5 Understanding Stakeholder Perceptions on the Challenges of a Residential Electricity Sector Reform
5.6 Stakeholder-Led Case Identification
As explained in the methodological framework (Chapter 4), the research follows a case study approach. The determination of a case is derived from a multi-level definition. At the top level the case is the ‘Reform of the residential electricity sector in China through a market-based intervention.’ The study period covers the years 2015 to 2035.
Case definition at lower level is closely connected with the conceptual construct of event patterns and the factors driving them. The discussion in Section 5.4 found that problem drivers are deeply rooted in China’s specific socio-economic and political structure. Over time they have manifested themselves in path dependent, co-evolutionary and self-organising processes. The observation that event patterns have evolved in different directions at regional level suggests the division of the overarching case into geographic units of enquiry.
Event patterns are embedded in a unique spatial context. The context is provided by a region’s economic structure, which determines people’s material standard of living. The context is also provided by the structure of a region’s energy system. The capacity and the emission intensity of the generation base is a determinant of local environmental
conditions. Both contextual factors are closely linked through the transfer of electricity from the less developed inner provinces to the affluent coastal regions. The transmission of electricity between provinces manifests itself in the inter-regional trade-off between the material standard of living and human well-being, which in sum determine an individual’s quality of life. In addition to a region’s development status and local air quality, the quota of electricity transfers from outside the region forms the third case criterion.
By combining the three criteria the following three regional cases have been identified50:
50 It is understood that many more permutations of the case criteria exist. The three cases seem to be representative of the conditions affecting 80% of China’s population (see Appendix Table 7.D).
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Case 1: Dominant coal sector, low household incomes, high level of air pollution, electricity exporter.
Case 2: Dominant innovation and services sector, high household incomes, high level of air pollution from non-industrial sources, electricity importer - high proportion of electricity imported.
Case 3: Dominant innovation and service sector, high household incomes, low to medium levels of air pollution, electricity importer - moderate proportion of electricity imported The next step is to identify provinces or cities that are representative of each case.
The province of Shanxi has been selected to represent Case 1. Beijing and Shanghai have been chosen to represent Case 2 and Case 3, respectively. The following sections provide the rationale for the selection of the three locations as case study sites.
Shanxi, along with other provinces in the region, is an electricity exporter. According to official data, over 90% of electricity is generated in coal fired plants (NSBC, 2015). 35% of electricity generated in the province is exported (Cui-Mei and Quan-Sheng, 2014).
Beijing and, to a lesser extent, Shanghai import a great part of electricity for consumption.
Beijing imports most of its electricity. All coal-fired power plants have been moved out of the city. Only a small number of gas-fired power plants remain and supply Beijing with electricity. Most of the electricity consumed in Beijing is from Shanxi and Inner Mongolia. A smaller share of electricity is imported from the neighbouring province of Hebei. All three provinces have enormous coal-fired power generation capacity, so that most of Beijing’s electricity consumption still comes from coal (NBSC, 2015; Feng, 2017; Cui-Mei and Quan-Sheng, 2014; Interviews 24, 30).
Shanghai’s pollution profile is less emission intensive than Beijing’s. About 60% of Shanghai’s electricity is generated within the city, mainly in gas fired plants as well as in advanced supercritical and ultra-supercritical coal power stations (NBSC, 2015; Overton, 2015; Interview 32). Most of the imported power is from Hubei and Sichuan, for which the proportion of hydropower is much higher than the national average (Cui-Mei and Quan-Sheng, 2014).
Pollution from electricity generation, which occurs within the city, is negligible in the case of Beijing. Nevertheless, the city is plagued by poor air quality throughout the year. In 2016 the average density of PM2.5 was around 73 µg/m3, according to municipal government figures reported by state media. My own calculations based on measurements taken by the U.S. Embassy confirm this figure. In 2015 the average PM2.5 level was calculated as 83 µg/m3 (U.S. Embassy, 2017; Beijing Bureau of Municipal Statistics, 2016). In Shanghai the annual average PM2.5 levels were calculated as 45 µg/m3 for 2016 and 50 µg/m3 for 2015 using data from the U.S. Consulate.
153 It proved more difficult to find historic air quality data for Shanxi. In 2013 average PM2.5
measurements ranged from 80 µg/m3(Tan, 2014) to 255 µg/m3in Shanxi’s capital city Taiyuan. Taiyuan is one of the major centres in China for energy production. About a quarter of China’s coal is mined in the surrounding province and burnt in the city’s factories and coal plants. According to official government statistics (NSBC, 2016), 1,120,643t of SO2
and 930,750 t of NOx were generated in Shanxi in 2015, an increase of about 10%
compared to the previous year. In Shanghai the corresponding figures are 170,843t of SO2
and 300, 621 t of NOx. Both pollutants have been declining steadily year on year since 2006, the first year for which SO2 was documented. Air pollution caused by processes within the city of Beijing has shown a similar downward trend.
