China - opportunities to improve energy efficiency in buildings

34086 May 2001 CHINA: OPPORTUNITIES TO IMPROVE ENERGY EFFICIENCY IN BUILDINGS Asia Alternative Energy Programme and Energy & Mining Unit East Asia and Pacific Region The World Bank   CONTENTS FOREWORD .....................................................................................................................................................................iii ACKNOWLEDGEMENTS .............................................................................................................................................iv ABBREVIATIONS AND ACRONYMS.......................................................................................................................v Units of Measure .......................................................................................................................................................v Energy Unit Conversion...........................................................................................................................................v Currency Equivalent .................................................................................................................................................v EXECUTIVE SUMMARY..............................................................................................................................................vi CHAPTER 1. WHY PROMOTE MORE ENERGY-EFFICIENT BUILDINGS? .......................................1 Current Energy Waste in Buildings.......................................................................................................................1 New Building Construction: Locking in Energy Waste for the Future?........................................................3 Social and Financial Imperatives..........................................................................................................................4 Environmental Benefits ...........................................................................................................................................5 Why Take Action Now?...........................................................................................................................................6 CHAPTER 2. SECTOR BACKGROUND................................................................................................................7 BUILDING STOCK AND CONSTRUCTION TRENDS.......................................................................................................7 Construction During the 1990s..............................................................................................................................7 Future Construction Trends...................................................................................................................................9 BUILDING OWNERSHIP, PRICES AND MARKETS........................................................................................9 Urban Housing Reform and Home Pricing .........................................................................................................9 Urban Home Ownership and Markets................................................................................................................10 Housing Reform and Building Energy Efficiency.............................................................................................10 BUILDING DESIGN AND CONSTRUCTION SYSTEMS IN CHINA................................................................................11 Traditional System under the Planned Economy ..............................................................................................11 The Evolving System under the Market Economy.............................................................................................11 HEATING AND COOLING IN URBAN BUILDINGS.......................................................................................................12 China's Climate Zones..........................................................................................................................................12 Heating Systems......................................................................................................................................................13 Heat Prices ..............................................................................................................................................................15 Residential Space Cooling Systems.....................................................................................................................15 Commercial Buildings...........................................................................................................................................16 OVERVIEW OF PAST EFFORTS TO IMPROVE ENERGY EFFICIENCY IN CHINESE BUILDINGS ..............................16 The 1995 Energy Efficiency Building Standards (JGJ26-95).........................................................................17 Pilot and Demonstration Projects.......................................................................................................................17 CHAPTER 3. IMPROVING EFFICIENCY IN THE HEATING ZONE......................................................19 THE NEED FOR A "TWO-HANDED" APPROACH........................................................................................................19 REFORM OF HEAT SYSTEM CONTROL AND BILLING...............................................................................................20 Consumer Control..................................................................................................................................................20 Measuring Consumption Levels...........................................................................................................................20 Shifting to Household Payment of Heat Bills ....................................................................................................22 Reform of Heat Tariffs ...........................................................................................................................................24 Opportunities for Modernizing Heat Supply Companies................................................................................24 Sequencing Implementation of Heat System Control and Billing Reforms ..................................................25 