Technology assessment of clean coal technologies for China (Vol. 3 of 3) : Environmental compliance in the energy sector : methodological approach and least-cost strategies - Shanghai municipality and Henan and Hunan provinces, China

23488 v 3 Technology Assessment of Clean Coal Technologies for China: Volume 3-- Environmental Compliance in the Energy Sector: Methodological Approach and Least-Cost Strategies Shanghai Municipality and Henan and Hunan Provinces, China December 2001 World Bank Energy Sector Management Assistance Program (ESMAP)   Contents Contents.........................................................................................................................................iii Foreword ....................................................................................................................................... iv Abstract ......................................................................................................................................... vi Preface ...........................................................................................................................................vi Acknowledgments.........................................................................................................................vii Abbreviations and Acronyms...................................................................................................... ix Units of Measure........................................................................................................................... xi Currency Equivalents................................................................................................................... xi Executive Summary...................................................................................................................... 1 1 Introduction .....................................................................................................................13 Objectives.............................................................................................................14 Report Organization .............................................................................................15 2 Background......................................................................................................................17 Overview ..............................................................................................................17 Economy...............................................................................................................18 Energy .................................................................................................................18 Power Subsector ...................................................................................................19 Environmental Issues............................................................................................20 Initiatives to Improve the Environment................................................................22 3 Methodology.....................................................................................................................25 The Methodology .................................................................................................26 4 Key Findings ....................................................................................................................43 Particulate Control................................................................................................43 NOx control ...........................................................................................................51 Least Cost Optimization Analysis ........................................................................54 5 Conclusions and Implications.........................................................................................65 Key Findings Regarding Environmental Control Options ...................................65 Environmental Externalities .................................................................................67 Key Findings Regarding the Methodologies Used and Recommendations for Future Work....................................................................................................67 Annexes..........................................................................................................................................69 iii  Foreword Funding for the studies was provided by a number of sources. The Shanghai and Henan case studies were funded by the Environmental Manual Program, the Dutch Trust Fund which was managed by the Energy Sector Management Assistance Program (ESMAP), the East Asia and Pacific Region's Energy Sector Unit (EASEG), and the Energy, Mining and Telecommunication Department's Energy Unit (EMTEG). The Japanese Trust Fund, as well as EASEG and ESMAP, funded the Hunan case study. The project was jointly managed by EASEG and EMTEG. World Bank staff1 led the project team in the development of the methodology, data analysis, and preparation of this report. The Beijing Economic Research Institute of Water Resources and Electric Power (BERI) undertook most of the data collection, analysis, and modeling work. Researchers from the Department of Environmental Engineering of Tsinghua University in Beijing performed environmental cost evaluation on sulfur deposition and ambient air pollution in the Hunan case study. The Electric Power Development Corp (EPDC) and Tokyo Electric Power Co (TEPCo) of Japan, and the Electric Power Research Institute (EPRI) in Palo Alto, California provided specific technical input in the Hunan case study. The Oeko Institute of Germany provided technical support in the use of the Environmental Manual (EM) model2 and the estimation of emission factors for end-use energy activities. In publishing this report, we hope to provide an insightful analysis of the long-term opportunities CCT presents for China. Yukon Huang Director China Country Programs East Asia and Pacific Region 1 Mr. Noureddine Berrah of EASEG, Mr. Masaki Takahashi and Mrs. Stratos Tavoulareas of EMTEG. 2 The EM model was developed by a number of bilateral agencies from Germany (BMZ and GTZ), Netherlands (DGIS), Switzerland (BAWi) and United Kingdom (DFID) with the coordination of the World Bank. iv  Abstract Economic growth has been fueled by increased coal combustion, which has serious environmental impacts. Coal is China's chief energy source, accounting for 75 percent of primary energy consumption. However, current consumption of more than 1.3 billion tons per year is China's main cause of pollution. Assessing and identifying least-cost environmental mitigation options is crucial to resolving China's air pollution problems. The government of China recognizes the importance of improving pollution control and has tightened environmental regulations throughout the country, particularly for the power and non-power sectors, the predominant source of air emissions. Its strategy has been to exert more stringent emission control at the plant level, levy emission fees for certain pollutants, and create acid rain SO2 control zones. In most cases, non-power sector options are more cost-effective than power sector options in reducing environmental pollution. Key control options include: