1. THE RATIONALE AND OBJECTIVES

　　The rationale for a Working Group on Energy Strategies and Technologies stems from the dual observation of the fundamental role of energy in development and economic growth, and the presently significant role of energy in environmental degradation. The present path of energy system development is not sustainable from a n environmental point of view, and is not compatible with the social and environmental goals of China, as spelled out in, for example, China's Agenda 21. This conclusion has been elaborated on in earlier reports of the WG to CCICED. A major change in energy system development in China is required to meet the social and environmental goals of China, which is summed up as sustainable development. Such developments will require a considerably longer time period than the five years of Phase Two of CCICED, however, as outlined in the work plan below, the WG believes significant contributions can be made during the just starting phase two.

　　Therefore, in order to realize the social and environmental goals of China, a new approach to energy has to be developed and implemented. Such an approach is called a sustainable energy approach. The Working Group's role is to provide, in this context, independent analysis and balanced advice to and strengthen sustainable development. The emphasis on recommending technically feasible and economically viable activities to develop and implement a sustainable energy approach.

　　The working Group observes that the sustainable energy approach will also strongly support other efforts to alleviate poverty and improve the situation of women. Conve national approaches to energy tend not to be conducive to helping reach objectives in these and other needful areas.

　　2. FOCUS OF THE WORK

　　The process of modernization of China involves creating, step by step, a socialist market economy. This economy will operate in a world characterized by globalization and liberalization of markets. These overriding processes will create the setting in which by and large, the development of China's energy system will take place.

　　Investments in the energy system make up a significant fraction of total investments in any rapidly growing economy. Energy investments in China are projected to increase from an average level of approximately $10 billion per year over the last decade for power alone, as the economy continues to grow. However traditional sources of finance are not likely to be able to meet increasing demands for capital. In the past, government finance was dominant, although foreign direct investment has been a very important and rapidly increasing source of capital in China in recent years. Realistically, only the financial markets, domestic and foreign, will be able to contribute the major fraction of the needed capital in the future.

　　This leads to a need to create conditions that will attract mobile private capital. China has already moved in this direction, as witnessed by the foreign investments that are being made. From the point of view of overall development of China, however, it is necessary, but not sufficient, that capital investments continue to grow.

　　A fundamental issue in energy for China is therefore the design of the facilitating environment for such investments to happen. The system of incentives and disincentives that lead market actors to make economically attractive investments in environmentally positive areas must contribute positively to sustainable development. The WG intends to accept the challenge of developing ideas in this context, which it regards as central to its work in the second phase of CCICED.

　　The major elements in a sustainable energy approach are (i) more efficient use o f energy, especially at the point of end use, (ii) increased utilization of renewable sources of energy, and (iii) developing and implementing a new generation of fossil-fuel using technologies (UNDP, 1997).

　　The WG has analyzed the situation of china in its earlier reports to CCICED, and concluded that all three elements are relevant and applicable to China's conditions. Detailed analysis in these areas may be found in the underlying reports ha t have been prepared for the WG, and attached to the WG reports to CICED. In the analysis of the WG during phase one, it was concluded that a much larger emphasis will have to be given in the energy related investments to energy efficiency and renewable sources of energy, as well as to the next generation of fossil fuel using technologies.

　　In Phase One of CCICED, the WG has also analyzed and made recommendations concerning the important contributions to sustainable development that may be obtained in China from an increased utilization of natural gas. The WG has also discussed and made recommendations with respect to how to design large-scale development of nuclear power in China. The objectives for the WG on these subjects have bee n fulfilled for the time being.

　　The work of the WG in phase two of CCICED will therefore continue to focus on a continued rapid improving of energy efficiency in China, and expanding the utilization of renewable sources of energy.

　　Also because of the large resources of coal in China, and the emerging global understanding of long term options to use coal in ways compatible with sustainable development, the WG also intends to contribute new ideas concerning the development of a long-term, sustainable coal strategy for China.

　　3. METHODOLOGY

　　The Working Group (WG) continues to be guided by its mandate which is to provide advice to CCICED on energy strategies and technologies which are aimed directly at satisfying the energy needs of China over the next decades of economic development, and at the same time furthering achievement by China of its Agenda 21 goals.

