The document discusses actions needed for a low-carbon economy in the Circum-Bohai-Sea region of China. It analyzes the necessity of transitioning to a low-carbon economy to avoid high costs, carbon lock-in, and ensure energy security. It evaluates the low-carbon development levels of three Chinese regions and finds Circum-Bohai-Sea lagging due to high energy and carbon intensity. The document proposes government policies, citizen behaviors, and enterprise movements to support the transition, and outlines SK's plans to invest in renewable energy in the region.
Paladin the way to low carbon economy for circum-bohai-sea region-
1. The Way to Low-Carbon Economy
for Circum-Bohai-Sea Region
PALADIN
Pan Zhaoan,pugo_866@163.com
Mo Yan, moyan86@gmail.com
He Ni, near_hn@yahoo.com.cn
Xiamen University
3. ◆ Avoid High Cost in the Future
Without any action, the loss of climate changing
〓 5% ~20%of GDP〓 loss of the First World War, the
Second World War and the Great Depression.
In 2040, losses caused by severe weather will reach
3 trillion dollars per year, accounting for 3% of the
current global GDP.
◆ Avoid Carbon Lock
Definition: with a huge economy , a
country’s technologies and systems based
on fossil fuel have great inertia.
If emission peak delays 10 years, the
maximum annual emissions rate would
expand its 1-fold, from current 2.5% to 5%.
◆ Energy Security
Reducing dependence on oil is the goal
of the countries all over the world.
More balance energy structure, much
safer energy security.
0
10
20
30
40
50
60
70
80
2000 2001 2002 2003 2004 2005 2006 2007
The Proportion of Energy
Consumption in China
Coal Share
Oil Share
Natural Gas Share
Hydroelectric, Nuclear Power and Wind Power Share
Unit:%
The Necessity for Low-Carbon Economy in the World1.1
The Necessity in China1.2
China relies heavily on coal and oil, whose
consumption accounts for 90% of all energy consumption.
4. ◆ Emission Reduction Commitment
0
5
10
15
20
25
0.00
1,000.00
2,000.00
3,000.00
4,000.00
5,000.00
6,000.00
7,000.00
8,000.00
China USA EU Russia India Japan Brazil Germany Canada UK
Carbon Emissions
Emissions(Million tons) per emission(ton)
Unit:
Unit:
0 1 2 3 4 5 6 7 8
World
China
USA
Korea
Japan
Energy Consumption
2006 2005 2004
Unit: 10 thousand dollars GDP
2009.12.18, Jiabao Wen,
Copenhagen,” Carbon
dioxide emissions per
unit of GDP of China in
2020 will reduce 40% -
45% than in 2005”.
The Necessity for Low-Carbon Economy in China1.2
◆ Economic Restructuring
China’s energy consumption per GDP is double of
the world average level ;
Much higher than USA, Korea, Germany, UK and
Japan .
◆ Pressure of Emission Reduction
China is the country with the largest carbon
emissions.
5. The Energy Distribution of SK in Three Regions1.3
SK international trade (Beijing) Co., Ltd.
SK (China) Investment Co., Ltd.
SK (Beijing) Highway Technology Co., Ltd.
SK Energy oil (Tianjin) Co., Ltd.
Offshore Oil Chemical Co., Ltd. Dalian
Beijing Valley Fuel Chemical Co., Ltd. Dalian
SK Energy Co., Ltd. Dandong
SK Energy Co., Ltd. Shenyang
SK Energy Development Co., Ltd. Shenyang
SK High Oil Co., Ltd. Shandong
SK Energy Co., Ltd. Zibo
SK Asphalt Co., Ltd. Rizhao
SK&Jinchao Plastic Industry (Yantai) Co., Ltd.
SK Heruida oil fire Yantai Co., Ltd.Yantai
SK Jinchao Plastic Industry (Yantai) Co., Ltd.
SK Energy (Qingdao)Co., Ltd.
