|Project Rationale and Linkage to Country/Regional Strategy
Concerned with the serious environmental impacts of a high use of fossil fuels, the Government of People's Republic of China (PRC) has announced obligatory targets to reduce energy consumption per unit of GDP by 20% and total emission of major pollutants (sulfur dioxide and chemical oxygen demand) by 10%. The promotion of renewable energy sources will be essential for achieving this challenging target. The guidelines recommend preferential financing and taxation, suitable investment policies and mandatory market share of renewable to encourage the production and consumption of renewable energy and increase its proportion in the primary energy consumption. Specific mention is made for accelerating the development of wind power (target 5 GW by 2010), biomass- (from forests) and stalk-based (from agro waste) power generation (5.5 GW), waste incineration, and bio-fuels (ethanol and bio-diesel oil). Further, the Government will actively promote the development and utilization of solar energy, geothermal energy and ocean energy?the technologies that are yet to become commercially viable.
PRC achieved the major economic targets during 2006, but the energy consumption per unit of GDP decreased only by 1.33%. This has led to grave concerns and the Government wishes to redouble its efforts to control energy use, by slowing investments in production and aggressively promoting renewable energy. Reducing fossil fuel use and thereby limiting the growth of greenhouse gas (GHG) emission in PRC are also of global significance.
Use of geothermal energy has a very long history. It is a renewable resource that has been used for centuries for therapy and since mid 1900s, for raising steam to generate power. However, such geothermal-based power plants could only be located in regions with the right geological condition that allows recovery of heat contained in the earth?s mantle.
Since late 1990s, considerable research and development (R&D) has been carried out to utilize another form of geothermal energy?that enables the temperature at depths of 30?200 meters to remain constant during all weather conditions, in the range of 7?13 degrees Celsius (0C) depending on the depth. If water at any temperature (near 4 0C during winter, or above 30 0C in summer) is pumped into the ground in tubes, the underground heat transfer system can be suitably designed so that the returning water is about 10 0C. This source/sink of heat can then be transformed for low energy application, i.e., space heating and cooling. For heating, a heat pump (using principles of refrigeration but in reverse) is used; and for cooling in summer, a source of low temperature water becomes available for air handling units. There are now over 1.5 million installations of shallow-ground geo-energy (SG-GE) in Europe and the USA.
PRC understands that SG-GE contributes toward energy conservation and environmental protection. Several government agencies, including the National Development Reform Commission (NDRC), the Ministry of Finance (MOF), Ministry of Construction (MOC), Ministry of Land and Resources (MOLR), and State Environmental Protection Administration (SEPA) have indicated strong support to exploring effective ways to scale up SG-GE utilization to reduce peak-period demand for air-conditioning in summer and space heating in winter, substitute fossil fuels, avoid addition of new power generation capacity, and reduce emission of carbon dioxide, sulfur dioxide, and other pollutants. The unit cost of utilizing SG-GE can be lowered through economies of scale, technological progress and targeted policy and fiscal support. When this happens, more people in the low-income group can afford to have access to heating and cooling services based on clean and renewable energy.
The Beijing EverSource Science and Technology Development Co., Ltd (EverSource) is committed to developing this innovative renewable energy resource in PRC. Since late 1990s, it has installed SG-GE systems for more than 3.5 million square meters of building structures in more than 100 locations, including the National Opera House and several stadiums for the upcoming Olympic Games in Beijing. As one of the industry leaders for SG-GE utilization, EverSource has offered to make its corporate resources (including existing installations, on-going projects, past and current audited financial statements, future development plans, and patented technologies) available for case studies to help promote the use of SG-GE systems. Other participants, including major users, designers, installers, and equipment manufacturers of SG-GE systems will also be consulted. The final results of the small-scale advisory technical assistance (TA) will be disseminated widely and publicly to boost the growth of the whole market of SG-GE systems.
In its Medium-Term Strategy II (2006?2008), Asian Development Bank (ADB) has identified energy as a core operational sector and achieving environmental sustainability as a strategic priority. ADB?s overall energy sector strategy hinges upon (i) providing cost-effective energy services to sustain economic growth and to alleviate poverty; (ii) facilitating private sector involvement in energy sector development; (iii) mitigating environmental pollution; and (iv) promoting regional energy cooperation. Recently, greater focus is on addressing energy security and climate change through improving energy efficiency and enlarging uses of indigenous clean and renewable energy. ADB has also introduced initiatives (e.g., the Energy Efficiency Initiative (EEI) and the Carbon Market Initiative [CMI]), and adopted new and more client-oriented lending modalities (e.g., multi-tranche financing facility and non-sovereign operations) to reinforce its assistance to the developing member countries for acquiring low-carbon technologies and to implement energy efficiency and renewable energy projects.
PRC and ADB priorities and strategies in the energy sector are well aligned. Utilizing SG-GE systems to displace fossil fuels will lead to higher energy efficiency, renewable energy development, and reduction in GHG emissions.