　　Recognizing China's abundant domestic energy resources, the WG seeks to find optimum ways of developing an energy supply mix which takes full advantage of those resources, including conventional and unconventional resources wherever it appears that meeting the objectives spelled out in China's Agenda 21, and satisfying China's economic development can be aided.

　　The approach of the WG which has evolved over phase one of CCICED and which continues to be effective, we believe, is to pursue a four-fold strategy of:

　　(1) Internal expert study and reporting,

　　(2) External promotion and running of workshops on key advanced sustainable technologies and strategies. Some of the workshops are expressly aimed at encouraging demonstration projects,

　　(3) Demonstration projects utilizing technologies on both the demand and the sup ply side that in the WG's opinion merit wide recognition and application in Chin a, and

　　(4) Direct efforts to build human capacity to analyze energy issues in a sustainable development perspective. The creation of the IRP network is the first example of this.

　　The WG relies on its extensive international and Chinese contacts to achieve as broad as possible representation of presenters and attendees from interested organizations. The WG strictly resists being drawn into any hands-on project development and management.

　　The role of the Working Group with respect to demonstration projects is therefore that of advisor and broker. By convening and chairing workshops, the WG itself gains valuable insights into the merits/demerits of specific technologies and strategies, and is brought into contact with the practical realities of achieving higher standards of sustainability. The WG maintains a close interest in the outcome and follow-up of these initiatives.

　　The WG recently established an liaison office at Tsinghua University, with financial support from the CCICED secretariat in Canada. This office is intended to help keeping the WG informed about energy related developments in China, and to make the outcome of the WG's efforts more widely available in China. The office w ill be helpful in keeping the WG informed about the advancement of various projects the WG has helped initiate.

　　4. REPORT ON ACTIVITIES IN 1996/97

　　4.1 General Status of Activities

　　Activities fall into four main fields: studies, workshops, demonstration project s, and capacity building. The WG meets in China twice yearly, and at these meetings, all activities are involved. Field visits form a part of most meetings. Over the past five years, all major supply-side sectors have been considered, with the exception of hydropower. Clean coal technology, natural gas and renewable energy, particularly solar and wind energy have been reviewed in depth, and reports have been issued. On the energy-using side, the steel industry, commercial buildings and transportation sectors have participated in seminal workshops from which real projects have emerged, or are about to.

　　The WG's perspective ranges from the simplest rural situations, where small- scale electricity generation, or biogas pits may be the concern, to advanced technology in the major energy-using sectors such as the steel industry (CSP workshop) or transportation (fuel-cell bus demonstration project).

　　On the capacity building side, the WG has promoted workshops relating to the institutional side of the energy industry and economic development in general. Integrated Resource Planning (IRP) workshops, coupled with Demand Side Management (D SM) and network-building, has been a prominent ongoing activity in this field.

　　4.2 Studies and Research Work

　　4.2.1 Toward a Strategic Approach for Coal Development and Utilization in China

　　In June 1997, the WG engaged in the first stage of an important study on a new approach to a long-term coal strategy for China, centered on the environmentally advantageous conversion of coal to syngas, and therefrom, a wide range of potential applications, such as ultra-clean fuels for transportation, fuel for co-generation, and syngas-derivd chemicals.

　　China's energy supply is dominated by coal, which accounts for 75% of energy production and consumption. With recoverable reserves of 114.5 billion tons, China ranks third in the word in terms of this resource. Reliance on coal to this extent, while it helps China's foreign exchange balance, brings many health and environmental problems. It also puts great strains on the infrastructure of distribution, and, given the low average efficiency of much of the conversion and utilization, there is great waste involved, which will take years to rectify.

　　China's dependence upon this key domestic energy resource is a fact of 21st century life and it is generally accepted that, for the planning horizon, this situation will not change. Given the enormous scale of the existing industry, and the inescapable fact that it will grow still further, there are national and global imperatives pointing to the need for a strategic approach to coal. These imperatives arise because of concern at local air pollution and acidification, and at the issue of global climate change.