SK Emerging Energy (Qingdao) Co., Ltd.
SK Zhenhua Asphalt Co., Ltd.Shanxi
Shanxi Huineng Coal Industry Co., Ltd.
SK Energy International Trading (Shanghai) Co., Ltd.
SK Takahashi Solvent Co., Ltd. Shanghai
SK Shenxin Packaging Co., Ltd. Zhejiang
SK Jin Hua Baoying Asphalt Co., Ltd.
Taizhou Zhongran-SK City Gas Development Co., Ltd.
SK Baoying Asphalt Storage Co., Ltd. Ningbo
19
6
0Energy enterprise resource is
concentrated in the Circum-
Bohai-Sea.
6. 0
20000
40000
60000
80000
2005 2006 2007
GDP&GDP Growth Rate
Yangtze River Delta Pearl River Delta Circum-Bohai-Sea
5
10
15
20
GDP in Circum-Bohai-Sea is the
compared with the other two(Reasons:It
includes Beijing and Shandong which is in the
third position nationwide in GDP )
Pearl River Delta has the largest growth rate,
followed with Yangtze River Delta, Circum-
Bohai-Sea the
Analysis
The average car ownership is highest in Pearl
River Delta with the highest growth rate.
The average car ownership in Circum-Bohai-
Sea is the with a soft growth rate
compared with the other districts.
Analysis
Average Civilian Car Ownership
1
3
5
7
0
2
4
6
8
Unit:everyhundredpersons
Comparative Analysis for The Three Regions2.1
largest
last.
lowest
7. Low-Carbon Standard Evaluation System2.2
Province F1 Rank F2 Rank F3 Rank Score Rank
Beijing 1.78 3 1.50 4 3.48 1 1.94 1
Shanghai 0.61 5 3.65 1 0.11 5 1.77 2
Tianjian 0.39 6 2.55 2 0.90 2 1.36 3
Guangdong 2.70 1 -1.91 10 -0.34 6 0.33 4
Zhejiang 1.82 2 -1.4 7 -1.42 11 -0.02 5
Jiangsu 1.29 4 -1.71 9 -1.37 10 -0.37 6
Inner Mongolia -2.50 10 1.71 3 -0.53 7 -0.46 7
Liaoning -1.22 8 -0.87 6 -0.72 8 -1.00 8
Hebei -1.38 9 -1.51 8 0.89 3 -1.07 9
Shandong 0.07 7 -2.58 11 -1.18 9 -1.22 10
Shanxi -3.56 11 0.59 5 0.18 4 -1.26 11
First level indicators Second level indicators
Low-carbon
production
Carbon production level
Energy consumption for unit GDP
Energy consumption for unit industry added
Industrial waste water emission
Industrial exhaust emission
Low-carbon
consumption
Carbon emission per capita
Energy consumption per capita
Electricity consumption per capita
Low-carbon
resource
Forest coverage
Average CDM project emission
Low-carbon
policy
The yearly total investment resource for industrial
pollution control
Government subsidy ratio for industrial pollution
control
Set up an evaluation system for
low-carbon economic
development level
Aim at comparing the low-
carbon development level of
three economic regions in China
Analyze the strengths, find out
the potentials and problems as
well as provide solid data base
for next section’s analysis.
8. District F1 Rank F2 Rank F3 Rank
Composite
Score
Rank
Yangtze River Delta 1.24 2 0.18 2 -0.9 3 0.46 1
Pearl River Delta 2.7 1 -1.91 3 -0.3 2 0.33 2
Circum-Bohai-Sea -0.92 3 0.2 1 0.4 1 -0.25 3
F2: Low-Carbon Consumption
and Resource Index
Circum-Bohai-Sea is in the first
place;
However,the population size
in Circum-Bohai-Sea is twice
times of that in Yangtze River
Delta,three time of that in Pearl
River Delta;
Thus,overall industrial
emissions and energy
consumption are much higher
than the other two districts.
