Bioenergy in China’s Agriculture Sector: Challenges and Opportunities

1. Bioenergy in China’s Agriculture Sector: Challenges and Opportunities Lin Gan Sustainable Bioenergy Conference Bonn, October 12-13, 2006

2. China in Two Faces • Very large disparity in living conditions between urban and rural areas • The gap is widening • Strong measures needed to reduce this gap

3. Agriculture Development • Economic: 9.5%/y between 1978-present • Agriculture: stagnation in production and prices • Increase in imports due to population growth, decline in arable land and higher demands • Growing disparity between the rich and the poor • Farmers migrate to urban areas as economic migrants, due to limited jobs in agriculture areas and low income from agriculture production • Energy use divided: switch to fossil fuels in coast regions and rely on traditional biomass use in west regions • Key problems: land loss due to urbanization, surplus labor force from agricultural sector

4. The Development and Environment Challenge • GDP grows by 10.4%/y, some regions excess 14% • Environmental protection objectives for 10th Five-Year Plan were not realized • Energy consumption increases faster than GDP • Western regions are far more energy inefficient than coast regions (2-3 times) • Climate change has seen its impact, e.g. droughts, floods, hurricanes, which led to hundred-billion Yuan of losses and damages

5. Drought in Sichuan Province

6. The Western Regions • Lag behind in economic development than the coast regions • Vulnerable in eco-systems • Poverty still a social problem (40-80 million) • Farmers still rely on traditional use of agriculture biomass for cooking and space heating • Focus on raw materials industry and energy will not make the regions rich • Attitude on GDP growth leads to ecological consequences • Weak in human resources and management capacities

7. Traditional Use of Biomass

8. Biomass for Cooking and Heating

9. Transition from Traditional to Modern Biomass use • 200 million tons of agri. residues/y • Most of them are burned in fields • If 20 million tons (10% of the total) are used for biomass CHP, US$ 750 million income for farmers

10. Reduce Coal Use • Coal: a major source of pollution • Lots of waste in burning of coal • Health impact of coal production and use is high • Infrastructure for burning coal can be used for biomass utilization

11. Miao in Guizhou

12. Traditional lifestyle

13. Impact of Indoor Air Pollution • Household use of coal for cooking, heating and drying of agriculture products • Open stove use as local culture and tradition • Problems found from early 1980s • Preventive measures are undertaken from recent years

14. Health Effects of Fluoride Poison • Thyroid gland • Kidneys • Brain and nervous system • Immune system • 1/30 people, or 45 million, in China are affected

15. Children Are Most Affected

16. Dental Fluorosis • Effects to teeth and bones • Common in China due to air and water pollution • More than 45 million people affected • Once affected, it remains for life

17. Arsenic poison in Guizhou • Concentrated in Southwestern region • Household coal use related • Due to local resource, climate, economic situation and tradition

18. Household bioenergy Applications • Independent off-grind power systems for households and villages to provide electricity to 35 million people by 2010 • Biogas: a major technology in agriculture sector for sustainable energy and farming practice • Tens of millions of users already, but further market expansion is needed

19. Biomass Transition • Requires an Integrated Approach for bioenergy development • From centralized to decentralized power systems development • Agricultural wastes for biogas, power and heat production • Direct biomass burning to reduce coal use • Develop pellets market demand in rural households: stoves for cooking and heating • Develop heat market for bioenergy use • Large potentials on biofuels in transport • Biomass CHP relevant for small cities and local residential areas

20. Biomass Potential • If 20 million tons of agriculture residues were uses, it could.. • Save 10 million tons of coal • Reduce CO2 emissions of 25 million tons • Generate 15 GWh of electricity • Produce 60 million GJ of heat • Enough for 25MW x 350 CHP plants

21. Social Benefits • Income generation • Job creation from biomass production, transport, equipment and services (150,000 jobs for 30GW) • Improvement in Health and living conditions • Reduce migrant pressure to urban areas

22. Biomass Applications • 2020 Electricity generation target from biomass: 30GW • Biogas CHP plants in feedstock farms • Biomass CHP with agriculture residues • Biogas with municipal and residential residues • Biofuels (ethanol & biodiesel) • Pellets and bio-briquette production • Investment in CHP: $30-36 bn

23. Development of Biomass Technologies • Efficient biomass stoves • Pellets production • Biogas technology for households and feedstock farms

24. Opportunities for International Cooperation • Investment cost for CHP: 0.6-0.7 yuan/KWh • Joint key equipment production: pellets machines, boilers and feeding systems for CHP plants • CHP power system designs and operation • Biofuels production technology for transport • Biomass resource production and management • Biomass stoves for various applications, e.g. households, restaurants • Service company management and marketing

25. Technology & Management Barriers • Modern bioenergy is new to China • Lack of combustion and gasification technologies • Lack of biofuel production capacity and technologies • Disparity in resource situation in different regions • Little experience on resource costs, collection and transportation systems, business services in market application • Lack of R&D capacity and management skills

26. Barriers on Market Development • Weak in incentive policies • Lack of effective financial instruments, e.g. public funds, venture capital, tax policy, micro-credit • Monopoly of utilities: access to e-grid • Low coal prices • Lack of appropriate technologies for rural applications, e.g. efficient stoves, small gasifies

27. Key Issues for Consideration • Priority should be on meeting local demands for rural residents • Substitutions for fossil fuel use important • Social development issues should be linked to bioenergy development • Local conditions have to be respected • Appropriate technologies would be more effective in application than modern technologies • Capacity building are important • Incentive polices are needed at central, regional and local levels

28. Thanks for your Attention!