End-Use Energy Consumption & CO2 Emissions

Institute of Climate Change and Sustainable Development of Tsinghua University et al.

doi:10.1007/978-981-16-2524-4_3

Institute of Climate Change and Sustainable Development of Tsinghua University et al.²

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Abstract

As a key pillar of China’s economic growth, the industrial sector constitutes the dominant source of energy consumption and CO₂ emissions. In 2018, the added value of China’s industrial sector was 30.5 trillion RMB, accounting for 33.9% of GDP. Energy is consumed by the industrial sector for fuel combustion and raw materials, etc.

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3.1 Industrial Sector

3.1.1 Current Development and Trend of the Industrial Sector

1.
State of Energy Consumption and CO ₂ Emissions of China’s Industrial Sector

As a key pillar of China’s economic growth, the industrial sector constitutes the dominant source of energy consumption and CO₂ emissions. In 2018, the added value of China’s industrial sector was 30.5 trillion RMB, accounting for 33.9% of GDP. Energy is consumed by the industrial sector for fuel combustion and raw materials, etc. [1]. In 2017, The end-use energy consumption of the industrial sector registered at 2.83 billion tce, comprising 64.8% of the total end-use energy consumption. Energy consumption of the industrial sector is mainly attributable to six energy intensive industries, including power, steel, cement, petrochemical, chemical and non-ferrous metal, which made up 75.1% of the total primary energy consumption of the industrial sector in 2017 [2] (see Fig. 3.1). Industrial CO₂ emissions include those from energy activities and industrial production processes. However, due to delayed survey and accounting, the statistics of CO₂ emissions of the industrial sector is relatively not up to date and inconsistent with the accounting standard of industrial output and energy consumption. The First Biennial Update Report on Climate Change reveals that the CO₂ emissions from fuel combustion in the industrial and construction sectors and from industrial production processes in China totaled 8.48 billion tons in 2012, or 91.0% of the total CO₂ emissions of the year (including land use changes and forestry), of which CO₂ emissions from fuel combustion of the industrial and construction sectors stood at 7.28 billion tons, which is 83.8% of the total CO₂ emissions from energy activities.

The expanding industrial output has resulted in rising energy consumption and carbon emissions of the industrial sector, but a notable slowdown has been observed. In terms of energy consumption, in 2017, the end-use energy consumption of the industrial sector was 2.83 billion tce, 1.9 times higher than in 2000 with an average growth of 6.5% year-on-year. [2]. From the perspective of carbon emissions, the published National Greenhouse Gas Inventory suggested total CO₂ emissions from fuel combustion in the industrial and construction sectors and from industrial production processes rose by 3.37 billion tons from 2005 to 2012, averaging 7.5% growth rate year-on-year, exceeding the 6.1% average year-on-year growth rate of industrial energy consumption in the same period [3]. Yet as China enters the advanced stage of industrialization and becomes a post-industrialized economy, a major slowdown in the growth of industrial energy consumption has been detected with a continuous decline in end-use energy consumption of China’s industrial sector, which registered negative growth for two years in a row (2014–2016). Despite a bounceback in 2017, the figure was still 1.5 million tce lower than that in 2014. From 2011 to 2017, the industrial sector consumed an additional 186 million tce—a mere 30% of the added energy consumption in China [2] (see Fig. 3.2).

Improvements are continuously made in energy conservation and emission reduction policies with sustained enhancement in energy efficiency and optimization in energy consumption mix. Through continued supply-side structural reform in coal and steel industries, campaigns and implementation of key energy-saving projects such as comprehensive upgrading of coal-fired boilers for energy conservation and eco-friendliness, energy efficiency enhancement of motor systems, reduction and replacement of coal consumption, energy performance contracting, etc., China has shown a slowdown in the growth of major energy-intensive products and sustained improvement in industrial energy efficiency with some sectors ranking among the global leaders in this regard (see Fig. 3.3). From 2000 to 2016, energy efficiency grew by one-third for the steel industry and a half for the cement industry in China [4]. Meanwhile, through coal reduction and substitution, promotion of electrification and technical progress in production, notable changes have taken place in the end-use energy consumption mix of the industrial sector, with 2012 as a turning point, when a decline was seen in both the total use and the proportion of coal and coke in the industrial sector, while the consumption of natural gas and electricity had been on a sharp rise. In 2017, the share of coal and coke consumption fell back to 44.8%, while the proportion bounced to 6.8% for natural gas and 24.6% for electricity [2] (see Fig. 3.4).

2.
Outlook on Energy Consumption and CO₂ Emission Trend of China’s Industrial Sector

With ample potentials in its development, China’s industrial sector is facing mounting pressures on energy demand. As the biggest developing country in the world, China is still in the intermediate stage of industrialization with considerable space for further growth and growing pressure of energy consumption and carbon emissions of the industrial sector. Despite being a manufacturing powerhouse, China trails way behind the US, EU and Japan in terms of core technologies, quality, efficiency and indigenous innovation, etc., with its manufacturing sector on the lower end of the global arena. At the per capita level, China’s industrial added value was 1.3 times of that of the world average yet merely 35.6% of the US in 2016 [5]. In the same year, China’s per capita industrial end-use energy consumption was around 95% higher than the world average and 16% higher than OECD countries, but still 12% lower than US [4]. At the global level, industry remains the key pillar for economic growth with minimal sign of “de-industrialization”. At the constant price of 2010, manufacturing as a percentage of global GDP climbed from 14.8 to 16.0% from 1991 to 2014 [5]. Despite a slowdown or even decline in total energy demand of the industrial sector in major developed countries, global industrial energy demand is set to grow continually. Studies have found that from 2017 to 2040, annual growth in energy demand of the world industrial sector will average around 1.3%, and major developed economies such as the US and EU might witness a drop in total demand, yet the share of industry in end-use energy consumption will slowly move along a rising curve [4]. Especially with the onslaught of COVID-19, increasing awareness of industrial security, independence and controllability is found in all countries, and the global industrial chain is approaching a new round of restructuring, which spells mounting strains for China to consolidate, shore up and empower its industrial chain.

The growth in energy demand will see a substantial slowdown as the industry shifts from extensive growth to quality development. As China transforms from a “world factory” to a manufacturing powerhouse and moves towards quality development, industrial energy demand is set to experience a tremendous slowdown despite its continued growth. In terms of industrial structure, as China’s industrial economy advances towards medium and high-end, the mainstay of the industry will shift from traditional sectors such as steel, building materials, and textile towards emerging industries of strategic importance, high-tech and advanced manufacturing, with increasing decoupling of industrial development and energy consumption. Meanwhile, as China succeeds in building a moderately well-off society, its urbanization rush is likely to tide off and the demand for major energy-intensive products will be saturated, which will downsize a portion of the energy-intensive sectors. Besides, amid a sweeping new round of global industrial revolution, the massive application of new technologies such as industrial robotics, AI and industrial internet catalyzed by growing industrial digitalization, internet penetration and intelligence, the existing mode of industrial production and organizational structure will be disrupted, producing a far-reaching impact on the energy mix of the industrial sector. To illustrate, industrial robotics and 3D printing will tremendously boost the energy efficiency and the electrification of the industry while replacing the traditional way of production and manual labor arrangement.

As industrial electrification picks up its pace, the peak will occur sooner in carbon emissions than in energy demand of the industrial sector. CO₂ emissions of the sector hinge on energy demand, energy efficiency and energy mix, among other factors; with the slowdown in energy demand of the industry, improved electrification and constant changes in power mix of the society, industrial CO₂ emissions will peak before its energy demand. With emerging industries such as modern manufacturing on a fast track of development and fossil fuels such as coal being increasingly replaced in heavily polluted areas, energy demand of the industry will primarily come from electricity and natural gas with reduced demand for coal and more electric and lower-carbon energy mix. Studies have shown that electricity of non-energy-intensive sectors will comprise 47% of the end-use energy consumption in China by 2040 [4]. Among industrial sectors, building materials and textile would peak emissions prior to steel and non-ferrous metals, etc.; while the energy demand and CO₂ emissions of the petrochemical industry might peak later due to the rapidly growing output. In the meantime, the fast growth of petroleum and coal as raw materials of the petrochemical industry will also lead to an earlier peak in industrial CO₂ emissions than energy demand.

The transition towards low-carbon industry remains unpredictable, with deep emission reduction as a daunting task. Ranking the top in industrial output, China is at the forefront of a new round of industrial revolution with tremendous emission reduction potential in employing innovative technologies and promoting integrated development of industrialization and low-carbon energy, electrification and information technologies. However, despite the sustained enhancement in energy efficiency of the industry, the development model featuring high input, consumption, and emissions has not been essentially reversed. Recently, many key petrochemical and coal chemical projects, including coal-to-aromatics, coal-to-ethanol, and coal-to-hydrogen projects, are under planning due to multiple factors, which brings additional pressure on controlling industrial energy consumption and carbon emissions. Meanwhile, the prevalent overcapacity and inter-regional imbalance in industrial development generate substantial challenges for energy-intensive sectors to widely reduce intensity. With a sizable existing industrial capacity and the limited operation time of many carbon-intensive plants, a premature retirement would incur massive sunk asset losses and potential unemployment risk. In addition, the lock-in effect stemming from the existing market stronghold of carbon-intensive technologies and industries is another stumbling block for the rapid expansion of low-carbon or zero-carbon technologies. Industrial transformation is highly associated with high-quality economic and social development, calling for an overhaul in the pattern of production and consumption across the society. Studies have suggested that postponing the goal of industrial transformation to 2035 would mean an extra 100 million tce consumption and 260 million tons of more CO₂ emissions from the industrial sector in 2040 [6]. Besides, as globalization grows, changes in international division of labor and industrial capacity footprint, uncertainties in the policies and market mechanisms of the carbon market and carbon tax and emerging trends such as CCS technology would produce major impact on future carbon emission trends from the industry.

3.1.2 Key Findings of Scenario Analysis

1.
Total End-use Demand

Under the policy, reinforced policy, 2 °C and 1.5 °C scenarios, the end-use energy demand of the industrial sector will still rise from the 2015 level, yet at a slower pace until peaking in around 2030 before a continual decline.^{Footnote 1} Under the constraints of the 2 °C and 1.5 °C scenarios, the end-use demand of the industrial sector is to peak prior to 2025 and drop by approximately 24–32% by 2050 from that of 2015.

As seen in Fig. 3.5 and Table 3.1, a more elaborated analysis reveals that in the policy scenario, the end-use energy demand of the industrial sector peaks at around 2030 at approximately 2.67 billion tce before sliding to roughly 2.44 billion tce by 2050; in the reinforced policy scenario, the demand hits the peak at around 2025 at about 2.6 billion tce before a drop to 2.05 billion tce in 2050; in the 2 °C scenario, the peak occurs in 2020–2025 at 2.5 billion tce and declines to around 1.65 billion tce by 2050; and in the 1.5 °C scenario, the peak arrives between 2020 and 2025 at roughly 2.2 billion tce before a reduction to 1.41 billion tce by 2050.

Table 3.1 Analysis of end-use energy demand of the industrial sector (billion tce)

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2.
Industrial CO₂ Emissions

In the four scenarios, total CO₂ emissions from industrial energy activities and production processes peak prior to 2030 before a continuous drop. CO₂ emissions from industrial energy activities peak in 2030 in the policy scenario, compared to around 2025 in the reinforced policy scenario or the 2 °C scenario and 2020–2025 in the 1.5 °C scenario.

As shown in Fig. 3.6 and Table 3.2, in the policy scenario, the peak of total industrial CO₂ emissions stands at roughly 5.71 billion tons and the figure falls to around 4.61 billion tons in 2050, when CO₂ emissions from industrial energy activities reaches 3.69 billion tons and emissions from industrial processes reach around 920 million tons. Compared to 2020, total CO₂ emissions from the industrial sector diminish by approximately 9.4%, of which emissions from energy activities contributed a 2.1% reduction in 2050.

In the reinforced policy scenario, total industrial CO₂ emissions are reduced to roughly 3.42 billion tons by 2050, of which 2.62 billion tons is from energy activities and 800 million tons from industrial processes; total industrial CO₂ emissions are cut by 32.8% in 2050 relative to 2020, and a 30.5% emission reduction is observed in energy activities.