F3: Low-Carbon
Policy Index
The average reductions of CDM
projects is a little bit higher in
Pearl River Delta.
Industrial pollution subside
from the government in
Circum-Bohai-Sea is 8%, which
is much higher than the other
two areas.
Combining the two factors,
Circum-Bohai-Sea is NO.1 .
Circum-Bohai-Sea is in the
last place;
Energy consumption of unit
GDP and unit industry value
added in Circum-Bohai-Sea
is the highest;
Carbon production in
Circum-Bohai-Sea is the
lowest.
F1: Low-Carbon Production
Index
Low-Carbon Standard Evaluation System2.2
9. Public Awareness
Weak public awareness
Lack of market power
The share from the companies in
Circum-Bohai-Sea is the lowest
Companies
Carbon Productivity
Carbon production level is low
Economic growth pattern needs
to be changed
Government
Government’s low-carbon
plan needs to be improved
Problems for Low-Carbon Economy in Circum-Bohai-Sea2.3
Indicators
★ ★★ ★★★
Energy
Consumption per
GDP
★ ★★ ★★★
★ ★★ ★★★
Average CO2
Emission ★ ★★ ★★★
★ ★★ ★★★
★ ★★★ ★★
Carbon Production
Industrial Energy
Consumption
Average Energy
Consumption
The Share of the
Companies’
Investment Sources
of Current Industrial
Pollution Control
Circum-
Bohai-Sea
Yangtze River
Delta
Pearl River
Delta
10. Power Valley, Solar City
National Renewable Energy Industrial Base
National Model City on Applied Solar Utilization
WWF China’s Low-Carbon City
Development Project’s Pilot City
Binhai
City Case
Green Low-Carbon Capital
Six “Golden Sunshine”
Projects
The Guidance for
Speeding up the
Development and
Utilization of Solar
Energy
Promote the Industrial
Development in Beijing
Environmental Friendly to Live
China’s First Experimental
Park on Recycling Economy
“Low-Carbon Life Starts from me”
TIANJIN Set Up the First Emissions
Exchange Market in China
The First Low-Carbon House in China
Solar City
National High Technology
Biology Industrial Base
New Energy Industrial Base
in State Torch Program
National Renewable
Energy Model City
on Construction
Applications
Beijing
Baoding
Dezhou
11. Government Actions for Low-Carbon Economy3.1
Policy
Start low-carbon economic development strategy as soon as
possible , which includes the 12th Five-Year Plan
Improve energy statistics system, and
gradually introduce carbon emission
statistics
Develop and improve the energy efficiency standards,
and strengthen the implementation of energy efficiency
standards
Economy
Credit support: increase the budget, promote
“green credit " via banks
Explore various financing channels:
financial allocation , policy bank loans & VC
Tax incentives
Product subsidies
Reform the energy pricing mechanism
Explore the "Carbon trading" in the field of
financial innovation
Implement the contract of energy
management, international CDM
transaction and other
new financing
means
R & D
Strengthen international cooperation in low-
carbon technology innovation
Set up special funds to support energy
technological R & D and innovation
Promote R & D cooperation between Schools
and firms
Personnel training
Scientific research
Project development
Information technology
National energy R & D institutions
Government
Actions
12. Citizen
Shape sustainable
consumption patterns
Reuse
Re-calculate
Recycle
Re-evaluate
Reduce
Rescue
Select energy-saving appliances
Less use of air conditioners
Turn off lights
Purchase new energy vehicles
Select the green low-carbon construction
Select green food
Buy less disposable products
Buy more second-hand or refurbished items
Use reusable shopping bags
Do waste sorting and recycling
Use readily biodegradable lunch box
Use more bio-energy
Establish special conservation
areas to save species
Refuse fur products
Against deforestation
and protect the forest
Calculate the direct economic costs
Calculate the carbon emission
Choose the products with lower price
and less carbon emission
Citizen Operations for Low-Carbon Economy3.2
13. Enterprise Movements for Low-Carbon Economy3.3
Set up
a new firm
Co-
operation
R&D
Purchase
Deposits
Open Shanghai's first hydrogen
service station for cell vehicles.
