Low carbon economy 2030 in China

29
Low carbon economy 2030 in China - Jiangxi Province as an example Hancheng DAI 2012.12.16 NIES

Transcript of Low carbon economy 2030 in China

Page 1: Low carbon economy 2030 in China

Low carbon economy 2030 in China - Jiangxi Province as an example

Hancheng DAI

2012.12.16

NIES

Page 2: Low carbon economy 2030 in China

Overview

2012/12/16 18th AIM International Workshop 2

— Motivation: develop methodology for provincial level low-carbon studies;

— Questions Future scenario of energy & emissions without policy intervention;

Economic cost of carbon reduction;

Measures to lower the economic cost;

Co-benefits of low carbon economy.

— Methodology A 2-region CGE model including Jiangxi province and rest of China;

A hybrid model including various technologies in power sector;

2005-2030 period;

— Findings Energy and emission would increase due to GDP growth

carbon price and GDP loss would be quite high in the most stringent

carbon reduction scenarios

With low-carbon countermeasures, carbon price and GDP loss would be

lowered substantially.

A lot of co-benefits associated with low-carbon economy, including air

pollutants reduction and energy security improvement

This model is relatively robust and can be applied to any other province

given the data.

Page 3: Low carbon economy 2030 in China

1. Introduction: energy and emissions in China

— Past (IEA, 2009)

— Future (EIA, 2011)

2012/12/16 18th AIM International Workshop 3

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CO2 emissions OtherBrazilSouth KoreaJapanEuropeCanadaUnited StatesIndiaChina0%

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Page 4: Low carbon economy 2030 in China

1. Introduction: Motivation and objective

2012/12/16 18th AIM International Workshop 4

To develop methodology at provincial level 1

To develop a framework for integrated and

quantitative assessment of low-carbon policies 2

To assess the effectiveness and economic

impacts of low-carbon policies 3

To provide policy recommendations for

promoting low carbon economy (LCE) 4

Page 5: Low carbon economy 2030 in China

1. Introduction: Question Statement

2012/12/16 18th AIM International Workshop 5

Future scenario of energy & emissions

under BaU 1

Key technologies /countermeasures to

achieve LCE 2

Economic cost of LCE 3

How to soften the economic cost? 4

Benefits and co-benefits ofof LCE 5

Page 6: Low carbon economy 2030 in China

2. Literature review: existing studies on LCE

2012/12/16 18th AIM International Workshop 6

— Country level • Japan: it has the technological potential to reduce its CO2 emissions by 70%

compared to the 1990 level in 2050, quantitative roadmaps which include over 600 options. (NIES, 2008) ;

• China: possible for China to reduce its emissions to 2005 levels in 2050 (Jiang,

2009).

• India: transiting to low carbon future either through advanced technologies like

CCS and nuclear energy, or through renewable technologies on the supply side and dematerialization, sustainable consumption and end use device efficiency on the demand side (Shukla, 2009) ;

• South Korea: "Low Carbon, Green Growth Policy“, reduce carbon emissions by

30% by 2020 relative to BaU (Jones and Yoo, 2010);

• Vietnam: low carbon society for Vietnam in 2030 for the residential,

commercial, industrial, passenger and freight transport sectors, emissions can be decreased by approximately 45% from BaU (Nguyen et al, 2010);

• Indonesia: LCS visions 2050, emissions would be 48-85% lower than the BAU,

clean energy, low carbon lifestyle, electricity and fuels in industry and sustainable transport (Dewi et al, 2010);

• Thailand: emissions in 2030 can be decreased approximately by 42.5% to 324

million t-CO2 (Limmeechokchai, 2010).

Page 7: Low carbon economy 2030 in China

2. Literature review: existing studies on LCE

2012/12/16 18th AIM International Workshop 7

— Country level • UK: Pathways to a low-carbon economy, the CO2 reduction by 40%, 60% and 80% by

2050 compared to 1990 levels, deep reduction in power and transport sectors. Higher GDP in mitigation scenario due to faster adoption of new carbon- reducing technologies and higher investment (Dagoumas, 2010);

• Australia: reduce accumulated CO2 during 2006–2051 by 50%, through renewable

electricity or advanced fossil fuel with CCS, nuclear and natural gas, GDP loss 14-37% (Foran, 2011).

