Dr Gabrial Anandarajah UCL Energy Institute, University College London g.anandarajah@ucl.ac.uk

1. IMPLICATIONS OF WIDER AVAILABILITY OF UNCONVENTIONAL GAS ON CHINA ENERGY SYSTEM UNDER CLIMATE CONSTRAINT SCENARIOS. Dr Gabrial Anandarajah UCL Energy Institute, University College London g.anandarajah@ucl.ac.uk www.ucl.ac.uk/energy

2. Content • Introduction • TIAM-UCL Global Energy System Model • Scenario definitions • Results • Conclusions

3. Introduction • This study develops scenarios under two different state of the world to analyze implications of unconventional gas on China energy system • With wider availability of unconventional gas. • With limited availability of unconventional • A multi-region global energy system model (TIAM-UCL) has been used to develop the scenarios

4. 16 Region TIAM-UCL Global Model: Overview • TMES Integrated Assessment Model (TIAM) • Dynamic partial equilibrium model approach with objective function minimising global welfare costs (consumer surplus + producer surplus) • Annualised capital costs, O&M costs, fuel costs, taxes/subsidies, salvage values • Technologically detailed bottom-up whole energy system model • 16 regions, including explicit China region • Flexible time horizon through to 2100 • Multi-emissions, plus reduced-form climate module

5. Elec Gas Coal Oil Reference energy system – Example Primary Supply End-useDevices DomesticDemands Coal Lighting Conversion and Process technology options Nuclear Space Heat Gas Cooking Renew.