Establish two EPR in the UAE with
Suez and Areva Group.
Built the megawatt solar photovoltaic power
generation system with China in 2004 ,
whose total installed capacity ranking first in
Asia with total
investment of 7.5 million U.S. dollars.
Cooperate with Shell in the
development and production of natural
gas in Sichuan.
Shell China Exploration and Production Co.,
Ltd. was awarded a CBM project in Shanxi
Province with 55% participating interest in
2007.
Invest nearly 180 million Yuan
building a 60,000 t / year scale
biodiesel demonstration plant.
Plan to spend 3.5 billion Australian
dollar on the acquisition of
Australian coal bed methane and
liquefied natural gas company in
100% equity with Shell Energy
Holdings Australia Ltd.
Cooperation .
Plan to buy Australia's largest
coal bed methane producer
Arrow Energy Ltd with Petro
China in 2010.
Invest in new energy field more than one
billion U.S. dollars annually.
M&A
In December 2009, enter the clean energy field by the acquisition of
XTO Gas Company with 41 billion U.S. dollars.
14. SK will increase its
investment in China on
renewable energy,
Combined with other areas,
SK will invest 1 billion Yuan
in total.
“
”
SK's Current Decisions in Low-Carbon Industry4.1
1, improve the efficiency to break
technological barriers;
2, provide more low-carbon energy
3, find any way possible to cut
the carbon emission and other
polluted emission.
“
”
We mainly realize the technological revolution in three areas:
Solar Energy
Wind Energy
Biology Energy
15. Challenges for SK in Low-Carbon Industry4.2
2004 2005 2006
The area is new and has a great potential in Circum-
Bohai-Sea region
The industry has not set up its competition bar
The industrial scale is relatively low
For SK, it needs to lead the technology ability
In China’s rural areas, the
firewood and coal saving stoves
reach 0.2 billion
Approximately 70% of rural
households benefit
3,764 large and middle digesters
0.341 billion cube meters biogas
0.12 billion ton organic waste
and waste water
80 billion cube meters biogas .
Supporting Policies
China has invested 4.8
billion Yuan for the
enterprise .
For the fuel ethanol
companies, the government
exempts 5% of the
consumption tax.
Shortage
The shortage of raw
resources limits the mass
production of biomass
energy
It does not set up a
comprehensive biomass
energy industrial system .
Solid Biomass Energy
Biology
Energy
Analysis
Gas Biomass Energy
2.26 billion rural household
biogas digesters
9.2% of the total rural
households
The 8.7 billion cube meters per
year for biogas production
Benefit 0.75 billion people
Add 18 billion Yuan directly to
the farmers .
Liquid Biomass Energy
1
16. Strong
competition
SK lacks of
technology
power
Company Strength
First install in Shandong in 1985, later in Tianjin,own the biggest wind power
manufacture in China .
Form the industrial arrangement with Beijing as the center and Dalian, Inner Mongolia
as the production bases.
In 2006, set up Tianjin Gamesa Wind Power Company.
In Jan, 2007, set up a blade manufacture in Dongying.
In Tianjin ,set up a joint venture manufacture-Ruineng North Fans Manufacturer.
Representative is in Beijing ;Set up Tianjin Suzlon Energy Company.
Wind Energy Industry Ranking for Countries
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
Million Watt
Challenges for SK in Low-Carbon Industry4.2
Wind Energy distribution in China
Wind
Energy
Analysis
2
17. 60% to 70% of the solar battery industry in China is controlled by the above companies,
which set the industry line bar extremely high and difficult for others to enter in.
For SK, it is urgent to set up a R&D center, which will help SK to take advantage of the
convenient management.
Companies Strength Weakness
Solar battery production level is
the second internationally.