— Sub-country level • Ahmedabad, India: low carbon vision toward 2035 through "Eight Actions“, by 67%

over 2035 BaU level (Shukla, 2009);

• Iskandar, Malaysia: Low-carbon Region by 2025, emission decreasing by 60% and

suppressed to 19.6 million t-CO2 (Ho, 2009);

• Australia: transitioning to low carbon communities through behaviour change in

households which result in less carbon intensive lifestyles & institutional and infrastructure systems (Moloney et al., 2009);

• Broward, USA: policies and responses on planning for low carbon city at county level

(Feliciano, 2011);

• Jilin city, China: emissions reduction by 25-42% in 2030 against BaU (Jiang et al,

2009);

• Guangdong Province, China: CO2 lowered by 29-50% in 2030 against BaU

(Jiang, 2009).

Page 8: Low carbon economy 2030 in China

3. A two-region CGE model for Jiangxi Province

2012/12/16 18th AIM International Workshop 8

Production block

Income block

Market block

Expenditure block

Household

Government

Goods

Goods

Goods

Goods

Goods

Goods

Government

Household

Tax on products

GHG

Income Tax

Gross saving

Domestic consumption

Local market Provincial inflow σ >4

Local Production Import σ≈4

Domestic

Export

Local market

Provincial outflow

T = 3

T = 2 Output Energy & VA

Output

Energy Value added

Electricity Fossil energy

Solid Gas Liquid Capital Labor Land

Resource GHG

σ = 0

σ = 0.4

σ = 0.7

σ = 1.5

σ = 0.6

Non Energy

NE1 NEk …

σ = 0

Income /Endowment

σ = 1

σ = 1

σ = 1

Capital Formation

Page 9: Low carbon economy 2030 in China

3. Methodology: CGE model

2012/12/16 18th AIM International Workshop 9

Production: 40 sectors (excl. electricity)

• Input: Intermediate inputs, capital, labor, land, resource, traditional biomass; • Land reliant: Agriculture, Forest, Livestock; • Resource reliant: Coal mining, natural gas, crude oil, mineral mining, other agriculture • Energy transformation : Coking, oil refinery, town gas • Other sectors

Technology

CCS technology Coal, Gas, Biomass with CCS; Cement, Chemistry, Iron and Steel

Bio-fuel Biomass to liquid, to gas Need land inputs (competing with agriculture)

• Five Coal • Oil power • Natural gas • Hydro

• Nuclear • Wind • Solar • Biomass

Power generation

Data

• Input-output table • Energy balance table • GHG emission factors of fossil fuels • Data on characteristics of electricity

generation technologies; • …

Region & time & GHGs

• Two regions: Jiangxi Province, rest of China • Time: 2005-2030, one year time step • Gas type CO2, CH4, N2O, CO, NH3, NMVOC, NOX, SO2; Energy related, process related, biomass

related.

Page 10: Low carbon economy 2030 in China

3. Data requirement of CGE model

2012/12/16 18th AIM International Workshop 10

Base year

• Input-output table: Statistics; • Energy balance table: Statistics; • CO2 emission factors: IPCC recommendation; • Energy price of coal, oil and gas: Statistics;

• Cost of renewable energy technology: Investigation & estimation.

Future scenario

Economy • GDP growth rate; • Labor force growth rate; • Elasticity of substitution among inputs; • Total factor productivity (TFP) improvement; • Production trend of key energy intensive

products (cement, iron & steel etc.); • Domestic consumption scenario;

Energy & Technology • Autonomous energy efficiency improvement; • Future international energy price; • Extraction cost change of fossil fuels; • Resource potential of renewable energy. • Utilization target of each renewable energy type in

different years;

Page 11: Low carbon economy 2030 in China

3. Jiangxi Province

2012/12/16 18th AIM International Workshop 11

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Jiangxi

Page 12: Low carbon economy 2030 in China

Jiangxi Province and Rest of China

2012/12/16 18th AIM International Workshop 12

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per capita GDP a

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• Evolution of Kaya factors of world, OECD, China and Jiangxi

Per capita GDP steady increases • Jiangxi < China < World < OECD Per capita CO2 increases • Jiangxi < China ≈ World < OECD Energy intensity falls • OECD < World < Jiangxi < China • In 2007 almost the same Carbon intensity • China increases • Jiangxi slightly decreases • Higher than world and OECD