In the 2 °C scenario, total industrial CO₂ emissions fall to around 1.67 billion tons by 2050, of which roughly 1.2 billion tons are from energy activities and around 470 million tons from industrial processes; compared to 2020, total industrial CO₂ emissions are cut by around 67.2% in 2050, and emissions from energy activities are down by 68.2%.

In the 1.5 °C scenario, total industrial CO₂ emissions reduces to approximately 710 million tons by 2050, of which 460 million tons are from energy activities and 250 million tons from industrial processes; compared to 2020, total industrial CO₂ emissions are reduced by 86.1% in 2050, of which 87.8% emission reduction is from energy activities.

Table 3.2 Analysis on total industrial CO₂ emissions (billion tons)

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3.
CO₂ Emissions from Industrial Process

In industries such as steel, cement, building material, and chemical, CO₂ emissions from both energy activities and industrial processes can be cut by substitution of raw materials or fuels, optimization of technologies and processes, improvement in system energy efficiency, and development of innovative low-carbon products. By 2050, CO₂ emissions from industrial processes is down by approximately 30% from 2020 levels under the policy scenario, 39% under the reinforced policy scenario, 64% under the 2 °C scenario and 81% under the1.5 °C scenario (Table 3.3).

Table 3.3 Analysis of CO₂ emissions from industrial process (billion tons)

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Emission reduction of industrial processes is, on one hand, attributed to industrial restructuring, technical renovation and the development of alternative raw materials and fuels. For example, lime may be replaced by raw materials of lower carbon intensity such as carbide slag, blast furnace cinder, fly ash and steel slag in cement production to cut emissions. In flat glass production, CO₂ emissions from the mixing process can be halved by replacing dolomite and limestone with MgO and CaO; while in the coal chemical industry, new gasification techniques such as pressurized coal-water slurry gasification and pressurized coal powder gasification help to reduce CO₂ emissions by a large margin. On the other hand, a constant drop is observed in demand for energy-intensive products owing to industrial restructuring and product quality upgrading. For instance, under the policy and reinforced policy scenarios, cement demand falls by around 30% from 2020 to 2050, while even sharper declines of 62% and 71% are expected under the 2 °C and 1.5 °C scenarios respectively (Fig. 3.7).

4.
Industrial Energy Mix and Electrification

All four scenarios point to a clear trajectory of decarbonization and electrification in the industrial energy mix, with smaller share of fossil fuels such as coal and petroleum and larger uptake of electricity in end-use energy, and distributive renewable electricity, renewable heating, hydrogen, and biomass are deployed on a wider scale (Fig. 3.8). The share of non-fossil energy and electricity in end-use industrial energy demand in 2050 will reach 34.3% in the policy scenario, 45.2% in the reinforced policy scenario, 66.7% in the 2 °C scenario, and 85.1% in the 1.5 °C scenario.

Fossil energy sees a continuous decline in the end-use industrial energy demand with its usage moving from fuel to feeding stock. For example, the industrial demand for coal, which is mainly used for raw materials and for heating in certain processes, is continuously shrinking. Compared to 2020, the industrial demand for coal drops by 14.3, 36.2, 77.1, and 92.4% respectively by 2050 under the policy scenario, reinforced policy scenario, 2 °C scenario and 1.5 °C scenario. Oil demand experiences a minor reduction of 4.9% in 2050 from 2020 levels under the policy scenario, and even more dramatic decline under the reinforced policy scenario, 2 °C scenario, and 1.5 °C scenario of 39.0, 65.9, and 82.9% respectively. Much uncertainty lies ahead for industrial gas demand with a surge of 220, 110, and 70% respectively under the policy, reinforced policy, and 2 °C scenarios yet a drop of 40% under 1.5 °C scenario.

It’s essential to reinforce the electrification transformation during the shift toward a low-carbon industry so that it will become the predominant source of energy. Specifically, the industrial electrification rate of industrial sector reaches 31.0%, 39.9%, 58.2%, and 69.4% respectively in 2050 under the policy scenario, reinforced policy scenario, 2 °C scenario, and 1.5 °C scenario. Such progress in China has visibly outpaced the historical development in general as the period between 2000 and 2015 saw an annual increase of industrial electrification of 0.5%, and under the 2 °C and 1.5 °C scenarios, such increase would jump to 0.9 and 1.4% respectively (Table 3.4).

Table 3.4 Analysis of end-use electrification of the industrial sector (%)

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The expanding demand for alternative industrial fuels and raw materials such as hydrogen and renewable energy has become a key lever for further carbon reduction in the industrial sector. Under the policy scenario, hydrogen and renewable energy comprise 3.3% of end-use industrial energy consumption by 2050, and the percentage is 5.3%, 8.5%, and 15.6% respectively for the reinforced policy scenario, 2 °C scenario, and 1.5 °C scenario (Table 3.5). Fossil fuels would be the main hydrogen source in the near and mid-term future before replaced by renewables or nuclear in the mid- to long term.

Table 3.5 Analysis of end-use energy mix of the industrial sector (%)

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5.
Energy Conservation and Efficiency Enhancement

To proactively tackle climate change, energy conservation and efficiency enhancement should become the “primary energy” for meeting the rising energy demand of the industrial sector. By 2050, the industrial output is expected to grow by around 2.6 times despite a reduced weight of industrial production in GDP. Through continuous optimization of its internal structure, improvement in added value in the products, and boost of energy efficiency of products and systems, the energy consumption of industrial output will continue to shrink. Under all four scenarios in terms of end-use energy consumption, a fall of 66%, 72%, 78%, and 80% in energy consumption of industrial output is expected between 2015 and 2050, which is an annual drop of 3.0%, 3.5%, 4.2% and 4.5%, respectively. In comparison, the period of 2000 to 2015 saw an annual decrease of 4.4%, meaning that long-term ambitious actions are needed for industrial structural improvement and energy efficiency enhancement in order to achieve the low emission goal of the industry.

In terms of technical energy efficiency improvement, significant potential is expected in energy-intensive industries such as steel, cement, and electrolytic aluminum; yet under the deep emission reduction scenario, the potential mainly arises from technical transformation. In the policy scenario, with a full achievement of the potential of existing feasible technologies in energy-intensive sectors, the unit energy consumption is reduced by 10–20% by 2050; in the reinforced policy scenario, major energy-intensive sectors see a further reduction of 10–20% in unit energy consumption by 2050 with the global leadership in technology and continual optimization of technical route; in the 2 °C scenario, world-leading technologies and complete technical innovations prompt a further drop of 10–15% by 2050. While in the 1.5 °C scenario, energy is saved mostly from a paradigm shift in the choice of technologies and raw materials, including the wide use of hydrogen (see Fig. 3.9).

3.1.3 Cost–Benefit Analysis of Investment in Different Scenarios

1.
Assessment of Energy Conservation and Carbon Reduction Potential in Industrial Sector

As the world’s largest manufacturer and a major developing country, China boasts an independent industrial system covering a full spectrum of sectors. Standing at the forefront of a new round of technological revolution and industrial transformation, it’s also challenged by the coexistence of advanced and obsolete production capacity and the imbalance of industrialization. Much awaits to be done in the promotion of mature low-carbon technologies and cutting-edge technological innovation for energy conservation and emission reduction of the industrial sector, where huge potential also exists in demand reduction, energy mix improvement, and upgrading of smart technologies. A comparison between the policy scenario and the 2 °C scenario is conducted as an example (see Fig. 3.10).

Under the reinforced policy scenario, the industrial energy demand is set to be 2.04 billion tce in 2050, which can be reduced to 1.62 billion tons under the 2 °C scenario through a bunch of technological and policy measures. In terms of activities, 50 million tce can be cut in energy demand of energy-intensive sectors through reducing the output of energy-intensive products while 45 million tons can be saved from that of non-energy-intensive sectors—a total of 95 million tons or 22.6% of the total energy conservation. In terms of technical route, optimized production processes, especially the massive deployment of deep decarbonization technologies in energy-intensive sectors helps reduce energy demand by 150 million tce, plus a 80-million-tons cut in non-energy-intensive sectors—a combined 230 million tons are saved, or 54.8% of the total energy conservation. In terms of energy efficiency, energy-intensive sectors are on track to reduce its energy use by 45 million tce by boosting energy efficiency while 50 million tons can be saved in non-energy-intensive sectors, adding up to 95 million tons or 22.6% of the total energy conservation.

2.
Cost–Benefit Analysis of Investment Under Different Scenarios

Now, the industrial sector boasts the greatest potential for emission reduction among all end-users, but the potential is likely to narrow down in the future with the rapid proliferation of energy-saving and carbon-reduction technologies and equipment. In the current stage, much potential still exists in emission reduction at low or negative cost in the industry, yet considering the fact that China shall remain the world’s biggest manufacturer over a long period of time, plus the inertia of industrial development and barriers of energy-saving and low-carbon technology progress, the rising cost of industrial emission reduction and increasing difficulties in deep emission reduction are inevitable. A look at the sources of emission reduction potentials shows that technical transformation in industrial production, development in energy efficiency technologies, and application of renewables mostly depend on an overhaul of the industrial investment structure and direction; however, a high level of electrification and hydrogen scale-up would rest on the supply of low-cost green electricity and hydrogen, of which the investment and benefit analysis goes beyond the industrial sector itself. Besides, cutting redundant demand for industrial products depends on the transition of China’s development model, the progress in China’s industrial productivity as compared to other countries, the implementation of industrial and restructuring policies and shifts in consumption pattern, etc. It would be difficult to carry out an accurate and quantitative assessment of the direct investment cost and benefit.

With these factors in mind, this research focuses on analyzing the main investment increment under the four scenarios, in other words, extra investment associated with shrinking demand due to restructuring will not be considered while investment in changes of technical routes, energy efficiency improvement, and energy or material substitution will be the focus of the study. A bottom-up method is employed and a production capacity resetting method is used for key sectors such as steel, cement, and petrochemical to compare the accumulative changes in investment in production capacity associated with production scale, technology and process improvements, by 2050 under different scenarios; for other industrial sectors, the accumulative investment demand for higher energy efficiency and electrification under different scenarios are compared through case studies of investment in energy conservation and electrification. For the industrial application of hydrogen, the statistics concerning investment cost is scant in existing studies and demo projects, while it remains unclear whether investment in hydrogen generation and transmission is included. In this study, a hypothesis is made that industrial hydrogen consumption is mainly generated from low-carbon energy without taking into account the investment demand for hydrogen generation.

Given the complexity of sectors, products and technical processes involved in the industrial sector, priority-setting and categorization shall be adopted in calculating energy-saving and decarbonization investment i.e. focusing on energy-intensive sectors such as steel and cement with non-energy-intensive sectors as secondary consideration, and categorizing mainstream energy-saving and decarbonization technologies into “average energy efficiency” (currently average performance), “advanced energy efficiency” (currently advanced performance), “leading energy efficiency” (globally leading performance) and “near theoretical efficiency” (close to theoretical energy efficiency) based on technical features, investment benefit, and application prospects, in order to explore the investment required for varied levels of penetration and structure of production capacity. Under the policy scenario, corporate energy efficiency witnesses continued improvement driven by technical progress, and the sector-wide energy efficiency migrates from “average” to “advanced” by 2050; under the reinforced policy scenario, cost-effective and energy-saving technologies are both adopted for the sector-wide energy efficiency to reach “leading” level by 2050; under the 2 °C scenario, cutting-edge and ground-breaking technologies and processes are deployed, helping most businesses to hit “near theoretical” energy efficiency with zero-carbon energy and carbon-free processes utilized to some extent; under the 1.5 °C scenario, high cost processes that drastically lower carbon emissions will be adopted on a massive scale.

Taking cement as an example, according to the Global Roadmap of Cement Sustainable Development in 2050 published by IEA, low carbon development is to be achieved in cement industry through enhancing energy efficiency, promoting alternative fuels, and applying CCS technologies. Building on the aforementioned research approach and scenario setting, and the investment needed for plants and processes of varied types of energy efficiency, the incremental investment for the cement industry and the investment required per ton of cement under different scenarios are calculated (see Fig. 3.11).

