Hydropower in China’s 12th Five-Year PlanA Banquet of Special Interest Groups?——What is the Future of Hydropower Governance?

Yu Xiao Gang

Green Watershed

Hydropower gain Vs. the environmental and social loss• In 2000, ttl Central SOE hydro asset :400

billion RMB, In 2010, ttl 4000 billion RMB•Hydro capacity fr. 100,000 mw in 2000, to

200,000 mw in 2010, 350,000 mw by 2020.

•Hydropower potential developed from 20% (2000) to 50% (2010) and 71% (2015), 80% (2020)

•Over 3600 rivers have been developed•Polarization: Gini index had reached 0.54.

100% developed

70% developed by 2020

3600 rivers have been developed (dammed)

Outline• 12th Five-Year Plan and Hydropower Discourse

• Deconstruction of the Hydropower Discourse

• Interest Group’s cake in the 12th Five-Year Plan

• Overcome the GDP-Orientation and Special Interest Group’s Greed; All sectors fight for Emission Reduction

the 12th Five-Year Plan and Hydropower Discourse

Examples of the Discourse

1. Demonization of Hydropower by NGOs during the 11th Five-Year Plan period

2. “frozen period ” of dam construction3. “Conspiracy ”4. To fulfill Emission Reduction

Commitments of Chinese Government, there will be a hydropower great leap

Hydropower as Key to Emission Reduction

• “To meet the 2020 target of emission reduction, the installed capacity of hydropower will has to be 380,000 mw by then.” Zhang Guo Bao, the former president of NEA.

Deconstruct the Hydropower Discourse

Logic of Emission Reduction by Developing Hydropower

•In The 12th Five-Year Plan of Renewable Energy Development , the renewables will reach 280,000 mw during 12th -5yp, and 350,000 mw during 13rd -5yp.

•This plan follows the target that non-fossil energy will account for 15% of primary energy consumption by 2020.

Where does the 320-350 million kilowatt target come from?

According to the counting of Renewable Energy Division of NEA, annual power generation of hydropower will have to be 1.2 trillion KwH by 2020. In 2009, the regular hydropower installed capacity (pumped storage not included) in China is about 180,000mw and 600 billion KwH. This means, to meet China’s emission reduction target, by 2020 the regular hydropower installed capacity will have to reach at least 320,000 mw -350,000 mw .

Irrationality of Hydropower Development• From Active Development during the 10th Five-Year Plan

period Irrationality• To Orderly Development during the 11th Five-Year Plan

period Back to rationality• To Explosive Development during the 12th Five-Year Plan

period Irrationality

• Why???• The decision maker are kidnapped by the

special interest group?

Hydropower Interest Group’s cake in the 12th Five-Year Plan

Interest of Hydropower• By 2020, 380,000 trillion watt ( close to the limit

of development potential). • power generation: 1.2 tillion KwH. • the assets will be around 8 trillion Yuan, the

stock speculation may reach to 20 trillion. • the annual selling will be 1 tril. -1.2 tril. Yuan. By

2015• After 10 years return to investment, the 40-50

years net profits. Moreover gray and invisible interest can be uncountable.

Major Hydropower Interest Groups• Big Six Power Group Companies (5+1) China Huangneng Group, China Datang

Corporation, China Huadian Corporation, China Guodian Corporation, China Power Investment Corporation and Three Gorges Corporation.

• Big Two Grids State Grid Corporation and China Southern

Power Grid• Big Four Corporations in the Supplementary

Industry China Power Engineering Consulting Group

Corporation, Hydro China Engineering Consulting Group Company, Sinohydro Corporation and China Gezhouba (Group) Corporation

Special Interest Group

• Special Interest Groups “Distributional coalitions affecting Public Interest” (Mancur Olson)

• Historic reasons for special interest groups: transition of economic system. Major state-owned power companies have gained monopoly over governmental power and market. the abuse of power is not subject to any supervision, vulnerable groups have not formed interest groups and can not counterbalance.