Page 13: Low carbon economy 2030 in China

4. Scenario towards 2030

2012/12/16 18th AIM International Workshop 13

— Consumption pattern (2 types)

• High carbon style

• Low carbon style

— Carbon constraints (3 types)

• Level 1: carbon intensity of GDP reduces as Copenhagen target

• Level 2: ERI’s Enhanced Low Carbon Scenario

• Level 3: Global collective reduction derived from 2 degree target

— Counter measures (4 types)

• None

• Non-fossil energy development

• Low carbon consumption pattern

• Carbon Capture and Storage (CCS) technology

• Inter-provincial emissions trading

Reference Scenario

Mitigation Scenario

Page 14: Low carbon economy 2030 in China

4. Scenario towards 2030

2012/12/16 18th AIM International Workshop 14

Nr. Scenario Non-foss il

energy

Consumpt ion

pat tern

CCS Emiss ion

trading

1 RS_HC conventional scale High carbon ��off off off No constraint

2 RS_LC conventional scale Low carbon off off off No constraint

3 CM_CAP1 2005 level High carbon ��off off on Level1: intensity target

4 CM_CAP2 2005 level High carbon off off on Level2: mild reduction

5 CM_CAP3 2005 level High carbon ��off off on Level3: most stringent

6 CM_CAP3_HC 2005 level High carbon off off on Level3, GDP intensity convergence

7 CM_CAP3_HC_RE Large scale develop High carbon ��off off on Level3, GDP intensity convergence

8 CM_CAP3_LC_RE Large scale develop Low carbon off off on Level3, GDP intensity convergence

9 CM_CAP3_LC_CCS Large scale develop Low carbon on off on Level3, GDP intensity convergence

10 CM_CAP3_LC_ET Large scale develop Low carbon on on on Level3, GDP intensity convergence

CO2 emiss ion constraint

Reference

Carbon constraints

Counter- measure

Page 15: Low carbon economy 2030 in China

4. Scenario: household consumption pattern

2012/12/16 18th AIM International Workshop 15

Jiangxi Urban Rural Urban Rural

Whole

Region High Carbon Low Carbon

Per capita expenditure (2005 US dollar) 746 303 5446 2214 4250 4250 4250

Food 40.8% 49.1% 27.8% 32.4% 28.7% 28.0% 32.0%

Clothing 10.6% 5.0% 10.1% 5.9% 9.3% 10.0% 6.0%

Housing 10.6% 13.1% 9.7% 22.8% 12.2% 10.0% 12.0%

Furnishings 7.0% 3.9% 8.0% 5.3% 7.5% 8.0% 5.0%

Health care and Medical services 5.3% 6.2% 6.5% 6.6% 6.5% 6.6% 6.5%

Transport and Communications 9.3% 9.2% 18.5% 13.0% 17.4% 18.0% 13.0%

Education and recreation 13.2% 11.1% 14.6% 11.3% 13.9% 15.0% 11.0%

Miscellaneous goods and services 3.2% 2.2% 5.0% 2.7% 4.5% 4.4% 14.5%

Rest of ChinaPer capita expenditure (2005 US dollar) 970 312 10280 3307 7700 7700 7700

Food 36.7% 45.1% 26.5% 31.7% 27.4% 26.0% 32.0%

Clothing 10.1% 5.8% 10.1% 5.9% 9.4% 10.0% 6.0%

Housing 10.2% 14.3% 9.6% 23.0% 11.7% 10.0% 12.0%

Furnishings 5.6% 4.4% 8.2% 5.3% 7.8% 8.0% 5.0%

Health care and Medical services 7.6% 6.4% 6.4% 6.5% 6.4% 6.4% 6.5%

Transport and Communications 12.6% 9.8% 19.1% 13.3% 18.2% 19.0% 13.0%

Education and recreation 13.8% 12.0% 14.9% 11.5% 14.4% 15.0% 12.0%

Miscellaneous goods and services 3.5% 2.3% 5.1% 2.7% 4.8% 5.6% 13.5%

2005 2030 Direction

Page 16: Low carbon economy 2030 in China

5. Results: Reference scenario

2012/12/16 18th AIM International Workshop 16

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Rest of China: TPES

1RS_GAP_HC

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+170%

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+560%

+620%

-8.7%

-13.2%

-11.9%

-11.7%

Energy saving and carbon reduction effect by low-carbon consumption.