Under the reinforced policy scenario, the energy efficiency reaches “leading” level with alternative fuels making up 30% of the fuel mix, thus increasing the investment needed per ton of cement capacity to 840 RMB from 680 RMB under policy scenario, while the incremental investment under the reinforced policy scenario and policy scenario is 30 billion RMB. Under the 2 °C scenario, energy efficiency rises to “near theoretical level” with the penetration of 50% for alternative fuels and 30% for CCS, and the investment per ton of cement capacity rises to 1,200 RMB, an extra investment of 100 billion RMB compared to reinforced policy scenario. Under the 1.5 °C scenario, CCS penetration grows to 80% while alternative fuels rise up to 70% of the fuel mix, driving up investment per ton of cement capacity to 1,590 RMB with approximately 240 billion RMB more investment than the 2 °C scenario. Specifically, the application of CCS entails an extra investment of around 250 billion RMB while retrofitting for alternative fuels requires an extra 40 billion RMB, accompanied by a drop in energy efficiency investment of 56 billion RMB due to reduced capacity.

3.1.4 Key Pathways and Policy Enablers

1.
Structural Transformation and Shrinking Demand

The development of service-oriented economy and inherent restructuring of the industry will promise more economic output with less energy consumption. Due to the huge discrepancy of energy productivity among industries and sectors, generally speaking, the service sector requires less energy than the industrial sector, light industry less than heavy industry, and emerging industries less than traditional ones when generating the same economic output (Fig. 3.12). Changes in industrial structure, organizational structure and positioning of product value chain of a country all exert tremendous impact on the energy efficiency of a country in a broad sense. The replacement of traditional industries by emerging industries will spur economic restructuring and a fresh round of economic growth, during which the internal restructuring and industrial modernization will boost the efficiency of energy allocation among different sectors as the energy consumption per unit of output in high value-added industries is much lower than that of energy-intensive and traditional industries, providing a strong buttress for the overall energy productivity of the industrial sector. Studies have found that during the 11th Five-Year Plan period, restructuring only contributed 4% of energy conservation of the industry, but the figure surged to 34% during the 12th Five-Year Plan period and is on track to approach 50% during the 13th Five-Year Plan period [7].

Elimination of wastage due to massive demolition and construction and improvement in material strength and quality will cut the demand for energy-intensive products from the source. Statistics show that the demolished housing area in China is around 37 ~ 41%^{Footnote 2} of newly built commercial residential houses, and the demolished buildings of short life cycle account for around 23% of newly built ones in urban areas [8]. The demolished buildings in China are 25–30 years of age on average despite their designed service life of 50–100 years. Such massive demolition and construction have been the cause of severe waste of energy and resources and environmental pollution. Based on 2.5–3 billion m² of newly completed buildings annually and an annual demolition of short-lived buildings comprising 25% of such, an extra 40 to 50 million tons of steel and 220 to 260 million tons of cement are consumed annually. Taking into account the energy consumed throughout the construction process, an extra energy consumption of approximately 120 million tce is recorded each year—around 5% of the current energy consumption countrywide. What’s also generated from this process are 400 million tons of waste, accounting for roughly 40% of total waste throughout the year. Apart from waste reduction efforts, wider acceptance of high-strength products will significantly minimize the use of materials, which represents a major step to build a resource-efficient and environmentally-friendly society. It not only contributes to energy saving and emission reduction, but also produces apparent economic benefits as such move reduces construction spending and the overall cost, and is pivotal for facilitating the restructuring and upgrading of related industries. Taking high-tensile steel bar as an example, such twisted steel bar of a tensile strength of 400 MPa or above features desirable strength and overall performance. 12%–14% of steel consumption can be reduced by replacing steel bar of 335 MPa with that of 400 MPa; while a further 5–7% reduction will be possible if steel bar of 400 MPa is replaced by that of 500 MPa. The use of high-tensile steel bars in high-rise or wide-span buildings is even more effective as the use of steel bars can be cut down by 30%.

The export product mix shall be optimized to reduce the export of “embodied energy”. China being the world’s biggest trading nation has seen massive export of “embodied energy” in its huge export to the overseas market. Many researchers in China and elsewhere have analyzed and calculated the embodied energy export in China’s foreign trade by the input–output method, concluding that such embodied energy export has expanded by 3.3 times from 338 million tce in 1995 to 1.438 billion tce in 2010, making up 25.8 and 44.3% of the total energy consumption of the year. With embodied energy import associated with general commodities and energy products deducted, the net export of embodied energy soared from 35.67 million tce in 1995 to 415 million tons in 2010, a 10.6-fold increase, and the share in total energy consumption of the year spiked from 2.7 to 12.8% [9]. The massive growth in net export of embodied energy arising from the rapid expansion of export constituted a key driver of the upsurge in China’s energy consumption in recent years.

2.
Technical innovation and Circular Economy

Switching from traditional carbon-intensive production mode towards low-carbon or zero-carbon techniques and products while improving product quality and life span would deliver high potential for energy conservation and emission reduction. Taking cement as an example, replacing cement ingredients or fuel with low-grade materials such as urban waste and industrial waste and by-products can dramatically cut down energy consumption and emissions. In the chemical fertilizer industry, using blue-green algae to produce nitrogen or nitrate fertilizers can effectively reduce CO₂ emissions from ammonium synthesis. In steel industry, CO₂ emissions per ton of steel using DRI is only 1/3 of that of BF-BOF steelmaking process, and the integrated electrolysis technology and renewable power process—still under development—could go one step further to enable near-zero carbon emission [10]. Meanwhile, among ten innovative energy-saving and decarbonization technologies yet to be commercialized in electrolytic aluminum industry, such as inert electrode, wet cathode, and multipole slot technology, techniques including carbothermic reduction of alumina and carbothermic reduction of kaolin are able to save 20–40% energy relative to traditional electrolysis techniques [11]. Besides, polymer (such as ethylene) production from CO₂ electrolysis process is also under development [12].

Revolutionizing traditional production and consumption patterns, actively developing circular economy, and reducing industrial output from primary resources constitute an integral part in driving down energy demand and carbon emissions of the industrial sector. According to a study by the International Resource Panel, by 2050, the development of circular economy would reduce global resources exploitation by 28%, which, coupled with climate policies and actions, can save approximately 63% of global CO₂ emissions while ensuring a 1.5% growth in global economic output [13]. Studies have shown that in energy-intensive industries such as steel, cement, electrolytic aluminum, and plastics, 3.6 billion tons of CO₂ emissions can be prevented each year by developing circular economy. Taking plastics as an example, with every million ton of plastics recycled, CO₂ emissions from 1 million cars will be offset [14]. With the aggregate stock of various products reaching a high level in China, vast potentials are promised in expanding recycling. Research findings have indicated that by 2050, scrap steel can take up 31–40% in steelmaking; alternative materials such as mixed materials can account for 35% in cement output; 40% of primary aluminum can be produced from recycled aluminum while 81% of paper and carton output can be based on recycled paper [15]. By expanding plastics recycling, demand for ethylene production is set to decline by 1/3 by 2050 [10]. Yet expansion of recycling is challenged by technological and market barriers as well as policy inadequacies, etc. Waste landfill is a case in point: landfill cost in China is only 7% of that in UK, incentivizing a preference for landfill for most plants in China over the possibilities of reduction and recycling [16].

3.
Technological Advancement, Energy Conservation, and Efficiency Boost

The spread of advanced energy-saving technologies and equipment helps to continuously tap into the potential of energy conservation and emission reduction in the industrial sector. Despite notable improvement in overall industrial technologies in China, great potential exists in enhancing overall energy efficiency via leading and mature technologies. Meanwhile, with technical progress in medium and low-heat residual heat and pressure utilization and industrial intelligence, new possibilities for energy conservation and decarbonization keep cropping up. In the steel industry, analysis finds that from 2010 to 2020, the potential for energy conservation and decarbonization arising from technological advancement has exceeded that from restructuring [17]. Meanwhile, through broader application of 36 typical energy-saving technologies, the steel industry saw its energy consumption reduced by 7.8% and CO₂ emissions by 10% in 2012, where secondary heating, power generation with residual heat from sintering and TRT are among the most promising technologies of energy conservation and decarbonization. Meanwhile, synergistic benefits such as pollutant reduction and water conservation also bear a major impact on the technical economic viability. 10 technologies are cost effective measured by energy-saving benefit alone, while over two thirds are cost effective if co-benefits of energy conservation, emission reduction and water-saving are taken into account [18]. A “bottom-up” study on the potential of 28 energy-saving technologies in China’s steel industry has demonstrated that from 2010 to 2050, the comprehensive energy consumption per ton of steel can be cut by 30–31% for blast furnace steelmaking and by 65–76% for electric furnace steelmaking [19]. Further analysis of the emission reduction potential and cost of the steel industry finds that the extension of mature energy-saving technologies promises the best potential and cost-effectiveness, which can deliver a total emission reduction of 818 million tons between 2015 and 2030 and energy savings of 216.9 billion RMB; besides, numerous negative-cost emission reduction technologies are available in the steel industry by 2030 [20]. In the cement industry, a clear prospect of emission reduction exists in phasing out obsolete production capacity and promoting existing mature and efficient technologies. The alternative fuel technology for cement kiln will demonstrate great potential between 2020 and 2030 while new alternative cement technology will be very attractive despite its immaturity at present [21].

A higher level of precise management empowers smart energy use and energy saving via big data. The growing popularity of “Internet plus” and IT application make real-time monitoring, precise analysis, and dynamic adjustment of energy consumption possible for businesses. In the future, China should place greater priority to improve the intelligence digitalization of its industrial development, with whole-process management of the entire energy consumption in production and better utilization of big data for energy conservation. For instance, the eTelligence at Cuxhaven in Germany’s energy internet pilot project “E-energy” allows real-time power supply and demand to be released on the internet platform based on CCHP. To illustrate, in case of wind power surplus, power companies would send a low price alert to major industrial users, who would turn on the cooling and heating tanks to balance energy supply and demand and reduce power bill. For another example, many of the comprehensive energy service projects widely launched in China enable online monitoring of energy consumption by installing monitors and sensors on key equipment in a bid to materialize on-line monitoring of energy use, compile and analyze data, identify abnormalities and reduce waste. In a word, digitalization and intelligence application in the energy sector make for systematic, precise and digital energy conservation and stand to be the “amplifier” of energy efficiency in the future.

4.
Electrification and Changes in Energy Mix

Promoting electrification of the industry while replacing fossil energy with low-carbon alternatives offer considerable opportunities for emissions reduction. For sectors with greater potentials such as non-ferrous metal and chemicals, the co-benefit of low-carbon electricity may bring about deeper decarbonization. But some researchers argue that as China’s current power mix is predominated by coal with a high CO₂ emission intensity, improved industrial electrification in the short term makes little difference to emission reduction. In terms of thermal demand alternatives, tremendous potentials exist with low-carbon electricity-based heat pump and electric boiler technologies as alternatives for low-temperature industrial heat demand, as heating demands at lower temperature (below 100 °C) can be met by heat pump, whose energy efficiency is 2 to 3 times higher than traditional boilers; while for mid-temperature heat demand (100 °C–500°C), alternative fuels such as biomass, low-carbon electricity and hydrogen are viable options. Studies have revealed by 2040, heat pump technology would represent a cost-effective solution to cater 6% of industrial thermal demand worldwide [4]. Besides, EAF, ultrared heating, and induction heating also provide opportunities, albeit at a limited scale. But for the industry’s demand for higher temperature, technological revolution is essential if low-carbon electricity is to replace traditional thermal boilers.

