“Development of a US/China Natural Gas Coalition Associated with 2008 Beijing Olympics”

John W. Spears
President

International Center for Sustainable Development
www.SolarCities.org 

Background

As the host of the 2008 Olympic Games in Beijing, the Chinese government has set a goal to conduct a “Green Olympics” and is committed to strengthen public awareness of environmental protection and promote the development and application of new technologies.  To accomplish the goal of a “Green Olympics,” Beijing is committed to a Zero Net Emission Games, where emissions of air pollution associated with hosting the Olympics will be minimized and offsetting emissions reductions for sulfur dioxide, carbon dioxide and other pollutants will be obtained from projects and programs in China as well as through emissions trading markets around the world.  

Beijing is known as one of the most polluted cities in the world in terms of air quality.   The main cause is a high consumption of coal each year.  Around 10-15 percent of the inner city’s 6 million residents still heat their homes with coal-burning stoves in the winter.  Beijing is also home to 110 polluting factories and some 1.17 million automotive vehicles.[1]  The Chinese government pledged to the International Olympic Committee that, if chosen to host the 2008 Olympics, Beijing would reduce its ambient air pollution to the level of Paris today.  The Chinese government has reportedly drawn up a budget of $21.7 billion (both from domestic and overseas private-sector investment) for 142 Olympics-related improvement projects in Beijing, of which $5.4 billion is to resolve environmental problems.[2] 

As part of an effort to improve air quality in Beijing, the government has planned to increase the use of cleaner energy such as renewable energy and natural gas in Beijing.  About 500 million cubic meters of natural gas will be utilized to replace all civilian and industrial uses of coal as fuel throughout the municipality of Beijing.[3]  About 90 percent of the city’s 20,000 pubic buses will be switched from diesel to natural gas by 2008 (up from 60 percent at present) and 60 percent of the city’s 67,000 taxis will also use natural gas by 2008 (up from 40 percent at present).[4]  A new natural gas transmission pipeline from the gas fields in Sichuan and Russia is planned to increase natural gas supply for the use in Beijing.   

US-China Cooperation on the Efficient Use of Natural Gas

The Chinese government has planned to minimize air pollution associated with hosting the Olympics, improve environmental quality of Beijing, promote the development and application of new technologies and introduce clean energy technologies.  The US government is collaborating with the City of Beijing on this effort.  Under the leadership of the US Department of Energy, five other US government agencies are providing support to the Olympic Challenge including:

On September 10, 2002, Vice Mayor Lin, Chairman of the 2008 Beijing Olympic Science and Technology Committee (BOSTC), and Assistant Secretary Bailey signed a Statement of Intent to cooperate on clean energy technology deployment for the 2008 Olympics.  The US-China Joint Working Group (JWG) has been established to further develop cooperative activities.  The first JWG Meeting took place on December 5-6, 2002 with representatives from US government agencies and the counterpart Chinese agencies to identify areas for cooperation that are of mutual interest.  Nine areas of cooperation were identified by the JWG at the meeting,

US-China Cooperation on the Efficient Use of Natural Gas

The objective of this project is to assist Beijing and the 2008 Olympics with the transition to the efficient use of natural gas.

The activities of cooperation are in four areas:

1)     Issues identification and team building

2)     Organize a US/China Natural Gas Coalition

3)     Organize a workshop on the efficient use of natural gas

4)     Develop a demonstration project

1.      Issues identification and team building.

Working with the gas industry in Beijing, we will study the supply and demand side of the gas industry in Beijing and the proposed expansion for the Olympics. We will also explore the barriers to the efficient use of natural gas. The primary areas of interest include distributed generation (DG), combined heating and power, combined heating cooling and power and building integrated systems. We have been working with  Beijing Gas Group (the gas utility in Beijing), Beijing Energy Net (a subsidiary of Beijing Gas Group charged with developing DG projects), and Falcon Energy (a private Chinese energy consulting firm that works closely with Beijing Energy Net). The team will identify key barriers (i.e., market, technological, economical, institutional and regulatory barriers) to natural gas utilization in China, as well as assist in the implementation of natural gas projects in Beijing.

2.  Organize a US/China Natural Gas Coalition

We will form a US/China Natural Gas Coalition that will include technology experts, gas companies, manufactures, and equipment vendors and others to work with a Chinese team.  Potential partners for this activity are the American Gas Association, which represents 187 local energy utility companies that deliver natural gas to more than 52 million homes, businesses and industries throughout the United States, and the Energy Solution Center which is a technology commercialization and market development organization representing 31 energy utilities, 13 municipal energy authorities, and 30 equipment manufacturers and vendors. Also the US Combined Heat and Power Association and their 400 members. The funding for this activity is targeted at business partners who will directly benefit from an implementation of natural gas project.