　　The WG have recognized that to contribute positive ideas to the decision-makers to grappling with these problems is one of the main challenges for the next 5 year program. The focal areas for this work will be electric power generation and fluid fuels production.

　　Early indications are that a syngas-based coal strategy for China offers the widest set of options, with application into the provision of clean technology for electric power and combined heat and power (CHP), using the proven Integrated Gasifier/gas turbine Combined Cycle (IGCC) system. "Syngas" is a mixture of hydrogen and carbon monoxide, which is made during the gasification of coal.

　　The "syngas route" simultaneously offers also the capability to produce very clean transport fuels, namely "synthetic middle distillates" for Diesel-cycle engine vehicles (a super clean aromatic and sulphur-free fuel), methanol for Otto cycle engine vehicles, and hydrogen for hydrogen fuel cell vehicles.

　　Hydrogen, manufactured centrally in this way, can also be used to fuel distributed CHP in urban housing and commercial centers, using low-temperature fuel cells, to the benefit of urban air quality.

　　Other options become available when coal use is modernized in this way. Chemical manufacture of specialist waxes and other products can be built up, using the gas generated in the coal grassfier.

　　The key to a syngas strategy is "oxygen-blown gasification", a technology which is already well established in China, mainly in the chemical process industries the late 1980s and 1995, the Ministry of Chemical Industry and Sinopec had them purchased a total of twenty three Texaco-licensed gasification plants. Since all technologies "downstream" of the gasifier are established commercial processes, the only matters to be overcome are economic and consensual on the long-term strategy for coal.

　　A most important corollary to such a strategy would be the low incremental cost opportunity for underground storage of Carbon Dioxide (CO2, Greenhouse Gas) produced at centralized hydrogen production plans. Such a convenient way of mitigating CO2 emissions is not available under present, dispersed energy production.

　　The WG has access to the latest developments which bear upon both these outstanding issues, and is their firm belief that a far-seeing policy on coal, by the authorities, could place strategy in the forefront of the next century's sustainable solutions to feelings of transport (road and rail) and electric power generation. China's own activities in this important field are considerable and there will be an information exchange to facilitate this work. Negative experience internationally in certain coal technologies which China still apparently considers promising, may cast new light on the desirability, or otherwise, of pursuing such technologies.

　　4.2.2 A Long Term Renewable Energy Strategy for China

　　Energy diversification through renewable. Energy demand however continues to rise as modernization continues and the energy gap continues to attract new coal-fired power generation, which can at least take advantage of modern, cleaner technologies such as mentioned above. Increasingly, however there are calls for a greater diversification of energy supply sources with environmental sustainability a higher priority than hitherto. Thus, natural gas is set to increase its 2% share and there is an increasing justification for taking renewable energy much more seriously, in particular wind energy, solar energy, and energy derived from biomass.

　　Renewable energy so far in China. While overall, Renewable Energy Technologies (RETs) will always be a minority contributor to the nation's total energy, in some energy deprived regions they could be very significant, since local, China ha s some of the best RET resources in the world (Tibet > 8,000 mega-joules/sq. m/y ear; Inner Mongolia wind energy of the highest quality). So far, however, RETs contributes so little that they are not visible in the national energy statistics. This is because low priced fossil fuel (coal) effectively blocks an inroad by RETs, particularly when the equipment (wind turbines, solar panels) has to be imported. Local manufacture could help change this situation, but no manufacturer would be willing to set up in China unless there was an assured market there on a large enough scale. To date, existing RET projects are essentially pilot or demonstration projects, relying on soft loans, grants and donations, bilaterally arrived at between equipment suppliers and local authorities. Follow up maintenance has proved a problem, and the insignificant scale (in terms of contribution to grid electricity) has done nothing to enhance the image and potential of the industry.

　　How can RETs be encouraged to grow? Part of the answer must lie in higher targets and larger, longer-term projects. Mechanisms need to be found to attract larger players in the energy supply industry to whom the notion of risking substantial venture capital in long term projects could be attractive in the expectation o f profitable activity over decades rather than years.