Hydrogen and biomass are pushing their borders in petrochemical, chemical, and steel industries and are expected to underpin deep decarbonization across the industrial sectors. Expanding the use of industrial hydrogen, especially in combination with hydrogen generation from renewable electricity, could enable substantial reduction in carbon emissions from industrial production processes and energy consumption. In the steel industry, DRI technology allows pellets to be directly reduced under lower temperature with green hydrogen as the reducing agent to produce sponge iron (directly reduced iron), with vapor and extra hydrogen released from the top of boiler, where the vapor can be reused after condensation and washing, thus achieving deep decarbonization. According to the statistics obtained by SSAB, CO₂ emissions per ton of steel produced with long process technique is 1600 kg (the average level ranges between 2000 and 2100 kg in other European countries) and electricity consumption is 5385 kWh; while CO₂ emissions per ton of steel produced with HYBRIT technology is only 25 kg with 4051 kWh of electricity consumed. In petrochemical and chemical sectors, combining technologies such as renewable electricity and hydrogen generation from water electrolysis, or developing cutting-edge technologies such as hydrogen generation from methane decomposition can reduce carbon emitted from the traditional SMR process. For biomass, studies have shown that increased use of biomass can replace 15–20% of energy consumption from industrial raw materials and fuels by 2050; for example, biodiesel can be a source of bionaphtha for refineries while ethylene can be produced from biopetroleum through dehydration, the latter already industrialized in Brazil [5]. Yet as things stand, cost remains a main barrier that impedes wider application of alternative energy in the industry, which might require synergistic transformation of technological process and infrastructure system.

5.
Emission Reduction in Industrial Process and Development of Negative Emission Technologies

CO₂ emission reduction from industrial process can be achieved mostly through alternative materials or fuels and system efficiency upgrade, where limitations abound in technological options, and deep emission reduction calls for improved technical process or innovation in materials, etc. Taking cement as an example, replacing limestone with newly developed adhesive materials can reduce CO₂ emissions from industrial process. Some new adhesives can even react with CO₂ to bring down carbon intensity in cement production by 30–90%. Meanwhile, some industrial companies are currently exploring the use of high temperature solar heat to enable lower emissions from alumina calcination in the aluminum industry and limestone calcination in the cement industry by developing solar rotary kiln [22]. Hydrogen also stands to be a high achiever in reducing emissions from industrial processes. Electrolyzed water based on renewables can be used to produce hydrogen-rich chemicals such as ammonia or methanol for various industries such as precursors (as in nitrogen fertilizers), reducing agents (as in low-emission steelmaking) and fuels, while hydrogen and CO₂ can be used for producing olefins and aromatic hydrocarbons.

Embracing negative emission technologies such as CCS will make a significant difference to the emission reduction target. For instance, in the cement industry, up to over 90% of CO₂ emissions can be captured by post-combustion capture (chemical absorption or membrane separation), oxy-fuel combustion (full or partial), e, or calcium cycle, etc. In the steel industry, the ratio exceeds 85% via chemical or physical absorption, membrane separation, and oxy-fuel combustion. In coal chemical industries such as ammonia synthesis, methanol production and coal to olefins, CO₂ captured can be used to produce chemical products such as carbonates, borax, dicyandymide, hydroxy, etc., which is expected to prevent over 300 million tons of CO₂ emissions.

3.2 Building Sector

3.2.1 Status and Trend

1.
Overview of Building Energy Consumption in China

Building sector represents a major energy consumer, consisting of residential buildings as well as public and commercial buildings. It refers to the energy consumed to provide such services as heating, air-conditioning, ventilation, lighting, cooking, domestic hot water, electric appliances and elevator/escalator, etc. Energy consumption of residential buildings mainly refers to energy consumed during the operation phase of residential buildings, including energy consumed from the use of various devices in the building to cater for daily life, study and rest, etc., mostly to meet the needs of residents and enhance services. Energy consumption of public and commercial buildings, on the other hand, refers to the energy consumed in the operation phase of public and commercial buildings to provide their designed functions. Such buildings refer to all non-residential buildings except for industrial production facilities, such as office buildings, schools, hospitals, shopping malls, hotels, stadiums and gymnasiums, theaters and transportation hubs, etc. Types of energy consumed in building operation mainly include electricity, coal, natural gas and heat from centralized heating system. Currently, building sector accounts for around one third of the world’s total energy consumption [23].

China’s building sector has witnessed soaring energy consumption in recent years, as illustrated in Fig. 3.13 [24]. In 2018, the final commercial energy consumption of building sector stood at 690 million tce (primary energy consumption converted as 1 billion tce),^{Footnote 3} making up approximately 20% of total final energy consumption across the country; commercial energy consumption and non-commercial biomass totaled 780 million tce (energy consumption of biomass at around 90 million tce). In 2018, electricity consumption of building sector was 1.7 trillion kWh, an electrification rate of 30%. The energy consumption and energy use intensity per capita has more than doubled compared to 2001.

In 2018, carbon emissions associated with fossil fuel consumption in building sector in China totaled 2.09 billion tCO₂^{Footnote 4} [24] as illustrated in Fig. 3.14, of which indirect carbon emissions from electricity consumption was 920 million tCO₂, or 44% of carbon emissions associated with the building sector; carbon emissions attributable to heat consumption in centralized heating in North China comprised 22%. From the countrywide perspective, carbon emissions per capita from building sector was 1.5 tCO₂/cap.

Continuous adjustment and growth of building scale is one of the key drivers for the spike in building energy consumption in China: on one hand, the ever increasing building area produces massive future demand for energy consumption in building operations, as more energy is needed to accommodate more buildings to function and provide services; on the other hand, a tremendous amount of building materials are used for massive construction works, and large quantities of energy consumption and carbon emissions result from the production of building materials.

China has seen a boom in new building construction since 2001 with over 1.5 billion m² of completed floor area annually and a whopping 2.89 billion m² in 2014 [25] (Fig. 3.15). However, with changes in the macroeconomic landscape, the annually completed floor space has diminished since 2015. Yet the massive newly completed floor area has resulted in continued growth in the building stock in China. In 2018, total building area in China was approximately 60.1 billion m², including 24.4 billion m² of urban residential buildings, 23 billion m² of rural residential buildings and 12.8 billion m² of commercial and public buildings (C&P buildings) [24].

Despite the surge in energy consumption in the building sector of China, its intensity is still rather low compared to developed countries, as illustrated in Fig. 3.16.

From a historical point of view, energy consumption per capita in most of the developing world has experienced a rapid climb before leveling off or a steady growth, but the eventual figure of the plateau varies greatly among countries. Currently the energy consumption per capita in China is roughly 0.5 tce/cap, close to that of South Korea in the 1980s and of Japan or Italy in the 1960s. As China is still undergoing relatively fast economic growth, there is possibility for another spike in building energy consumption in the future. In other words, China is now at a crucial juncture of deciding the pathway toward an energy-efficient building sector, and the choice would mean a great deal to the future trend, which directly bears on the trajectory of the total energy consumption and carbon emissions of China.

2.
Building Energy Consumption by Sub-sectors

Given the differences in winter heating pattern, building types in urban and rural areas, lifestyle as well as people’s activities in residential and public buildings and energy-powered equipment between southern and northern regions in China, building energy consumption can be grouped into four sub-sectors, namely north urban heating (NUH), urban residential buildings energy consumption (UR buildings, excluding NUH), commercial and public building energy consumption (C&P buildings, excluding NUH), and rural residential buildings (RR buildings) energy consumption [24].

Each accounting for around one fourth of total building energy consumption in China, these four categories each features its own characteristics. A look at their changes between 2001 and 2018 shows a substantial growth in total energy consumption of all categories except for biomass in rural regions that saw continuous decline, as illustrated in Fig. 3.17 [24].

Changes in total energy consumption and intensity between 2001 and 2018 by category and the main causes are provided below:

Energy consumption for NUH is rising but with a continuous drop in consumption intensity, which signals the progress made in building energy conservation and clean heating in recent years as the average energy consumption per unit of floor area has fallen from 23 kgce/m² in 2001 to 14 kgce/m² in 2018, to which major contributors include better building insulation, higher proportion of efficient heat sources and improvement in heating system efficiency.

Total energy consumption of C&P buildings (excluding NUH) registers a four-fold increase, accounting for the biggest share among the four categories with the consumption intensity per unit area on constant rise from 8 kgce/m² to 14 kgce/m² and electricity use per square meter climbing from 35 kWh_e/m² to 63 kWh_e/m². The growth in total area of public buildings and proportion of large-scale public buildings and the expanding demand for energy are the main contributors.

Total energy consumption of UR buildings (excluding NUH) has more than doubled, with average energy consumption per household rising from 253 kgce/hh to 469 kgce/hh and electricity consumption per household from 794 kWh_e/hh to 1809 kWh_e/hh. The increase is mainly attributable to the growing demand driven by domestic hot water, air-conditioning and home appliances, etc.; with energy-saving lamps widely used, no significant increase in lighting energy consumption is observed in households while the energy consumption intensity of cooking remains largely unchanged. Yet the growing energy consumption of winter heating and home air-conditioning in regions with hot summer and cold winter has sparked extensive debates on the path of energy conservation for heating and air-conditioning.

Commodity energy consumption has doubled in RR buildings, accompanied by a continuous and rapid drop in the use of biomass. Greater access to electricity, better income and increased number and use of home appliances in rural households are the main drivers for the surging electricity consumption per rural households. Meanwhile, a growing portion of biomass is replaced by other commercial energy, resulting in the sharp drop in the share of biomass in domestic energy consumption in rural regions. An analysis on the development of energy consumption in rural residential households indicates no major change in total consumption per household but a steep reduction in the share of biomass; the commercial energy consumption and electricity consumption per household rose from 459 kgce/hh to 1131 kgce/hh and from 435 kWh_e/hh to 1770 kWh_e/hh respectively while biomass consumption per household nosedived from 1212 kgce/hh to 612 kgce/hh.

3.
Forecast in Related Studies

Much has been studied in the energy consumption of the building sector in China, of which some results are illustrated in Fig. 3.18.

As is illustrated above, under reference scenario, it is generally believed that building energy consumption in China will experience sustained growth by over 60%; under the scenario where ambitious energy-saving and emission-cutting measures are taken, energy consumption of the sector is generally believed to reach a plateau or start to fall around 2030 until it reaches 600–800 million tce by 2050, close to the current energy use.

3.2.2 Scenario Analysis

1.
Scenario Design

The following four scenarios are set for this research:

a.
Policy scenario

The policy scenario is based on the assumptions that the occupant behavior modes in China will move towards an intermediate level and that the building stock and energy intensity will stay on the current track of growth, the energy consumption per capita by 2050 would draw close to energy-efficient countries in the developed world, with energy-saving policies in the sector introduced and implemented on schedule. However, stricter policies arising from the needs to tackle the climate change, revolutionize the energy system and curb environmental pollution are excluded, and no guidance is provided for people to change their lifestyle.
b.
Reinforced policy scenario

The reinforced policy scenario assumes that the building stock and energy intensity would grow to some extent yet under further control, with energy consumption per capita still lower than the overwhelming majority of developed countries by 2050, that energy efficiency policies for buildings would be stricter than the current ones under China’s climate commitment and some form of encouragement are provided to change people’s lifestyle.
c.
2 °C scenario

The 2 °C scenario is based on the assumptions that existing constraints in carbon emissions, resources and environment in China are fully considered for energy consumption in the building sector and that frugality is preserved to the maximum provided that people’s fundamental demand for a satisfactory livelihood is met, the policies will be reinforced across the board with policy measures proposed to cap energy consumption and carbon emissions and their intensity; energy-saving technologies will sustain steady development with significantly enhanced efficiency and slight increase of total energy consumption. The growth of building stock and energy intensity will gradually decline and total carbon emissions from the building sector will peak before 2030 for China to meet the 2 °C temperature target.
d.
1.5 °C scenario

Based on the 2 °C scenario, 1.5 °C represents a more ambitious target to be achieved through a more proactive electrification journey with less use of fossil fuels and continual improvement in energy efficiency, thus further cutting direct emissions by 2050 and enabling China to meet the 1.5 °C target.

For clarification, variation in key parameters in different scenario settings is shown in Table 3.6.

Table 3.6 Parameters set for different scenarios

Full size table

2.
Results of Scenario Analysis

A scenario analysis of China’s building stock, energy consumption and carbon emissions by 2050 is conducted based on the above assumptions. 2050 Energy consumption by category is shown in Tables 3.7, 3.8 and Fig. 3.19.