Based on the key barriers to natural gas utilization identified in activity 1, The US/China Natural Gas Coalition will work with Chinese team to recommend policies and strategies that will help overcome those barriers. Activities of the Coalition will include training programs and workshops, as well as direct technical assistance. We will work with the Gas Technology Institute (GTI) to be a partner in this activity. We will assist Beijing Energy Net in conducting a feasibility study to identify the range of opportunities that exist for the utilization of CCHP systems in Beijing for the Olympic Green. We will develop a proposal to the US Trade Development Agency for financial support to conduct a feasibility study on an installation of distributed generation CCHP systems in Beijing.   We will work with a major natural gas technology company, possibly the United Technology, in this activity. 

3. Workshop on Efficient Gas Technology

We will start planning for a workshop on efficient gas technology to be held in Beijing in June or July 2003. This workshop will target the issues and barriers identified in Task 1 and during our meeting in April.

4. Also as a follow up to Task 1 and 3 we would like to develop a demonstration project with private sector funding.

Natural Gas Coalition Demonstration Project 

One of the major venues to be built in the Olympic Green is the Olympic Village, which will contain 360,000 square meters of apartments available to the athletes, coaches and team officials during the Games and will be sold as commercial housing after the Games.[5]  ICSD proposes to work with Beijing Energy-Net DE, Ltd. (BEN), a subsidiary of the Beijing Gas Group, to conduct a feasibility study on the use of natural gas for distributed generation combined cooling/heating and power (CCHP) systems in the Olympic Green especially for the Olympic Village.  

BEN is promoting distributed generation in Beijing and for the Olympics.  John Spears from ICSD met with representatives from BEN on December 7, 2002 as the US representative of the US/China Collaboration on the Green Olympics and discussed potential cooperative activities on distributed generation projects in Beijing. BEN has proposed a CHP plant which will be located at the Olympic Green and will use the existing district heating system at a proposed cost of US$ 40 million.  BEN has asked ICSD to help them with this project and with other 6 other CCHP projects in the following 4 areas:

  1. Finding US partners in the proposed projects,
  2. Removing institutional barriers to distributed generation projects in general including:
    1. Interconnection issues with the electric utility that does not allow independent power producers (IPPs) sell to the grid,
    2. Utility policy that forbids IPPs from selling power,
    3. Codes and standards that prohibit high pressure gas inside buildings.  This is important for building integrated CCHP projects,
  3. Gas technology including CCHP, distributed generation and building integrated systems, and
  4. Gas pricing policy.

Potential Benefits to US Businesses  

The City of Beijing is planning to invest more than $23 billion in
preparation for the Olympic Games in 2008. Much of this money will be
spent on construction projects in the following areas: Olympics
facilities, transportation, telecommunications, and environmental
improvements. Some of the projects are continuations of city improvements
that have been planned for years. Others are entirely new projects that
will now come to fruition since Beijing has been officially selected to
hold the Olympics. Coupled with the Beijing municipal government promise
that bidding on these projects will be open on an equal basis to both foreign and domestic companies, the 2008 Games could be a very enticing business opportunity.

The opportunities for using CCHP systems in Beijing and for the Olympic Green are immense.  The CCHP systems are commercially proven technologies and they have been proven to be more economical and energy efficient in providing cooling, heating and power, especially in high-density areas.  This proposed activity will significantly benefit US businesses.  The US has the most advanced distributed generation technologies in the world.  Also, as mentioned in its national energy plan, the US has placed a major emphasis on the development and implementation of distributed generation technologies across the US.  Since the Chinese have committed to, and prepared the budget, for the 2008 Olympics, the potential to export US distributed generation CCHP technologies to China is tremendous.   This project will help identify the range of opportunities that exist for the utilization of CCHP systems in Beijing.  In addition, it will help US businesses clearly understand institutional barriers of distributed generation in China.  This information will enable the US private sector to take advantage of the developing gas-based markets in China and to compete with other foreign companies, especially the French, who have already shown an interest in assisting Beijing in the development of a central station combined heat and power plant. 

Join The Team

If you or your company would like to join and support the US/China Natural Gas Coalition, please contact:

John Spears

International Center for Sustainable Development

22923 Wildcat Rd.

Gaithersburg, MD 20882

301-428-1040
jspears@SolarCities.org
www.SolarCities.org