　　4.2.3 Resource Licensing Work as a Method for Renewable Energy Development

　　Conceptual background. In the neighboring energy industries of petroleum and natural gas, concession-granting mechanisms have been in place for much of this century and have been manifestly successful in building giant industries. The key institutional element is the concept of exclusive rights pertaining to a geographically delineated concession (or license) area, granted to a successful bidder in exchange for an obligation to diligently develop the hydrocarbon resource according to certain quality and expenditure commitments. The same principle could b e extended to renewable energy resources.

　　Concessions for renewable energy. Wind, solar and biomass energy resources are all by their nature geographically constrained. Economically interesting amounts of each energy resource are found in some areas, but not in others. The same app lies to subsurface resources such as petroleum, natural gas and coal. Thus, there is no obstacle, in principle, to subdividing RET resource areas into concessions or licenses, as in fossil fuel industries, and inviting competitive bids from natural and international players to develop them in accordance with the regulatory framework and the offtake arrangements established in advance. So far, the parallels with the fossil fuel extractive industries are very close.

　　One important difference is, however, that as RET projects generate electricity as the off take product, the national, or provincial grid must be the major offtaker. At a higher than average initial cost. RET electricity would not be a welcome addition in most situations. Institutional ways must therefore be found to accommodate the new supply in the early phases of development, and before the economics of local manufacture have worked through to bring the RET supply to a more competitive position.

　　Initial action needed. Work is needed to generate model Renewable Energy Regulations, which would govern the issuance of concessions and licenses, the obligations and rights of concessionaires in the matter of exploration, appraisal and exploitation of the renewable energy resource within the licensed area. The Regulations would specify term and duration of the licenses, terms of extension and/or relinquishment. It is crucial also that here is clarity as to the authority of t he issuing authority to issue licenses, as major investments will be called for in the scale of the projects envisaged (1 gigawatt and more). Work is also needed to generate the Model Offtake Agreements which need to be in place, in frame work terms at least, before any invitations to bid could be issued.

　　Consideration needs also to be given to the technical realities of potential RET resource areas, to focus upon what is realistic regarding license areas, the minimum densities of wind and solar energy as attractive targets for venture cap ital. How big should concession areas be in what sort of areas?

　　Consultation with the authorities and relevant enterprises in such areas and wit h any central authorities and ministries, whose views on draft model agreements would need to be sought. While certain general principles might apply to all RET concessionary approaches, there are also features which distinguish wind, solar and biomass projects which need to be worked through to some degree to establish at least the conceptual framework of each.

　　A possible demonstration project. A target project for wind energy in Jilin Province is being considered, and is discussed below in Section 5.

　　4.2.4 Energy Efficiency in Township and Village Enterprises

　　Township and Village Enterprises (TVEs) are enterprises owned and run by communities of townships and villages as well as cooperatives in China. They are 22 mil lion in number, and occupy a significant place in the Chinese economy. They employed 128.6 million people (20% of the total employed) and they produced value added equivalent of RMB 1,459.5 billion Yuan (25.1% of GDP) in 1995. Their energy consumption reached 385 million tce, accounting for 29.8% of total energy consumption in 1995. Coal accounts for 70.1%, electricity 19.9% and fuel oil 10% of this energy.

　　In the manufacturing industry sector, TVEs were nearly 1.5 million in number in 1995, accounting for just over 20% of all enterprises with the total output value of RMB 3.4 trillion Yuan (37% of the industry total). Between 1991 and 1995 their number declined but their output nearly quadrupled. However, the output per worker of TVEs was lower than those of the industry average, and of the state-owned enterprises, indicating lower productivity.

　　Four manufacturing sectors, those of brick, lime, coke and cement accounted for 50% of the total energy use in manufacturing in 1995. This indicated the importance of targeting certain industries for increased energy efficiency.

　　TVEs are also serious sources of pollution. They emitted 22% of industry wastewater, 11% of industrial waste gas and 21% of industrial waste reidues.

　　Despite the importance of TVEs in the national economy, from the points of view of energy use, and discharge of pollutants and waste, the available information which is needed to assist in the development of strategies to improve efficiency and reduce pollution is limited.

　　More specific information is therefore urgently needed on TVEs energy use and on pollution emission profiles, particularly from the ceramics (including brick, cement and lime) industries, also the cooking, iron and steel industries in the TV E domain.