Table 3.7 Energy consumption by type under reinforced policy scenario in selected years

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Table 3.8 Energy consumption by category under 2°C scenario in selected years

Full size table

Under the policy scenario, building energy consumption would continue its rise until reaching roughly 990 million tce in 2050, with electrification rate accounting for 50% of energy consumption and 10% coming from coal consumption; under the reinforced policy scenario, energy consumption of the sector reaches a plateau by 2030 and starts to fall after 2045, reaching approximately 850 million tce in 2050, with electrification making up 56% of energy consumption and coal less than 5%; under 2 °C scenario, energy consumption of the sector begins its downward trajectory from 2020 to around 710 million tce in 2050, with electrification comprising 63%, the use of coal almost phased out and biomass increasing to 77 million tce thanks to the expanded penetration of efficient use of new biomass resources; under the 1.5 °C scenario, energy consumption of the sector drops to 620 million tce, with 78% of electrification and biomass energy of around 90 million tce.

A drop is detected in the aggregate of direct carbon emissions and indirect emissions from heating under all scenarios (Table 3.9). By 2050, direct carbon emissions stand at roughly 831 million tCO₂ under the policy scenario, 562 million tCO₂ under the reinforced policy scenario, 306 million tCO₂ under the 2 °C scenario and 81 million tCO₂ under the 1.5 °C scenario.

Table 3.9 Energy consumption and carbon emissions in selected years

Full size table

Energy consumption by 2030 and 2050 under different scenarios are illustrated in Fig. 3.20. As is shown in the Figure, building energy consumption is set to continue its growth for a period of time compared to 2015. With the implementation of relevant policies, total energy consumption of buildings would go down, with less use of coal and natural gas and bigger share of electricity and increased biomass consumption.

3.
Development Trend of Energy Consumption by Category

The energy consumption by category under different scenarios is illustrated in Fig. 3.21.

With continuous improvement in building performance and optimization of heating source mix in northern China, energy consumption of NUH is expected to fall continually, with a drop of approximately 30% by 2050 under the policy scenario and 70% under the 2 °C scenario. In the future, it is advised to prioritize the use of excess heat from industrial production and various forms of CHP for heating in northern urban China, and heat pump is recommended for regions where such excess heat is out of reach. Meanwhile, further progress should be seen in overheating due to excessive or unevenly distribution of heating.

As the demand for improvement living standards and services still prevails in China, energy consumption of both UR and C&P buildings (excluding NUH) continues to rise. Under the policy scenario, energy consumption of urban residential and public buildings experiences a two-fold and one-fold increase by 2050 respectively, compared to 1.5 times and 50% under the 2 °C scenario. For these two types of buildings, proper guidance of service demand and behavioral patterns could obviously reduce energy consumption.

For C&P buildings, new building construction in the next stage mainly caters to the demand for better public services and the development of tertiary industry. Proper control on the number of large-scale and energy-intensive buildings and active adoption of energy consumption quota are expected to curb the growth of energy usage. For residential buildings, energy consumption for cooking and lighting has already entered a plateau and the construction of new buildings going forward are mostly energy consumed by air-conditioning, heating in regions with hot summer and cold winter and home appliances.

Growing urbanization is accompanied by a decline in rural population. Despite the constant rise in energy consumption per household, total energy consumption of rural residences is on the decrease, dropping by 25% and 45% by 2050 respectively under the policy scenario and the 2 °C scenario. Energy-efficiency retrofitting of rural houses will go a long way toward reduced energy consumption, especially in the northern region. Another key contributor is biomass. Under the 2 °C scenario, efficient biomass recycled from the fields is preferred by rural residents to meet their heating and cooking needs in an efficient manner.

4.
Carbon Emission Peaking and Near-Zero Emission

The foregoing analysis shows that direct emissions from buildings have plateaued in recent years and kept falling after 2020. With indirect emissions taken into account, however, carbon emissions from buildings are on the rise in recent years. In the context of changes in emissions from electricity under different scenarios, total emissions from the building sector are illustrated in Fig. 3.22.

The figure shows that under the policy scenario, total carbon emissions from the building sector peaks around 2030 at close to 2.3 billion tCO₂ before starting its decline in 2035 to approximately 1.56 billion tCO₂ in 2050; under the reinforced policy scenario, total carbon emissions hit the peak around 2025 at approximately 2.1 billion tCO₂ and fall back to around 1.13 billion tCO₂ in 2050; under both the 2 °C and the 1.5 °C scenarios, the peak occurs around 2020 at respectively 2.01 billion and 2 billion tCO₂, followed by steady drop in carbon emissions from the building sector under the 2 °C, gaining speed from 2035 until coming close to 400 million tCO₂ in 2050; under the 1.5 °C, carbon emissions begin a steep fall from 2030 and slow down after 2045 until reaching roughly 80 billion tCO₂ in 2050.

To make the 1.5 °C scenario a reality and bring about near zero emission, the following efforts are needed: ambitious move towards higher energy efficiency and changes in energy consumption mix for buildings; encouragement of green lifestyle and employment of efficient and green technologies to minimize energy demand; a much less use of fossil fuels in heating, cooking and domestic hot water; higher penetration of electrification and rational and efficient use of biomass to reduce carbon intensity of energy consumption. At present, compared to other scenarios, no apparent technological barriers exist for the building sector to achieve near-zero emission, the challenge are mostly associated with the proliferation of technologies, like pushing for changes and upgrades of heating sources in the north, changes in residents’ cooking habits and utilization of biomass, etc. Meanwhile, under this scenario, the proportion of centralized heating in northern urban regions will see a significant decline because of shrinking coal-fired power and full usage of excess heat. Higher level of electrification means that natural gas pipelines are no longer necessary for buildings, and these changes will trigger a shift in the demand for related infrastructure.

3.2.3 Evaluation of Emission Reduction Technologies and Pathways

This section will provide an introduction of key emission reduction measures and their potentials in each of the four categories of energy consumption.

1.
NUH (Northern Urban Heating)

The main solution lies in reducing the actual heat needed for buildings, and upgrading the heat source mix and system efficiency [31].

The former includes higher standards of building envelops to minimize the heat demand for newly constructed buildings and retrofitting the existing building envelops. Notable progress has been made through these two steps during the past three decades, yet there is still room for improvement. Meanwhile, with the urbanization drive in China, the existing buildings are gradually overtaking new construction, which means a growing importance of retrofitting existing buildings for enhanced energy efficiency.

To improve the heat source mix, it is advised to prioritize low-grade excess heat from CHP and industrial production. And for buildings where low-grade excess heat is unavailable, heat pump is recommended. In recent years, with the steady expansion of clean heating in northern China, CHP is rapidly gaining prominence, so are gas heating, heat pumps and industrial excess heat, but such excess heat is yet to be fully harnessed. Meanwhile, with maturing technology of long-distance heat transfer, location is less of a constraint for excess heat utilization, which also makes much more economic sense. Persistent energy-saving renovation and clean heating penetration, technology development, comprehensive enhancement in system and equipment efficiency and remediation for overheating heating will also contribute to energy conservation and emission reduction on this front.

Energy-saving potentials of key measures under different scenarios are illustrated in Fig. 3.23.

2.
Public and commercial Buildings (Excluding NUH)

Energy consumption in this category is set to rise further. But the growth can be slowed down through enforcing energy saving and emission reduction measures. In light of the overall principle of capping energy consumption and intensity, the whole-process building management with curbing actual energy consumption as the main target will be the central and most effective step to curtail energy consumption in this category and achieve energy saving and emission reduction [32].

Energy-saving feasibility study should be conducted on building design and renovation plan, where the demand for indoor environment, building stock control, etc. should be discussed, and passive technologies and renewables such as solar PV should be fully utilized to optimize the design, save energy and reduce emissions.

For the building equipment and systems, there are already cases of high energy consumption accompanied by high energy efficiency as a result of the lopsided pursuit of higher equipment efficiency, i.e. behavioral changes triggered by equipment replacement, eventually leading to much more energy consumption. Therefore, the development of equipment system should address both efficiency and its compatibility with use cases. Meanwhile, to boost electrification of public and commercial buildings, domestic hot water, disinfection and vapor generation equipment should gradually switch to electrothermal pump and direct electrothermal appliances, etc. Examples have proven that for healthcare facilities with special need for vapor, production of hot water or vapor with distributed electrothermal approach should be encouraged as it consumes less energy than centralized gas-fired boilers due to less heat loss during transmission.

In addition, optimizing operation management represents another major energy-saving pathway in this category. This includes encouraging users and operators to adopt more energy-efficient ways of use, and promoting EPC, etc.

Energy-saving potentials of each measure are illustrated in Fig. 3.24.

3.
Urban Residential Buildings (Excluding NUH)

Like public buildings (excluding NUH), growing energy consumption is also expected of this sector, and interventions are needed to mitigate the surge [33].

To upgrade the design of residential buildings, possible measures include promoting passive energy-saving technologies (such as the use of natural ventilation and lighting, improving building envelope and providing shade on the external façade of the building, etc.), improving residential community planning and using more renewable energy such as solar PV.

Studies have shown that lifestyle mostly explains why energy consumption in China is significantly lower than the developed world. To enable energy-saving and low-carbon development, its essential to sustain the current green lifestyle. Meanwhile, technologies adaptable to green living shall be developed to avoid luxurious behavioral changes due to technological option. For example, the mode of using heating and cooling only when needed should be encouraged, and the use of energy-intensive home appliances shall be discouraged.

Currently, residential buildings are still heavily reliant on gas for cooking and domestic hot water, prompting greater efforts to increase electrification in the energy mix. Various types of electric cooking utensils and electric heating for domestic hot water are mature enough to meet residential needs, and guidance in lifestyle, especially in the transformation of traditional ways of cooking, is vital to promote these technologies.

Potential of each measure is illustrated in Fig. 3.25.

4.
Rural Residential Buildings

In view of the type of buildings, people’s lifestyle and resources endowment in rural regions, the notion of “coal-free villages” might be an option in the north and “eco-villages” in the south to enable energy-efficient and low-carbon development in rural regions [24].

Compared to urban buildings, rural residences have much room for improvement in terms of building performance, giving rise to the need of green retrofitting to enhance the energy efficiency. In northern regions, better building envelop is needed to provide more effective insulation, and passive solar power technology can be deployed to cut the heating demand in winter; while in southern regions, more effective insulation is also desired for building performance through passive cooling technologies.

Now, many rural households are still using traditional biomass or bulk coal for heating and cooking, which is inefficient and causes indoor air pollution. It is recommended to switch to more efficient appliances for heating and cooking, such as efficient and clean biomass combustion.

Moreover, optimized energy mix and better use of renewables are also important steps. Northern regions are advised to reshape the system of rural energy supply with full use of biomass and solar power, among other renewables to phase out coal in domestic use. Southern regions, on the other hand, are encouraged to be coal-free and maximize the use of all renewables.

Potentials of each measure are illustrated in Fig. 3.26.

3.2.4 Implementation Pathway & Policy Recommendations

Joint efforts are indispensable for multiple stakeholders to adopt policy measures from different angles to secure green and low-carbon development of the building sector. Given a sound planning of the building size, a robust development roadmap for low-carbon buildings should be devised with energy demand reduction and energy structure improvement as the shared targets and the development of energy technologies and guidance for lifestyle as major approaches.

1.
Setting a Cap on Total Building Stock

Total building stock is a significant factor for energy consumption and building emissions, and appropriate planning to cap total building stock in the future are necessary for low carbon development of the building sector [34].

One the one hand, the overall building stock must be checked and the total floor area of civil buildings should be kept under 74 billion m². Currently the building area per capita in China is close to and even exceeded the level of some developed countries in Europe and Asia. Even with the continuous growth of urbanization in the future, the demand for new buildings is limited based on the current building floor area per capita. So new construction projects and new buildings must be put under strict control.

On the other, massive demolition and construction projects must be curtailed with advancement in maintenance technologies to improve the ratio of maintenance and upgrading of buildings. During the last two decades, an enormous number of houses and infrastructure projects have been built in China, and going forward, the focus should shift from massive construction to massive maintenance, renovation and function upgrades, i.e. from demolition and construction to life cycle extension and quality upgrade.

