Do Fossil-Fuel Price Distortions Impact the Low-Carbon Transition in China’s Energy Intensive Industries?

Energy intensive industries (EIIs) in China are predominantly reliant on fossil fuels. Consequently, such high fossil fuel dependency has amplified carbon emission levels and blocked the low-carbon transition. It is inappropriate to discuss the solution of the dependency before investigating fossil-fuel price distortion and its impact on the industrial energy consumption. Therefore, this paper built a dynamic trans-log cost function model based on provincial panel data of China’s Ells between 2004 and 2016, to investigate inter-fuel substitution effects caused by own price elasticities and cross price elasticities, and analyzed the impact of fossil-fuel price distortions on low-carbon transition. The level of price distortions in coal, gasoline and diesel was evaluated, based on which the CO2 mitigation potentials in China’s EIIs were estimated. Results show that: 1) in each EII sector, the own price elasticities of all fuels were negative while the cross price elasticities among coal, oil and electricity were positive, suggesting substitution effect exists; 2) the average level of price distortions in coal, gasoline and diesel is 7.48, 11.1 and 32.19%, respectively, which means the prices of coal tend to be more market- oriented than the other two fuels; 3) removing coal price distortions can potentially reduce CO2 emissions in China’s EIIs by 905.78 million tons, while the effects of removing oil price distortions were uncertain, unless the substitution of coal for oil was restrained. Therefore, there is still much room for improvement in China’s fossil-fuel market reform. Possible policies are required to improve the production in EIIs and the low-carbon transition by adopting cleaner energy resources to substitute fossil-fuels.

The Influence of Energy Price Distortion on Region Energy Efficiency in China’s Energy-Intensive Industries from the Perspectives of Urban Heterogeneity

As typical representatives of China’s industrial sectors, energy intensive industries are the focus of energy conservation. This study constructs a trans-log production function and stochastic frontier analysis model to analyze the impact of energy price distortion on total factor energy efficiency in energy intensive industries on the city level. The results reveal that the phenomenon of energy price distortion existed in all cities from 2003 to 2019, with an average degree of −0.175; and the total factor energy efficiency in China’s energy intensive sectors showed an upward trend, with an average efficiency of 0.729. Further deep analysis of affecting mechanisms concluded that the price distortion showed a significant restraining effect on improving energy efficiency, while the improvement of urban agglomeration systems had an opposite effect. In addition, energy consumption structure, foreign trade, and infrastructure construction are positively correlated with energy efficiency. Therefore, promoting the market-oriented reform of China’s energy market is of great significance to improve city energy efficiency and build a resource-conserving society.

Environmental life-cycle assessment of waste-coal pellets production

Industrial decarbonization is crucial to keeping the global mean temperature <1.5°C above pre-industrial levels. Although unabated coal use needs to be phased out, coal is still expected to remain an important source of energy in power and energy-intensive industries until the 2030s. Decades of coal exploration, mining and processing have resulted in ~30 billion tonnes of waste-coal tailings being stored in coal impoundments, posing environmental risks. This study presents an environmental life-cycle assessment of a coal-processing technology to produce coal pellets from the waste coal stored in impoundments. It has been shown that the waste-coal pellets would result in the cradle-to-gate global warming of 1.68–3.50 kgCO2,eq/GJch, depending on the source of electricity used to drive the process. In contrast, the corresponding figure for the supply of conventional coal in the US was estimated to be 12.76 kgCO2,eq/GJch. Such a reduction in the global-warming impact confirms that waste-coal pellets can be a viable source of energy that will reduce the environmental impact of the power and energy-intensive industries in the short term. A considered case study showed that complete substitution of conventional coal with the waste-coal pellets in a steelmaking plant would reduce the greenhouse-gas emissions from 2649.80 to 2439.50 kgCO2,eq/tsteel. This, in turn, would reduce the life-cycle greenhouse-gas emissions of wind-turbine manufacturing by ≤8.6%. Overall, this study reveals that the use of waste-coal pellets can bring a meaningful reduction in industrial greenhouse-gas emissions, even before these processes are fully decarbonized.

Uncovering the characteristics of air pollutants emission in industrial parks and analyzing emission reduction potential: case studies in Henan, China

Industrial parks contribute greatly to China’s economic development while emitting huge air pollutants. It is necessary to study the characteristics of air pollutant emissions in industrial parks. In this study, emission inventories for 11 industrial parks were established. Meanwhile, the source emission and spatial distribution characteristics of the industrial park were analyzed. The cluster analysis was used to classify these parks into “4Hs”, “Mixed” and “4Ls” parks. “4Hs”, “Mixed” and “4Ls” represent that the levels of energy intensity, economic proportion of energy-intensive industries, coal proportion and pollution performance value are high, medium and low in turn. Then three emission reduction measures were set up to estimate the emission reduction potential and environmental impacts. The results show that: (1) the emissions of SO2, NOx, CO, PM10, PM2.5, VOCs and NH3 of 11 industrial parks in 2017 were 11.2, 23.1, 30.8, 8.3, 3.5, 5.1, and 1.1 kt, respectively. (2) Power plants were the largest source of SO2 and NOx emissions, and industrial processes were the largest emission source of CO, PM10, PM2.5, VOCs and NH3. (3) “4Hs” parks with traditional energy-intensive industries as the leading industries should be the emphasis of air pollutant emission reduction. (4) Through the optimal emission reduction measures, SO2, NOx, PM10, PM2.5 and VOCs were reduced by 81, 46, 51, 46 and 77%, respectively. Environmental impact reductions include 1.6 kt SO2eq acidified gas emissions, 1.4 kt PO43−eq eutrophication substances, 4.2 kt PM10eq atmospheric particulate emissions, 7.0 kt 1,4-DCEeq human toxic substances, and 5.2 kt PM2.5 eq breathing Inorganic. This study is helpful to understand the characteristics of air pollutants emissions in industrial parks and promotes the proposal and implementation of air pollutant emissions reduction strategies.

The Green Hydrogen Puzzle: Towards a German Policy Framework for Industry

Green hydrogen will play a key role in building a climate-neutral energy-intensive industry, as key technologies for defossilising the production of steel and basic chemicals depend on it. Thus, policy-making needs to support the creation of a market for green hydrogen and its use in industry. However, it is unclear how appropriate policies should be designed, and a number of challenges need to be addressed. Based on an analysis of the ongoing German debate on hydrogen policies, this paper analyses how policy-making for green hydrogen development may support industry defossilisation. For the assessment of policy instruments, a simplified multi-criteria analysis (MCA) is used with an innovative approach that derives criteria from specific challenges. Four challenges and seven relevant policy instruments are identified. The results of the MCA reveal the potential of each of the selected instruments to address the challenges. The paper furthermore outlines how instruments might be combined in a policy package that supports industry defossilisation, creates synergies and avoids trade-offs. The paper’s impact may reach beyond the German case, as the challenges are not specific to the country. The results are relevant for policy-makers in other countries with energy-intensive industries aiming to set the course towards a hydrogen future.