　　Highly relevant also to the WG work is information on any current or proposed local and national policy measures (such as the Energy Conservation Bill) and other institutional issues. The ongoing work will seek to draw conclusions from international comparisons, and therefore aims to compile Chinese data in a manner best suited to that purpose. (See also Section 5 below)

　　4.2.5 Energy Supply and Demand Scenarios for China

　　Energy Supply and Demand Scenario update (EASES). An update to the final report of April 1996 ("Development and Dissemination of Efficiency-Oriented and Environmentally-Constrained Alternative Energy Strategy Scenarios (DASES) in China", prepared by ITEESA) was presented in December, concluding that:

　　(1) Liquid fuel supply and demand will be a serious problem in the future; there is an urgent need for more work on petroleum supply and demand issues.

　　(2) Natural gas imports should be considered.

　　(3) China's ample renewable energy sources should be tapped, as coal will remain dominant, advanced clean technologies are needed.

　　(4) Nuclear uncertainties strengthen the case for alternatives.

　　(5) Integrated Resource Planning (IRP) will best achieve China's basic principle of paying equal attention to the development (exploitation) and conservation of energy resources.

　　(6) Demand Side Management (DSM) is one of the best approaches to implement energy conservation policy, but no mechanism yet exists; therefore work is needed in this area.

　　(7) Environmental regulatory policy as an important tool needs to be strengthened, as market alone cannot achieve desired policy goals.

　　The Natural Gas/Renewable Energy scenario (NGRE) shows plausible deep reductions in coal dependency and some enhancement of natural gas and renewable used for power generation. Studies on petroleum supply and demand are ongoing, a progress report being given to the WG in June.

　　Petroleum Forecast Scenario (ongoing). China has successfully maintained 20 years of economic growth at a rate above 10% per annum, at the same time achieving an energy efficiency gain, whereby energy consumption grew 5.4% less than the economy. The threefold growth of energy consumption, from 454 Mtce in 19 75 to 1,290 Mtce in 1995, nonetheless has caused severe environmental problems. Oil consumption grew 4.3% less strongly, from 67 Mt in 1975 to 156 Mt in 1995, with China becoming a net importer since 1993.

　　Though theoretical studies indicate abundant petroleum resources, in practice the proven reserves are not abundant. Accordingly, the WG has embarked on a petroleum demand forecast, till 2020, as a supplement to the IRP Country Case Study. The methodology follows the DEFENDUS concept and leads to a forecast of future demand of different oil products (gasoline, diesel, kerosene, and fuel oil. LPG etc.). Preliminary results are becoming available, but more work is needed before useful statistics can be published, because it is clear that different criteria are used to forecast future activity in different sectors of the economy. Many discrepancies need to be better understood. This valuable work is ongoing.

　　4.3 Workshops of Technology/Demonstration Projects

　　No new workshops took place under this heading in 1997, effort instead being directed to consolidate the work achieved in the Fuel Cell Bus workshop/demonstrate on project, and to evaluate what technologies should be focused upon for workshops in the second phase (see Section 5 below).

　　4.4 Demonstration Projects

　　Fuel-Cell Bus Project. The workshop organized by the WG in May 1995 on this them e generated sufficient interest in Beijing for the promotion of a highly visible demonstration of this ultra-clean transportation technology in the capital. UND P has responded favorably to a proposal by Moftec for a project on advancing fuel cell technology for buses in China, and this project is now underway. Interest is also being shown by the railway authorities who are investigating the alternative that the fuel cell offers to line electrification.

　　4.5 Progress on Capacity Building

　　The Third International Workshop on Integrated Resource Planning (IRP) was held in Beijing at Tsinghua University in December 1996. As before, the workshop was sponsored by the International Energy Initiative (IEI), and jointly supported and organized by CCICED and the Institute for Techno-Economics and Energy Systems Analysis (ITEESA). Fifty participants attended from ten provinces and cities, wit h foreign expertise on hand from India, Thailand, Japan and France.