2.
Building an Energy Conservation System with “Dual Controls”

A “dual control” system—policies for capping both total amount and intensity for building energy conservation—should be created with actual energy consumption as the core criteria for assessment. It is advised to encourage the introduction of policies and regulations concerning building energy conservation at local levels on a case-by-case basis, thus putting into practice the energy consumption and intensity control measures on the ground. Meanwhile, to facilitate the execution of control measures, Standard for Building Energy Consumption should be revised and updated and used as the master standard for creating a supporting standard system [35].

Clear and consistent building energy consumption data is the basis of data-driven building energy saving efforts. It is recommended to implement Classification and Presentation of Building Energy Use Data in a timely manner and improve the calculation of various metrics. At the same time, enhancements on the accuracy, availability and transparency of the rules governing building energy use data would provide better support for the energy-efficient and low-carbon development of buildings [36].

3.
Realizing Low Carbon Structural Transformation

It is crucial to move toward a new pattern of building energy use and form of system, and incorporate restructuring efforts in the building sector for low-carbon transformation in the building development goals [37].

Major steps should be taken to promote all-round electrification, PV buildings and absorption of renewable power to accommodate the uniqueness of future energy supply. Mature technologies are available to meet end-use building demand through electricity, but guidance needs to be provided for people’s lifestyle and behavior modes, especially for the change of traditional cooking method. Roofs and vertical façades of buildings exposed to sunlight should be fully harnessed to roll out PV buildings and increase the renewable power generation of the buildings themselves. It is suggested to vigorously develop flexible power consuming buildings integrating DC distribution, distributive power storage and smart charging piles in cities and towns to alleviate power shortage. In rural regions, in contrast, PV roof and wind and solar power penetration in DC microgrid should be developed in full scale with changes in power consumption modes.

Large quantities of fossil fuels are currently used for NUH. The heating potential of low-grade residual heat from CHP and industrial production should be fully tapped as the primary heat source for NUH. Clean heating renovation based on natural gas boilers should not be furtherly encouraged. Instead of determining power generation by heating supply in thermal power stations, large-capacity power storage installations and electrothermal conversion equipment such as heat pump should be built in heat source facilities to materialize the coordination of heat and power.

Ambitious actions should be encouraged in rural regions to develop and efficiently use biomass energy and put in place a system of biomass acquisition, processing and sales. Through compression molding of solid fuels and biogas scale-up, local biomass resources can be fully tapped to meet local demand for cooking, domestic hot water and part of heating. This could curb GHG emissions from compost and straw returning to field while creating opportunities for products and industries in biomass collection, processing and application.

4.
Providing Guidance for Green Lifestyle

Variance in usage patterns is the key reason for a much-lower building energy intensity in China than in the developed countries. Apart from encouraging green lifestyle, it’s also a priority for building energy-saving efforts to design and construct buildings and systems that are compatible with the traditional way of energy-saving for residents [38].

The fact that building energy intensity is lower in China than in the developed world is best explained by the green behavior pattern that should be encouraged instead of jumping on the bandwagon of a luxurious lifestyle. In line with Master Plan of Building a Green Life Campaign, guidance for green lifestyle should be reinforced during campaigns to build green communities as well as green buildings, and building energy-saving awareness should be raised in other green initiatives in collaboration with other ministries and commissions.

The need for energy-saving technologies stems from behavioral pattern, which is in turn subject to the guidance of technologies. While arousing people’s awareness for a green lifestyle, buildings and systems compatible with user habits should be designed and constructed. Building designers should prefer nature based concepts and advocate the preference for distributive AC systems. Technology assessment should prioritize behavioral pattern consistent with a green lifestyle.

5.
Developing Feasible Low-Carbon Technologies

Suitable energy-saving and low-carbon technologies hold the key to energy efficient development of the building sector. Scenario and pathway analyses point to the need for further breakthroughs in key energy-saving technologies, including clean heating for northern China, DC building technology enabling flexible power use in buildings, building and equipment system design and operation methods compatible with behavioral pattern and renewable energy utilization (such as efficient biomass utilization, integrated PV building technology), etc.

As evidenced by many cases, the one-sided pursuit for new technologies and high efficiency may result in high energy efficiency and high energy consumption, eventually causing buildings to consume more energy [38]. Therefore, technological decisions should be made with outdoor weather conditions and corresponding behavioral pattern taken into account and actual energy consumption as a key metric for evaluation.

The following roadmap for future low-carbon building development is shaped based on the above analysis, as illustrated in Fig. 3.27.

3.3 Transportation Sector

3.3.1 Development & Trend of the Transportation Sector

3.3.1.1 Traffic & Carbon Emissions

China has scored enormous achievements in its transportation sector as a leading country in the scale and capacity of transportation infrastructure. As illustrated in Figs. 3.28 and 3.29, a sharp rise is seen in cargo and passenger turnover with the rapid economic growth and social development. Despite an array of proactive measures in low-carbon development with the adoption of more efficient means of transportation including vehicles, trains, vessels and airplanes, the sector still see a surge in the quantity of energy consumption and total CO₂ emissions and an increasing proportion in total energy use.

Cargo turnover in China has undergone a steep increase in China, reaching 19.4 trillion tons-km in 2019, a 198% increase compared to 2005.

Passenger turnover and urban passenger traffic are also on the fast track of increase. In 2019, intercity passenger turnover registered at 3.54 trillion people-km, 2.61 times of that in 2005. Meanwhile, urban passenger transport is on the rise—126.6 billion trips were made in 2005, which grew to 231 billion in 2019, up 82%.

Total energy consumption of transportation rose from 231 million tce^{Footnote 5} in 2005 to 505 million in 2019, an increase of 119% and an annual growth of 5.8%, with its weight in China’s total energy consumption growing from 9.1% in 2005 to 10.7% in 2018.

CO₂ emissions from the sector soared from 457 million tons in 2005 to 954 million tons in 2019, up 108% with an annual growth of 5.3%. The proportion of direct CO₂ emissions from the transportation sector in total CO₂ emissions in China climbed from 7.3% in 2005 to 9.5% in 2018.

Since 2005, CO₂ emissions from passenger and cargo transportation has been rapidly expanding, of which cargo transportation—whose total CO₂ emissions are still on the rise—is responsible for more carbon emissions than any other category of transportation. CO₂ emissions from intercity passenger transportation has been growing since 2005, albeit at a slower pace comparatively speaking. CO₂ from urban passenger transportation also shows an upward trend with a strong momentum.

Road transport is the biggest CO₂ emitter in China’s transportation sector, proportion rising from 72.0% in 2005 to 84.7% in 2019, during which a slight drop is observed in emissions from railway and waterway transportation; while for aviation transportation, the increase in CO₂ emissions is remarkable, growing from 4.0% in 2005 to 6.9% in 2019.

3.3.1.2 Main Characteristics of Carbon Emissions from Transportation

1.
Carbon Emissions from Transportation as a Percentage of Total Emissions Are Low, but are Rapidly Rising

Soaring energy consumption and carbon emissions have increasingly become a headache amid a boom in transportation. The strong growth in demand has pushed up its energy consumption as a percentage of total energy end-use in China from 5% in 1980 to 9.1% in 2005 and 10.7% in 2019. Its share in total direct CO₂ emissions in the country has also jumped from 6.1% in 2005 to 9.3% in 2019.

2.
Road Transportation Comprises the Bulk of Carbon Emissions, but Aviation is Rising Faster than Any Other Sector

Road transport represents the largest share in the surging CO₂ emissions from transportation, but aviation is making increasing contribution to total emissions. In 2019, the share of road, railway, waterway and aviation transportation accounted for 84.7, 1.4, 6.9 and 6.9% respectively in total CO₂ emissions from transportation. During the past 15 years, the contribution of road transportation has hovered around 85% while that of railway and waterway experienced a minor decline. A strong growth is noted in aviation from 4.0% in 2005 to 6.9% in 2019.

3.
Carbon Emissions from Gasoline and Diesel Consumption are the Mainstream

In 2019, the transportation sector took up 10.7% of total energy consumption in China, and 88.3% of energy consumption of transportation is attributable to oil products. CO₂ emissions from gasoline, diesel and kerosene accounted for 35.18, 52.53 and 6.88% respectively of energy-based CO₂ emissions from the transportation sector in 2019, of which gasoline and diesel added up to 87.72%, an overwhelming majority of the total emissions.

4.
Indirect Carbon Emissions from Electricity Consumption Can’t Be Ignored

Despite a modest share of transportation in electricity consumption in the current stage, a steep rise is expected with the future development of railway transport, urban rail transit, tram, trolleybus, EVs and electric vessels. A full life cycle analysis indicates that CO₂ emissions from power generation that corresponds with electricity consumption should not be overlooked.

3.3.1.3 Future Trend of Carbon Emissions of the Transportation Sector

As is illustrated in Fig. 3.30, a range of studies have demonstrated that CO₂ emissions from China’s transportation sector will witness rapid growth in the short- and mid-term and gradually slow down in longer term. By 2050, annual CO₂ emissions under the baseline scenario will surge to 1.8 to 2.4 billion tons, a strong growth momentum projected by the majority of forecasts and scenario studies, which signify that without proactive and continuous mitigation policies in place, CO₂ emissions are likely to double or triple from the current level [39,40,41,42,43].

These studies show that with the completion of industrialization and upgrading of industrial structure, the mix of transportation will be continually optimized with increased proportion of low-carbon transportation, innovation and wider application of low-carbon transportation equipment and technologies, which stand to dramatically reduce GHG emissions from the transportation sector.

3.3.2 Future Development and Scenario Setting

3.3.2.1 Transportation Demand, Structural Changes and Technological Development in the Future

1.
Learnings from International Experience

Currently, passenger and cargo transportation and their associated energy consumption and carbon emissions in China are still on the increase, standing in stark contrast to the decline after a phase of growth in many developed countries, some of whom have put in place a full-fledged transportation infrastructure system when China is still in the phase of rapid development. In parts of the developed world, urbanization and motorization have been brought to fruition with minor growth in private car ownership. By comparison, urbanization and motorization are pressing ahead in full speed in China with a rapidly increasing number of private cars on the road and a peak is not yet in sight. Despite the differences in the stage and characteristics, the transportation sector in China does share a similar path of development with the developed nations, and their course of development as well as the experiences and lessons for low-carbon transportation are valuable references for China [44].

International experience suggests that the decline in carbon emissions from passenger transportation faces tough challenges and proper guidance should be offered to encourage rational consumption. The relative trend of changes in carbon emission intensity from passenger transportation worldwide demonstrates the unit energy consumption may grow with rising demand for comfortable travels, resulting in the continuous increase in carbon emission intensity [45]. Between 2007 and 2018, the private car ownership in China skyrocketed from 57 million in 2007 to 204 million in 2019, with a average growth rate of 8.8% year-on-year. The exponential growth has led to a sharp rise in carbon emissions. In 2013, private cars overtook taxis as the biggest contributor to carbon emissions in urban passenger transport. With relatively less room and more challenges of reducing the carbon emission intensity of passenger transportation in China, it’s essential to come up with a holistic plan to strike a perfect balance between energy conservation, emission reduction and service improvement. To this end, public awareness for a sensible consumption pattern holds the key, which should neither compromise convenience, safety and comfort of travels for the sake of emission reduction nor pursue maximum comfort at the cost of excessive carbon emissions.

Vast potentials, however, are observed in cargo transportation where efficiency improvement is paramount. Throughout the past decades, China’s economy has flourished with a remarkable rise in demand for bulk goods such as steel and cement, among other materials for infrastructure, which are primarily transported by road. For example, cargo turnover of road transportation experienced an annual growth of 8.6% from 2005 and 2019, and 90% of road transportation depends on fossil fuels for energy, prompting continual increase in carbon emissions. On the other hand, demand for urban home delivery has apparently picked up with the advent of e-commerce, from which carbon emissions as a percentage of freight transport has nearly doubled from 2010 to 2019. In the future, modern logistics should be given much greater priority with enhanced organized transportation and efficiency to lower the energy intensity and carbon emissions from freight transport.