6. Primary Sources Production/Extraction Treatment/ Transport Energy Conversion Technologies Fuels and Energy Carriers Distribution CO2, Pollutants and Waste Treatment Energy End Use TRANSPORT CAR dme+20%eff 2 dst+10-20%eff 3 elc e95 eth dme fc gas+10-20%eff 3 hH2fc MeH2 stor hH2fc gas stor hH2 ICE liq stor H2/gsl/dsl/hybr 3 lpg/nga 2 3w dst/eth/gas 3 m.cycle eth/gas 2 AIRCRAFT gas/H2/ker 10km 3 ker 11km int. ker/H2 10km 3 int. ker 11km TRAIN freight dst/elc 2 passeng dst/elc 2 SHIP dst/gas/eth 3 int. dst/fc//hfo 3 BUS dst/gas/eth/met 4 elc/H2fc/lpg/nga 4 hybr dst/nga/H2 3 mini dst/gas/eth 3 mini lpg/nga 3 TRUCK dme/dst/gas/eth 4 lpg/met/nga 3 mid dst/gas/eth 3 mid lpg/nga/H2 3 mid H2fc gas stor mid dst hybrid SUV +LCV dme+20%eff 2 dst+10-20%eff 3 e95 eth dme fc gas+10-20%eff 3 H2fc MeH2 stor H2fc gas stor H2 comb liq stor H2/dsl/gsl hybr 3 nga/lpg 2 lpg gas light ends obsolete av. refinery FUEL DISTRIBUTION NETWORKS fuel gas prim. production debutanizer conventional on/offshore oil & NGL blender gasoline hydrotreater reformer sec. production naphtha jet fuel H2 alkylation tert. prod. EOR olefins current av. refinery pipeline mid dist distillation hydrotreater diesel Waste treatm 3 shipping e. heavy oil production hydrotreater cat. cracker fuel oil heavy gas-oil del. cocker Fluegas treatm 6 oil/tar sand production Refinery adv. best practice refinery del. cocker Partic. control 3 lube oil oil shale production dewaxer DeNOx 4 OIL deasphalter H2 asphalt DeSOx 3 hydrocracker VDR vac. distillation coke visbreakerer IND MACH. DRIVE Non-Fe met 5 Chem ind 7 Food&beverage 7 Textile 7 Machinery 5 Non met mineral 5 Pulp&paper 5 Iron&steel 5 Other energy use Electrification PULP Chem cont digest Chem batch digest Mechan prod Other prod Chem pulp&paper Waste paper to pulp PAPER Conv prod Cond belt dry Impulse drying Steam boiler 4 IND BOILERS 5/100MW 6 BOILER SAVING Insulation 7 Steam trap 7 Excess air reduc 7 Econ preheating 7 Return condens. 7 Blowdown 7 Vap recompr. 7 Vent condenser 7 Coal loss reduc 7 BLAST FURNACE Blast furnace 2 Bl furn. coal CCS 2 Basic O2 furnace Bl. furn slag FURNACES Elc arc dri Elc arc scrap Dri midrex H2 Dri midrex gas CCS2 Ppen hearth COKE OVENS Beehive Dry quenching Conventional Non-recov BIO IND PROCESS Bagasse Ind waste prod Municipal biom Biom to biofuels Fuelwood Wastes&residues Straw Forest biom recov Plantation 2 Cellul biomass Process heat 6 Other final use 8 PROCESS HEAT 6 ELECTROLYSIS 4 ALUMINIUM Hall-Heroult cell Inert anode cell Soderberg cell Secondary Al Alumina AMMONIA Coal/oil pox CCS4 Nga reform CCS2 CEMENT Blast furnace Fly ash prod Portl dry kiln CCS2 Portl wet kiln Portl clink, v kiln Portl preparation Process heat kiln 6 CHEMICAL Eth to ethyl dehydr Dme to olefins Ethane cracker Naft/hfo/lpg crack 3 Meth. to olefins Propyl to ethyl CHLORINE Diaphr. cell Membrane cell Hg cell IRON&STEEL Cold rol steel Hot roll steel Steel cont cast Steel ingot cast Pelletiz. iron ore Sinter. iron ore CO2 capture coal Fuel decarbon 2 hard coal extraction COAL Fluegas sep 3 brown coal extraction INDUSTRY UCST CHP PCST SCST AFBC PFBC IGCC IGFC shipping CO2 transp 2 extraction open mining rail syngas lignite extraction gasification CO2 storage extraction peat On/off EOR/EGR CTL fischer tropsch synfuels On/offs aquifer On/off depl.field NATURAL GAS natural gas production ECBM A-GTCC DG GTCC CHP FC 2 Recycle/use pipeline EGR natural gas GTL fischer tropsch Mineralisat. coalbed gas production methanol liquefact. methanol production LNG ship Rigasific. production stranded gas reforming NAT GAS DISTRIBUTION PIPELINE gas hydrates production nat gas LWR III LWR II LWR III+ LWR IV ELECTRICITY DISTRIBUTION GRID enrichment. uranium extraction transport manufacturing electricity FBR IV HTGR III HWR II HTGR IV thorium NUCLEAR electrolysis 4 RESID. COMMERCIAL D-lithium enrichment. extraction transport manufacturing H2O thermolysis HYDROGEN DISTRIBUTION STORAGE magnetic inertial CH4 reforming hydrogen direct comb. coal cofiring ELC APPLIANCES Copy print fax 5 PCs server 5 Refrigerator 5 Fans 5 Cloth driers 5 Cloth washer 6 Dish washer 6 Freezer 5 Home entert 5 Home office 5 Elc equipment 5 RESID CHP 11 COOLING Chiller 4 Heat pump 7 Central 4 Room 2 Solar absorpt. Cooking 11 HEATING Boiler 7 Burner 4 Heat pump 3 Heat exchang 2 Insulation 4 Stove 3 Heater 5 Solar heater WATER HEATING Water heater 11 Solar water heater Heat pump 2 LIGHTING Fluo compact Fluorescent Halogen Incandescent Ker lamp Light diode manure anaer. dig wet biom HEAT DISTRIBUTION NETWORK biogas msw gasific. collect. heat st turb CHP GTCC DGen forest/agr w. pyrolysis sol. biom industry w. bio-oil reforming biodiesel oil extract. esterif. oil crops methanol prod. product. sugar-starch hydroth. liquef. ferment. distillat. INTERSECTORAL bioethanol Waste treatm 8 biodiesel Waste recycl 5 fischer tropsch ligno-cellul. product. hydrol. ferment. offshore DME product. wind Waste disp 3 RENEWABLES onshore ethanol ethanol prod. COMB ENGINES Gasol engines Diesel engines Gas engines Turbo engines Stirling engines STORAGE DEVICES Batteries ELC DEVICES Motors Transformers Generators Alternators Inverters Converters Switchs TH. DEVICES Boilers Burners Heaters Heat exchanger Driers Steam generators Heat pumps Ovens Furnaces Solar panels FLUID DEVICES Pumps Compressors Ventilations Gas turbines Steam turbines Hydro turbines Reversible turbines run of river hydro Waste treatm dam tidal solar th. mini hydro PV otec pumping ENERGY STORAGE PV th. film wave wave plant H2 bioprod. PV conc. steam turb geo extract. CSP dish photolysis CSP tower solar thermolysis CSP throug