　　After some 20 years of research and application, the IRP methodology has become widely accepted in modern economics by the 1990s. It has gained respect through the practicality of the means it offers to achieve rational resource allocation in a modern technological society. It has proved to be compatible with the market oriented society, particularly at the level of a province or nation. It is amen able to the legal principle, and it strengthens cost-effectiveness and efficiency in providing services. It encourages dynamic economic development, at the same time provides a consistent means for achieving conservation and environmental goals. It is clearly suitable for planning energy strategies and guiding decision- makers in energy.

　　Experience in China since its first introduction in 1992, and in the workshops of 1994 and 1995, has confirmed its acceptability and promise, particularly when applied in conjunction with Demand Side Management (DSM). In 1994, this work led to the setting up of the IRP Promotion Network (IRPPN). This network has conducted a number of studies since then.

　　The Third International Workshop (1996) focused on experience exchange in IRP/DS M at home and abroad. It was agreed that in China IRP/DSM is still at an initial stage and that more attention must be paid to providing concrete justification t o decision-makers as to the benefits of applying this methodology. A shortfall o f funding and of experience in making the best use of what funds are available h as reduced the net achievement in energy saving and efficiency over what could b e done.

　　There was, however, notable progress in many areas. Domestic researchers reported on IRP or IRP/DSM studies conducted in Shenhen, Shanghai (4 papers on DSM, energy conservation, and the paper and steel sectors), Beijing/Tianjin/Fuzhou/and Langfang, Nanchang, Liaoning Province (stage 1), and several more general papers w ere presented on aspects of IRP, DSM and efficiency in the energy, industrial and hotel sectors. Work continues to expand the IRPPN, and to extend coverage to new sector and regions.

　　It was agreed that the Fourth International IRP Workshop would be supported by IEI and takes place in Thailand, where EGAT will be the host.

　　5. FIVE YEAR WORKPLAN

　　5.1 General Considerations

　　The following workplan is based on the approach outlined in sections 1 through 3 above. In context outlined there, the WG will contribute in phase two of CCICED to the development of market rules for sustainable energy development in China, including contributions to the discussions of the role of government in shaping these rules. The WG will identify and analyze importune new technologies for sustainable energy, propose demonstration projects, and discuss the institutional an d human capacity issues that are crucial for making full use of sustainable energy options in China.

　　With the time limitation of two meetings per year, at which studies are reported, technological and capacity-building workshops are convened and demonstration projects are followed up, it is necessary to be selective in what the WG hopes to achieve in the next five years. Human resources and funding also exert constraints upon what can be effectively tackled.

　　As workshops stem from mature studies, and the choice of studies is arrived at through an ongoing discussion of priorities throughout the period, it follows that the portfolio of these activities remains dynamic. The WG's attention will continue to be directed into those areas and themes that seem most important to Chinese members, seeking at the same time to ensure a balanced attention over the twin concerns of economic development and the environment. The international member s will strive to ensure that the most appropriate, clean and efficient technologies, and the most effective institutional arrangements experienced worldwide, are brought to the attention of the group.

　　5.2 Studies

　　The WG believes that it is not feasible to aim for much more than 5 studies concurrent at any time, which indicates, assuming roughly 1 to 2 years per study, 12 to say 15 studies over the period.

　　Ongoing studies include:

　　● Energy efficiency and pollution mitigation in township and village enterprises(TVEs)

　　● A strategic approach for coal development and utilization in China

　　● A report on the energy structure of China

　　● Small scale electricity generation using biomass

　　● Energy supply and demand scenarios for China; the petroleum sector

　　Candidate studies in the pipeline include:

　　● Transportation study for Changchun City

　　● Grid-connected, distributed markets for photovoltaic technology

　　● The potential for using the fuel-cell s an alternative to line electrification n for the railway system of China

　　● Linking products of desulphurization with improved agriculture

　　5.3 Future Technology-Oriented Workshops

　　The WG envisions convening about 2 technology-oriented workshops per year, focused upon potential demonstration projects to follow. Already agreed for January 1998 is a workshop on:

　　● Biomass-generated electricity, in which four themes will be explored; infrastructure, policy, small-scale technology and the biomass resource.