Page 17: Low carbon economy 2030 in China

5. Results: Mitigation scenario

2012/12/16 18th AIM International Workshop 17

Carbon constraints • CAP1: Carbon intensity of GDP reduces as Copenhagen target; • CAP2: ERI’s Enhanced Low Carbon Scenario; • CAP3: Emissions in 2030 are reduced by 9.5% compared with 2005’s

level, derived from 2 degree target.

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-72%

Nr. Scenario Non-foss il

energy

Consumpt ion

pattern

CCS Emiss ion

trading

3 CM_CAP1 2005 level High carbon ��off off on Level1: intensity target

4 CM_CAP2 2005 level High carbon off off on Level2: mild reduction

5 CM_CAP3 2005 level High carbon ��off off on Level3: most stringent

CO2 emiss ion constraint

Page 18: Low carbon economy 2030 in China

5. Results: Mitigation scenario

2012/12/16 18th AIM International Workshop 18

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Reference

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Reference

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CAP1CAP2CAP3

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20

05

$/

t C

O2

Rest of China: CO2 Price

CAP1CAP2CAP3

-1.4%

-12%

-19%

-1.0%

-14%

-21%

841

499

48

807

510

34

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CO

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ReferenceCAP1CAP2CAP3

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Rest of China: CO2

ReferenceCAP1CAP2CAP3

-14%

-52%

-65%

-17%

-62%

-72%

Carbon emissions in mitigation scenarios are exogenously assumed.

Carbon prices increase with more reduction.

GDP loss is higher under more stringent constraint.

Page 19: Low carbon economy 2030 in China

5. Results: Mitigation scenario

2012/12/16 18th AIM International Workshop 19

Five types of responses

• None;

• Non-fossil energy development;

• Low carbon consumption pattern;

• CCS technology;

• Free inter-provincial emissions trading.

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2005 2030RS 2030CM

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Solar

Biomass

Wind

Nuclear

Hydro

Reference: Energy Research Institute, 2009.

Assumptions on CCS: • Absorb 80% CO2; • Need 1.5-2 times more capital and labor input;

• Need 30% more electricity input; • Annual penetration rate: less than 2% of existing power plant capacity.

Nr. Scenario Non-foss il

energy

Consumpt ion

pattern

CCS Emiss ion

trading

6 CM_CAP3_HC 2005 level High carbon off off

7 CM_CAP3_HC_RE Large scale develop High carbon ��off off

8 CM_CAP3_LC_RE Large scale develop Low carbon off off

9 CM_CAP3_LC_CCS Large scale develop Low carbon on off

10 CM_CAP3_LC_ET Large scale develop Low carbon on on

Page 20: Low carbon economy 2030 in China

5. Overall impacts of countermeasures

2012/12/16 18th AIM International Workshop 20

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P:

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Jiangxi 2030

GDP Carbon price

807

595

451 389 391

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ROC 2030

GDP Carbon price

• Under carbon constraint scenario, carbon price and GDP loss would be quite high;

• With all countermeasures introduced, carbon price will fall by half, and GDP loss would be about 9% instead of 20%.

Page 21: Low carbon economy 2030 in China

Comparing with historical trends

2012/12/16 18th AIM International Workshop 21

Per capita GDP steady increases • China: higher than current OECD; • Jiangxi: higher than world level Per capita CO2 increases • China: close to OECD • Jiangxi: close to world level • Falling in mitigation scenario Energy intensity further falls • China and Jiangxi lower than current

world level; • Jiangxi lower than China Carbon intensity decreases • Due to non-fossil energy

development. • But still higher than world and OECD

due to coal domination.