No specific R&D or sales department in
Circum-Bohai-Sea
Headquarter is in Baoding Inefficient management team
Representative is in Beijing, set
up a solar company in Tianjin
It is a joint venture company with China
Yiqing Group, which bring operation risk
Complete running arrangement
in Circum-Bohai-Sea
No R&D center in Circum-Bohai-Sea
Challenges for SK in Low-Carbon Industry4.2
Company Names
2007 2008 2009
Supply
(MW)
Sales
(MUS$)
Sales
(MUS$)
Supply
(MW)
Sales
(MUS$)
Suntech Power Holding. Co., Ltd 64 1348.3 497.5 1923.5 704 1693.3
Canadian Solar Inc 83.4 302.8 167.5 709.2 325.3 643.3
Solarfun Power Holdings. Co., Ltd 78.4 328.3 172.8 725.4 313.4 553.5
Trim Solar Limited 67.96 301.8 201.01 831.9 399 845.1
JA Solar Holdings Co. Ltd 132.4 369.3 277 800 509 553.7
Yingli Green Energy Holdings Co. Ltd 142.5 580 281.5 1107.1 525.3 1062.8
China Sunergy Co., Ltd 74 234.3 107.2 350.9 194 284.9
Competitors Analysis for SK in solar industry in Circum-Bohai-Sea region
Solar
Industrial
Analysis
3
Domestic
Companies’
Supply and
Sales
Supply
(MW)
18. Renewable
Energy
Current
Development
Future
Picture
Technology
Requirement
Entering
Threshold
Government
Support
Money
Resource
Solar ★★★ ★★ ★ ★ ★★ ★★
Wind ★★★ ★★ ★★ ★★ ★★ ★★
Biomass ★ ★★★ ★★★ ★★★ ★★★ ★
Weakness
International management style
Large investment package
Complete running arrangement in
Circum-Bohai-Sea
No R&D center in Circum-
Bohai-Sea
Unstable fund resources
problem
Government Support: The Circum-
Bohai-Sea region has make its low-
carbon economy as its main
development road in the future
Technology Innovation
Investors’ enthusiasm for the low-
carbon economy
Single financial resource
Depend on the business cycle
Operation risk
S W
O T
Evaluation on Renewable Energy4.3
SWOTAnalysisforSKon
RenewableEnergy
4.4
19. Wind
1.Fans Manufacture
★ Abandon the industry.
2.Wind Farm
★ Our suggestion for SK is
to cooperate with some
local state-owned power
groups to own a share in
the business.
3.Additive Market
★ SK could use the
opportunity to share the
Circum-Bohai-Sea market
with its high technology
level in battery field, sales
net and local government
policy.
★ SK could use its technology
advantage to enter the field
along with the well-prepared
sales channels and sufficient
capital.
★ Another method SK could
use is to joint venture with
the local companies.
Solar
Products for SK in Low-Carbon Industry4.5
★ Develop its Fuel ethanol : It
is a blank field in Circum-
Bohai-Sea region.
★ Explore biodiesel: Because
the companies at home and
abroad are entering the field
consecutively, SK needs to
seize opportunities.
Biomass
For
Maintain Core Competitiveness
Set up a R&D Center
20. It’s the national politics center, which helps to know
and master the policy changes in time
There are many universities and research
centers in Beijing, which helps the process of the R&D
Close to SK headquarter, easy to manage
Strength
Tianjin
Beijing
Shanghai
High living cost,lower the employee’s happiness
High housing price, which increases the running cost Weakness
It’s a national new energy center
Local governments provide preferential policies
for the companies
Intercity Highway makes Beijing and Tianjin as a whole
Relative low housing price
Strength
Inefficient human resources
Hard for SK headquarter to manage Weakness
SK has stable sales net in Yangtze River Area
Competitive Human Resources
Strength
The Farthest from SK headquarter
High living cost
High housing price
Weakness
Advice:
Choose
Tianjin
R&D Center Decision for SK in China4.6
R&D Center
in China