　　Candidate workshops of the future already under discussion include:

　　● Coal utilization strategy

　　● Photovoltaic technology

　　● Decentralized electric supply

　　● Urban transportation

　　● Competitive technologies in electricity generation

　　5.4 Future Demonstration Projects

　　Given the extensive work which needs to be undertaken, which includes significant initial funding for the feasibility stage, and the location of willing investor s in the project, it is possible that most, one project per year might be successfully launched into at least the feasibility stage. On this basis, it is possible to envisage about 5 new demonstrations projects over the next 5 years.

　　5.4.1 Wind Energy Resource Concession Project

　　A wind energy demonstration project, based upon the Renewable Energy Resource Concession concept (see section 4.2.3) has attracted funding to take it to the first stage of concept proof. The location is to be NW Jilin Province, where high quality wind resources exist. The project has the strong support of the provincial authorities, a circumstance, which greatly adds to the chances for a successful outcome, if the technical and economic realities prove to be viable. The first stage involves the generation of several key models agreements, covering the rights and liabilities of license holders and the electricity offtakers. This work should commence before the end of 1997, as soon as human resource issues can be solved.

　　5.4.2 Energy-Efficient Commercial Building

　　A successful workshop in 1995 confirmed the interest in China in the construction n of a new generation of energy-efficient commercial buildings, given the explosive growth in this sector, and the huge new, and unnecessarily high, energy demands this was imposing on the nation. New materials and a knowledgeable attitude b y developers to the energy consequences of their construction choices, can now make a major contribution to energy construction, the best time being and during, rather then after construction.

　　A highly visible commercial building demonstration project will do much to advertise these truths in a municipality, or province. Changchun City has realized the potential for future energy saving this could represents, and is gearing up to be the first city to make energy-efficiency a priority in commercial building construction.

　　5.4.3 Small-scale Generation of Electricity from Biomass

　　Early candidates for a demonstration project will be small-scale plants to produce electricity from different sources of biomass, which are quite plentiful in different parts of China (sugar cane bagasse in the southwest, corn stalks in Jilin, poultry litter in poultry producing areas).

　　A small scale biomass fuel cell/gas turbine power system could, if successful, have far reaching implications for the decentralizing generation from large, environmentally negative, central locations to dispersed situations, bringing both environmental and employed benefits to deprived rural areas. The WG is actively engaged with exploring the concept and its implications for leap-forging technology to the economy.

　　The viable possibilities for demonstration projects in this domain for the next five-year period will begin to emerge following the planned workshop in January 1998.

　　5.5 Future Capacity Building

　　Capacity Building is an essential part of disseminating energy-efficient know-how and environmental awareness, as well as guiding decision-makers at all levels into the best avenues of national resource allocation. The next five years will see a continued extension of what has already proved itself to be of value. These will also be a new area of the institutional framework which will be considered, in studies initially, and thereafter in workshops to test applicably and acceptably in the context of China's economic situation.

　　5.5.1 Continuation of Ongoing Capacity Building

　　Integrated Resource Planning Promotion Network (IRPPN). The Integrated Resource Planning Promotion Network, building on the encouraging start already made in the past 3 years, is expected to continue in its present workshop format (in China, and occasionally overseas) over the full 5 year period.

　　Demand Side Management (DSM). Reactions at the recent workshop indicate that extra efforts are needed to boost capacity building in the area of DSM. The point h as been noted and will be a concern of the WG in future workshops.

　　5.5.2 New Capacity Building Initiatives

　　Role of the Government and Energy Industry with regard to Sustainable Development. An initial sounding of interest in this aspect was conducted in a workshop in 1996, and it is likely that there will be justification for the WG to consider further the issue of sustainability and the government's role in safeguarding this in a modern market-oriented economy.

　　6. REPORT ON FUNDING

　　The costs of meetings of the WG have been funded by the Canadian secretariat of the CCICED, covering the international participation and direct local costs. Fun ding for workshops and other activities have been identified by the WG during phase one from other sources. A large number of contributors have been supportive, as acknowledged in the reports of the WG to CCICED.

　　In the judgment of the WG, a larger contribution to total costs from CCICED funds would be desirable.