The two developed cities of Shanghai and Beijing have fully fledged advanced economies increasingly relying on strategic innovation driven industries and services. In Shanghai companies involved in the development of green technology have a strong base (Shanghai Municipal Government, 2016). As financial centre of the country (Zhaojin, 2016) the introduction of a carbon market and the general adoption of market-based policies is set to provide additional opportunities in the city. Beijing as capital is home to many
organisations that offer products and services relevant to the transition of China’s economy. The current high development status of both cities is reflected in income levels that are well above the national average. Household energy consumption has been
gradually increasing in Beijing and Shanghai. Electricity use at home and energy for electric vehicles are becoming more important with urbanisation and lifestyle changes (Wehrle, 2008).
The province of Shanxi follows the traditional economic model built on mining, heavy industry and coal based electricity generation. In 2015 the average disposable per capita income was 52,892 RMB in Beijing and 52,962 RMB in Shanghai. In Shanxi, the average disposable income was considerably lower at 26,420 RMB51. The potential implications of a carbon market on regional employment opportunities, household affluence and electricity consumption further justify a regional case study approach (NSBC, 2016).
5.7 Conclusion
This chapter presented a causal model of the Chinese energy system. It is based on three interconnected problems that in sum determine people’s quality of life: A coal based energy system, poor local environmental quality and deteriorating human well-being; rising residential electricity consumption; a decline of the traditional (coal based) industrial sector and a stagnating or deteriorating material standard of living.
51 According to the OECD (2017b) “household disposable income can be seen as the maximum amount that households can afford to spend on consumption goods or services without having to reduce their financial or non-financial assets or to increase their liabilities.”
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These problems have distinct spatial characteristics. A regional case study approach lends itself to the investigation of the spatial dislocation of household electricity consumption and electricity generation. The overarching research question, which is concerned with regional equity issues of a carbon market, also justifies the adoption of a regional case study. The cities of Beijing and Shanghai and the province of Shanxi were selected as case study regions. The three regions are representative of the different problem patterns that have emerged across China.
Patterns evolve as events interact over time. Patterns influence each other and should therefore not be analysed in isolation. The isolated cause and effects relationships occurring within patterns were connected to form a causal model of energy system.
Awareness of causal structure is the basis for understanding the effectiveness of a market-based intervention to disrupt patterns of unsustainability over time. The Chinese leadership has selected a carbon market to address sustainability issues of the energy systems through the deployment of technical innovations. Expert consultation also highlighted the
important role that is attributed to technology in solving environmental problems in China.
Technology has the potential to improve environmental quality within a relatively short time span. However, once provinces have attained a high level of development, technology itself could become a driver of unsustainability. The system dynamic model developed in Chapter 6 will test the effect of an innovation driven approach facilitated by a carbon market on the three study regions.
The feedback mechanisms of the causal model constructed in Section 5.5 suggest that interventions at a deeper systemic level, additional to a market-based reform, could be required to deliver long lasting change. In line with the analogy offered by the iceberg model, measures need to target the mental models of people as consumption related pollution and deteriorating levels of human well-being threaten to off-set the benefits derived from a high material standard of living. Factors motivating environmentally friendly behaviour are explored in Chapter 7.
Stakeholder involvement is an integral part of this research. The engagement of experts and residential electricity users shaped the study in a number of ways. Their input located salient issues within a web of interrelated problems. Stakeholders were influential in changing the environmental focus of the study to local air pollution. The original research design envisaged the investigation of the carbon market’s potential to mitigate global climate change impacts. Experts pointed out the relevance of a ‘co-benefits’ approach as climate change and air pollution are two major environmental issues connected in multiple ways. Stakeholder engagement in the study design also minimised research bias compared to a set-up, where the researcher alone defines the frame of the analysis.
The review of evaluation literature on the EU ETS highlighted the wide ranging problems associated with a market-based solution to environmental pollution. This chapter demonstrated that a number of challenges await the implementation of a national emissions trading scheme that are specific to the situation in China. In a systems-based framework three criteria define an effective intervention. Firstly, the extent to which the
155 intervention disrupts the status quo and moves the system towards the desired state;
secondly, the extent to which the intervention is based on a causal understanding of the intended outcome; thirdly and most importantly, the extent to which the intervention meets the requirements of those affected. The extent to which these three criteria are fulfilled by a national carbon market are explored in the following two chapters.
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