1. Challenges to China’s Transition to a Low Carbon Electricity System Fritz Kahrl, UC Berkeley, E3 Ding Jianhua, E3 Jim Williams, E3 Hu Junfeng, North China Electric Power University

2. China’s Power Sector is the World’s Largest CO 2 Emitter Energy-Related CO 2 Emissions, Global and Chinese Power Sector Source: IEA, 2009

3. China has Ambitious Goals for Renewable Generation Capacity 2009 Capacity Existing Target Proposed Target Hydropower196 GW300 GW Wind18 GW30 GW150 GW Solar0.3 GW1.8 GW20 GW Biomass1.1 GW30 GW Sources: 2009 capacity is from CEC (2010). Existing and proposed targets are from Martinot (2010). 2009 Capacity, Existing and Proposed Targets for Renewable Capacity

4. Planning Investment Dispatch Pricing Regulation Centrally Planned: Coal-fired Generation Serving Industrial Loads Post-Planned: Diverse Generation Sources Serving Diverse Loads An Incomplete Transition

5. China’s Electricity System is Relatively Expensive Sources and Notes: China data are from SERC (2010); U.S. data are from EIA (2010). Average 2009 Retail Electricity Prices in China and the U.S., Ranked by Province/State in Ascending Order

6. Industry Dominates Load Source: Data are from CEG (2008). Shares of Electricity End Use by Sector, China, 1980-2006

7. Forecasted Demand Growth in China is still High 2009 Actual and High/Low Forecasted 2020 Electricity Demand, China and U.S. Sources: China “2009 Actual” is from SERC (2010); “2020 – Low Forecast” is from IEA (2009); “2020 – High Forecast” is from Zhang (2009). For the U.S., all data are from EIA (2010).

8. An Evolutionary Moment for China’s Power Sector High forecasted growth Structural shifts in demand Growing environmental awareness and regulation Rising wholesale and retail energy prices

9. Reducing Demand Growth is Key for Reducing Share of Coal Shares of Coal and Non-Coal Generation, 2009 and Low and High Demand Growth Scenarios for 2020

10. Regional Power Grids in China Western Inner Mongolia Power Grid (WIMPG) State Grid: Northwest, Northeast, North, Central, East Southern Grid: South

11. Summary Reforms in planning, investment, dispatch, pricing, and regulation are precondition for power sector decarbonization in China Without capacity to better manage and allocate costs, will be difficult to meaningfully increase share of renewable generation in China Progress possible through incremental improvements in institutional planning and regulatory capacity Soft technology transfer in electricity sector management should be priority area in OECD-China climate policy dialogue