　　7. REFERENCES TABLED AND PUBLICATIONS ISSUED

　　7.1 China's Fuel Energy Strategy; 1997, Professor Yang Jike, for CCICED Energy Resource Strategy and Technology Conference in Changchun.

　　7.2 Energy Consumption and Prospects in China; 1996 Prof. Zhou Feng-qi, ERI, Beijing for the Energy and Environment Steering Committee of the World Bank.

　　7.3 Solar-Assisted Hydrogen Production from Natural gas with low CO2 Emissions; 1997, Robert H Williams and Brian Wells, Center for Energy and Environmental Studies, Princeton University, NJ, for the international Conference on "Technologies for Activities Implemented Jointly" of the IEA Greenhouse Gas R&D Programme.

　　7.4 Giving Priority to Public Transportation for Optimizing the Energy Resource Situation and Improving the City Environment; 1997, Miao Ruoyu, Deputy secretary General of the Changchun Municipal Government, for CCICED Energy Resource Strategy and Technology Conference in Changchun.

　　7.5 The Key Role Electricity Plays in Sustainable Development; 1997, Prof. Xie Shaoxiong, State Power Corporation of China, for CCICED Energy Resource Strategy and Technology Conference in Changchun.

　　7.6 Small-scale Biomass Fuel Cell/Gas Turbine Power Systems for Rural Areas; 199 7, Sivan Kartha, Thomas G Kreutz and Robert H Williams, Center for Energy and Environmental Studies, Princeton University, NJ, for the Third Biomass Conference of the Americas, Montreal, Quebec.

　　7.7 Progress Report of Some Case Studies in IRPN, 1997; Gao Dai, Zhou Aiming, Li Wun, ITEESA, Tsinghua University, for CCICED Energy Resource Strategy and Technology Conference Changchun.

　　7.8 Demand Forecasting of Various Oil Products by 2000-2020 (draft), 1997; Deng Guori, Ma Yuqing ITEESA, Tsinghua University, for CCICED Energy Resource Strategy and Technology Conference in Changchun.

　　7.9 Keynote Address; The Role of Government in East Asian Economic Development 1 997; Masahiro Okuno-Fujiwara, Institute of Developing Economies; Keynote Address, International Symposium,'

　　8. OTHER PAPERS/PRESENTATION SLIDE PACKS

　　8.1 Reference material for Development of Fuel Cell Locomotive; 1997 Prof. Yu-Shi Mao.

　　8.2 Towards a Strategic Approach for Coal Development and Utilization in China; 1 997, Robert H Williams, Center for Energy and Environmental Studies, Princeton University NJ.

　　8.3 Grid-Connected, Distributed Markets for PV Ethnology; 1997, Robert H William s, Center for Energy and Environmental Studies, Princeton University, NJ.

　　8.4 Towards a Strategic Approach for Biomass Development and its Utilization for Energy in China; 1997, Robert H, Williams, Center for Energy and Environmental Studies, Princeton University, NJ

　　8.5 Fuel Cells and their Fuel for Transportation; 1997, Robert H. Williams, Center for Energy and Environmental Studies, Princeton University, NJ

　　MEMBERS OF THE WORKING GROUP

　　Chinese Members:

　　Co-Chairman: Professor NI Weidou

　　Professor MAO Yushi

　　Professor XIE Shaoxiong

　　Professor ZHOU Fengqi

　　Professor QIU Daxiong

　　Professor WANG Hanchen

　　Assistant: Associate Professor WANG Yanjia

　　Associate Professor CHEN Hua

　　International members:

　　Co-Chairman: Professor Thomas B.JOHANSSON

　　Dr. Timothy BRENNAND

　　Professor Ugo FARINELLI

　　Professor Amulya REDDY

　　Dr. Robert WILLIAMS

　　Mr. Keiichi YOKOBORI

　　Assistant: Mrs. Martha DUEN AS-JOHANSSON

　　Acknowledgments:

　　The Working Group would like to acknowledge financial and in kind support from t he CCICED, ENEA, the International Energy Initiative, the Rockefeller Foundation, and the UNDP. Dr. Williams would like to acknowledge support from the W. Alton Jones Foundation and the Merck Fund.