Monopoly of Special Interest Groups•Three Characteristics: Monopoly Exclusiveness Selfishness

• impactsConsumers’ interest is damagedLack of Incentive for advanced technology, management and quality improvement. Social justice is impaired. Dam affected interest is hurt,Captured Government decrease Social Fairness

Conflict with Political Civilization: Conflicting Triple Roles: society administrator, market regulator, enterprise owner

Overcome Special Interest Group’s Greed and Fight for Emission Reduction by All sectors

Balancing and Restraint

•Restraint: The government and the public opinion should firmly restrain the special interest groups seeking of special interest by damaging the whole interest of public.

•Balancing: Support the disadvantaged group and pursue democratic process to establish a mechanism of checks and balances among interest groups.

China's new anti-monopoly law (2008)•Scrutiny of monopoly of Hydro• fines ranging from 1% to 10% of the total

sales volume in the relevant market in the previous year.

•Hydro : ttl about 300 billion sales, 3-30 b. fine?

• (EIA law fine only 250,000 RMB 37000 USD)•Monopoly ? obviously •Need to check? Of cause•How to check? People participation

Deepen the Reform

•Shift of government duty focus: from economy oriented to social oriented, provide public services.

•Separation between •government and enterprise,•government and capital, •government and market agent. •government and special interest groups.

Full assess Costs

•Costs of watershed ecosystem

•Resettlement cost, especially regarding of ethnic minorities in South-west China

•Risks of geological and seismic disaster

•Mega-dam construction will severely impact Chinese government responsibility of protecting natural and cultural heritages.

Hydropower Potential in Southwest China need to be reassessed

400 million kw

Economic potential

? Million kw

Environmental and social potential

Technique and economic cost

Environmental and social cost

Geology and earthquake disaster cost

? Million kw

Limit due to disaster vulnerability

Costs

Hydro Potential

People’s War of Emission Reduction• Emission reduction is the responsibility of all sectors and

the whole society, rather than hydropower sector alone. The potential of reducing emission in different sectors are larger.

• The potential lies in everywhere, from supply to demand, from management mechanism to technique input, form government, market to general public. This should be a business for public participation.

Various Alternatives

SupplyDemand

Technique and Products

Management, service and knowledge

Energy supply

13

4 2

Environmental protection and immigration policy

Technique reformation in six major energy-consuming sectors and energy-saving appliances

EMC （ Energy Management Contract）

Technique and Products on supply side

• Clean coal technology • Hydropower development• Efficiency enhancement of existing

hydropower• Wind, solar, small hydro, biomass• Smart Grid, Intelligenization of power

distribution and supply• Community power generation and

community grid, connecting big grid • Reducing power transmission loss• Regional Heat and Electricity

Coproduction• Full use of waste heat

1

Management and Service on supply side

• Comprehensive energy plan and management • Sustainable assessment standard of energy

sectors• Accountability , transparency, public

participation • Improve environmental and resettlement

policy• Geology and earthquake risks assessment• Efficiency enhancement of existing facility

and operation• Incentive policy encouraging involvement of

private SMEs • Encouraging investment in new energy (wind

and solar power, etc.)

2

Technique and Products on Demand Side

• Automatic demand response system• Energy-saving production process• Innovation and promotion of appliance

technique (half of energy is consumed by household, car refrigerator, air-conditioner, kitchen electric appliance,)

• 65% Energy Saving Standard for Newly Constructed Buildings

• Office energy-saving criteria

3

Management, Service, Knowledge on Demand Side

• Energy tax, carbon tax, tiered electricity pricing• Consumer incentives and restraint mechanism

(power saving or low bill for low carbon power resource)

• Energy saving criteria of production equipment and processes

• Market mechanism: energy saving and emission reduction (carbon emission trading ) market

• EMC (Energy Management Contract)• Government, factory, corporation, organization:

energy saving and emission reduction plan, carbon disclosure

• Household energy consumption education and saving plan

4

Let’s work together •to conquer greedy special interest

group•to meet our emission reduction target

•Thank you