IMPLEMENTATION OF BUILDING ENERGY EFFICIENCY MEASURES......................................................................25 Improving Energy Efficiency in Existing Buildings..........................................................................................25 Implementing Building Energy Efficiency Standards to Improve Energy Efficiency in New Buildings.26 Developing Energy Efficient Building Materials and Products.....................................................................29  ii CHAPTER 4. BUILDING ENERGY EFFICIENCY OUTSIDE OF THE HEATING ZONE ...............32 Role of the Market..................................................................................................................................................32 Paying Attention to Energy Efficiency in New Building Design....................................................................33 Improving the Energy Efficiency of Heating and Cooling Equipment..........................................................35 Improving HVAC Systems in Commercial Buildings.......................................................................................36 Cooperation with Electric Power Companies...................................................................................................36 CHAPTER 5: RECOMMENDED FOLLOW-UP ACTIONS...........................................................................37 POLICY ACTIONS..........................................................................................................................................................37 Specific Investment and Program Support.........................................................................................................38 Integrated Policy and Investment Pilot Projects...............................................................................................38 Activities for the Heat Zone ..................................................................................................................................39 Activities for the Non-heated Zone......................................................................................................................40 Activities for All Zones ..........................................................................................................................................41 Tables in Text: Table 1.1 International Comparison of Building Envelope Thermal Standards..............................................2 Table 2.1 Residential and Commercial Building Stock in China .......................................................................7 Table 2.2 Prices for Central Heating in Selected Cities, 1999..........................................................................15 Table 2.3 Household Ownership of Air Conditioners in Selected Provinces, 1998......................................15 Figures in Text: Figure 2.1 Building Construction in China, 1991-1998.........................................................................................8 Figure 2.2 Energy Consumption Patterns in Commercial Buildings with HVAC Systems, Shanghai.......16 Figure 3.1 Insulation Standards and Energy Savings in the Netherlands, 1965-1995....................................27 Boxes in Text: Box 3.1 Experiences in Heating Metering and Billing Reform in Poland ...................................................23 Box 3.2 Moscow's Building "Energy Passport" Program ..............................................................................29 Box 3.3 Promoting More Energy-Efficient Building Materials in Sweden .................................................31 Box 4.1 The USA's "Building America" Program: A Public-Private Partnership to Develop Energy Efficient Residential Buildings.............................................................................................................35  iii FOREWORD Substantial results in efforts to improve the energy efficiency of space conditioning in urban residential and commercial buildings in China are slow in coming. The use of highly energy inefficient designs, materials and construction is continuing unabated through the construction boom since 1990. More than one-half of China's urban residential and commercial building stock in 2015 is expected to be constructed after the year 2000. Demand for heating and cooling service in the new buildings will be greater than ever. Most unfortunately, almost all of the new buildings being constructed are still based on the older, highly energy-inefficient design principles. Central heating systems are still mostly based on designs from the 1950s that allow no consumer adjustment of heat levels. This study was, therefore, undertaken to establish priorities for supporting measures to improve the energy efficiency of Chinese residential and commercial buildings, and to help lay a foundation for future support by international donors, especially the Global Environment Facility (GEF). Whereas the former housing construction, ownership and occupation system stymied efforts to improve building energy efficiency in China for many years, institutional and incentive changes from ongoing housing reforms present major new opportunities for energy efficiency gains. The study concludes that major cost and energy savings can be achieved in urban residential heating supply and use systems, with major benefits for peoples' livelihood, environment and financial performance of heat companies. Achievement of meaningful savings however, will require a "two-hand" approach, combining both reform of the heat billing and metering system, and associated heat supply system modernization, together with more aggressive development of more energy efficient buildings. It is expected that such a "dual track" approach could be implemented in several more innovative municipalities, as a core element in a future GEF/Bank investment project. As a result of the study the development and implementation of a range of related, high-priority technical assistance activities is also being pursued. Yoshihiko Sumi Director Energy and Mining Sector Unit East Asia and Pacific Region  iv ACKNOWLEDGEMENTS This report was prepared by Robert P. Taylor, Feng Liu and Anke S. Meyer. It is based on background and analysis reports commissioned from Tsinghua University, under the leadership of Prof. Yi Jiang (Yan Qisen and Di Hongfa) of the Department of Thermal Engineering. Up to date