Optimized transportation structure, intermodal transportation, adoption of advanced means of transport and low-carbon energy technologies and smart transport solutions are the major avenues for low-carbon development of the transportation sector. By employing a mixture of measures such as planning, pricing, investment, publicity, education and organization, passenger and freight transport should be encouraged to switch from carbon-intensive options such as cars and trucks to railway, waterway and public transportation with less carbon emissions. High-speed rail and intercity rail should be built to link cities and light rail, maglev and suburban railway are recommended in urban environment for more intensive city or city cluster to form with the aid of energy-efficient, large-capacity and high-speed transportation modes, thereby shaping an intensive and low-carbon transportation supply system. The development and application of new transportation technologies, alternative fuels, IT and smart transport should be valued, especially when it comes to alternative fuels and new transportation technologies, together with a clear roadmap for technology innovation.

2.
Analysis of Transportation Demand and Structure

In freight transport, demand will change gears from high speed to a slower but steady growth, of which the transport of bulk cargo will peak prior to 2030 while the demand for high-value, decentralized, small-sized and time-sensitive cargo deliveries will pick up rapidly; low-carbon policies will also steer towards an enhanced freight transport structure.

Chinese economy has shifted from a high-speed growth to high-quality development with more progress in supply-side structural reform. The growth in demand for cargo transport will slow down, but as industrialization and urbanization forge ahead, such demand will maintain a medium growth before 2030. China will embark on a new journey of new industrialization underpinned by technological innovation from 2030 to 2040, during which the growth in industrial output and cargo transport will slacken off. Cargo turnover will move toward the peak after 2040 and slowly decline afterwards.

In 2018, China took the world’s top spot in the output and transport of bulk goods. With greater strides in terms of supply-side structural reform, shift in development mode, economic structure and transition of growth drivers, the heavy chemical industry is set to report a slower growth, cutting the demand for bulk goods such as coal, iron ore and steel. It is expected that the demand for transporting bulk commodities will reach a high plateau from 2020 to 2030 before a decline after 2030 as urbanization and massive infrastructure works come to fruition. Given the sheer size of China’s territory and population and uneven resources endowment, no drastic reduction is expected even after the peaking of bulk commodity transport, which would be kept relatively stable in the short term.

Logistics is becoming more “personalized” thanks to internet-based customization and the shift from centralized to decentralized reinforced control of industrial production, among other new trends, which has rapidly driven up the demand for decentralized and small-sized cargo transportation. Meanwhile, the demand for small-sized, multiple-lot and high-value freight transport is rising as a result of improved living and consumption standards, which also requires faster, more convenient and more timely delivery and spurs the growth of cargo transportation by air and road. A remarkable increase is noted in the share of high added-value and lightweight products, whose value per unit of transport far exceeds bulk commodities. These changes in the category of goods will drive sustained growth of containers and express delivery transportation.

With continuously upgraded road network and the advantage of “door-to-door” delivery, road will remain the primary means of cargo transportation. The weight of railway and waterway transportation is subject to policy measures: forceful low-carbon transportation policies will shift part of the cargo transport from road to railway and waterway, resulting in an increased share of railway and waterway turnover; incentives for railway-waterway intermodal transportation will also foster new opportunities in railway and waterway transportation.

With economic restructuring taking place in China, bulk goods transportation by road such as coal, grain and mineral ores will gradually move towards railway and waterway, while road will undertake more small-quantity, multiple-lot, lightweight, high added-value and time-sensitive cargo transport. On the other hand, with the increase in the length of highway and improvement in logistic delivery system, the average distance for road cargo transport will be longer. Passenger transportation will see the total demand rapidly pick up, but the growth would be dragged down as urbanization slows down. The booming city clusters will spur the growth in intercity passenger transport while urban passenger transportation is set to grow further, driving the development of private cars and public transport.

More often than not, rapid urbanization is accompanied by high total demand and growth of passenger transport, while in later period of urbanization, the demand is featured by a high volume but minor growth. Currently in the medium phase of urbanization, China is expected to enter a transition period by 2030 when industrialization and urbanization move from medium to medium-to-late phase with a mid- to high-speed growth in passenger transport. Between 2030 and 2050, China’s urbanization will gradually mature, which means a slower growth in passenger transport as urbanization loses its momentum.

An important embodiment of the urbanization drive in China, city clusters will see strengthened economic and social ties, and the share of intercity passenger travels between major city clusters grows in total passenger transport across the country.

Demand for urban travels will continue to rise with ongoing urbanization and economic growth. The emergence of new technologies and new models such as autonomous driving and carpooling will encourage more people to travel by car for speed and comfort; when better infrastructure becomes available and awareness of low-carbon and green mobility gets stronger, public transportation might also be a preferred option.

3.
Development Trend of Transportation of Typical Freight Categories in China

The composition of freight categories for railway, inland waterway, coastal waterborne and expressway artery transportation is shown in Table 3.10. The transport of different categories of cargo varies in proportion among these means of transportation, with bulk goods accounting for over 90% of railway and 52.6% of expressway [46].

Table 3.10 Artery transport cargo mix by category and proportion of bulk freight in China

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The following forecast is conducted on the trends of transportation of coal, steel and smelting materials, building materials, grains, containers and express deliveries (Table 3.11):

1.
Coal transportation will remain stable in short term and report substantial decline in mid and long term.
2.
Transportation of smelting materials, especially steel, will experience a steady fall [47].
3.
Transportation of building materials such as cement will show a downward trend, but a slight increase will occur with wood.
4.
Total grain transportation sees no major change with continuously improving transportation mode.
5.
A sustained growth is expected for container transportation.
6.
Transportation of express deliveries will sustain rapid increase.
Table 3.11 Forecast of typical cargo categories
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4.
Development in Transportation Technologies

Future innovations in transportation technologies will speed up green and low-carbon development of the transportation sector. With higher penetration of electrification in railway, lightweight vehicles and fuel and power saving technologies, wider acceptance of autonomous driving, eco-driving and fleet, upgrading of engine and vehicle manufacturing technologies in road transportation, application of precise flight management technology and biofuels in aviation, remarkable progress will be made in transportation technologies, which will in turn contribute to higher energy efficiency and emission reduction. Faster market penetration of clean energy and new energy vehicles and vessels and accelerated use of aviation biofuels will catalyze cleaner and lower-carbon energy supply in transportation.

Progress in railway transportation technology is mainly manifested in the level of electrification and lightweight vehicles. In light of the progress in railway electrification rate, lightweight trains, power and fuel efficiency and smart management, etc., energy consumption from railway is on track to drop by 15–30% in 2030 and 35–50% in 2050.

Advancement in road transportation technologies is mainly demonstrated by better fuel economy. For over a decade, fuel consumption of passenger vehicles in China has continued to fall. According to the statistics from MIIT, corporate average fuel consumption (CAFC) was 7.02 L/100 km in 2015, followed by an average growth of 1.7% annually after the implementation of Phase I Standard of Fuel Economy in 2006. Made in China 2025 and Energy-Saving and New Energy Vehicle Technology Roadmap have specified targets for reduction in fuel consumption for varied passenger car technologies, which have been supported by multiple measures adopted by the national government. Phase IV Standard of Passenger Vehicles has entered into effect in 2016 with stricter fuel consumption standards in the future. Given the technological upgrades in engine and vehicle manufacturing, eco-driving, truck fleeting and road network optimization, energy consumption by road transportation is set to fall by 35–50% in 2030 and 55–70% in 2050.

Technological progress in waterway transportation is mainly reflected in vessel building standards. With vessel scale-up technology and vessel type standardization, its energy efficiency will increase by 20–50%.

Such progress in civil aviation, on the other hand, is most remarkable in terms of flight management technology and biofuels. With the development of delicacy flight management technology, biofuel application and development and use of new engines/aircrafts, energy efficiency of aviation is projected to improve by 20–70%.

China has seen an upsurge in new energy vehicles (NEV) in terms of production and sales, which boast tremendous potential for future growth. From 2011 to 2018, annual sales of NEV shot up from less than 10,000 to 1.256 million units, making China the world’s biggest NEV market. The production and sales of fuel cell vehicles (FCV) hit 1527 units. The industry has grown to over a hundred billion yuan from a few billion at the outset. The industrial chain, consisting of upstream mineral resources and key raw materials, mid-stream core components such as battery, motor and controller and downstream vehicle and charging piles, has evolved and matured, with the emergence of many world-leading businesses. As the market takes off, the end sales and penetration will continue to climb. From the second half of 2017, many countries have announced plans and timetables to ban the sale of oil-fueled vehicles. Studies have shown that in light of the development stage of Chinese carmakers, industrial structure and transportation conditions, China is expected to impose the ban (except for trucks for special purposes and heavy-duty trucks) around 2030 to pave the way for NEV.

NEV will be quickly universalized in the future and become the overwhelming market mainstream by 2050. Energy-Saving and New Energy Vehicle Technology Roadmap issued by the national government in 2016 stated that NEV, including EV, will partially replace vehicles with internal combustion engines by 2025, and its ownership will account for 2–3% of the total, and such replacement will be scaled up by 2030 to 5–10%. According to CATARC, the manufacturing cost of BEV will be on the par with the average HEV by 2025 and further reduced to the level of traditional vehicles by 2033, after which BEV will enjoy the best cost-competitiveness among its peers, and the market will be the lever for wider acceptance of NEV. Based on consumer choice, it is expected that annual sales of BEV and NEV will respectively make up around 60 and 70% by 2050, when NEV will be the overwhelming market mainstream, of which FCV will comprise a bigger share in the category of coaches and mid- to heavy-duty trucks.

Biomass energy represents the future of clean energy for aircrafts. Studies have indicated that compared to conventional fuels, the use of biofuels during cruising will cut CO₂ emissions by 60–98%, with which biofuels can be directly mixed for use. IATA has unveiled a forecast report and introduced plans and roadmap in this connection. Given that biofuels are fully adaptable to the existing aviation system and will not cause erosion of rubber sealing elements of fuel pipes, no major changes will be needed in aircrafts or ground systems. It is expected that 30% of aviation fuels around the world will be biofuels by 2030, and 50% by 2040.

3.3.2.2 Introduction of Scenario Setting

Building on the above analysis, one should see that with new climate targets such as the “carbon peak” and the strategic move to build a strong nation through transportation development, transport is moving ever closer to the goal of low-carbon growth.

Meanwhile, with the application of mobile internet, IoT, cloud computing, big data and other new technologies, disruptive innovations have taken place in NEV, energy storage and autonomous driving, and the notion of “internet + ” has permeated into all areas of transportation, which has given birth to new business models and revolutionized the transportation landscape.

CO₂ emissions from transportation will be subject to multiple factors in the future, such as the model and pattern of transportation, energy efficiency of conveyance, relations between public transportation and private cars, tendency in transportation demand, etc.

Four scenarios, namely the policy scenario, reinforced policy scenario, 2 °C scenario and 1.5 °C scenario, are set in this study. Energy consumption and carbon emissions of the transportation sector are calculated with the metrics in the four scenarios for comparison and analysis. Parameters used by the research include emergence of new business models such as shared mobility, change in consumer mindset, penetration of new energy means of transportation, application of autonomous driving, optimization of transportation structure, technological advancement in transportation and spatial layout of infrastructure, etc. (see Table 3.12).

Table 3.12 Main parameters and characteristics of scenario setting

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3.3.3 Analysis of Different Scenarios

3.3.3.1 Energy Consumption and Carbon Emissions

As shown in Fig. 3.31 and Tables 3.13 and 3.14, given the current development, total energy consumption of the transportation sector undergoes rapid growth until around 2040, and peaking around 2035 will not happen unless strong policy interventions are conducted.

Table 3.13 Energy consumption of transportation sector by scenario in China between 2015 and 2050 (million tce)

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Table 3.14 Energy consumption of transportation sector by category in China between 2015 and 2050 (million tce)

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As is shown in Fig. 3.32, Tables 3.15 and 3.16, given the current development, total carbon emissions of the transportation sector grow rapidly until around 2040, and peaking around 2030 will not happen unless strong policy interventions are conducted.

Table 3.15 Total carbon emissions from the transportation sector in China from 2015 to 2050 (million tons)

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Table 3.16 CO₂ Emissions from transportation in China from 2015 to 2050 (million tons)

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Under the policy scenario, total carbon emissions are on continuous rise. Despite the decline in carbon emissions per unit of turnover/passenger traffic, total CO₂ emissions grow continuously as the growth in passenger and cargo turnover and urban passenger traffic outpaces the decrease in unit energy consumption until it peaks at 1.16 billion tons in 2040.

Under the reinforced policy scenario, with the optimization of transportation vehicle structure, technological innovations and proper allocation of resources, total CO₂ emissions from the transportation sector continue to grow and peak around 2035 before declining.

Under the 2 °C scenario near zero emission, regional and urban–rural transportation can be better coordinated with higher efficiency through strengthened connection of comprehensive transportation hubs; growing application of “internet + ” in transportation enhances the level of intelligence in transportation; an optimized transport structure rationalizes passenger and cargo transportation of railway, road, waterway and civil aviation; more modern transportation equipment and better fuel mix are made possible through technological progress; more ambitious penetration of NEV, including EV, among other measures, enables a peak of total CO₂ emissions from the sector around 2030 at 1.075 billion tons.

Under the 1.5 °C scenario net zero emission, through further development of intermodal transportation, transportation improvement, accelerated use of electrification and hydrogen and application of low-carbon technologies in aviation and ocean navigation, total CO₂ emissions from transportation would peak around 2030 at 1.04 billion tons before a drastic decline to around 172 million in 2050.

A comparative analysis of the four scenarios suggests that compared to the policy scenario, energy carbon emissions from the transportation sector are down by 10.2% in 2040 under the reinforced policy scenario; the emissions are down by 7.8% in 2030 under the 2 °C scenario and by 84.7% in 2050 under the 1.5 °C scenario.

3.3.3.2 Analysis on the Trend Towards Electrification

Under the policy and reinforced policy scenarios, oil products—primarily diesel and gasoline—are the biggest energy consumers in the transportation sector through 2050. As indicated in Table 3.17, under the 2 °C scenario, and 1.5 °C scenario in particular, more ambitious measures would be adopted to expand electricity consumption in transportation as a replacement of oil products, including promoting the penetration of NEV and railway electrification. Major steps would be taken to boost EV development for road transportation to embrace electrification.

Table 3.17 Electricity consumption of transportation by scenario (billion kWh)

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“Pure electric drive” should be deemed as the mainstream technical pathway. Owners of PHEVs are to be encouraged to use the motor-driven (CD) mode for their rides. Due considerations should be given to the penetration of energy-saving vehicles and hydrogen-based FCV as well as alternative fuels. Moreover, the construction of charging infrastructure shall be accelerated to prepare for the electrification of road transportation.

3.3.3.3 Key Measures for Net Zero Emission

Analysis has suggested that under the 2 °C scenario, CO₂ emissions from transportation by 2050 would stand around 550 million tons, of which aviation and water transport encounter more challenges in emission reduction because of their dependence on traditional petroleum-based fuels. A host of interventions must be done in order to achieve net zero emission.

CO₂ emissions from the transportation sector can be further reduced to around 100 million tons via energy efficiency enhancement and massive use of biofuels and hydrogen in aviation and water transportation. Key measures include replacing 125 million tons of refined oil with 31 million tons of biofuels and 19 million tons of hydrogen in the transportation sector to avoid approximately 370 million tons of CO₂ emissions.

3.3.3.4 Summary of Scenario Analysis

If the current trend—rapid economic and social development and accelerated industrialization and urbanization—is to continue, total carbon emissions from the transportation sector is bound to rise sharply until around 2040. Only with powerful policy tools can the peak occur around 2030. A swift reduction in emissions can be made possible through further development of intermodal transport, enhanced transport structure and faster penetration of electrification and hydrogen.

Under the 2 °C or 1.5 °C scenario, total carbon emissions from transportation hit the peak around 2030 at roughly 1 billion tons. Under the policy or reinforced policy scenario, refined oil represents the biggest component of energy consumption in transportation until 2050. The 2 °C or 1.5 °C scenario, however, the soaring electricity consumption in transportation, replaces a large chunk of refined oil, which would quickly decrease the total emissions onwards.

The massive use of biofuel and hydrogen in aviation and ocean freight transportation helps drive down CO₂ emissions from transportation to approximately 170 million tons in 2050, close to net zero emission.

3.3.4 Goals, Pathways and Policy Recommendations for Low Carbon Development

3.3.4.1 Goals and Pathways of Low Carbon Development

Table 3.18 provides the roadmap for the migration toward low-carbon development, with metrics including total carbon emissions, spatial layout, vehicles, transportation structure, transport services and low-carbon governance, etc. 2025, 2035 and 2050 are selected as the milestones.

Table 3.18 Low carbon development targets of the transportation sector

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Carbon emissions from the transportation sector is expected to peak in 2035 with a clean, low-carbon, multi-model and efficient modern comprehensive transportation system taking shape. The infrastructure capacity of various means of transportation is adequate but not excessive. The overall coverage of infrastructure network further expands with weakness largely disappearing and the accessibility and smoothness of domestic travel substantially improved. A modern, user-friendly and efficient comprehensive hub system are in place with efficient connection between different means of transportation, more convenient passenger transfers and much greater efficiency in cargo transshipment. Passenger and cargo transportation structure are rationalized with growing freight transport via railway and water; eco-friendliness of infrastructure, resources utilization efficiency and supporting services for clean energy transportation are substantially enhanced, and the proportion of clean and efficient transportation vehicles ranks top among global leaders.

By 2050, near zero emission should become a reality in the transportation sector, and the green and low-carbon development of the sector is aligned with the call to build a strong and modern socialist nation and a transportation powerhouse. The synergy of technology, management and innovation should shape low-carbon transport to make clean and low-carbon vehicles and industrial chain, and improve management efficiency across the board. A low-carbon, integrated and three-dimensional transportation network is created through the greening of the whole process and full life cycle of transportation. An all-day green development system of transport infrastructure emerges, compatible with the environmental capacity of resources and in harmony with work, life and the ecosystem. Cleaner and lower-carbon means of transport gain further prominence with new energy or clean energy applied in almost all new means of transport.

3.3.4.2 Strategic and Policy Recommendations

To build a clean, low-carbon, intermodal and efficient integrated modern transportation system, the following recommendations are made for the scientific development of low-carbon strategies and policies for the transportation sector:

1.
Ensure an earlier peak of energy demand of the transportation sector. Fully harness the role of electricity, hydrogen and biofuels as alternative fuels; further improve the transportation mode and demand management, peak energy consumption of transportation somewhere between 2030 and 2035 and enable a remarkable drop in consumption in the wake of the peak.
2.
Set the targets for carbon emission peak of the transportation sector. Given that road transports remains the principal source of energy consumption and direct CO₂ emissions and boasts tremendous potential in energy replacement, sometime around 2030 might be defined as the target for CO₂ emission peak for the entire transportation sector.
3.
Explore the pathway for near zero carbon emission in transportation. Actively tap into the potential for technology application in subsectors facing greater challenges in carbon reduction; devise a net zero emission plan in order for aviation and water transport system to massively adopt biofuels and hydrogen around 2050.
4.
Vigorously promote NEV development. Support groundbreaking EV technologies and plan ahead for the charging infrastructure; speed the penetration of EVs in the passenger car segment; facilitate a ban on gasoline passenger vehicles by 2040; speed the electrification of coaches and trucks; meanwhile, secure a spike in EV and FCV ownership.
5.
Stricter fuel economy standards for cars and other means of transportation to gradually enhance transport energy efficiency. Improved fuel economy represents one of the very effective steps to curb energy consumption and GHG emissions in the near, mid and long term.
6.
Optimize transportation structure and enable a shift of long-distance passenger and freight transport towards railway and waterway, which shall remain the backbone of mid- to long-distance transportation of bulk commodities; further utilize assembly/evacuation ports and reduce the use of heavy-duty diesel trucks for long-distance transportation of bulk commodities; transport not suitable for road, such as long-haul passenger duty, should switch to aviation or railway to reduce inappropriate need for road.
7.
Enforce transport demand management across the board and encourage green and low carbon mobility. Urban public transportation should be prioritized in the planning, land approval, finance and right of way; accelerate the construction of BRT, bus lanes and rail transit, and slow traffic such as bicycle and pedestrian lanes; large-capacity public transport system should be developed; exercise differentiated transport management and hold down the rise of private car ownership; enhance management and control measures through driving up the user cost of private cars and discourage the use of private cars on the road.
8.
Reinforce financial incentives such as green transport finance and taxes. Employ policy packages comprising market-based policy measures, i.e. carbon tax, license tax, congestion charge and parking fee as well as mandates and control measures, i.e. biofuel standard, fuel economy/carbon standard in order to ensure the coordinated and effective management of demand, energy and CO₂ emissions of the transport sector.

Notes

1.
Note: in this study, processing and converting petrochemical and coal chemical are included in the industrial sector. The statistics of end-use energy consumption of the industrial sector include energy consumed as fuel and raw materials and for hydrogen generation in the future, etc., but exclude energy consumed by means of transportation such as vehicles owned by plants, or coal and natural gas consumption by captive power plants—slightly different from the statistics released by National Bureau of Statistics.
2.
In 2002, a total of 120 million m² of urban houses were demolished in China, or 37.5% of newly completed commercial residential buildings of 320 million m² of the same year; in 2003, a total of 161 m² of urban houses were demolished in China, or 41.3% of newly completed commercial residential buildings of 390 million m² of the same year.
3.
Building energy consumption includes direct fuel consumption, heating consumption and electricity consumption. Generally speaking, the final energy consumption is the sum of these three categories calculated with electrothermal equivalent method. In this section, considering the scale of centralized heating in North China where the heating source upgrading has long been the main task of energy conservation efforts in China, which is not discussed in the chapter of energy supply. In this chapter, direct heat consumption is converted into primary energy consumption (i.e. coal, natural gas, electricity etc. needed to generate heat) to sum up, i.e. building energy consumption in this chapter refers to the sum of direct energy consumption, electricity consumption and heat consumption converted into primary energy consumption, calculated with electrothermal equivalent method. In carbon emission calculation, direct carbon emission only includes the part attributable to direct fuel consumption in buildings; while carbon emissions from indirect heating and electricity are correlated with heating and electricity consumption respectively.
4.
Carbon emission coefficient of electricity is defined as 553 gCO₂/kWh.
5.
Electricity consumption in the transportation sector is converted into coal equivalent with electrothermal method: 1 kWh = 122.9 gce.

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Institute of Climate Change and Sustainable Development of Tsinghua University et al. (2022). End-Use Energy Consumption & CO₂ Emissions. In: China's Long-Term Low-Carbon Development Strategies and Pathways. Springer, Singapore. https://doi.org/10.1007/978-981-16-2524-4_3

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DOI: https://doi.org/10.1007/978-981-16-2524-4_3
Published: 30 November 2021
Publisher Name: Springer, Singapore
Print ISBN: 978-981-16-2523-7
Online ISBN: 978-981-16-2524-4
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Abstract

3.1 Industrial Sector

3.1.1 Current Development and Trend of the Industrial Sector

3.1.2 Key Findings of Scenario Analysis

3.1.3 Cost–Benefit Analysis of Investment in Different Scenarios

3.1.4 Key Pathways and Policy Enablers

3.2 Building Sector

3.2.1 Status and Trend

3.2.2 Scenario Analysis

3.2.3 Evaluation of Emission Reduction Technologies and Pathways

3.2.4 Implementation Pathway & Policy Recommendations

3.3 Transportation Sector

3.3.1 Development & Trend of the Transportation Sector

3.3.1.1 Traffic & Carbon Emissions

3.3.1.2 Main Characteristics of Carbon Emissions from Transportation

3.3.1.3 Future Trend of Carbon Emissions of the Transportation Sector

3.3.2 Future Development and Scenario Setting

3.3.2.1 Transportation Demand, Structural Changes and Technological Development in the Future

3.3.2.2 Introduction of Scenario Setting

3.3.3 Analysis of Different Scenarios

3.3.3.1 Energy Consumption and Carbon Emissions

3.3.3.2 Analysis on the Trend Towards Electrification

3.3.3.3 Key Measures for Net Zero Emission

3.3.3.4 Summary of Scenario Analysis

3.3.4 Goals, Pathways and Policy Recommendations for Low Carbon Development

3.3.4.1 Goals and Pathways of Low Carbon Development

3.3.4.2 Strategic and Policy Recommendations

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