it has been previously pointed out the Chinese persistence on coal is not only harmful for China emissions record but also for its own electricity supply security. We found that coal does not any more support independence of fuel imports since it is partly an imported resource.





China's efforts to reform its coal sector, mainly via shutting down small, inefficient and dangerous coal mines, needs to go further in reducing the impact of the coal pathway dependency.

Figure 4: Shannon Wiener Index (SWI) for Electricity Sector 

Since coal imports are rising (partly driven by record-low international coal prices as the rest of the world moves away from coal) then coal increases electricity sector import dependence (see Figure 3) and at the same time keeps its diversity very low (see Figures 4 and 5). Both HHI and SWI show that the diversity of the Chinese electricity sector is very low. Despite the absence of any absolute thresholds SWI is generally considered to be good when it is near 2 and HHI when it is near 2000. 

Figure 5: Herfindahl-Hirschman Index (HHI) for Electricity Sector 

We argue that China should reduce its dependence on coal and increase the presence of other resources in its fuel mix. All fossil fuels and nuclear energy are partially imported in China and while they will improve diversity they will also increase import dependence. However, if China substitutes coal with renewable energy sources then it will benefit both its independence (since renewable energy sources are predominantly indigenous) and its resource diversity.

This article is based on research conducted by Keagan Rubel and Konstantinos Chalvatzis and has been published at the Journal of Technological Forecasting and Social Change. The authors are grateful to the anonymous reviewers and the journal's editors for their constructive and helpful comments.

Will the lights go out in the UK?

Quite recently Ofgem's outgoing CEO Mr Buchanan, warned us about electricity shortages and rising energy prices. For the limited attention span of busy media and public that may have come as a surprise. But it wasn't really one. Mr Buchanan, was in fact following up from Ofgem's earlier press release on the same issue. Ofgem reported that the electricity margin could fall from 14% in 2012 to the dangerously low 4% in 2015/16. But how did we arrive here?

In brief, the dirtiest UK coal-fired power plants are shutting down as a result of the Large Combustion Plant Directive (2001/80/EC). No, the EU is not to blame. The Directive was rightly agreed to control the very harmful SO2 and NOX emissions. Notice, it was agreed in 2001 and by the way it succeeded similar Directives of 1994 and 1988.There was plenty of time to prepare. Scottish Power's Cockenzie (1200MW), E.On's Kingsnorth (1940MW) and RWE's Didcot A (2000MW) are taken off the grid. That's a significant capacity loss but there are several other coal-fired power plants remaining in operation in the UK. Tighter environmental regulations will probably take them out of the market by or before reaching their lifespan. New coal-fired plants in the UK will have to be fitted with CCS systems which do not exist yet. Germany seems to have different views on that matter planning to open about 12GW of coal-fired capacity by 2020.

Germany has to do that to substitute the 23% capacity loss their will suffer after shutting down all their nuclear power plants by 2022. Which brings me to the next problem of the UK's power sector. That of underinvestment in nuclear power. In fact, there's no investment at all. After all nuclear players deserted the UK's "new nuclear scene" we're left with EDF demanding guaranteed prices for life. The Government tries to offer that in a politically correct way and in the meanwhile pushes back to 2030 (instead of 2025) its plan for 16GW of new reactors. EDF is probably less in a hurry than the Government should be. While any new capacity is being delayed the Government will have to choose between switching the lights out or extending the already extended lifespan of the existing nuclear fleet. Did I mention that nearly all of the UK's operating nuclear fleet belongs to EDF?

This stranglehold was identified in 2009 in a DECC's report "The UK Low Carbon Transition Path". The Analytical Annex, found low levels of capacity margin and significant expected energy unserved by 2025. It seems that in 2013, things only look worse.

Let me then return to the initial question. Will the lights go out? As someone who believes that power-cuts are entirely unacceptable at these times and part of the world I'll say that it won't happen. It is not my faith in existing policies that is responsible for this optimism. I just tend to believe that since the capacity exists (even if retired) it will be used for generation. We may also need to import as much electricity as possible from the continent. We may finally need to use more open cycle gas turbines than we planned.

Quite shamefully, we'll also have to bare the environmental and financial costs for these choices. The government promised to act over the looming energy gap but they don't seem to have a clear plan, let alone a plan B...


PS: Even though it certainly reads like it, I'm not frustrated only with the Coalition government. It doesn't look to me that the previous Governments treated this matter with the sense of urgency it deserves either.

Carbon Capture and Storage: too hopeful?

Since I first heard about carbon capture and sequestration or storage (CCS) back in 2004 I felt like there was something inherently wrong about it. Perhaps it was this picture of someone cleaning the floor by swiping the dirt under the carpet that made me think this was simply not the way forward. In the meanwhile CCS  remained present in the climate change plans of many countries which count on it to reduce their emissions.

But if it is a bad idea then why should anyone care? This is not the right place to blame the coal lobby for promoting "clean coal" in order to lock the world in coal-fired electricity generation technologies. In fact not just the coal lobby but the world needs CCS.

The explanation requires us to take a step back in the energy supply chain. CCS at least initially means coal. Without an intention to praise coal's role it is hard to ignore that it supplies more the 41% of the world's electricity (IEA). The development of renewable energy has been rapid over the last decade but coal remains the single most important fuel for electricity generation. Proven, safe and cheap; but heavily polluting. In spite of efficiency improvements the world will only need more electricity in the near future as a result of transport, industry and household electrification. It is unavoidable that a major stake of this electricity will have to be generated in coal-fired power stations because a worldwide fuel mix change will take decades.

Coal is the most polluting, commonly used fuel but at the same time it is the cheapest and easiest to find. It is also the fuel for which we know our reserves will last the longest. Science tells us that the worldwide emissions of greenhouse gases need to be reduced if we want to avoid extreme climate change. If we cannot avoid coal, maybe we can at least avoid the consequences of burning it? The world needs hope.  

So, what's happening with CCS applications? The UK first launched a competition for CCS commercialisation in 2007. After EON withdrew plans for CCS at Kingsnorth power station it was time for Longannet to be cancelled in 2011. Was this a set-back for CCS in the UK? Yes it was, but the UK Government did not give up. A new initiative offering £1bn was set up and in late 2012 four projects were short-listed. Three of them applied for EU funding under the NER300 scheme but none was successful. In fact the Commission did not fund any CCS project at all citing as the main reason that member-states did not agree to cover funding gaps. The second round for EU funding is expected in 2013-2014 but the pot is only about €300m.

Like everybody else I'd like to think that CCS will work and allow us to use fossil fuels (not just coal) without having to suffer dangerous climate change or abruptly change lifestyle due to severe energy shortage1. However, it does not look to me like CCS development is progressing fast enough. In the meanwhile the world moves on with CCS-ready power stations. This often means as little as having some spare land next to the power station where the CCS systems could be installed when the technology becomes commercially attractive. CCS is not yet demonstrated to be technologically viable and this will not happen until the 2020s. Commercial attractiveness is a completely different stage though and one that may or may not be reached.



1There is no doubt that the world would face a severe energy shortage if we were to rely only on carbon neutral energy today.