7. TIAM Model TIAM Model Resource1 Resource 2 Resource 3 Endogenous technology learning Module: New Technologies Reg. 16 Reg. 1 Multi-region model Each region has its own energy system Module: Market for emission trading OPEC Climate Module Reg. 2 Reg. .... Reg. ...

8. Resource supply and Upstream Sector • For each region, split into three subsectors: • Mining (characterising basic resources) • Primary energy production (extraction and basic processing) • Secondary transformation (coke production, oil refining) • Conventional and unconventional oil and gas resources resources are modelled • Biomass resourcesare modelled • Key to this sector is the trade module covering: • Oil crude • Oil products – DST, GSL, HFO, NAP • Natural gas / LNG • Coal • Uranium • Biomass (energy crops and solid biomass)

9. Global supply cost curves for all natural gas by category of gas and region in 2005

10. Scenarios • Two Reference Scenarios • with low gas availability (LG-REF): no climate policy is applied and the availability of unconventional gases is limited; • with high gas availability (HG-REF): no climate policy is applied. Unconventional gas availability is increased and production costs of some gas types slightly reduced with an exogenous learning rate; • Two respective Low Carbon Scenarios: a global cumulative GHG emission constraint is applied in order to restrict the global temperature increase to 2oC • with low gas availability (LG-LCS): • with high has availability (HG-LCS):

11. Primary energy consumption in China HG-LCS LG-LCS • Share of coal decreases from 65% in 2005: • to 44% in LG-LCS in 2050 • to 16% in HG-LCS in 2050 • Share of gas increases from 2% in 2005 • to 12% in LG-LCS in 2050 • to 34% in HG-LCS in 2050 • Wider availability of unconventional gas less has less impact on biomass, nuclear, wind and solar primary energy consumptions. • Primary energy in HG-LCS is less compared to LG-LCS (why?)

12. Electricity generation mix • LG Scenario • More generation • Low carbon electricity decarbonizes end-use sectors • Less bio-CCS • Biomass directly used in industry sector for heating • HG Scenario • Less generation • Gas partly decarbonizes end-use sectors (industry) • More bio-CCS

13. Sectoral emissions LG-LCS HG-LCS • Net emissions is higher in LG-LCS • Wider availability of unconventional gas slightly increases China’s GHG mitigation potential • CCS captures more CO2 emissions in LG-LCS • CCS is relatively more important in LG-LCS

14. Conclusions • Wider availability of unconventional gas: • reduces coal use especially in the power sector • reduces total electricity generations • reduces primary energy use as gas is directly used in end-use sectors • Increases bio-CCS generations • reduces CCS capacity requirements • slightly increases China’s GHG mitigation potential

15. Thank You g.anandarajah@ucl.ac.uk