Shaping climate policy in the housing sector in northern Chinese cities

Abstract

What are relevant urban development investment strategies for improving building energy efficiency (BEE) and decarbonizing the urban district heating supply in rapidly urbanizing China? Different trajectories of BEE and energy supply technologies are compared in the urban context in a northern Chinese city. Vigorous improvement of BEE will significantly enhance the prospective financial capacity to facilitate deployment of backstop technologies (e.g. carbon capture and storage) in order to decarbonize the energy supply and achieve the long-term targets of low-carbon buildings. Carbon finance instruments should be used to facilitate public policy to accompany the necessary transition in the urban development process. The government-run efficiency procurement scheme will overcome the problem of insufficient incentive and high transaction costs associated with individual Clean Development Mechanism projects. Appropriate investment strategies (allocation of financial resources over the time frame) will allow local governments to harness the large potentials of carbon emissions mitigation while minimizing the risk of long-term technical lock-in in the built environment in Chinese cities.

Résumé

Quelles sont les stratégies d'investissement pertinentes au développement urbain dans une Chine en rapide urbanisation, pour l'amélioration de l'efficacité énergétique des bâtiments (building energy efficiency – BEE) et la décarbonisation de l'approvisionnement en chauffage urbain? Différentes trajectoires de BEE et de technologies d'approvisionnement en énergie sont comparées dans le contexte urbain pour une ville du Nord de la Chine. Un BEE fortement amélioré renforcera considérablement la capacité financière propice à faciliter le déploiement de technologies «backstop» (telles que la capture et stockage de carbone) de sorte de décarbonner l'approvisionnement en énergie et atteindre les cibles à long termes relatives à un secteur du bâtiment sobre en carbone. Les instruments de finance carbone devraient être employés pour aider la politique publique à soutenir la transition nécessaire du processus de développement urbain. Le régime d'acquisition d'efficacité du gouvernement permettra de maîtriser le problème de l'insuffisance des incitations et des coûts de transaction élevés pour les projets MDP individuels. Des strategies d'investissement appropriées (allocation de ressources financières sur la durée) permettront aux gouvernements locaux de saisir le grand potentiel d'atténuation des émissions de carbone tout en minimisant le risque à long terme de verrouillage technologique dans l'environnement bâti des villes chinoises.

Keywords:

• China
• climate change mitigation
• energy efficiency
• investment strategies
• transition costs

Mots clés:

• atténuation du changement climatique
• Chine
• coûts de transition
• efficacité énergétique
• stratégies d'investissement

Notes

As pointed out by Hu et al. (2010), residential buildings account for 80% of the annual completed floor area in China over the past 20 years. This study therefore focuses on the housing sector in northern China.

These three products combined produce more than half of the CO₂ emissions from the industry sector and more than one-fifth of global CO₂ emissions (IEA, 2009).

Energy consumption in buildings in rural China is excluded, as a large number of rural households still use biomass (straw, stalks and firewood, among others) for residential consumption, and few detailed statistical data are available.

The technical specification and calculation of thermal and appliance consumption in the residential and commercial buildings constructed in compliance with different BEE standards is explained in Li et al. (2009). The actual U-values for houses complying with Tianjin local standards were provided by the World Bank pilot BEE programme report; necessary data were collected by the second author during field studies in Tianjin in 2007 and 2008. U-values for the rest are taken from each country's own buildings codes that have been enforced and implemented. See the Appendix for a full description.

The supply systems are (i) district coal-fired heat-only boiler (1.4–7 MW/unit), (ii) district gas-fired heat-only boiler (7 MW), (iii) district medium-sized CHP (7–14 MW/unit, or 10–20 t/h), (a) coal-fired CHP, (b) gas-fired CHP, (iv) municipal district heating (coal-fired CHP, 116 MW/unit), (v) individual heating with gas boilers (20–50 kW/household).

In the model, new constructed house floor area in each year is simply modelled as the difference of total existing floor area in current year (S _i ) minus the value in the previous year (S _i−1). Regarding the residential buildings, the total existing area in year i is estimated by the following formula:

where HS _i is the total housing area in year i; UP _i is the urban population in year i; PCFS _i is the floor area per head in year i and DA _i is the demolished housing area in year i.

In theory, households' choice to purchase energy-efficient appliances or not depends mainly on household income and energy prices at a given time. Since the main focus here is on the thermal performance of buildings and heating consumption, to simplify our analysis both energy prices and income (per capita GDP) are taken exogenously, and a trend of penetration of high-efficiency appliances in a more or less linear way is assumed. In fact, the public policy plays a determining role in energy-efficiency improvement in appliances in the market, for example through the introduction of an energy labelling scheme (which has already been applied to certain categories of appliances in China).

New buildings volume depends on the hypotheses on urban population growth, per capita living space and demolished as well as rehabilitated area each year (1.5 million square metres are assumed to be demolished each year in the model). The assumptions are based on the Chinese government's policy publications, research papers and municipal urban planning documents. The model took the dynamics of the housing stock into account. Thermal retrofitting was assumed to be carried out in the existing inefficient housing stock at the same rate in all scenarios (500–550,000 m² per year); the total existing housing stock was around 141 million m² in 2005, roughly half of which did not comply with the BEE standards. It is assumed that 40% of inefficient houses are to be retrofitted by 2030 and one-quarter of existing housing stock in 2005 will be demolished, with the rest kept intact. Total housing floor space is estimated to increase by 4% per year to stand at 340 million m² in 2030.

The LEAP model, developed by the Stockholm Environment Institute, has been widely applied in energy and environmental studies for scenarios simulation purposes across the world and is recognized by the research community. A number of articles have been published by running LEAP to answer country- and/or region-specific questions. One of the authors of this article, Jun Li, has had intensive exchanges with Dr Charlie Heaps, the LEAP model's developer and maintainer, during the model building and simulation processes.

Data in buildings heating consumption calculation and scenarios simulations come from the World Bank's Tianjin BEE pilot programmes. Published literature, and data on capacity, efficiency and costs of heating supply infrastructure, and fuels were collected by Jun Li during his field studies in the city of Tianjin during 2007 and 2008.

The main driver of this policy is local atmospheric pollution control (reducing sulphur dioxide emissions) rather than reducing carbon emissions.

There are intensive debates from the carbon prices perspective in the Chinese climate policy arena. The range of prices envisioned is relatively large, between CN¥10–100 per ton of CO₂. A price of US$30 per ton is here assumed, which is relevant to the international carbon market forecast, for instance compared to the projected carbon price level in EU countries at the same horizon.

See CEPHEUS project (2001) and Feist et al. (2002) for detailed information about Passivhaus standards in European countries.

A massive fuel-switching policy potentially threatens China's long-term energy supply security, because a significant proportion of natural gas will need to be supplied by Russia and other central Asian Countries. The frequent disputes between gas supply and consumption countries over price (in particular between Russia and eastern European countries) reveal the considerable geopolitical risks and the supply fragility of high dependence on imported natural gas. The Chinese energy policy makers must take long-term energy supply security into account in addition to the obligatory climate considerations. Some framework agreements on gas and oil supply have already been signed between China, Russia and Turkmenistan. In 2006, China and Russia signed a memorandum of understanding to develop two pipelines to supply 60–80 billion cubic metres of natural gas to China annually from 2011, yet completion of this deal stalled due to disagreements over several issues, including price (Time, 2009).