Bioenergy in Chinas Agriculture Sector: Challenges and Opportunities Lin Gan Sustainable Bioenergy Conference Bonn, October 12-13, 2006.

Bioenergy in China’s Agriculture Sector:

Challenges and Opportunities

Lin Gan

Sustainable Bioenergy ConferenceBonn, October 12-13, 2006

China in Two Faces

• Very large disparity in living conditions between urban and rural areas

• The gap is widening• Strong measures

needed to reduce this gap

Agriculture Development• Economic: 9.5%/y between 1978-present• Agriculture: stagnation in production and prices• Increase in imports due to population growth,

decline in arable land and higher demands• Growing disparity between the rich and the poor• Farmers migrate to urban areas as economic

migrants, due to limited jobs in agriculture areas and low income from agriculture production

• Energy use divided: switch to fossil fuels in coast regions and rely on traditional biomass use in west regions

• Key problems: land loss due to urbanization, surplus labor force from agricultural sector

The Development and Environment Challenge

• GDP grows by 10.4%/y, some regions excess 14%

• Environmental protection objectives for 10th Five-Year Plan were not realized

• Energy consumption increases faster than GDP

• Western regions are far more energy inefficient than coast regions (2-3 times)

• Climate change has seen its impact, e.g. droughts, floods, hurricanes, which led to hundred-billion Yuan of losses and damages

Drought in Sichuan Province

The Western Regions

• Lag behind in economic development than the coast regions

• Vulnerable in eco-systems• Poverty still a social problem (40-80 million) • Farmers still rely on traditional use of agriculture

biomass for cooking and space heating• Focus on raw materials industry and energy will

not make the regions rich• Attitude on GDP growth leads to ecological

consequences• Weak in human resources and management

capacities

Traditional Use of Biomass

Biomass for Cooking and Heating

Transition from Traditional to Modern Biomass use

• 200 million tons of agri. residues/y

• Most of them are burned in fields

• If 20 million tons (10% of the total) are used for biomass CHP, US$ 750 million income for farmers

Reduce Coal Use• Coal: a major source

of pollution• Lots of waste in

burning of coal• Health impact of coal

production and use is high

• Infrastructure for burning coal can be used for biomass utilization

Miao in Guizhou

Traditional lifestyle

Impact of Indoor Air Pollution

• Household use of coal for cooking, heating and drying of agriculture products

• Open stove use as local culture and tradition

• Problems found from early 1980s

• Preventive measures are undertaken from recent years

Health Effects of Fluoride Poison

• Thyroid gland

• Kidneys

• Brain and nervous system

• Immune system

• 1/30 people, or 45 million, in China are affected

Children Are Most Affected

Dental Fluorosis

• Effects to teeth and bones

• Common in China due to air and water pollution

• More than 45 million people affected

• Once affected, it remains for life

Arsenic poison in Guizhou

• Concentrated in Southwestern region

• Household coal use related

• Due to local resource, climate, economic situation and tradition

Household bioenergy Applications

• Independent off-grind power systems for households and villages to provide electricity to 35 million people by 2010

• Biogas: a major technology in agriculture sector for sustainable energy and farming practice

• Tens of millions of users already, but further market expansion is needed

Biomass Transition • Requires an Integrated Approach for bioenergy

development• From centralized to decentralized power systems

development• Agricultural wastes for biogas, power and heat

production• Direct biomass burning to reduce coal use• Develop pellets market demand in rural

households: stoves for cooking and heating • Develop heat market for bioenergy use • Large potentials on biofuels in transport• Biomass CHP relevant for small cities and local

residential areas

Biomass Potential

• If 20 million tons of agriculture residues were uses, it could..

• Save 10 million tons of coal

• Reduce CO2 emissions of 25 million tons

• Generate 15 GWh of electricity

• Produce 60 million GJ of heat

• Enough for 25MW x 350 CHP plants

Social Benefits• Income generation • Job creation from biomass production, transport,

equipment and services (150,000 jobs for 30GW)• Improvement in Health and living conditions• Reduce migrant pressure to urban areas

Biomass Applications

• 2020 Electricity generation target from biomass: 30GW

• Biogas CHP plants in feedstock farms

• Biomass CHP with agriculture residues

• Biogas with municipal and residential residues

• Biofuels (ethanol & biodiesel)• Pellets and bio-briquette

production• Investment in CHP: $30-36 bn

Development of Biomass Technologies

• Efficient biomass stoves

• Pellets production

• Biogas technology for households and feedstock farms

Opportunities for International Cooperation

• Investment cost for CHP: 0.6-0.7 yuan/KWh• Joint key equipment production: pellets

machines, boilers and feeding systems for CHP plants

• CHP power system designs and operation• Biofuels production technology for transport • Biomass resource production and

management• Biomass stoves for various applications, e.g.

households, restaurants• Service company management and

marketing

Technology & Management Barriers• Modern bioenergy is new to China• Lack of combustion and gasification

technologies• Lack of biofuel production capacity and

technologies• Disparity in resource situation in different

regions• Little experience on resource costs,

collection and transportation systems, business services in market application

• Lack of R&D capacity and management skills

Barriers on Market Development

• Weak in incentive policies• Lack of effective financial instruments,

e.g. public funds, venture capital, tax policy, micro-credit

• Monopoly of utilities: access to e-grid• Low coal prices• Lack of appropriate technologies for

rural applications, e.g. efficient stoves, small gasifies

Key Issues for Consideration• Priority should be on meeting local demands for

rural residents• Substitutions for fossil fuel use important• Social development issues should be linked to

bioenergy development• Local conditions have to be respected• Appropriate technologies would be more

effective in application than modern technologies• Capacity building are important• Incentive polices are needed at central, regional

and local levels

Thanks for your Attention!