information on building energy efficiency and heating reform developments at the national, provincial and municipal levels was provided by the Ministry of Construction, particularly the Office of Energy Efficiency in Buildings under Director Han Aixing, and by officials and experts in Beijing, Changchun, Lanzhou, Shendong, Taiyuan, Tangshan, and Tianjin. The leading options to overcome the outstanding policy and institutional barriers blocking progress in promoting more energy efficient buildings, especially new buildings, were discussed at a major workshop in Beijing during March 6-8, 2000 with about 40 experts from a variety of Chinese agencies and institutes and several international groups. The authors thank the following individuals for their collaboration at the various stages of the study: Mr. Shu, Liu Younong and Peng Mengyue (Science&Technology Development Promoting Center of the Ministry of Construction), Prof. Lang Siwei (Institute of Air Conditioning at the China Academy of Building Research), Prof. Tu Fengxiang (China Building Energy Efficiency Association), Osmo Tammela, Songsu Choi, Rachid Benmessaoud, Jas Singh, Jeremy Levin (World Bank), Tracy Narel (USEPA), Joe Huang (Lawrence Berkeley Laboratories), David Goldstein and Robert K. Watson (NRDC), Bill Prindle (Alliance to Save Energy), and John Hogan (City of Seattle). The study was carried out with the financial support from the World Bank's Asia Alternative Energy Programme (ASTAE) under its REAP window and from the GEF.  v ABBREVIATIONS AND ACRONYMS DOE Department of Energy ESCO Energy Service Company GHG Greenhouse gas HVAC Heating, Ventilation, Air Conditioning MOC Ministry of Construction NUTEK Swedish National Board for Industrial and Technical Development OWMR Office of Wall Materials Renovation PVC Polyvinylchloride SPV Swedish Building Code Agency TRV Thermostatic radiator valve UNITS OF MEASURE Gcal Gigacalorie (one million kilocalories) GJ Gigajoule K Kelvin (0 K = -273.15 Celsius = -450 Fahrenheit) MWh Megawatt-hour M2 Square meter Rc Thermal resistance value TCE Ton of raw coal TWh Terawatt-hour W Watt ENERGY UNIT CONVERSION 1 Gcal = 1.16 MWh = 4.19 GJ = 1.75 steam tons/hour 1 GJ = 0.278 MWh = 0.239 Gcal = 0.42 steam tons/hour 1 MW = 0.86 Gcal = 3.6 GJ = 1.52 steam tons/hour 1 TCE = 5 Gcal = 20.9 GJ = 5.8 MWh CURRENCY EQUIVALENT US$ 1 = RMB 8.28 (2000 average)  vi EXECUTIVE SUMMARY Why promote more energy efficient buildings? China has not yet achieved substantial results in efforts to improve the energy efficiency of space conditioning in urban residential and commercial buildings. Residential buildings in China are estimated to consume 50-100% more energy for space heating as compared to buildings in similar cold climates in Western Europe or North America, and still provide far less comfort. The major reasons are heat losses through exterior walls, through windows and through imbalances and inability to control heat use in centralized heating systems, and a series of maintenance and management deficiencies stemming from the current heat billing system. The most critical aspect of China's building energy waste problem is that the use of highly energy inefficient designs, materials and construction is continuing unabated through the construction boom since 1990. More than one-half of China's urban residential and commercial building stock in 2015 is expected to be constructed after the year 2000. Demand for heating and cooling service in the new buildings will be greater than ever. Most unfortunately, almost all of the new buildings being constructed are still based on the older, highly energy-inefficient design principles. Central heating systems are still based on designs from the 1950s which allow no consumer adjustment of heat levels. The Chinese Government has promulgated new energy efficiency standards for buildings in the heating zone, aimed to achieve energy savings in new buildings of 50% compared to buildings constructed in the early 1980s, but the standards are generally not enforced. Solid progress has been made in developing more efficient building designs suitable for Chinese conditions, and various more energy-efficient windows, building materials, insulation board, etc., demonstrated in a number of pilot project efforts. But without enforcement of the building standards and changes in the prevailing heat billing system, neither the building design and construction industry, nor building owners and users, have the incentive to make the major changes necessary in heated buildings to move from pilot efforts to real implementation. Urban space heating has been considered a government-sponsored welfare requirement in northeast, northern and northwestern China for decades. But the sharp economic downturn in Northeast China during the late 1990s, coupled with the great inefficiencies of the heating supply and use systems, has created a financial crisis for these heating systems. According to official estimates, in the three northeast provinces bills for heat supply at current prices are equivalent to 15-30% of individual household incomes. Fundamental resolution of these problems will take time and requires simultaneous action on a series of difficult fronts, including (a) reform of the heat billing system to make end-users accountable for heat bills calculated based on actual heat consumption, in line with other ongoing housing and state-owned-enterprise reforms; (b) adoption of methods to increase end-user control of their heat usage; (c) measures to improve end-user heating comfort levels and reduce end-user costs by improving the efficiency of heat use by end- users; (d) investment and operational/management reforms in heat supply companies to reduce inefficiencies and costs. Improvements in efficiency can substantially reduce current high environmental costs associated with space conditioning, especially heating, by reducing the very high local particulate and sulfur dioxide concentrations typical of Chinese cities in the heating zone as well as the global greenhouse gas (GHG) emissions resulting from coal use for heating purposes.  vii Attaining real results in improving the efficiency of space conditioning in buildings is a long-term proposition, but progress requires concrete actions to be taken now, in order to make a difference. Serious action during the next 1-2 years on a number of the difficult problems constraining progress is urgent because: