World Energy Outlook 2007

educing industrial consumption, either through structural changes in the
economy or via improved energy efficiency. Examples include an increase of
5-10% in taxes on exports of steel and non-metallic minerals and the removal
of, or reduction in, export credits for energy-intensive products, like steel
products. The Top 1 000 Enterprises Programme, which covers industrial
companies that collectively accounted for 33% of Chinese energy consumption
in 2004, will, if fully implemented, save 70 Mtoe over five years, starting from
2006 and contribute between a quarter and half of the 20% reduction in
energy intensity targeted in the current Five-Year Plan. The policy on
industrial structural change is expected to increase industrial energy efficiency
through the closure of inefficient, small-scale plants.
Energy efficiency improvements in the Alternative Policy Scenario assume
attainment of the 2020 targets for energy efficiency in iron and primary steel,
non-metallic minerals and chemicals and petrochemicals which are set out in
the China Medium and Long Term Energy Conservation Plan. The energy
intensity of iron and steel production (including steel from scrap) is assumed
to improve further beyond these policy targets than in the Reference Scenario,
thanks to wider availability of scrap steel. An iron to steel ratio of 0.7 is
assumed by 2020, rather than by 2030 as in the Reference Scenario. In 2005,
it was 0.9. The ratio, nonetheless, remains above that in the United States.
Summary of Results
Industrial energy demand falls by 18% in 2030 in the Alternative Policy
Scenario relative to the Reference Scenario. Electricity, heat and fossil-fuel use
is lower compared with the Reference Scenario, but biomass and other
renewables use is higher. Reduced consumption of coal accounts for 60% of
savings, while electricity accounts for 28%, oil for 5% and gas for 4%.
Structural change of the overall economy and shifts within the industrial sector
towards less energy-intensive production contribute more than 80% of the
energy savings. The former is reflected in lower activity levels in the
Alternative Policy Scenario. Improved efficiency accounts for the remainder.
Savings in energy use in iron and steel represent the largest share of the savings,
resulting from increased use of scrap steel recycling and energy intensity
improvements in the Alternative Policy Scenario (Figure 11.7). Blast furnace
size and iron ore quality can make considerable differences to energy intensity.
The smallest blast furnaces, at less than 100 m 3 , are 25% less efficient than
those larger than 3 000 m 3 . The largest share of production, 48%, is from blast
furnaces sized 300-999 m 3 , which are 20% less efficient than the largest ones,
which themselves make up only 7.1% of production. The “other industries”
sub-sector is also significant, especially in electricity savings, because of a shift
to manufacturing of lighter, higher value-added products (Table 11.5). Savings
in chemicals and petrochemicals are limited, as we do not assume a shift
376 World Energy Outlook 2007 - CHINA’S ENERGY PROSPECTS