Page 22: Low carbon economy 2030 in China

- Oil import dependency - Air pollutants emission

Co-benefits of low-carbon economy

2012/12/16 18th AIM International Workshop 22

Page 23: Low carbon economy 2030 in China

5. Co-benefits: Oil import dependency

2012/12/16 18th AIM International Workshop 23

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2005 2011 2017 2023 2029

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Import (RS)

Import (LC)

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Import (RS)

Import (LC)

Page 24: Low carbon economy 2030 in China

5. Co-benefits: air pollutants

2012/12/16 18th AIM International Workshop 24

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CO2: Jiangxi

Household

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OthEnergy

Electricity

OtherManu

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Metal0

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CO2: Rest of China

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Household

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Household

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OthEnergy

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Metal0

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Household

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Electricity

OtherManu

Chemicals

Metal

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Household

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OthEnergy

Electricity

OtherManu

Chemicals

Metal

Agriculture

Page 25: Low carbon economy 2030 in China

5. Co-benefits: air pollutants

2012/12/16 18th AIM International Workshop 25

0

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CH4: Jiangxi

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CH4: Rest of China

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2005 2030CM

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NMVOC: Jiangxi

Household

Service

Transport

OthEnergy

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Chemicals

Metal0

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NMVOC: Rest of China

Household

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Electricity

OtherManu

Chemicals

Metal

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N2O: Jiangxi

Household

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Metal0

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Emis

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(Mill

ion

To

n)

N2O: Rest of China

Household

Service

Transport

OthEnergy

Electricity

OtherManu

Chemicals

Metal 0

0.1

0.2

0.3

0.4

0.5

0.6

2005 2030CM

Emis

sio

ns

(Mill

ion

To

n)

NH3: Jiangxi

Household

Service

Transport

OthEnergy

Electricity

OtherManu

Chemicals

Metal

-1%

0

5

10

15

20

25

2005 2030CM

Emis

sio

ns

(Mill

ion

To

n)

NH3: Rest of China

Household

Service

Transport

OthEnergy

Electricity

OtherManu

Chemicals

Metal

Page 26: Low carbon economy 2030 in China

Conclusions

2012/12/16 18th AIM International Workshop 26

• Energy and emission would increase due to GDP growth in future reference scenarios; therefore, China’s participation is crucial for global climate mitigation;

• At national level, economic impacts are closely related to stringency of carbon constraints; at provincial level, economic impacts are also determined by burden sharing scheme;

• Without additional low-carbon countermeasures, carbon price and GDP loss would be quite high in the most stringent carbon reduction scenarios;

• With introduction of the low-carbon countermeasures, carbon price and GDP loss would be lowered substantially.

• There are a lot of co-benefits associated with low-carbon economy, including air pollutants reduction and energy security improvement.

Page 27: Low carbon economy 2030 in China

Future work

2012/12/16 18th AIM International Workshop 27

• Inter-provincial flow of labor and capital;

• Technology in transport sector;

• Apply to other provinces, or developing 31-region model.

Page 28: Low carbon economy 2030 in China

Publications

2012/12/16 18th AIM International Workshop 28

Journal papers Dai Hancheng, Masui Toshihiko, Matsuoka Yuzuru, Fujimori Shinichiro (2012). "The Impacts of

China’s Household Consumption Expenditure Patterns on Energy Demand and Carbon Emissions towards 2050." Energy Policy 50(Special Issue): 736-750.

Dai Hancheng and Masui Toshihiko (2012). "Assessing the Contribution of Carbon Emissions Trading in China to Carbon Intensity Reduction." Energy Science and Technology 4(1): 1-8.

Dai Hancheng, Masui Toshihiko, Matsuoka Yuzuru, Fujimori Shinichiro (2011). "Assessment of China's Climate Commitment and Non-Fossil Energy Plan towards 2020 Using Hybrid AIM/CGE Model." Energy Policy 39(5): 2875-2887.

Proceeding papers and presentation

Assessing the Contribution of Inter-provincial Carbon Emissions Trading in China to Carbon Intensity Reduction in 2020. The 2nd Congress of the East Asian Association of Environmental and Resource Economics, Bandung, Indonesia, Feb 2-5, 2012.

Contribution of China’s Renewable Energy Development in Power Generation to Carbon Intensity Reduction. The 1st Congress of the East Asian Association of Environmental and Resource Economics, Sapporo, Hokkaido, Aug. 18-19, 2010.

Impact Assessment of China's Climate Target towards 2020. The 15th Asia-Pacific Integrated Model International Workshop, Tsukuba, Japan, Feb. 20-22, 2010

Page 29: Low carbon economy 2030 in China

Thank you for your attention!